Did Secret Data Doom Biden?

Why Politico Is Wrong About the Biden Boom

You might remember that in mid-November, there was an idea that Donald Trump won the 2024 election because the economy wasn’t very good. Sure unemployment was low and wages were up. But egg prices! Years of inflation with no relief in sight! That sort of thing.

This take was everywhere. The New York Times, the Washington Post, the Wall Street Journal and seemingly every cable news pundit had a version of it. There’s something to it, for sure, but “the good economy was actually terrible” view as it is often presented is overly monocausal.

But now, Politico has waded in with a take about as spicy as years-old paprika: the conventional wisdom was right all along! The Biden economy was terrible, a former banker and bank regulator, tells readers. Voters were right to think that the strongest labor market in living memory was actual awful, he argues, not just because of inflation, but because of a sinister underlying darkness in the economy that government statistics failed to represent.

It’s a remarkable piece of goalpost shifting, vibe gazing and faux naivety, all far less clever than it thinks it is.

To start, there’s a particularly humorous moment where Ludwig exercises a specific kind of post-2016 columnist twitch and notes that while elites and their government facts say one thing, his common man bona fides tell him otherwise. Rather than indulging in the Pennsylvania diner cliche, he points to his own experience. Sure, he cops to being a D.C. insider, but notes that he lives a dual life that gives him unique insight into what’s really going on in the economy. He’s also “an adviser to lenders and investors across the country.” Oh, got it! He’s not just a D.C. elite, he also talks to rich people.

Ludwig then shifts his daring defense of conventional wisdom to analyzing some vibes: cities kinda feel bad because of visible homeless people and Republicans are mad about that and Democrats don’t care. He provides no data here. While homelessness is a dramatic policy failure of American governance, what Ludwig is litigating is not the causes of that homelessness, which in a perverse way are often a signal of affluence not decay, but rather that it makes Republicans specifically angry. And it’s here that you realize Ludwig isn’t seriously talking about what he says he’s talking about so it’s best to move on.

The core of his argument is that the unemployment rate – the one you hear reporters talk about when they talk about the job market – is so caveated as to be intentionally withholding the truth:

Known to experts as the U-3, the number misleads in several ways. First, it counts as employed the millions of people who are unwillingly under-employed — that is, people who, for example, work only a few hours each week while searching for a full-time job. Second, it does not take into account many Americans who have been so discouraged that they are no longer trying to get a job. Finally, the prevailing statistic does not account for the meagerness of any individual’s income.

That’s right, the knowledge that the headline unemployment rate hides something nefarious about the economy is... right there in the definition of the unemployment rate.

The trick here is to recast something very obvious to a moderately informed observer – that, of course, when a news story says the unemployment rate is 4%, as was in January, it does not mean that 96% of America is employed – as sinisterly withheld information. This is not a deep insight, it’s obvious kids, lots of seniors and plenty of adults aren’t working. Exactly what portion of those groups are or are not in the workforce is an interesting issue, one that is captured in the very unemployment stats Ludwig goes on to cite as proof that unemployment stats are bogus.

To pile on the absurdity, the stat that Ludwig cites in order to argue that the U.S. economy was bad in 2024 – a proprietary metric that only counts Americans with full-time jobs paying his definition of a living wage as “employed” – was at its lowest rate in three decades before the election and has remained basically the same since. (It’s important to note that the Bureau of Labor Statistics provides other, more broad definitions of unemployment, such as what it calls U6, that are higher than the headline rate and take into part-time worker who want full time work.)

As you can see in the chart from his website, Ludwig’s preferred stat hit an all-time low of 22.3% in June of 2023 and inched up to right around 24% in the months ahead of the 2024 election. Take out the immediate onset of the pandemic and it’s still near all-time lows. Yes, this guy wrote a column about how bad the job economy is when his bespoke measure of the economy shows the economy is doing better than it has since Bill Clinton’s first term.

The deeper motivation of this bizarre piece becomes clear when you consider Ludwig’s runs an eponymous think tank that brands the unemployment stat he created as TRU (“True Rate of Unemployment”). He’s shilling his think tank’s views. In Wall Street parlance, he’s “talking his book.” The problem is, we can read his book too and he’s not being truthful about what it says.