Big Convention

Economists, like other professionals, have a lot of conventions/conferences/meetings.

Some of you might eventually go to one of these.

The big one is the ASSA (Allied Social Science Association) meetings, held during the first week of January. Mostly this is just the AEA (American Economics Association).

This year's meeting was in San Antonio.

At these meetings, people present their new research papers, network, catch up with friends that went in different directions from graduate school ... and a lot of them dine out, play golf, and do touristy stuff. I even got married at one (well, right after a WEAI conference ended)! Until a few years ago, almost all first interviews for new professors (who start work in August) were done at these meetings too: all the hiring schools, and all the applicants, were in one place for a few days. For example: I was the SUU person who first interviewed Dave Berri, around a table in a hotel ballroom in New Orleans.

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Every year the Wall Street Journal sends a reporter to the meetings, who files a story about some zeitgeist they absorbed there. This year's article is entitled "Nation’s Top Economists Are Short-Term Happy, Long-Term Glum".

It's not too big on deep economic content, just a few quotes from a few big names.

One thing macroeconomists are perplexed about is where'd all the inflation go? This was a huge deal 2 years ago, a fading crisis a year ago, and now just a quaint worry for some. The truth is, macroeconomists really don't know. 

What our models tell us is that bringing down inflation is hard. Mostly this is because it's self-perpetuating: if you expect prices to go up, you're more inclined to buy now, which pushes up prices, confirming your expectations. 

What our practical experience tells us is that policymakers aren't very good at pulling that off. A lot of inflation ends up being persistent for many years, even decades. While in other cases, inflation is brought down by a recession — unintentionally created by policymakers "hitting the brakes too hard" — a so called hard landing.

Even worse, no one had great confidence in the policymakers this time around: monetary policy is increasingly run by amateurs and political hacks, while with fiscal policy, both Democrats and Republicans have been making choices to push up inflation for several years now.

I'm as guilty of this as anyone: my prediction was inflation for 15-20 years, punctuated by not-quite-hard-enough-landings.

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The article also touches on inflation maybe heating up again. That's essentially my point from the previous paragraph.

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The article also offers a nugget that you should take to heart: for all our complaints about the post-CoVid recovery in the U.S., we're doing better than most other developed countries. I find the explanation offered very plausible ... although you may not have heard it in our heated political environment. Truth be told, we actually do a lot less to help out firms in the U.S. than most other developed countries do, and a lot more to help individuals and families especially that other countries don't do.

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The article also touches on the importance of productivity growth. We'll be talking a lot about that in class this semester. Unfortunately, we know a lot more about how to measure it, and how important it is, than how to make it happen.

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Lastly, there's a chart of a cool new data index (keep the word index in mind, because we'll spend some time in about a month thinking about how to put those together).

We know there were problems with supply chains over the last few years: first with the initial wave of CoVid and the lockdowns, but then again almost 2 years months after that. The thing is, no one ever measured it because it wasn't a problem before.

So some economists from the Federal Reserve Bank of New York constructed a measurement by weighting existing data series. The result, GSCPI (Global Supply Chain Pressure Index), shows that we're in a good place now, that there were 2 distinct bad patches over the last 4 years, and that they were a lot worse than what we'd experienced before that.