The Full Belmonte, 1/23/2024
Supreme Court allows federal agents to remove wire barriers at U.S.-Mexico border, siding with Biden administration over Texas
“A divided Supreme Court cleared the way for border patrol agents to remove razor wire that Texas officials installed along a busy stretch of the U.S.-Mexico border until the legality of the barriers is resolved in court. Texas sued the Biden administration last year to prevent agents from removing or cutting the barriers, which the federal government says prevent the agents from reaching migrants who have already entered U.S. territory.”
Read the story at Washington Post
Trump seeks control of the Republican primary in New Hampshire against Nikki Haley, his last major rival
One of the six registered voters casts his ballot during the first-in-the-nation midnight vote in Dixville Notch, New Hampshire.
“Donald Trump is aiming for a commanding victory Tuesday in New Hampshire, securing a sweep of the first two Republican primary races that would make a November rematch with President Joe Biden look more likely than ever. The biggest question is whether Trump’s last major rival, former U.N. Ambassador Nikki Haley, will be able to eat into his margin — or pull off an upset outright. Read more.
Why this matters:
In the first results released early Tuesday, all six voters of Dixville Notch cast their ballots for Haley over Trump. The resort town is the only one in New Hampshire this year that opted to vote at midnight. Haley has also dedicated significant time and financial resources to the state.
Trump’s allies are already pressuring Haley to leave the race and those calls will intensify if he wins New Hampshire easily. Were she to drop out, that would effectively decide the Republican primary on its second stop, well before the majority of Republican voters across the country have been able to vote.” [AP News]
American, British forces carry out large-scale strikes on Houthis in Yemen
“The U.S. and U.K. conducted large-scale air and missile strikes on Houthi rebel facilities across Yemen on Monday, according to a U.S. and British official, stepping up operations against the militant group as it vows to continue attacking ships in the Red Sea.
The U.S. military has launched multiple rounds of preemptive strikes against Houthi anti-ship missile sites that were preparing to fire against international shipping over the past week. But those strikes have failed to deter the militants from continuing to attack commercial vessels transiting the Red Sea and Gulf of Aden.”
Read the latest at POLITICO
Israeli hostages
“Israel has offered Hamas a two-month ceasefire as part of a prospective deal that would free more than 100 hostages being held in Gaza, according to Axios. The broader agreement would allow the safe passage out of Gaza for top Hamas leaders who orchestrated the October 7 attacks. Analysts say that draining Gaza of its leaders could weaken Hamas' grip on the war-torn stripwhile also allowing Israel to continue tracking down high-value targets abroad. On the ground, 21 Israeli soldiers were killed in combat in Gaza on Monday in the biggest single loss of life for Israeli troops since the start of the war.” [CNN]
The Pentagon has no more money for Ukraine
“For the first time since Defense Secretary Lloyd Austin established the international group to support Ukraine in April 2022, the United States will host the monthly gathering of about 50 countries out of money, unable to send the ammunition and missiles that Ukraine needs to fend off Russia. Read more.
Why this matters:
The U.S. will be looking to allies to keep bridging the gap while waiting for Congress to pass a budget and potentially approve more money for Ukraine’s fight.
The U.S. has provided Ukraine more than $44.2 billion in security assistance since Russia invaded in February 2022. About $23.6 billion was pulled from existing military stockpiles and almost $19 billion in the form of longer-term military contracts, for items that will take months to procure.” [AP News]
Judge orders the unsealing of divorce case of Trump special prosecutor in Georgia accused of affair
“A judge has ordered court records to be made public in the divorce involving a special prosecutor hired in the election case against Donald Trump and others and accused of having an affair with Fulton County District Attorney Fani Willis.” Read More at AP News
“Cal State professors reached a tentative deal to raise wages, ending the largest strike by university faculty in U.S. history hours after it began.” [New York Times]
“A Florida bill backed by the state’s chief financial officer would create a $5 million fund to help pay for Trump’s mounting legal fees. State Senator Ileana Garcia, a Republican, has filed a proposal to create the “Freedom Fighters Fund,” which would provide financial support for Florida residents running for president who face legal action. Trump, who lives in Palm Beach, Florida, faces four felony indictments in state and federal courts and is also a defendant in civil litigation.” [Bloomberg]
Dexter Scott King, younger son of Martin Luther King Jr., dies of cancer at 62
“Dexter Scott King, who dedicated much of his life to shepherding the civil rights legacy of his parents, the Rev. Martin Luther King Jr. and Coretta Scott King, died Monday after battling prostate cancer. He was 62.” Read More at AP News
Two SEALS lost at sea
Navy SEALs Christopher Chambers (left) and Nathan Gage Ingram were killed during an operation off the coast of Somalia. Photos: Defense Department
“The Pentagon today identified two Navy SEALs who went missing at sea earlier this month and were pronounced dead over the weekend.
Navy Special Warfare Operator 1st Class Christopher Chambers, 37 (above left), and Navy Special Warfare Operator 2nd Class Nathan Gage Ingram, 27, were reported missing Jan. 11.
The two vanished during a raid in which the U.S. military seized a cache of Iranian-supplied missile parts and other weaponry bound for Houthi rebels in Yemen.
President Biden said in a statement: ‘Jill and I are mourning the tragic deaths of two of America's finest — Navy SEALs who were lost at sea while executing a mission off the coast of East Africa last week. ... These SEALs represented the very best of our country, pledging their lives to protect their fellow Americans.’” [Axios]
Israeli army faces its heaviest daily loss in Gaza
Israeli President Isaac Herzog said it had been an ‘unbearably difficult morning’ learning about the extent of the death toll. Credit: Reuters
“Monday was the deadliest day since October 7 for Israeli forces in Gaza after 24 of its soldiers were killed in the centre of the Strip. Chief spokesman for the Israel Defense Forces (IDF), Daniel Hagari, said it is thought a rocket-propelled grenade hit a tank near two buildings they were in, killing 21 reservists. Israeli Prime Minister Benjamin Netanyahu described the deaths on Monday as ‘one of the most difficult days since the war erupted’. The IDF said it was still investigating the details of the incident and confirmed that three officers were killed in a separate attack in southern Gaza. Also in the south of the Strip, dozens of people are reported to have been killed in intense Israeli strikes on Khan Younis, as battles between soldiers and Hamas fighters rage on the ground. The city has been a recent focus of Israeli forces, who are convinced top Hamas commanders are holed up there.” [BBC]
Hospitals Under Siege
Smoke billows over Khan Yunis in southern Gaza amid ongoing battles between Israel and Hamas on Jan. 22.AFP
“The Israel Defense Forces (IDF) advanced on two southern Gaza hospitals in Khan Younis on Monday, marking the single bloodiest day of fighting in the Israel-Hamas war since 2024 began. IDF troops stormed and arrested medical staff at al-Khair General Hospital, and Israeli tanks surrounded al-Amal Hospital, which also serves as the Palestinian Red Crescent’s headquarters in the city. Nasser Medical Center, located in Khan Younis, is the only major accessible and still-functioning hospital in Gaza.
More than 25,000 Palestinians have been killed, including at least 50 killed Sunday night, and nearly 63,000 others have been wounded since war broke out on Oct. 7, the Hamas-run Gaza Health Ministry announced on Sunday. Israel claims to have killed around 9,000 Hamas militants in the past three months, though it has provided no evidence to confirm that number.
Israeli officials continue to accuse Hamas of working in and around Khan Younis medical centers, which it denies, and the IDF believes the city hosts the principal headquarters for perpetrators of the Oct. 7 attack. The majority of Gaza’s 2.3 million residents, who were originally forced to flee to Khan Younis to avoid Israeli strikes, have since evacuated just north to Deir al-Balah and south to the city of Rafah near the Egyptian border.
International criticism of Israeli policies worsened this weekend after Prime Minister Benjamin Netanyahu reiterated his opposition toward Palestinian statehood. ‘After Hamas is destroyed Israel must retain security control over Gaza to ensure that Gaza will no longer pose a threat to Israel, a requirement that contradicts the demand for Palestinian sovereignty,’ Netanyahu’s office said in a statement. That includes security control over all land west of the River Jordan, which includes the West Bank.
Saudi Arabia said on Sunday that it would not normalize relations with Israel nor aid in Gaza’s reconstruction so long as Israel continues to block a path forward for Palestinian statehood. ‘If we are just resetting to the status quo before Oct. 7, in a way that sets us up for another round of this, as we have seen in the past, we’re not interested in that conversation,’ Saudi Prince Faisal bin Farhan said.
Domestic support for Netanyahu also took a hit this weekend following the prime minister’s decision on Sunday to reject a Hamas-proposed hostage deal. Hamas is currently holding around 136 people captive. The militant group said it would release all Israeli hostages if Israel withdrew its troops from Gaza, freed Palestinian prisoners, and accepted Hamas’s governance of the region. The hostages’ families and other advocates for their release protested Netanyahu’s decision outside his private home in Jerusalem on Sunday and disrupted a Knesset finance meeting on Monday to demand that more be done.
Netanyahu said Hamas’s offer is not a viable option. ‘If we accept this, we won’t be able to guarantee the safety of our citizens,’ he said of the Hamas proposal. ‘We will not be able to bring evacuees home safely and the next Oct. 7 will only be a matter of time.’ Instead, Israeli officials said Netanyahu has proposed another multiphase hostage deal that would include the release of all Israeli hostages and a two-month pause in fighting, the longest cease-fire Israel has ever offered Hamas since the war began. Hamas has yet to respond to it.” [Foreign Policy]
Arab countries are working on a proposal for postwar Gaza that would create a pathway toward a Palestinian state in exchange for Saudi recognition of Israel, according to Arab officials.
“The first joint plan by Arab states to end the war in Gaza, the proposal was submitted to Israel via the U.S. and is still being finalized, Saudi and Egyptian officials said. Israel so far has rejected it, with the creation of a Palestinian state the main sticking point. Israeli officials didn’t immediately respond to requests for comment. The war, which began after Hamas’s Oct. 7 attack on Israel, has Gaza’s already desperate humanitarian situation deteriorating into chaos, residents and aid groups said, citing logjams in food deliveries and a battlefield that overlaps the places offering help. The enclave is home to most of the world’s hungriest people, according to a consortium of U.N. agencies and nonprofit relief groups.” [Bloomberg]
Germany’s surging far right provokes a reckoning
Participants shine lights from their phones during a demonstration against racism and far-right politics in front of the Reichstag building in Berlin, on Sunday. (Christian Mang/AFP/Getty Images) (AFP Contributor#AFP/AFP/Getty Images)
“Over the weekend, it seemed a nation’s conscience had stirred into action. In cities across Germany, anti-fascist demonstrators took to the streets, protesting against the country’s far-right Alternative for Germany party, or AfD. The spark to the demonstrations came in the form of an investigate report published earlier this month that revealed how AfD members had participated in a November meeting with far-right extremists where they discussed plans to conduct mass deportations should they come to power.
That’s not the wholly fictive scenario it once used to be. The surging AfD is polling at 22 percent — a level of support greater than what each of the three centrist and center-left parties in the country’s ruling coalition currently command. It seems poised to break the ‘cordon sanitaire’ erected around it by Germany’s more mainstream parties that have so far refused to entertain coalition talks with the far-right faction and possibly shoulder its way into power in state elections later this year.
That AfD officials were openly entertaining the idea of forced repatriation of migrants and even some German nationals of foreign origin horrified many in a country with a deep memory of its dark past. By some accounts, more than a million people participated in the anti-AfD protests.
‘In Hamburg and Munich, rallies had to be dispersed because significantly more people than expected attended. Aerial images from across the country showed masses of people braving bitter January temperatures to fill city squares and avenues,’ reported my colleague Kate Brady. “According to police figures, in Berlin on Sunday, about 100,000 people gathered on the lawns of the Reichstag, which houses Germany’s lower house of parliament.”
Signs and slogans at the rallies made clear what many Germans believe is at stake. Banners warned of the return of ‘Nazis’ — and marchers summoned the legacy of the 1930s, when Adolf Hitler and his allies seized control via the ballot box. ‘Everyone, together, against fascism’ was the chant in Berlin.
The investigative report by nonprofit research institute Correctiv detailed the extensive private discussions had between AfD members and a coterie of influential right-wing extremists and wealthy business executives at a November meeting in a hotel in Potsdam, outside of Berlin. This included talk of a ‘remigration’ plan that would deport asylum seekers, non-Germans with residency rights and even ‘non-assimilated’ German citizens.
Martin Sellner, a far-right extremist and leader of the Austrian ‘Identitarian Movement,’ attended the gathering and floated a ‘master plan’ that could even see these deportees sent to an imagined ‘model state’ in North Africa. Whatever the unviability of the proposals, it echoed Nazi deliberations in 1940 to forcibly relocate millions of Jews to Madagascar. Sellner once maintained correspondence with Brenton Tarrant, the white nationalist gunmen who carried out the hideous 2019 killing spree at a set of mosques in Christchurch, New Zealand.
Top AfD leaders have sought to distance themselves from the meetings, arguing that they were not officially sanctioned by the party and do not reflect its stated agenda. Alice Weidel, the party’s co-leader, said in a recent interview with the Financial Times that the AfD’s views were unfairly stigmatized and criticized the methods Correctiv used to infiltrate the gathering.
‘It was just an attempt to criminalize the very idea of repatriating people lawfully who don’t have leave to remain here, or are subject to a deportation order,’ said Weidel, whose close aide Roland Hartwig reportedly attended the November event. ‘The AfD is the party that stands for enforcing this country’s laws.’
A protester holds a placard showing former Nazi propaganda minister Joseph Goebbels, left, and Bjoern Hoecke, the top candidate of the AfD in the upcoming federal state elections in Thuringia, on Sunday. (Wolfgang Rattay/Reuters)
That’s a claim bound to raise eyebrows. In three German states, party officials are known to be under surveillance by the German domestic spy agency for their ‘certified right-wing extremist’ positions. Some of the party’s opponents want Germany’s judicial authorities to intervene and ban the party under provisions in the German constitution that allow for the banning of factions the ‘seek to undermine or abolish the free democratic basic order.’
More than a million people have signed a petition calling on constitutional authorities to strip Björn Höcke, the AfD party chief in the state of Thuringia, of his rights to vote and participate in politics because of the ‘fascist’ threat he poses for the country’s democracy and Germans of migrant background.
But there’s a high bar for such a measure and the German political establishment, including deputy chancellor Robert Habeck, is broadly leery of endorsing such efforts, fearful they may backfire. Already, the party is channeling the notoriety of being under surveillance in its favor, wearing the classification as ‘a badge of honor, using it as yet further proof that it’s the only real alternative to the other parties,’ noted Georg Mascolo, political columnist at the Süddeutsche Zeitung.
The party’s extended surge in the polls comes on the back of mounting discontent with the ruling coalition. ‘Even though 2024 is just a few weeks old, Germany has already been rocked by huge farmers’ protests, with thousands of tractors blocking cities and motorway junctions this past week alone,’ detailed Spiked’s Fraser Myers. ‘It has been crippled by transport workers’ and doctors’ strikes. Factories in its much-vaunted manufacturing sector are shutting down and shipping production elsewhere. The federal government is struggling to reckon with a budget crisis and is ushering in a new age of austerity. Data released this week showed that Germany had the worst economic performance last year of any major economy.’
In this backdrop, the avowedly anti-establishment AfD is picking up momentum. ‘Calls for the AfD to be banned are completely absurd and expose the anti-democratic attitude of those making these demands,’ Weidel said in a written statement to Politico, echoing the line one may hear from former U.S. president Donald Trump and his supporters as his legal travails follow over the course of this election cycle.
In her interview with the Times, Weidel looked confidently ahead to the coming months, when the AfD is expected to perform well in upcoming European parliamentary elections. She even raised the possibility of her nation following Britain out of the European Union. ‘If we fail to rebuild the sovereignty of the E.U. member states, we should let the people decide, just as Britain did,’ she told the British newspaper. ‘And we could have a referendum on ‘Dexit’ — a German exit from the EU.’
For now, the AfD’s opponents hope to kneecap the far right before it gets close to achieving its goals. ‘You are a wolf in sheep’s clothing,’ Lars Klingbeil, leader of the Social Democrats, told Weidel during a Bundestag debate last week. ‘But I’m telling you: your facade is beginning to crumble. People are finally getting to see the real face of the AfD.’
The World This Week
“Tuesday, Jan. 23: Turkish lawmakers vote on Sweden’s NATO membership bid.
European Commission President Ursula von der Leyen and Croatian Prime Minister Andrej Plenkovic visit Bosnia and Herzegovina. Outgoing Dutch Prime Minister Mark Rutte continues his trip there.
Wednesday, Jan. 24: Argentina’s General Confederation of Labor holds a nationwide strike.
German Chancellor Olaf Scholz hosts Slovakian Prime Minister Robert Fico in Berlin.
Thursday, Jan. 25: Turkey’s and South Africa’s central banks determine their interest rates.
French President Emmanuel Macron begins a two-day visit to India.
Nepal holds upper house elections.
Friday, Jan. 26: Tuvalu holds parliamentary elections.
Sunday, Jan. 28: Finland holds a presidential election.
Monday, Jan. 29: Iranian Foreign Minister Hossein Amir-Abdollahian visits Pakistan.
Colombia’s six-month cease-fire with the Ejército de Liberación Nacional rebel group expires.” [Foreign Policy]
“Boycotting the ‘Hindu Vatican.’ India’s opening of a grand Hindu temple in the holy city of Ayodhya (sometimes called the “Hindu Vatican”) on Monday as part of the ruling party’s efforts to promote Hindu nationalism ahead of national elections this spring. However, the temple—dedicated to Rama, a warrior-king worshipped as one of Hinduism’s most popular deities—was built over the destroyed Babri Masjid mosque.
Political opposition leaders accused Indian Prime Minister Narendra Modi of using the opening ceremony to stoke religious fervor and boost the popularity of his Bharatiya Janata Party (BJP), leading many to boycott the event. ‘By promoting Rama as the warrior-king who ruled over an ideal state, the BJP aims to create a constituency of voters who see their identity primarily in religious terms and equate the Hindu faith with the nation of India,’ argued Salil Tripathi in Foreign Policy.
Under Modi, India’s far-right Hindu nationalist agenda has chipped away at the nation’s originally secular structure, hurting India’s religious minorities. Reports of hate speech and crimes against Muslims and other groups have skyrocketed under his rule. And Modi’s so-called tiger warrior diplomacy has impeded some of his foreign-policy aspirations.” [Foreign Policy]
(PIB/AFP via Getty Images)
A Hindu devotee shouts a religious slogan on the banks of Sarayu river ahead of the opening of the temple of Lord Ram in Ayodhya, India. (Adnan Abidi/Reuters)
(India’s Press Information Bureau/Handout via Reuters)
“One shot at a time. Cameroon became the first country in the world on Monday to begin routinely giving children a new malaria vaccine approved by the World Health Organization. Yaoundé hopes to inoculate around 250,000 children in 2024 and 2025. The Gavi vaccines alliance said it is working with 20 other African nations to eventually immunize more than 6 million children within the next two years.
Around 95 percent of the world’s malaria deaths occur in Africa. Young people are particularly at risk, with children under age 5 accounting for at least 80 percent of deaths. Cameroon will offer the shot free of charge for all infants under 6 months old.
Also on Monday, at least 10 Cameroonian students were killed and more than 100 others injured after a stampede broke out at Lycée Bilingue d’Etoug-Ebe high school in the nation’s capital. An initial investigation believes students running late to class rushed to enter the school grounds after the front gate was opened. First responders and law enforcement were dispatched to the scene.” [Foreign Policy]
“Repeating history. Hundreds of thousands of people across Germany, including around 100,000 demonstrators in Munich, marched this weekend to protest the far-right Alternative for Germany (AfD) party. Their anger centered on a report, published this month by a German investigative journalists’ group, that said members of the AfD and the extremist Identitarian Movement held a meeting in November 2023 to discuss deporting millions of immigrants from Germany, which some protesters likened to the Nazis’ expulsion of Jews and other ‘undesirables’ in the 1930-40s.
The AfD has since condemned the meeting, saying it had no financial or official ties to the event. Still, German leaders have used the report to condemn the far right’s growing influence. ‘We protect everyone — regardless of origin, skin color or how uncomfortable someone is for fanatics with assimilation fantasies,’ Scholz wrote on X, formerly Twitter, adding that he would not allow anyone in Germany to be judged by their country of origin.” [Foreign Policy]
“Delhi’s high court is finally taking a stand on one of India’s most controversy-inducing feuds: Who invented butter chicken and dal makhani? New Delhi’s Moti Mahal restaurant recently filed a petition accusing rival Daryaganj of falsely claiming that its ancestor invented the much-beloved dishes. Moti Mahal is run by the descendants of Kundan Lal Gujral, and Daryaganj is run by the descendants of Kundan Lal Jaggi, both of whom (along with a third friend) ran the original Moti Mahal restaurant in Daryaganj, where the dishes originated. All we need is a pair of star-crossed lovers, and we have a modern Romeo and Juliet.” [Foreign Policy]
“As the world recoils at the rising toll of deaths, injuries and homelessness in Gaza caused by Israel’s war, and responds with summits and cease-fire calls, Israelis are living a different reality in which defeating Hamas feels like an existential necessity.
Despite the loss of more than 200 Israeli soldiers in nearly four months — the biggest single toll was 24 yesterday — there is a sense of unity and solidarity in Israel over the need for warfare both in Gaza and on the border with Lebanon.
For a country that had been increasingly focused on startup culture, new regional relationships and some of the elements of the good life (fine wine and cuisine, clever content for Netflix), this represents a profound and sudden shift.
‘It’s become a kind of awakening from several delusions, especially one which says economic relations can win out over religious hatred,’ observed Gad Yair, a sociologist who specializes in Israeli culture at Jerusalem’s Hebrew University. ‘Money won’t buy us peace. We are going to be a more militarized society.’
Prime Minister Benjamin Netanyahu’s popularity has cratered due to the security failure of Oct. 7 — when Hamas operatives broke through a border fence, killing 1,200 Israelis and kidnapping 240. But opponents and supporters are so far standing behind his plan to defeat Hamas and push back Hezbollah in Lebanon.
The 25,000 Palestinians killed in Gaza, according to the Hamas-run Health Ministry, have done little to dent that support because of the sense in Israel that other militias on its borders might try the same thing.
The economy has taken a severe hit with hundreds of thousands of workers in the army reserves and tens of thousands of Palestinian staff barred from entry.
But with the fighting expected to last for many months even if another break for a release of hostages can be agreed, Israeli public support for the war shows little sign of waning.” — Ethan Bronner [Bloomberg]
An Israeli army vehicle patrols the border with Gaza on Jan. 19. Photographer: Jack Guez/AFP/Getty Images
“A far-reaching plan to channel Europe-Asia trade through the Middle East is effectively on ice because of the Houthi attacks. The fallout from the Israel-Hamas war has halted progress on what’s known as the India-Middle East-Europe Economic Corridor — a project touted last year by Washington and key allies that envisages building new rail links across the Arabian peninsula.” [Bloomberg]
“European Union leaders are ready to challenge Hungary if Prime Minister Viktor Orban continues to block a €50 billion ($54.5 billion) support package for Ukraine at an extraordinary summit next week, sources say. Member states are poised to approve the aid at the Brussels meeting on Feb. 1 regardless of Hungary’s support.” [Bloomberg]
“Javier Milei is turning into quite the pragmatist after rising to Argentina’s presidency by touting radical proposals and showing little willingness to negotiate with the country’s ‘political elite.’ In the latest about-face, his government yesterday scrapped plans to privatize oil producer YPF SA, while proposing only partial sales of other state-owned firms.” [Bloomberg]
“South African elections this year are expected to be the most competitive since the end of apartheid but are unlikely to bring major change to how the country is governed. While the African National Congress, which has led the nation since 1994, will probably lose its majority, it will be able to form a coalition with minor rivals and retain power, according to the head of the Social Research Foundation, a polling and analysis company.” [Bloomberg]
“Chinese authorities are considering a package of measures to stabilize the slumping stock market, sources say, after earlier attempts to restore investor confidence fell short and prompted Premier Li Qiang to call for ‘forceful’ steps.” [Bloomberg]
“Turkey’s parliament is set to vote on Sweden’s entry into the North Atlantic Treaty Organization this week, bringing the alliance to the cusp of completing its Nordic expansion.” [Bloomberg]
“Iran executed a man accused of killing a security officer in protests that followed the death in custody of Mahsa Amini in September 2022.” [Bloomberg]
The Dow Jones Industrial Average surged past 38000 for the first time.
“The index added 0.4% to hit 38001.81. The S&P 500 rose 0.2%, kicking off the week with another high, and the tech-heavy Nasdaq Composite added 0.3%. Investors have been encouraged by the start of earnings season and signs that the economy remains strong. Does that mean the moment for small-cap stocks is over? In late 2023, shares in smaller companies were among the biggest beneficiaries of the growing optimism that the Fed would pull off a soft landing and start cutting interest rates. The new year has been a reality check. Hotter-than-expected economic data have forced investors to push back their expectations on when rate cuts could start, raising questions about whether small-caps’ gains are sustainable.” [Bloomberg]
January 23, 2024
By German Lopez
Good morning. We’re covering Americans’ gloomy views of the economy —
In Manhattan. Maansi Srivastava/The New York Times
An economic mystery
“By many measures, the U.S. economy is strong right now. Unemployment is near its lowest point in decades. Inflation has slowed down. Wages have grown faster than prices since last year. Stock prices have surged.
But many Americans are not feeling it, and say the economy is in bad shape. The persistent pessimism has baffled many economists.
The situation may be changing. American confidence in the economy has picked up in recent months, surveys show. And President Biden’s campaign hopes the turnaround will boost his re-election prospects.
Still, measures of consumer confidence remain lower than normal. Why have Americans resisted the good economic news? Experts have tried to answer that question for months. Today’s newsletter will cover seven of their leading explanations.
1) Inflation
The first, and most obvious, explanation is rising prices. Historically, Americans hate high inflation. For one, it is universal; high prices affect everyone. In comparison, high unemployment directly affects only a minority, even during recessions.
‘When prices rise, it feels like something is taken away from you,’ my colleague Jeanna Smialek, who covers the economy, told me.
Year-over-year change in the Consumer Price Index | By The New York Times
Inflation has cooled recently. But that does not mean that prices have necessarily decreased; they are merely rising much more slowly than they were when the inflation rate was at its highest. Consider: The average price for one pound of chocolate chip cookies peaked in March. But it still costs about $5.10 today, up from $3.50 four years ago.
2) Housing costs
Among higher prices, one category stands out for many Americans: housing. It is typically the most expensive thing that Americans own or pay for. As housing costs increase, they can squeeze people’s ability to pay for anything else.
And costs have increased. Rents have climbed by about 22 percent since late 2019, and a key measure of home prices is up by about 45 percent.
3) No normalcy
During the pandemic, many people looked forward to the day when things would return to normal. So far, they haven’t.
Murder rates have fallen in the last two years, but they are still higher than they were before the pandemic. Dangerous driving is more common. Downtown foot traffic remains down in many cities. The upcoming presidential election will likely duplicate the contest from the middle of the pandemic.
These factors do not always appear in economic statistics, but they color people’s perceptions of their lives and the economy.
4) Asymmetric polarization
Economic confidence surveys capture the political mood. When a Republican is in the White House, Democrats tend to take a more negative view of the economy. And vice versa.
But the trend is not symmetrical. Consider this data from the pollster Civiqs: When Donald Trump won the 2016 election, Democrats’ views of the economy soured but remained mostly positive until the pandemic. After Biden defeated Trump, Republicans went from describing the economy in overwhelmingly positive terms to using overwhelmingly negative ones.
Source: Civiqs | By The New York Times
In other words, Republicans react much more strongly to a president from the opposite party than Democrats do. That disproportionately affects the national mood during this Democratic administration.
5) Bad-news bias
The news media often presents a negative view of events, possibly making people feel worse about the state of the world.
Rising inflation got a lot of regular, and widely viewed, news coverage. Better economic news, including drops in inflation and low unemployment, has received less attention. Many Americans have heard the bad news but not the good.
6) Social media’s role
One does not have to wander deep into social media to find negative commentary on the economy. Memes about the woes of capitalism and anger over high prices are common. Younger Americans tend to get most of their news from social media, and they also have worse views about the economy by some metrics.
(The Times looked at the grim view of the economy that is common on TikTok.)
7) Delayed response
Maybe the rift between the state of the economy and Americans’ perceptions is less of a mystery than it seems, and the paradox will soon end. People just need more time. After years of uncertainty driven by a pandemic and then inflation, many Americans might want to make sure that things are truly turning around before they buy into any potentially false hopes.
One fact supporting this conclusion is that consumer sentiment has started to improve after more than a year of cooling inflation, as Jeanna wrote yesterday. As the challenges that made Americans pessimistic ease, attitudes about the economy could relax as well. Their views could even change in time for the presidential election.” [New York Times]
AI's threat to '24
Photo illustration: Annelise Capossela/Axios. Photos: Jacquelyn Martin/pool, David Dee Delgado/Getty Images
“Experts have been warning for months that deepfakes and AI-generated content have the potential to wreak havoc on the 2024 election by persuading voters of things that aren't true — and undermining confidence in things that are.
It's already happening.
Driving the news: Some New Hampshire voters have been getting robocalls from a fake Joe Biden, encouraging them not to vote in tomorrow's primary.
It's not Biden. But it sounds like him, down to using the word ‘malarkey.’ Some voters believed the president was calling them, NBC News reports.
It's unknown who did it.
Separately, OpenAI shut down a tool created by supporters of long-shot Democratic candidate Dean Phillips. "DeanBot" used ChatGPT to simulate the experience of chatting with Philips.
ChatGPT's terms of service prohibit political campaigning.
Our thought bubble, from Axios AI+ co-author Ryan Heath: We can expect a wave of faked robocalls — and also video content — from now through Election Day.” [Axios]
Elon Musk privately visits Auschwitz-Birkenau site in response to accusations of antisemitism on X
“Elon Musk has visited the site of the Auschwitz-Birkenau World War II Nazi German death camp. The billionaire has faced criticism for subscribing to an antisemitic conspiracy theory and allowing hate messages on his social media platform X, formerly Twitter.” Read More at AP News
Health
“A top cancer center affiliated with Harvard is seeking to retract or correct dozens of studies after an outside scientist discovered faulty data.” [New York Times]
“Twice as many U.S. adults have gotten a flu shot this season as have gotten the latest Covid booster, STAT reports.” [New York Times]
A prehistoric super-shark was probably even longer than scientists thought.
“What is it? The megalodon, which lived 3.6 million years ago. We know it had teeth as big as human hands, but there’s disagreement over exactly what it looked like.
What’s new? It may have measured over 50 feet from nose to tail, and it was more slender than movies like “The Meg” have suggested, a recent study said.”
Read this story at Washington Post
Norman Jewison, acclaimed director of 'In the Heat of the Night’ and 'Moonstruck,' dead at 97
“Filmmaker Norman Jewison has died at 97. The Canadian-born director’s work ranged from Doris Day comedies and “Moonstruck” to social dramas such as the Oscar-winning “In the Heat of the Night." Read More at AP News
1 for the road
Photo: Armando Franca/AP
“Maya Gabeira of Brazil rides a wave today during the Nazaré Big Wave Challenge surfing tournament in Nazaré, Portugal.
Gabeira set a world record in 2020 for the tallest wave ever surfed by a woman — breaking the record she set in 2018.
Both records were set at Nazaré, whose giant waves you may recognize from the HBO documentary "100 Foot Wave."“ [Axios]