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Blog Post - views-on-the-economy-and-the-world

The Historical Puzzle of US Economic Performance under Democrats vs. Republicans

| Mar. 28, 2024

We have heard much about the puzzle that US economic performance under President Joe Biden has been much stronger than voters perceive it to be.  But the current episode is just one instance of a bigger historical puzzle:  the US economy has since World War II consistently done better under Democratic presidents than under Republican presidents.  This fact is even less widely known, including among Democratic voters, than the truth about Biden’s term.  Indeed, some poll results suggest that more Americans believe the reverse, that Republican presidents are better stewards of the economy than Democrats.

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Putin’s Latest Nuclear Messaging: Softer Tone or Threat of Use?

| Mar. 15, 2024

On March 13, President Vladimir Putin granted an interview, in which he again delved into the conditions under which he says he would initiate the use of nuclear weapons. His remarks were so ambiguous that it caused mainstream Western media organizations—which tend to agree on what to emphasize in news out of the Kremlin—to put divergent headlines on the news stories that they ran about this particular interview. “Putin, in Pre-Election Messaging, Is Less Strident on Nuclear War. The Russian leader struck a softer tone about nuclear weapons in an interview with state television,” was the NYT’s headline. In contrast, the FT’s headline was “Russia ‘prepared’ for nuclear war, warns Vladimir Putin. President resumes bullish rhetoric over use of atomic arsenal if west threatens Moscow’s sovereignty,” while CBS News ran with “Putin again threatens to use nuclear weapons, claims Russia's arsenal ‘much more’ advanced than America's” and WSJ led with “Putin Rattles Nuclear Saber Ahead of Presidential Elections; Raising specter of nuclear confrontation.” So, which is it? Has Putin just struck a softer tone about nuclear weapons or has he rattled his nuclear saber yet again? The answer is both.

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Blog Post - views-on-the-economy-and-the-world

Six Explanations for Misperceptions Regarding the Strong Economy

| Feb. 25, 2024

By now, quite a variety of explanations have been offered for the puzzle that the unusually good state of the US economy has not been reflected in public opinion surveys, and especially not in polls regarding President Joe Biden’s bid for re-election in November.  At least six hypotheses have been put forward regarding the performance-perception gap.

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Blog Post - views-on-the-economy-and-the-world

Helping Ukraine is a National Security No-brainer

| Jan. 28, 2024

Much is difficult to understand about what has happened to one of our two political parties.   Among other things, I don’t understand why some Republican congresspeople oppose an extension of US support for the government of Ukraine in its fight against the Russian invasion, and why others who may be in favor of continuing support give it so low priority as to allow their colleagues to block it, by holding it hostage to unrelated Mexican border concerns.

Weighing costs and benefits, backing Ukraine is one of the most sensible US foreign affairs policy priorities in a long time. As Ukrainian President Volodomyr Zelensky said earlier this month, “Giving us money or giving us weapons, you support yourself.”

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Population Numbers Allow Ukrainian Military to Call Up 500,000, But Can It Afford to Keep Them?

| Jan. 11, 2024

Since December, my colleagues at Russia Matters and I have been monitoring1 how Ukraine’s President Volodymyr Zelenskyy and its commander-in-chief Valerii Zaluzhnyi have sparred over who should assume prime responsibility for the plan to conscript up to 500,000 Ukrainians. As we watched the two employ what Sun Tzu would have described as “indirect methods” to avoid becoming the person publicly associated with the unpopular plan, we could not help wondering whether the Ukrainian authorities actually have the capacity to add (and keep) half a million to the fighting force, if the government and parliament eventually agree on a bill that would authorize such an addition.2 Here’s what I have found out in my effort to answer that question.

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Blog Post - views-on-the-economy-and-the-world

Fix Air Traffic Control!

| Dec. 17, 2023

Air travel is soaring, as a long-term trend, especially in the growing economy.  It is also soaring seasonally: The few days after Christmas are expected to be especially intense.  Many passengers will experience maddening flight delays this holiday season, especially in the US. A few might be exposed to scary airport near-misses.  It is reasonable to hope that the excellent US safety record — no fatal crashes since 2009 — will be extended.  But close calls have increased during the post-pandemic return to commercial air travel, reaching about 300 in the most recent year, 27 of them serious.

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Blog Post - views-on-the-economy-and-the-world

Does the Fed Deserve Credit for the Disinflation?

| Nov. 19, 2023

The Bureau of Labor Statistics on November 14, remarkably, announced that the US CPI had been unchanged in October (whether seasonally adjusted or not).  That is, the level of the CPI was unchanged, not the inflation rate, which was zero.  Of course, single-month numbers are too volatile to draw much of a conclusion.  Not every month will see the price of gasoline plunge by 5.0 %, as it did from September to October.

More informatively, the headline CPI inflation rate over the last 12 months was 3.2 %, far down from 6.5 % in 2022.  At the risk of tempting fate, one might say that the inflation battle is being won.

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Average Age of Ukrainian Soldiers Is Past 40 and That Could Be a Problem

| Nov. 03, 2023

Time journalist Simon Shuster has just published an article titled “Volodymyr Zelensky’s Struggle to Keep Ukraine in the Fight,” which contains three revelations that do not bode well for that struggle. First, the article reveals that Zelensky—who remains staunchly opposed to either truce or peace—is so convinced of Ukraine’s victory that one of his closest aides describes him as “delud[ing] himself.” Second, the article reveals that after his September trip to the U.S., Zelensky has been feeling betrayed by his Western allies, who he feels have left him without the means to win the war, only the means to survive it. Last but not least, even if the West did come through with all the weapons they have pledged, “we don’t have the men to use them,” one of Zelensky’s close aides told Time’s Shuster, revealing that the average age of a Ukrainian soldier has already reached 43.1 That third revelation is, perhaps, the most consequential of the revelations that Shuster—who has been relentlessly covering post-Soviet conflicts for decades—makes in his Nov. 1 article

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Blog Post - views-on-the-economy-and-the-world

China’s Great Leap Backward

| Oct. 23, 2023

Ten years ago this November, the 18th Central Committee of China’s Communist Party held its quinquennial Third Plenum.  The meeting decided on a set of reforms that were well-chosen to sustain the national growth rate.  But the reforms have not been implemented, contributing to a big slowdown in the economy.

  1. The decline in Chinese growth

As of ten years ago, 2013, a naive extrapolation of the differential in growth rates between China and the US suggested that the number two economy would overtake the number one economy by 2021 (when GDPs are compared using nominal exchange rates). Some even said the cross-over year would be 2019. This did not happen; the US economy remains far ahead.  Goldman Sachs and others now project that China’s GDP will not catch up with US GDP until 2035if ever.  Even if the crossover occurs, it may be only temporary.  The Chinese economy is forecast to peak sometime in the middle of the century, after which the ongoing decline in the labor force will outweigh productivity growth.  This drastic revision of crossover forecasts is one indication of how sharply trend growth in the Middle Kingdom has been revised downward since 2013.