Macroeconomics in 2020

I was invited to give a Zoom talk about the economy to a group of friends from my gym here in Seattle. So I thought, why not kill two birds with one stone? (To my pet-friendly friends, that is figurative, I will not kill any birds with any stones.) Why not write out what I want to say at the Zoom on my blog?

So here goes. Some of my faithful readers might be curious about my process for these posts. Be curious no longer. My process is mostly iterative. I write one phrase, maybe a whole sentence. Once it is written I wonder what might come next. If nothing follows, then I take a nap. If something follows, then I write it down and then read both sentences. And so on. This approach contrasts greatly with the idea that I might think through an issue in totality and then cleverly write it out in a consistent and forceful manner. Hmm…I wonder what I should say next?

The objective of this piece today is to present what I know about macroeconomics to a group of lady weight-lifters. I could go on and on about that topic but I fear these ladies deserve a punchline and something I can say in about 15 minutes. I am writing this draft on June 3, 2020, so whatever I might say about macroeconomics ought to reflect the fact that the world as I have always known it has turned upside down. I have studied macroeconomics since Spanky played with Our Gang. But most of what I thought I knew essentially went out the window in the last months.

Some say that experience and history form our understanding of the world today and our forecasts of the world tomorrow. Not now. I feel a little like the guy who leaves the Earth and finds himself on another planet and immediately starts looking for a Wendy’s. Surely there must be a nice cheeseburger around here somewhere. Maybe not.

Blog posts should have three points. So that is my first one. If you were hoping for a macroanalysis or a forecast today, then go to that planet and find me a double cheeseburger with fries. Economists and politicians are falling all over themselves these days to tell us what lies ahead in the economy. They agree on one thing – the US economy is in a recession right now. AGREED! That means the economy sucks pond water. That means the unemployment rate is high and rising. That means people are trying to spend less than my parents did in 1929. That means companies are going out of business left and right.

But when it comes to the future, the experts are all over the place. The Congressional Budget Office said we will not grow for 10 years. Others are focused on the alphabet when it comes to the future. A V-shaped recovery is fast while a U-shaped recovery takes a while longer before we are eating chili dogs on Coney Island. I am thinking about a double U/V/inverted W-shaped recovery but dry Martinis are involved with that so you might want to hold off on that one.

My first point? Don’t listen to all that crap. You have better things to do.

Which brings me to point 2. Point 2 is that even if you could decipher point 1, it’s all macro and in 2020, macro has almost nothing to do with you. Imagine how different 2020 is from any time you or your grandpa or grandma have ever known. What are you? A wacky millennial? Are you just graduating from college? Are you an old fart like me? Are you white privileged? A person of color? Do I need to go on?

Have you ever imagined a time like this when the world is impacting each of us so differently? Whether it is Covid or race relations or the many economic/sociological impacts of those major changes – we are not being impacted equally. In macro we talk about the average person. Today there is no average person. I love to tell the following joke about the average person. Imagine a person in his kitchen with his foot in a hot oven and his hand in the freezer. On average his temperature is just fine. Hmmm.

Summarizing. Point 1. There is no macro. Point 2. There is no macro.

Point 3 comes next. It is the coup de gras, whatever that means. If there is no macro, then there is just one thing left – it is you. You is what really matters because whatever has already happened and whatever will transpire, there is very little you or I can do to stop it. This is the proverbial rock and hard place. Things are not good, and they are not going to get better very fast. So, there you are. Rock. Hard place. You.

What can you do? What you can do is decide how you are going to live in that spot. You can piss and moan. Some people like to piss and moan. It might make them feel better. If that is you, then by all means please P&M. But please don’t do it in my soup. Some of us, even though it is tough to do, would prefer to think about good things. Maybe you like to remember when your mother used to tell bedtime stories to you. Maybe you love to hug your kids or your boyfriend. Whatever, it is possible to face tough situations with a positive mental attitude.

I hear some of you saying,Yea, Davidson you have it made. You are old and living off your fortune. You have a girlfriend who does your laundry. You have it easy. Okay, so maybe I am not suffering like others. But I will appeal to a book I read recently written by a psychologist* who was in a Nazi prison camp. He was pretty sure he would never get out. So, like a good psychologist he did a study of his fellow inmates. He concluded that those who could not find anything good to think about or plan for died in camp. Those who, despite the current deprivation and uncertainty about ever leaving it, planned for the future and lived.

Like those in the Nazi camps – we have a choice. Whatever yours is, I hope we can find some solace and all get through this rock and hard place. No – that’s not macro.

*Man's Search for Meaning by Viktor Frankl