October 27, 2022

Data released this morning from the U.S. Bureau of Economic Analysis showed that the nation’s gross domestic product—that is, the total value of goods and services produced in the U.S.—was up in the third quarter of 2022, increasing at an annual rate of 2.6%. This increase reflected increases in “exports, consumer spending, nonresidential fixed investment, federal government spending, and state and local government spending,” as well as decreases in imports. That growth was partly offset by lower housing sales.

Disposable personal income and personal savings were also up.

The previous two quarters had shown the economy contracting, and since Republicans have made the notion that the country is in a recession a centerpiece of their campaign messaging, President Joe Biden was quick to celebrate the news, saying in a statement that “today we got further evidence that our economic recovery is continuing to power forward.” He noted that the country has added 10 million jobs since he took office and that employment remains at a 50-year high.

New York Times economic and business reporter Ben Casselman complicated the story a bit. He noted that the data from the past three quarters—two down, one up—shows that the economy is slowing, and he suggested that this quarter’s big swing upward is due to changes in trade and inventories. But, he pointed out, slowing the economy a bit is exactly what the Federal Reserve is trying to do: slow demand to bring down inflation.

The primary tool the Fed uses to do that is interest rates, but those adjustments are very blunt instruments, and those people interested in continuing growth are always worried the Fed will raise interest rates too much, too fast, throwing the economy into reverse. Trying to figure out exactly how to adjust the economy so inflation slows but employment doesn’t, seems to me to be rather like trying to catch an egg on a plate, as the saying goes.

Biden observed today that inflation remains a problem—“we need to make more progress on our top economic challenge: bringing down high prices for American families”—but noted that gas prices continue to fall (the average price of a gallon of gas today was $3.76 a gallon). He also pointed to the Inflation Reduction Act’s reduction of drug prices and health care premiums, which will go into effect next year. In addition, the administration yesterday announced plans to stop so-called junk fees on consumers, as well.

Yesterday, Jim Tankersley and Emily Cochrane of the New York Times noted that Republicans are emphasizing inflation as a reason to vote Democrats out of office. Republicans say they will reduce government spending and pass more tax cuts, including a repeal of the tax increases on corporations that the Democrats passed this summer. They promise to cut funding for the IRS, which Congress funded to enable it to go after corporations and the very wealthy who cheat on their taxes.

But, Tankersley and Cochrane point out, “few economists on either end of the ideological spectrum expect the party’s proposals to meaningfully reduce inflation in the short term.” Indeed, economists say tax cuts could make inflation worse by freeing up more money.

What would take money out of the economy, though, is Republicans’ promise to get rid of the IRA’s new health care tax credits and caps on drug prices. They also promise to stop Biden’s student loan forgiveness program, which would put loan burdens back on about 40 million Americans, thus cutting down their disposable income.

Meanwhile, London-based oil company Shell today reported its third-quarter adjusted earnings. They were the second highest on record for Shell: $9.45 billion. (Shell’s top earnings period was the second quarter of this year, when it reported $11.5 billion.) Profits for Paris-based TotalEnergies were $9.9 billion. That’s more than double what their profits were in the same period last year. Shell says it will use the windfall to buy back about $4 billion of its shares, making this year’s total buybacks $18.5 billion. It will also increase dividends to shareholders.

According to Stanley Reed of the New York Times, Shell’s chief financial officer told reporters that the company had not paid Britain’s new windfall tax on oil and gas profits because the company’s spending on projects in the North Sea had reduced profits, but that they expected to see the tax kick in next year.

If Biden is focusing on the economy before the midterms, the Republicans seem to be doubling down on their ties to the right-wing movements around the world. In a speech today, Russian president Vladimir Putin appeared to be reaching out to right-wing Americans when he divided “the West,” into two groups: one of “traditional, mainly Christian values” that aligns with Russia, and one of “aggressive, cosmopolitan, neocolonial” values “acting as the weapon of the neoliberal elite” and trying to impose its “strange” values on the world.

Antisemitism is also on the rise on the American right in what looks like outreach to those embracing European-style fascism. Former president Trump recently warned American Jews to “get their act together” and show more support for Israel “before it is too late,” while the recent outbursts from artist Ye (also known as Kanye West) have led Adidas to cancel its contract with him and upended his other projects. In Pennsylvania the Republican candidate for governor, Doug Mastriano, a right-wing Christian who opposes the separation of church and state, has made attacking the Jewish faith of his Democratic opponent, Attorney General Josh Shapiro, a big part of his campaign.

“Empirically, something is different,” Jonathan Greenblatt, chief executive officer of the Anti-Defamation League, told Michelle Boorstein and Isaac Arnsdorf of the Washington Post. “The level of public animosity towards Jews is higher than it’s been in recent memory.” My own guess is that increasing antisemitism on the part of Republicans is not simply the encouragement of hate such as that exhibited four years ago today when a gunman murdered eleven people and wounded six more at the Tree of Life synagogue in Pittsburgh, but is rather an attempt to signal directly to neo-Nazis before the election that the party wants their support.

The danger posed by the current-day Republican Party’s embrace of authoritarianism is not going unchallenged. Indeed, it is remaking American politics as defenders of democracy band together. Today, Representative Liz Cheney (R-WY) endorsed Representative Elissa Slotkin (D-MI) for reelection, her first endorsement of a Democrat since the Republican Party turned on her over her insistence on holding Trump to account for the January 6 attack on the Capitol.

Both women sit on the House Armed Services Committee. Cheney called Slotkin “a good and honorable public servant who works hard for the people she represents, wants what's best for the country, and is in this for the right reasons.” Cheney continued: “While Elissa and I have our policy disagreements, at a time when our nation is facing threats at home and abroad, we need serious, responsible, substantive members like Elissa in Congress. I encourage all voters in the 7th district—Republicans, Democrats, and Independents—to support her in this election.” The two will appear together at an “evening for patriotism and bipartisanship” on November 1.

And in Alaska, Senator Lisa Murkowski, a Republican, and Representative Mary Peltola, a Democrat, have just endorsed each other in the upcoming election. The Alaska Federation of Natives has endorsed them both.

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Notes:

https://www.bea.gov/news/2022/gross-domestic-product-third-quarter-2022-advance-estimate

https://www.whitehouse.gov/briefing-room/statements-releases/2022/10/27/statement-by-president-biden-on-third-quarter-gdp-report/

https://www.theguardian.com/business/2022/oct/27/profits-at-worlds-seven-biggest-oil-firms-soar-to-almost-150bn-this-year-windfall-tax

https://www.nytimes.com/2022/10/27/business/economy/us-economy-gdp.html

https://www.washingtonpost.com/business/2022/10/27/gdp-2022-q3-economy/

https://www.nytimes.com/2022/10/27/business/shell-earnings-profit-oil-gas.html

https://www.nytimes.com/live/2022/10/27/world/russia-ukraine-war-news

https://www.nytimes.com/2022/10/10/us/politics/mastriano-shapiro-antisemitism.html

https://www.nytimes.com/2022/10/26/us/politics/midterms-gop-republican-inflation-plans.html

https://gasprices.aaa.com/national-average-continues-to-fall-as-gas-demand-remains-low/

https://www.washingtonpost.com/religion/2022/10/27/antisemitism-kanye-trump-adidas-jews/

https://s3.documentcloud.org/documents/23207150/republican-liz-cheney-endorses-democrat-elissa-slotkin.pdf

https://talkingpointsmemo.com/news/cheney-endorsement-elissa-slotkin-democrat

https://thehill.com/homenews/campaign/3701555-murkowski-peltola-buck-parties-to-endorse-each-other-in-alaska/