Category Archives: Economics

Miscellaneous economy stuff

Federal Government Shutdowns

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I’ve written a few times (the latest here) about the results of Federal government shutdowns. Progressive-Democratic Party politicians always and everywhere are in full-throated panic-mongering about the disaster that is a shutdown. Far too many Republican Party politicians timidly accept the Leftist Party’s claims and seek to do anything, even on bended knee, to avoid a shutdown.

I have a challenge for them, and for all you out there in reader land.

Here are two graphs, the first from Macrotrends showing our GDP growth rate from year to year from 1961 through 2022, and the second from stastica showing GDP levels over the more focused period of 1990-2022.

My challenge is this: find, in either graph, the Federal government shutdowns of 2013, 2018, and 2018-2019.

As an aside, as I write this late Saturday, the House passed a 45-day, keep the government open, funding bill; the Senate then passed the House bill and forwarded the thing to President Joe Biden (D). The bill omitted any spending cuts, steep or otherwise, and dropped any aid for Ukraine.

This, in light of the above, represents a surrender to the Progressive-Democrats forced by the allegedly Republican Chaos Caucus led by Zoo Master Matt Gaetz (R, FL), who have offered nothing beyond “No” to any bill on offer, including the prior Republican-led House stop-gap bill that included significant cuts to spending—which would have given time to work out the remaining appropriations bills with even deeper and broader spending cuts. Gaetz might as well have joined Progressive-Democrat Congressman Jamaal Bowman in deliberately pulling a Congressional office fire alarm in an attempt to stall any House action at all.

Furloughs and Redundancy

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If the government is partially shut down by Progressive-Democratic Party Congressional politician obstructionism, millions of federal employees could face furloughs, some federal offices may close or work shortened hours.

Those furloughs and closures would give us some interesting data on the usefulness/criticality of those furloughees and offices. Here’s what Slate found regarding these items during the Obama “shutdown” some 10 years ago:

Notice a couple of things here regarding Progressive-Democrat President Joe Biden’s threat to stop paying our military members and Party politicians’ threats regarding the VA (right click on the graph and select Open Image in New Tab to get a bigger image). One is the Veterans Affairs level of furloughing: all of 4%. That’s not importantly different from the ordinary absentee rate due to illness, vacation, and so on.

Then look at the Defense line and the Note at the bottom of the graph, the latter which says Department of Defense total includes military personnel. Half of civilian personnel have been furloughed. The civilian furlough rate of 50% is a strong indication of how many of those civilians really are needed in the Pentagon and elsewhere in DoD. The military side of DoD can easily continue being paid out of current tax law-driven revenues flowing in to the government.

Finally, notice the furlough rate at so many of those Federal Agencies. That’s also a very strong indication of how many employees are truly unnecessary. Certainly, short-term furloughs overstate the degree of redundancy, but they give a very good index into how many truly are excess.

Bidenomics

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It’s terrific, or so claims our Progressive-Democratic Party President, Joe Biden. Here are some examples of how well it’s working.

  • He [Mark Zandi, Chief Economist at Moody’s Analytics] estimates that the typical American household would need to use 42 weeks of income to buy a new car, as of August, up from 33 weeks three years ago.
  • New 30-year fixed-rate mortgages today carry rates around 7%, up from 3% two years ago.
  • The typical credit card carried a 20.7% interest rate in May, up from 14.6% in February 2022….

That’s Bidenomics’ inflation, which drives the Fed’s moves on interest rates. That’s also Bidenomics’ inflation, which drives prices higher. That last pushes the need to borrow, whether to buy a home, buy a car (new or used), or via credit card debt to buy daily and monthly necessities.

Sure, Bidenomics is working. And maybe I know of some beachfront property north of Santa Fe….

Featherbedding

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It’s not just for railroads, or auto unions. It seems to have come to the Writers Guild of America. The WGA and the Alliance of Motion Picture and Television Producers appear to have reached a tentative agreement, wanting only fleshing out the details and then a WGA rank and file vote.

The tentative agreement appears to include these items:

  • a minimum number of writers per television show
  • guaranteed employment for those writers from conception to postproduction

If those really are included, they would be just naked featherbedding. Not even TV and movie production needs a guaranteed, fixed numbers of writers, or of any other type of employee, nor should these businesses need to provide guaranteed employment, whether or not the employees are needed at one time or another.

Instead, those items should be matters agreed in contracts between employee groups or their representing unions and the particular television and movie production company.

This wastefulness—and increased cost to consumers—is part of the price a union shop inflicts on the rest of us.

Student Debt and Savings

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The lede’s lead sentence leads into it.

Everybody knows that US households’ savings soared after the pandemic struck, as the combined effects of checks from the government and fewer opportunities to spend swelled wallets.

Increasing household savings is, in almost all cases, good since we Americans don’t keep a big enough cash cushion against unexpected exigencies, anyway. There was, though, one key area, one Critical Item, that did—and does—represent quite a large opportunity legitimately to spend: paying down the student debt held by one or more members of a household.

Sure, the Federal government, with questionable legality, initiated a pause on student debt payment and associated interest accruals. However, that pause was on lenders’ ability to demand payment. That pause in no way blocked the ability of the student borrowers to continue making payments of their loans.

Where we stand today is indicated by the San Francisco Fed (keep in mind that they say their estimate is pessimistic):

They calculate that excess savings peaked at about $2.1 trillion in August 2021, but by the second quarter of this year less than $190 billion remained, putting them on pace to be depleted in the current quarter.

Now (assuming arguendo, the estimate is accurate), in the face of those vastly depleted and rapidly disappearing savings, those student debtor households will have to resume student loan payments, whether they want to or not, next month. That represents a sequence of problems for our economy and for them: student loan debtors must make loan payments from shrunken resources, which means they’ll spend less in the consumer economy. Less consumer spending slows our economy. In a slowing economy, employers hire fewer employees or employ fewer folks outright—furloughs and layoffs. That tightening, even shrinking, labor tightens even further the economic condition of those student debt-laden households.