Quick take: The latest economic data. And yes, the 2024 election.

 We now have data on Q1 GDP growth.  The data are not good, in mourning of which, I will spare you a lecture on grammar.  We got about 1.6% growth, which is positive, yes, but along with that, inflation came in at 3.4% using PCE as the measure (personal consumption expenditures).  The Fed likes that measure, and so do I.  That was a significantly higher measure on inflation, so the combination is particularly troubling.  A lower than expected GDP and higher than expected inflation.  Normally, unemployment and inflation run inversely, and yes, GDP and employment are different, but closely related, but the other point is that the Fed's only real tool is to adjust interest rates.  With inflation still running high, they cannot reasonably bring down interest rates, so interest rates stay high, but that also restricts growth, and growth is coming in lower than expected.  That's a bad combination.  We are not in full-blown stagflation territory, but we are in a bit of a danger zone.  Do not panic, but this is not good.  Keep some perspective.  PCE at 3.4% is not that bad, all things considered.  It is simply higher than we came to expect, and too high for an interest rate reduction, and the combination of that and 1.6% GDP growth is a complicated situation.  We also do not know how anomalous these data are.  Sometimes one quarter will be an outlier, particularly for GDP.  Never treat one quarter's data as anything more than one quarter's data, but understand that it is the combination of the data that makes the economic situation and attendant policy bind difficult.  Otherwise, 1.6% growth is OK, not even requiring fiscal stimulus, and bringing down PCE from 3.4% would not be difficult, except that when GDP is at 1.6%, we are at a lower point than we would like, given that inflation rate.  The point is that 1.6% growth is not great, but it would be easily managed at a lower inflation rate.  The problem is that inflation is still running noticeably above target.  A PCE of 3.4% is not horrendous, but it could be managed with a growing economy.  The problem is that we have 1.6% growth.  Two minor problems on their own make a significantly worse problem combined.

But of course, the question for a political scientist-- which I nominally am-- is what this means for 2024.  When asked about 2024, I usually say, ask me when we get Q2 data.  We have Q1 data.  What does this tell us about Q2?  A little.  Economic data are, in statistical terms, "autocorrelated."  Huh, you ask?  That means the data at time t tell us a lot about time t + 1.  So, don't expect 5% growth next quarter (this quarter).  We also know that the incumbent's approval rating has been hovering around 40%.  An incumbent facing 1.6% GDP growth with a 40% approval rating is running against the odds.  If the data continue along the current path, the odds would favor the opposition party.

Note my word choice.  I put no names to the odds-laying because the names don't matter, the candidates don't matter, that's not how elections work.

Matthew Garrison, "Turn Around," from Matthew Garrison Live.  This is Jimmy Garrison's son (Jimmy was Coltrane's bassist).