Opinion | The Gerontocracy of the Democratic Party Doesn’t Understand That We’re at the Brink – The New York Times

Credit…Desiree Rios for The New York Times

If you want a sense of what separates much of the leadership of the Democratic Party from many of its supporters — of what illustrates their profound disconnect from younger cohorts of liberal and progressive voters — you could do much worse than to read this recent statement from Senator Dianne Feinstein of California.

“Some things take longer than others, and you can only do what you can do at a given time,” she said in an interview with Rebecca Traister of New York magazine. “That does not mean you can’t do it at another time,” she continued, “and so one of the things you develop is a certain kind of memory for progress: when you can do something in terms of legislation and have a chance of getting it through, and when the odds are against it, meaning the votes and that kind of thing.”

“So,” Feinstein concluded, “I’m very optimistic about the future of our country.”

This entire comment was, in Traister’s analysis, a damning example of the sanguine complacency that seems to mark much of the gerontocratic leadership of the Democratic Party.

I agree.

What’s missing from party leaders, an absence that is endlessly frustrating to younger liberals, is any sense of urgency and crisis — any sense that our system is on the brink. Despite mounting threats to the right to vote, the right to an abortion and the ability of the federal government to act proactively in the public interest, senior Democrats continue to act as if American politics is back to business as usual.

Earlier this year at the National Prayer Breakfast, to give another example, President Biden praised Senator Mitch McConnell, the minority leader, as a “man of your word” and a “man of honor.”

“Thank you for being my friend,” Biden said to a man who is almost singularly responsible for the destruction of the Senate as a functional lawmaking body and whose chief accomplishment in public life is the creation of a far-right Supreme Court majority that is now poised to roll American jurisprudence back to the 19th century.

House Speaker Nancy Pelosi is similarly enamored of this rhetoric of bipartisan comity in the face of a Republican Party whose members are caught in the grip of a cult of personality marked by conspiratorial thinking and an open contempt for electoral democracy.

“It might come as a surprise to some of you that the president I quote most often is President Reagan,” Pelosi said at the ribbon-cutting for the Washington branch of the Ronald Reagan Presidential Foundation and Institute. “The good humor of our president was really a tonic for the nation, the gentleman that he was.”

And last month, she told an audience in Miami that she wants a “strong Republican Party” that can return to where it was when it “cared about a woman’s right to choose” and “cared about the environment.” Of course, the ideologically moderate Republican Party that Pelosi seems to want resurrected was largely dead by the time she entered national politics in the late 1970s, bludgeoned into submission with the notable help of Ronald Reagan, among other figures.

As I reflect on this attitude among Democratic leaders, I’m reminded of the historian Jefferson Cowie’s argument about the New Deal’s relationship to the American political order. In “The Great Exception: The New Deal and the Limits of American Politics,” Cowie argues for an interpretation of the United States in the 20th century that treats the New Deal era, from the administration of Franklin Roosevelt to the 1970s, as a “sustained deviation from some of the main contours of American political practice, economic structure, and cultural outlook.”

The Great Depression and World War II may have “forced clear realignments of American politics and class relations,” Cowie writes, “but those changes were less the linear triumph of the welfare state than the product of very specific, and short-lived, historical circumstances.”

If this is true — if the New Deal was the product of highly contingent circumstances unlikely to be repeated either now or in the future — then the challenge for those committed to the notion of a government that protects and expands the collective economic rights of the American people is to forge a new vision for what that might be. “The path forward is not clear,” Cowie writes, “but whatever successful incarnation of a liberal ‘social imaginary’ might follow will not look like the New Deal, and it might be best to free ourselves from the notion that it will.”

I think you can apply a similar “great exception” analysis to the decades of institutional stability and orderly partisan competition that shaped the current generation of Democratic leaders, including the president and many of his closest allies.

They came into national politics in an age of bipartisan consensus and centrist policymaking, at a time when the parties and their coalitions were less ideological and more geographically varied. But this, too, was a historical aberration, the result of political and social dynamics — such as the broad prosperity of the industrial economic order at home — that were already well in decline by the time that Biden, Pelosi, Feinstein and others first took office.

American politics since then has reverted to an earlier state of heightened division, partisanship and fierce electoral competition. Even the authoritarianism on display in the Republican Party has antecedents in the behavior of Southern political elites at the end of the 19th century and the beginning of the 20th.

Millions of Democratic voters can see and feel that American politics has changed in profound ways since at least the 1990s, and they want their leaders to act, and react, accordingly.

Standing in the way of this demand, unfortunately, is the stubborn — and ultimately ruinous — optimism of some of the most powerful people in the Democratic Party.

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Source: Opinion | The Gerontocracy of the Democratic Party Doesn’t Understand That We’re at the Brink – The New York Times

The Recovery Threw the Middle-Class Dream Under a Benz – The New York Times

Once a year or so, the economist Diane Swonk ventures into the basement of her 1891 Victorian house outside Chicago and opens a plastic box containing the items that mean the most to her: awards, wedding pictures, the clothes she was wearing at the World Trade Center on the day it was attacked. But what she seeks out again and again is a bound diary of the events of the financial crisis and their aftermath.

“It’s useful to go back and see what a chaotic time it was and how terrifying it was,” she said. “That time is seared in my mind. I looked at it again recently, and all the pain came flooding back.”

A decade later, things are eerily calm. The economy, by nearly any official measure, is robust. Wall Street is flirting with new highs. And the housing market, the epicenter of the crash, has recovered in many places. But like the diary stored in Ms. Swonk’s basement, the scars of the financial crisis and the ensuing Great Recession are still with us, just below the surface.

The most profound of these is that the uneven nature of the recovery compounded a long-term imbalance in the accumulation of wealth. As a consequence, what it means to be secure has changed. Wealth, real wealth, now comes from investment portfolios, not salaries. Fortunes are made through an initial public offering, a grant of stock options, a buyout or another form of what high-net-worth individuals call a liquidity event.

Data from the Federal Reserve show that over the last decade and a half, the proportion of family income from wages has dropped from nearly 70 percent to just under 61 percent. It’s an extraordinary shift, driven largely by the investment profits of the very wealthy. In short, the people who possess tradable assets, especially stocks, have enjoyed a recovery that Americans dependent on savings or income from their weekly paycheck have yet to see. Ten years after the financial crisis, getting ahead by going to work every day seems quaint, akin to using the phone book to find a number or renting a video at Blockbuster.

The financial crisis didn’t just kill the dream of getting rich from your day job. It also put an end to a fundamental belief of the middle class: that owning a home was always a good idea because prices moved in only one direction — up. The bubble, while it lasted, gave millions in the middle class a sense of validation of their financial acumen, and made them feel as if they had done the Right Thing.

In theory, if you lost your job, or suffered some other kind of financial setback, you could always sell into a real estate market that was forever rising. Ever-higher home prices became a steam valve, and the “greater fool” theory substituted for any conventional measure of value.

The kindling for the fire that consumed Wall Street and nearly the entire economy was mortgages that should never have been taken out in the first place. Homeowners figured the more house the better, whether or not their income could support the monthly payment, while greedy banks and middlemen were all too happy to encourage them.

When the bubble burst, the bedrock investment for many families was wiped out by a combination of falling home values and too much debt. A decade after this debacle, the typical middle-class family’s net worth is still more than $40,000 below where it was in 2007, according to the Federal Reserve. The damage done to the middle-class psyche is impossible to price, of course, but no one doubts that it was vast.

Banks were hurt, too, but aside from the collapse of Lehman Brothers, the pain proved transitory. Bankers themselves were never punished for their sins. In one form or another — the Troubled Asset Relief Program, quantitative easing, the Fed’s discount window — the financial sector was supported in spectacular fashion.

Like the bankers, shareholders and investors were also bailed out. By cutting interest rates to near zero and pumping trillions — yes, you read that right — into the economy, the Federal Reserve essentially put a trampoline under the stock market. The subsequent bounce produced a windfall, but only for a limited group of beneficiaries. Only about half of American households have any exposure to the stock market, including 401(k)’s and retirement plans, and ownership of the shares of individual companies is clustered among upper-income families.

For homeowners, there wasn’t much of a rescue package from Washington, and eight million succumbed to foreclosure. Sometimes, eviction came in the form of marshals with court orders; in other cases, families quietly handed over the keys to the bank and just walked away. Although home prices in hot markets have fully recovered, many homeowners are still underwater in the worst-hit states like Florida, Arizona and Nevada. Meanwhile, more Americans are renting and have little prospect of ever owning a home.

Worsening the picture, the post-crisis era has been marked by an increased disparity in wealth between white, Hispanic and African-American members of the middle class. That’s according to an analysis of Fed data by the Pew Research Center, which found that families in the latter two groups were more dependent on housing as their principal form of investment. Not only were both minority groups harder hit by foreclosures, but Hispanics were also twice as likely as other Americans to be living in Sun Belt states where the housing crash was most severe.

In 2016, net worth among white middle-income families was 19 percent below 2007 levels, adjusted for inflation. But among blacks, it was down 40 percent, and Hispanics saw a drop of 46 percent. For many, old-fashioned hard work has simply not been a viable path out of this hole. After unemployment peaked in the fall of 2009, it took years for joblessness to return to pre-recession levels. Slack in the labor market left the employed and unemployed alike with little leverage to demand raises, even as corporate profits surged.

Maybe it was inevitable that when half the population watches its wages stagnate while the other half gets rich in the market, the result is President Donald Trump and Brexit.

“It peeled away the facade and revealed an anger that had been building for decades,” said Ms. Swonk, who is chief economist at Grant Thornton in Chicago. “The crisis was horrific, but its legacy pushed us over the edge in terms of the discontent.”

It also made inequality and the One Percent an urgent topic, and made unlikely celebrities of wonky intellectuals such as the economist Thomas Piketty. His best seller, “Capital in the Twenty-First Century,” published in 2013, was 816 data-laden pages that laid out a grim diagnosis. Mr. Piketty argued that the decades after World War II, when the divisions between the classes narrowed and opportunities to move up the economic ladder expanded — that is, when the middle class as we knew it was formed — may actually have been an aberration. Society, Mr. Piketty wrote, risks a return to the historical norm of a yawning gap between rich and poor.

Whether or not he is right, the concentration of wealth that is a legacy of the financial crisis will make itself felt far into the future. Younger Americans, in particular, will be marked by the experience of 2008 much as the Crash of 1929 and the Great Depression haunted the generations who lived through it in the last century. Not only were they unable to accumulate assets in the lean years of the early recovery, but they also missed out on the recent stock market rally that benefited their older and richer peers.

A recent study by the Federal Reserve Bank of St. Louis found that while all birth cohorts lost wealth during the Great Recession, Americans born in the 1980s were at the “greatest risk for becoming a lost generation for wealth accumulation.”

For those fortunate enough to still possess wealth after the crisis, the future looks very different. With the security provided by assets, rather than just income, they and especially their children are on a glide path for a gilded financial future.

“Over and over, you see that family wealth is an important determinant of opportunity for the next generation, over and above income,” said Fabian T. Pfeffer, a sociologist at the University of Michigan. “Wealth serves as a private safety net that allows you to behave differently and plan differently.”

A wealthy person who loses a job can afford to be more choosy and wait for an opportunity suited to his or her skills and experience. The risk of going to an expensive college and taking on debt is lower when there is parental wealth to fall back on.

Timothy Smeeding, who teaches public affairs and economics at the University of Wisconsin, put it more bluntly. “You can see dynasties starting to form,” he said.

Ten years have passed since the trauma of 2008, the nerves are still raw, and the pain still has a way of flaring up. Every time she goes down into the basement and peruses her diary, Diane Swonk feels it anew.

“It is the diary of an economist, as well as a mother and a human being,” Ms. Swonk said. It includes her published writings for clients, as well as her feelings, thoughts and fears as the crisis unfolded. She also recorded her impression of key figures she met during those fateful months, including Lawrence H. Summers, a top White House economic official at the time, and Ben S. Bernanke, then the chairman of the Federal Reserve.

“The financial crisis became a delineator,” she said. “There were those who could recoup their losses and those who could not. Some people have amnesia, but we are still living with the wounds.”

Nelson D. Schwartz has covered economics since 2012. Previously, he wrote about Wall Street and banking, and also served as European economic correspondent in Paris. He joined The Times in 2007 as a feature writer for the Sunday Business section. @NelsonSchwartz

 

 

Source: The Recovery Threw the Middle-Class Dream Under a Benz – The New York Times

Americans Are Having Fewer Babies. They Told Us Why. – The New York Times

Women have more options, for one. But a new poll also shows that financial insecurity is altering a generation’s choices.

Jessica Boer, 26, kissing her cat Kip at her home in Portage, Mich. Like an increasing number of people in her generation, she does not plan to have children. “Now we know we have a choice,” she said.CreditBrittany Greeson for The New York Times

Americans are having fewer babies. At first, researchers thought the declining fertility rate was because of the recession, but it kept falling even as the economy recovered. Now it has reached a record low for the second consecutive year.

Because the fertility rate subtly shapes many major issues of the day — including immigration, education, housing, the labor supply, the social safety net and support for working families — there’s a lot of concern about why today’s young adults aren’t having as many children. So we asked them.

Wanting more leisure time and personal freedom; not having a partner yet; not being able to afford child-care costs — these were the top reasons young adults gave for not wanting or not being sure they wanted children, according to a new survey conducted by Morning Consult for The New York Times.

About a quarter of the respondents who had children or planned to said they had fewer or expected to have fewer than they wanted. The largest shares said they delayed or stopped having children because of concerns about having enough time or money.

The survey, one of the most comprehensive explorations of the reasons that adults are having fewer children, tells a story that is partly about greater gender equality. Women have more agency over their lives, and many feel that motherhood has become more of a choice.

But it’s also a story of economic insecurity. Young people have record student debt, many graduated in a recession and many can’t afford homes — all as parenthood has become more expensive. Women in particular pay an earnings penalty for having children.

“We want to invest more in each child to give them the best opportunities to compete in an increasingly unequal environment,” said Philip Cohen, a sociologist at the University of Maryland who studies families and has written about fertility.

At the same time, he said, “There is no getting around the fact that the relationship between gender equality and fertility is very strong: There are no high-fertility countries that are gender equal.”

The vast majority of women in the United States still have children . But the most commonly used measure of fertility, the number of births for every 1,000 women of childbearing age, was 60.2 last year, a record low. The total fertility rate — which estimates how many children women will have based on current patterns — is down to 1.8, below the replacement level in developed countries of 2.1.

The United States seems to have almost caught up with most of the rest of the industrialized world’s low fertility rates. It used to have higher fertility for reasons like more teenage pregnancies, more unintended pregnancies and high fertility among Hispanic immigrants. But those trends have recently reversed, in part because of increased use of long-acting birth control methods like IUDs.

In the Morning Consult and Times survey, more than half of the 1,858 respondents — a nationally representative sample of men and women ages 20 to 45 — said they planned to have fewer children than their parents. About half were already parents. Of those who weren’t, 42 percent said they wanted children, 24 percent said they did not and 34 percent said they weren’t sure.

One of the biggest factors was personal: having no desire for children and wanting more leisure time, a pattern that has also shown up in social science research. A quarter of poll respondents who didn’t plan to have children said one reason was they didn’t think they’d be good parents.

Jessica Boer, 26, has a long list of things she’d rather spend time doing than raising children: being with her family and her fiancé; traveling; focusing on her job as a nurse; getting a master’s degree; playing with her cats.

“My parents got married right out of high school and had me and they were miserable,” said Ms. Boer, who lives in Portage, Mich. “But now we know we have a choice.”

She said she had such high expectations for parents that she wasn’t sure she could meet them: “I would have the responsibility to raise this person into a functional and productive citizen, and some days I’m not even responsible.”

This generation, unlike the ones that came before it, is as likely as not to earn less than their parents. Among people who did not plan to have children, 23 percent said it was because they were worried about the economy. A third said they couldn’t afford child care, 24 percent said they couldn’t afford a house and 13 percent cited student debt.

Financial concerns also led people to have fewer children than what they considered to be ideal: 64 percent said it was because child care was too expensive, 43 percent said they waited too long because of financial instability and about 40 percent said it was because of a lack of paid family leave.

Women face another economic obstacle: Their careers can stall when they become mothers.

This spring, Brittany Butler, 22, became the first person in her family to graduate from college, and she will start graduate school in social work in the fall. She said it would probably be at least 10 years before she considered having children, until she could raise them in very different circumstances than in her poor hometown neighborhood in Baton Rouge, La.

She admits being “a little nervous” that it may become harder to get pregnant, but she wants to pay off her student loans and, most of all, be able to live in a safe neighborhood.

“A lot of people, especially communities of color, can’t really afford that now,” she said. “I’m just apprehensive about going back to poverty. I know how it goes, I know the effects of it, and I’m thinking, ‘Can I ever break this curse?’ I would just like to change the narrative around.”

Starting a family used to be what people did to embark on adulthood; now many say they want to wait. Last year, the only age group in which the fertility rate increased was women ages 40 to 44. Delaying marriage and birth is a big reason people say they had fewer children than their ideal number: Female fertility begins significantly decreasing at age 32.

David Carlson, 29, graduated from college in 2010, when the job market was still rough. He and his wife had $100,000 in undergraduate debt between them. They both work full time — he in corporate finance and she in counseling — but they don’t yet feel they can take time away from their careers.

“Wages are not growing in proportion to the cost of living, and with student loans on top of that, it’s just really hard to get your financial footing — even if you’ve gone to college, work in a corporate job and have dual incomes,” said Mr. Carlson, who lives in Minneapolis and writes a personal finance blog for millennials.

He said they’d consider adoption if they decided to have children but had waited too long. Another option for having children later in life is egg freezing. Only 1 percent of female survey respondents said they had frozen their eggs — but almost half said they would if not for the cost.

Researchers say the United States could adopt policies that make it easier for people to both raise children and build careers. Government spending on child care for young children has the strongest effect. Policies that encourage parents to share child care help, too. Germany and Japan have used such ideas to reverse declining fertility.

High employment among women and high fertility don’t have to be in conflict, but they will be without such policies, said Olivier Thevenon, an economist studying child and family policies at the Organization for Economic Cooperation and Development.

“Whether the young generation will catch up later is not certain,” he said, “but will depend on their capacity to combine work and family.”

Claire Cain Miller writes about gender, families and the future of work for The Upshot. She joined The Times in 2008 and was part of a team that won a Pulitzer Prize in 2018 for public service for reporting on workplace sexual harassment issues. @clairecm Facebook

A version of this article appears in print on , on Page B 1 of the New York edition with the headline: A Baby Bust, Rooted in Economic Insecurity. Order Reprints | Today’s Paper | Subscribe

 

 

Source: Americans Are Having Fewer Babies. They Told Us Why. – The New York Times

No Wonder Millennials Hate Capitalism – The New York Times


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Credit
Spencer Platt/Getty Images

On a Friday night last month, I moderated a debate in Manhattan about whether we should scrap capitalism. It was organized by the socialist magazine Jacobin; defending capitalism were editors from the libertarian publication Reason. Tickets for all available 450 seats sold out in a day. So Jacobin moved it to a venue that holds around twice as many. The extra tickets sold out in eight hours.

When I arrived, people were lined up for blocks; walking to the door, I felt like I was on the guest list at an underground nightclub. Most attendees appeared to be in their 20s and 30s, part of a generation that is uniquely suspicious of capitalism, a system most of their elders take for granted.

The anti-Communist Victims of Communism Memorial Foundation was alarmed to find in a recent survey that 44 percent of millennials would prefer to live in a socialist country, compared with 42 percent who want to live under capitalism. For older Americans, the collapse of Communism made it seem as though there was no possible alternative to capitalism. But given the increasingly oligarchic nature of our economy, it’s not surprising that for many young people, capitalism looks like the god that failed.

Nowhere is that clearer than in the wretched tax bill passed by the Senate in the early hours of Saturday morning, which would make the rich richer and the poor poorer. According to the nonpartisan Tax Policy Center, the bill directs the largest tax cuts as a share of income to the top 5 percent of taxpayers. By 2027, taxes on the lowest earners would go up.

Millennials, a generation maligned as entitled whiners, would be particularly hard hit. As Ronald Brownstein argued in The Atlantic, the rich people who would benefit from the measures passed by the House and the Senate tend to be older (and whiter) than the population at large. Younger people would foot the bill, either through higher taxes, diminished public services or both. They stand to inherit an even more stratified society than the one they were born into.

Here’s one example. The Senate bill offers a tax break for parents whose children attend private school. But it cuts deductions for state and local taxes, which could make it harder to fund the public schools where the vast majority of millennials will send their kids.


There is no coherent economic rationale for what Republicans are doing. Academic economists are basically unanimous that the Republican tax plan would increase America’s deficit, which Republicans used to pretend to care about. With unemployment low, many experts say the economy doesn’t need a stimulus. The tax cuts are likely to increase the trade deficit, which President Trump purportedly wants to reduce. Republicans often say they want to simplify the tax code, but as the accountant Tony Nitti argues in Forbes, the tax bill would make much of it more complex.

How to explain this smash-and-grab legislative looting, which violates all principles of economic prudence? Part of it is simple greed, but there’s also an ideology at work, one that sees the rich as more productive and deserving than others. Louise Linton, the wife of Treasury Secretary Steven Mnuchin, spelled it out on her Instagram feed in August, responding to an Oregon mother who had the audacity to criticize Linton’s use of a government plane: “Lololol. Have you given more to the economy than me and my husband? Either as an individual earner in taxes OR in self sacrifice to your country?”

Lest you think that’s just the sputtering of a modern Marie-Antoinette with poor grammar, consider what Senator Chuck Grassley, Republican of Iowa, told The Des Moines Register about the need to repeal the estate tax, which falls only on heirs of multimillionaires and billionaires. “I think not having the estate tax recognizes the people that are investing, as opposed to those that are just spending every darn penny they have, whether it’s on booze or women or movies,” he said. By this logic, Linton, or Trump’s children, are more socially useful than anyone irresponsible enough to live paycheck to paycheck.

Not to be outdone, the next day, Senator Orrin Hatch, Republican of Utah, argued that Congress still hasn’t reauthorized the Children’s Health Insurance Program, which he helped create and still claims to support, because “we don’t have money anymore.” He went on to rant against the poor: “I have a rough time wanting to spend billions and billions and trillions of dollars to help people who won’t help themselves — won’t lift a finger — and expect the federal government to do everything.” It was unclear whether he was talking about the nearly nine million children covered through CHIP or their parents.

After the fall of Communism, capitalism came to seem like the modern world’s natural state, like the absence of ideology rather than an ideology itself. The Trump era is radicalizing because it makes the rotten morality behind our inequalities so manifest. It’s not just the occult magic of the market that’s enriching Ivanka Trump’s children while health insurance premiums soar and public school budgets wither. It’s the raw exercise of power by a tiny unaccountable minority that believes in its own superiority. You don’t have to want to abolish capitalism to understand why the prospect is tempting to a generation that’s being robbed.



Source: No Wonder Millennials Hate Capitalism – The New York Times

While We’re Distracted by the Drama, the Economy Seems to Be Taking Off – The New York Times

It may not be as dramatic as the torrent of political news out of Washington; an improving economy, after all, announces itself through a series of data releases that are just a little bit better than people were expecting. But that’s exactly what has happened. In consumer spending, the job market and manufacturing, the economy seems to be enjoying consistent, broad-based growth to start the year.

There could always be a setback, of course, but the momentum is almost uniformly positive as the Trump era gets underway.

Some of the factors at work may turn out to be temporary. Energy prices were near recent lows a year ago, and their recovery since has meant oil exploration and related fields are recovering. Similarly, the effects of a steep run-up in the value of the dollar from 2014 to early 2015 have now worked their way through the economy and aren’t holding back manufacturing the way they once were.

An unusually warm winter is probably a factor in some of the good numbers, as people who in a normal year would have hunkered down amid snowstorms instead went shopping. But the positive tenor of the latest data has been building for months, and includes some data sets that shouldn’t be too affected by the weather.

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Bookstore sales have been strong, contributing to the vitality of the American economy.

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David Ryder/Bloomberg

Think of the numbers released Wednesday and Thursday as the latest strong signals, not in isolation. Retail sales rose 0.4 percent in January, the Commerce Department said, and a booming 0.8 percent when volatile auto sales are excluded. American consumers are powering ahead in the eighth year of the expansion.


The Consumer Price Index rose 0.6 percent, the Labor Department said; even excluding volatile food and energy, it was up 0.3 percent. The index is now up 2.3 percent over the last year excluding food and energy, suggesting that inflation is now in the ballpark of the 2 percent mark that the Federal Reserve aims for (the Fed focuses on a different inflation number that still shows readings below 2 percent).

And the number of permits issued for new housing units rose 4.6 percent in January, the Census Bureau said Thursday, and is up 8.2 percent from a year ago, as the housing recovery kicks into a higher gear. The number of housing units started fell slightly in January, but November and December numbers were revised higher.

While overall industrial production fell 0.3 percent in January, according to new Fed data, that was only because the warm winter depressed energy demand and thus output by utilities. Manufacturing output rose 0.5 percent. To cap off a day of good data pointing to an economic surge, the Federal Reserve Bank of New York said its survey of business activity soared to its highest level in two years.

This all continues a recent theme. The economy added 227,000 jobs in January despite an unemployment rate that is already low. The number of people filing new claims for jobless benefits each week keeps hitting lows not seen since the 1970s.

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Shoppers have continued to buy, which has kept the American economy moving.

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Steve Griffin/The Salt Lake Tribune, via Associated Press

The improving data — and particularly the uptick in inflation — does create a puzzle for the Federal Reserve. In testimony this week, the Fed’s chairwoman, Janet Yellen, made clear that an interest rate increase was on the way, though she left ambiguity on whether it would happen at the Fed’s March meeting or later in the spring or summer.

If the Fed indeed raises interest rates this spring in an effort to keep the economy from overheating and inflation from taking off, it will be the third rise since December 2015 — but would signal that a faster pace of rate increases was on tap.

On one hand, the Fed’s policies work with a lag, so it must act with an eye toward where the economy is going, not where it has been. On the other, after years of trying to slog out of a deep recession, Ms. Yellen and her colleagues don’t want to act prematurely and stop the expansion in its tracks.

“Waiting too long” to raise rates, Ms. Yellen told Congress this week, would be unwise because it might require the Fed “to eventually raise rates rapidly, which could risk disrupting financial markets and pushing the economy into recession.”

The stock market has reached new highs in recent days based on a mix of positive economic data and optimism that the Trump administration will bring business tax cuts and profit-friendly deregulation. Granted, a trade war or other disruptions could be damaging, and markets could turn quickly if some of the anticipated goodies don’t materialize from Washington.

But the steady flow of improving economic data is a reminder that things are looking pretty good for 2017 if President Trump and Ms. Yellen can avoid messing it up.


 

While We’re Distracted by the Drama, the Economy Seems to Be Taking Off – The New York Times.