Is the Country.... Continuing to Get Better?

More signs of a return to normalcy.

Photo by Pat Whelen on Unsplash

The most widely read Drezner’s World newsletter to date ran six months ago. Back in December 2022 I suggested, elite commentary notwithstanding, that maybe, just maybe, the country was getting better. This went viral in part due to a link from the Drudge Report. In part it was due to the hypothesis itself, which flatly contradicted what the young people would describe as the country’s “vibe”: the widespread belief that the United States was in terminal decline.

Six months later, it is worth revisiting the premise: is the country actually… getting better?

You know what, I’m going to say that it is!

Back in December, I talked about how a lot of economic concerns were trending in the right direction. That continues to be the case! All those analysts bleating about global supply chain stresses must now acknowledge that those stresses have largely receded. Whether one is looking at the cost of shipping a container from China to the United States or the amount of time it takes to get that container picked up from a port, the world looks now like it did before the start of the pandemic. This will contribute to falling rates of inflation, thereby easing pressures on the Fed to increase interest rates further.

Now a bad reason for more flexible supply chains and lower inflation would be the United States tipping into recession. Is that happening? It is worth remembering that back in October Bloomberg predicted a 100 percent chance of there being a recession in 2023. That’s a super-confident prediction!

And yet, at close to the midpoint of the year, I think folks need to acknowledge that the economy is humming along at a decent clip. As NPR’s Scott Horsley reported last Friday, “Hiring surged last month as U.S. employers added 339,000 jobs, far above expectations, according to a report from the Labor Department on Friday. The job gains for March and April were also stronger than previously reported. The April jobs figure was revised up by 41,000, while the March number was revised up by 52,000. The strong jobs numbers indicate the U.S. jobs engine continues to chug along, with substantial hiring in business services, health care and hospitality.”

The Wall Street Journal’s Sarah Chaney Cambon sounded equally upbeat in her latest story, noting that “the hallmarks of a widely expected recession remain elusive.” Her kicker wryly observes that, “Economists surveyed by The Wall Street Journal in April put the probability of a recession at some point in the next 12 months above 50%. But they have said that since October, and the recession appears no closer.”

Even if the economy is getting better, many Americans still do not believe that fact. Axios’ Felix Salmon notes the cognitive dissonance between the actual performance of the U.S. economy and the public’s more pessimistic take on the U.S. economy:

Americans are not happy with the economy. Which is weird, given that it is doing just fine.

It's hard to see what could turn sentiment around. That's largely because of Fed chair Jerome Powell, who doesn't want and won't allow some kind of economic boom — he thinks the economy is running too hot already….

Americans [are] broadly happy with their own personal finances, but a majority consistently thinks (erroneously) that we're in a recession, and just 18% think the national economy is in good shape, per the Fed's most recent Survey of Household Economics and Decisionmaking.

Salmon suggests that one reason for pessimism was the sturm und drang over the debt ceiling. If that is true, then the actual deal being hammered out in a way that prevents the political branches of government from mucking things up for at least 18 months provides an additional fillip of good news.

It is possible that Americans are still brooding over signs of social dysfunction¹ — but there is good news on this front as well. It looks as though the wave of violent crime that surged during the pandemic is receding even more quickly in 2023 than in 2022. According to the Atlantic’s Jeff Asher:

Official crime statistics are only released after a substantial delay, so for nearly a decade I’ve collected and compiled big-city crime data as a way to assemble a more real-time picture of national murder trends. And this spring, I’ve found something that I’ve never seen before and that probably has not happened in decades: strong evidence of a sharp and broad decline in the nation’s murder rate.

The United States may be experiencing one of the largest annual percent changes in murder ever recorded, according to my preliminary data. It is still early in the year and the trend could change over the second half of the year, but data from a sufficiently large sample of big cities have typically been a good predictor of the year-end national change in murder, even after only five months.

Murder is down about 12 percent year-to-date in more than 90 cities that have released data for 2023, compared with data as of the same date in 2022.

Why is the drop in murder so steep? The criminologists that Asher talked to focused on the receding pandemic:

The end of the emergency phase of the coronavirus pandemic may also be contributing to the decline in murder. “With COVID restrictions being lifted and a return to some degree of normalcy, the traditional constraints that occurred within society affecting the routine activities of people have returned,” [Temple University criminal-justice professor Jerry] Ratcliffe said.

Anthony Smith, the executive director of Cities United, an organization working to address community violence, agrees that the end of the pandemic is playing a role in falling violence. “Structures and systems that folks relied on are back open and driving. A lot of this took place during COVID time when a lot of stuff was shut down and folks didn’t have access. There was a lot of bleakness, there was just nothing,” Smith told me. “The world opened back up.” Smith believes that young people were particularly disconnected by the shutdown in services prompted by COVID, contributing to increasing violence among youth.

Even in spheres of life where the pandemic has permanently shifted behavior, it appears that a new equilibrium has been achieved. Time’s Alana Semuels reports, “The share of days worked from home, at around 30%, appears to have stabilized at about five times what it was before the pandemic, according to research by Nicholas Bloom, a Stanford professor who studies remote work. That could be a good thing for both employees and employers: One Bloom study found that people who worked from home were more productive and one-third less likely to quit than those who didn’t.”

So, to recap: the U.S. economy has avoided a default and continues to hum along at a steady clip. Violent crime is on the downswing. Workers and firms are figuring out the right ratio of working from home and working in the office. And the country is no longer in a state of emergency due to the pandemic. The United States is not just doing well compared to other, struggling great powers; it’s doing better than it was before.

The hard-working staff here is writing this not to stay that everything is coming up roses. The country still has its fair share of problems. But as I noted six months ago: “maybe if things stop getting worse, and start reverting to the mean, Americans can start developing expectations of things actually getting better. There are a lot of spheres of life where cementing that expectation creates a virtuous circle, a self-fulfilling prophecy.”

The data is incontrovertible: in a lot of spheres of life, the stresses of the pandemic are falling away, and the key socioeconomic systems that govern the country are either returning to normal or adjusting to a new normal. Given the events of the past decade, that is very welcome news.

1. Or maybe, just maybe, urging others to brood.