It’s the inflation, stupid: Why a ‘vibecession’ is hurting Biden – despite an economy which is the envy of Europe

Published

2 years ago

April 16, 2024

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In the circumstances, the numbers could hardly look much better.

A year or two ago, the conventional wisdom was that America was facing a terrific recession.

Instead, according to the latest data from the International Monetary Fund, the US has outperformed pretty much every other major economy in the world (including China).

In its latest World Economic Outlook report – the most closely-watched set of international forecasts – it upgraded the US more than nearly every other major economy.

From a European perspective, there is much to be jealous of about America’s recent performance (most European nations, including the UK, saw the IMF downgrade their growth forecasts).

Yet here’s the puzzle. Despite this comparatively strong economy, despite having seen a lower peak in inflation than most European nations (especially the UK), American consumer confidence remains in the doldrums.

It’s not just Europeans who find this perplexing. So too does the White House.

They pumped cash into the manufacturing sector at the very moment it needed it, via a series of expensive programmes including the CHIPS Act (to bring semiconductor manufacturing back home) and the Inflation Reduction Act (to encourage green technology firms to set up factories in the US).

The idea was that from the depths of the pandemic, America would “build back better” – that Biden would emulate Franklin D Roosevelt and his New Deal of the 1930s.

And most conventional statistics suggest that strategy is bearing fruit. Manufacturing employment is rising; factories are being constructed at the fastest rate in modern history. And gross domestic product – the most comprehensive measure of output – is rising. Unlike in the UK or Germany, there was no recession.

So why, then, is consumer confidence so weak? Why are Biden’s approval ratings – the key polling benchmark for the US leader – lower than pretty much any of his predecessors at this stage in their terms?

Travel around Pennsylvania, as we have done over the past few days, and you encounter all sorts of explanations.

It’s the inflation, stupid

Food banks are getting busier; and while some businesses are beginning to see that federal money trickling down, many of the programmes are still at the approval stage. The money hasn’t arrived yet.

But, above all else, you hear one recurrent answer: it’s the cost of living. It’s food prices, it’s gas prices, it’s rents.

And there’s also a big gap here between life through an economic prism and the life lived on Main Street in places like Bethlehem PA – an old steel town trying to reinvigorate its economy.

Talk to an economist and they’ll remind you that inflation – the rate at which prices are changing over the past year – is finally beginning to drop. But while this is statistically true, it misses a couple of pragmatic realities.

First, prices aren’t going down; they’re just rising a bit less quickly than they were before. The squeeze hasn’t gone away.

Second, while economists often fixate on the change in the consumer price index over the past year (3.5% in March), what the rest of the population notices is the change in prices over a longer period.

Over the past two years prices are up around 9%. Over three years, they’re up 18%.

In other words, the explanation for the “vibecesssion”, as economists have christened it (there’s no formal recession but the vibes feel bad), might actually be exceptionally simple: It’s the inflation, stupid.

In Pennsylvania, perhaps the most critical of all the swing states in the US, the question is whether Donald Trump can capitalise on this disaffection to win over the citizens who abandoned him last time around.

In the meantime, the Biden White House is biding its time, hoping that those New Deal economic textbooks they followed when pumping cash into the economy are really to be trusted.

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Demolition work begins on White House East Wing for Trump’s £186m ballroom

Published

10 hours ago

October 21, 2025

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Demolition work begins on White House East Wing for Trump's £186m ballroom

Demolition on parts of the White House’s East Wing has begun in order to build Donald Trump’s new ballroom.

On Monday, builders were seen tearing down the facade of the building.

The US President, who insists the $250million (£186m) ballroom will be paid for by himself and donors, said in July it would not interfere with the existing landmark.

The East Wing was built at the beginning of the last century and was last modified in 1942.

Mr Trump said in July: “It will be beautiful. It won’t interfere with the current building. It won’t be – it will be near it, but not touching it. And pays total respect to the existing building, which I’m the biggest fan of. It’s my favourite.”

Mr Trump confirmed on Monday that ground had been broken on the project, despite lacking approval for construction from the federal agency that oversees such projects.

Photos of the demolition work showed construction equipment tearing into the East Wing façade and windows and other building parts in tatters on the ground.

He added that future parties would start with cocktails in the East Room, before they are taken into the “finest” ballroom in the country.

It will also boast views of the Washington Monument with room for 999 people, he added. Other estimates have claimed it will house some 600 people.

On his social media platform, Truth Social, he said: “Completely separate from the White House itself, the East Wing is being fully modernised as part of this process, and will be more beautiful than ever when it is complete!”

Trump has also claimed on social media that the project would be completed “with zero cost to the American Taxpayer! The White House Ballroom is being privately funded by many generous Patriots, Great American Companies, and, yours truly”.

Earlier this year, Trump said they have “wanted a ballroom” in the White House for 150 years.

“There’s never been a president that was good at ballrooms,” he said. “I’m good at building things and we’re going to build quickly and on time. It’ll be beautiful, top, top of the line.”

Since being in office, Mr Trump has made a number of changes to the White House.

He has hand-picked gold ornamentation for the Oval Office and has redone the Rose Garden.

A former Republican member of Congress, Joe Walsh, called the latest plans an “utter desecration”, and said if he became president would take “a bulldozer” to the ballroom.

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Inside ‘data centre alley’ – the biggest story in economics right now

Published

14 hours ago

October 21, 2025

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Inside 'data centre alley' - the biggest story in economics right now

If you ever fly to Washington DC, look out of the window as you land at Dulles Airport – and you might snatch a glimpse of the single biggest story in economics right now.

There below you, you will see scattered around the fields and woods of the local area a set of vast warehouses that might to the untrained eye look like supermarkets or distribution centres. But no: these are in fact data centres – the biggest concentration of data centres anywhere in the world.

For this area surrounding Dulles Airport has more of these buildings, housing computer servers that do the calculations to train and run artificial intelligence (AI), than anywhere else. And since AI accounts for the vast majority of economic growth in the US so far this year, that makes this place an enormous deal.

Down at ground level you can see the hallmarks as you drive around what is known as “data centre alley”. There are enormous power lines everywhere – a reminder that running these plants is an incredibly energy-intensive task.

This tiny area alone, Loudoun County, consumes roughly 4.9 gigawatts of power – more than the entire consumption of Denmark. That number has already tripled in the past six years, and is due to be catapulted ever higher in the coming years.

Inside ‘data centre alley’

We know as much because we have gained rare access into the heart of “data centre alley”, into two sites run by Digital Realty, one of the biggest datacentre companies in the world. It runs servers that power nearly all the major AI and cloud services in the world. If you send a request to one of those models or search engines there’s a good chance you’ve unknowingly used their machines yourself.

Their Digital Dulles site, under construction right now, is due to consume up to a gigawatt in power all told, with six substations to help provide that power. Indeed, it consumes about the same amount of power as a large nuclear power plant.

Walking through the site, a series of large warehouses, some already equipped with rows and rows of backup generators, there to ensure the silicon chips whirring away inside never lose power, is a striking experience – a reminder of the physical underpinnings of the AI age. For all that this technology feels weightless, it has enormous physical demands. It entails the construction of these massive concrete buildings, each of which needs enormous amounts of power and water to keep the servers cool.

We were given access inside one of the company’s existing server centres – behind multiple security cordons into rooms only accessible with fingerprint identification. And there we saw the infrastructure necessary to keep those AI chips running. We saw an Nvidia DGX H100 running away, in a server rack capable of sucking in more power than a small village. We saw the cooling pipes running in and out of the building, as well as the ones which feed coolant into the GPUs (graphic processing units) themselves.

Such things underline that to the extent that AI has brainpower, it is provided not out of thin air, but via very physical amenities and infrastructure. And the availability of that infrastructure is one of the main limiting factors for this economic boom in the coming years.

According to economist Jason Furman, once you subtract AI and related technologies, the US economy barely grew at all in the first half of this year. So much is riding on this. But there are some who question whether the US is going to be able to construct power plants quickly enough to fuel this boom.

For years, American power consumption remained more or less flat. That has changed rapidly in the past couple of years. Now, AI companies have made grand promises about future computing power, but that depends on being able to plug those chips into the grid.

Last week the International Monetary Fund’s chief economist, Pierre-Olivier Gourinchas, warned AI could indeed be a financial bubble.

He said: “There are echoes in the current tech investment surge of the dot-com boom of the late 1990s. It was the internet then… it is AI now. We’re seeing surging valuations, booming investment and strong consumption on the back of solid capital gains. The risk is that with stronger investment and consumption, a tighter monetary policy will be needed to contain price pressures. This is what happened in the late 1990s.”

‘The terrifying thing is…’

For those inside the AI world, this also feels like uncharted territory.

Helen Toner, executive director of Georgetown’s Center for Security and Emerging Technology, and formerly on the OpenAI board, said: “The terrifying thing is: no one knows how much further AI is going to go, and no one really knows how much economic growth is going to come out of it.

“The trends have certainly been that the AI systems we are developing get more and more sophisticated over time, and I don’t see signs of that stopping. I think they’ll keep getting more advanced. But the question of how much productivity growth will that create? How will that compare to the absolutely gobsmacking investments that are being made today?”

Whether it’s a new industrial revolution or a bubble – or both – there’s no denying AI is a massive economic story with massive implications.

For energy. For materials. For jobs. We just don’t know how massive yet.

US

Nicholas Rossi: US man who fled to Scotland to avoid rape charges jailed

Published

19 hours ago

October 20, 2025

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Nicholas Rossi: US man who fled to Scotland to avoid rape charges jailed

Nicholas Rossi, an American man who faked his death and fled to Scotland to escape rape charges, has been jailed for at least five years.

The sentence handed down to the 38-year-old is the first of two he faces after being convicted separately in August and September of raping two women in 2008.

Utah has “indeterminate sentencing” – meaning jail terms handed down are in a range of years rather than a fixed number, with release dates set by the state’s parole board.

During August’s three-day trial, Rossi’s accuser and her parents took the stand – with the victim telling the court that he left a “trail of fear, pain, and destruction” behind him.

“This is not a plea for vengeance. This is a plea for safety and accountability, for recognition of the damage that will never fully heal,” she said.

Brandon Simmons, a prosecutor in the case, alleged Rossi “uses rape to control women” and posed a risk to community safety.

Rossi – whose legal name is Nicholas Alahverdian – maintained his innocence during the sentencing hearing. In a soft, raspy voice, he said: “I am not guilty of this. These women are lying.”

He was first identified in 2018 after a decade-old DNA rape kit was examined.

How Rossi was caught

But in February 2020 – months after he was charged in one of the cases – an online obituary claimed he had died of non-Hodgkin lymphoma.

Rossi was arrested in Scotland the following year while being treated for COVID, after hospital staff recognised his distinctive tattoos – including the crest of a university he never attended.

A protracted court battle meant he wasn’t extradited until January 2024, with Rossi claiming he was an Irish orphan named Arthur Knight who was being framed.

Investigators identified at least a dozen aliases that he had used to evade capture over the years.

One of his victims had been recovering from a traumatic brain injury when she responded to a personal advert that Rossi had posted on Craigslist.

They began dating and were engaged within a couple of weeks – and according to her testimony, Rossi had asked her to pay for dates and car repairs, lend him money, and take on debt for their rings.

She told the court that Rossi raped her in his bedroom one night after she drove him home – and went to police years later after discovering that another woman in Utah had come forward with accusations.

Rossi is due to be sentenced for the second conviction in November.