Why today's Philly Fed report is not as strong as it seems
Today's figures from the Philadelphia Federal Reserve appear bullish at first glance, but a closer examination reveals some mixed signals amidst a decidedly end-of-cycle overall tone.
Chief Economist & CIO
The winner is once again populism and the loser is “samhället”, a Swedish word that is often translated as ‘society’, but whose root is "to come together". At the moment, Sweden is doing the exact opposite and splitting down the middle over immigration and its impact on the 'Swedish model' of social democracy with a generous welfare state.
It’s simple and it’s plain and there's no reason to complain….
Samhället is everything in Sweden. The concept manifests in everything from the country's famed social welfare system to its cultural insistence on near-perfect egalitarianism, and it massively shapes the way Swedes see and define themselves.
The Swedish ideal is of a unified society, or a team, and the pursuit of this ideal is part of Swedes' DNA. In order to unify, however, negative sentiments or notes of dissonance must be carefully policed and excluded, and this is why Sweden is so politically correct.
In Sweden, one cannot be politically correct enough... until recently, at least. Now the country's pursuit of fairness and openness is forcing Swedes to be so P.C., they have become un-P.C.!
Sweden's inability to address the elephant in its well-appointed room – immigration, of course – manifested as a kind of societal self-censorship that left vast, undiscussed areas around the national consensus. In that space, the right-wing, anti-immigration Sweden Democrats party grew larger and larger as it confronted the very beast that polite society was unwilling to even acknowledge.
The more that the Swedish establishment insisted on not talking about immigrants as a group, and the more that it doubled down on its "humanitarian superpower" model, the more room it left for SD to play to voters' fear of foreigners, cultural change, and the risk to their traditional entitlements.
Until this election campaign, Sweden's major political parties maintained an unspoken consensus to avoid the topic of immigration. This was broken by SD leader Jimmie Åkesson, who in a televised debate with Prime Minister Stefan Löfven stated that "four out of five non-Swedish rapists living in Sweden are not deported. Four out of five! Why do we need to keep foreign rapists in Sweden?"
To say the PM’s response was evasive would be an understatement. The event is marked by many as a key turning point, not only in SD's fortunes, but also for those of the ruling Social Democratic Party.
That was when immigration charged into the 2018 election with all the thunder of, well, an elephant.
Sweden was quickly pushed into the uncomfortable position of having to discuss a problem that had been ignored for years, a problem for which there are no good solutions, no perfect compromises, and most importantly for Sweden, a problem on which it is very difficult to be fair (unless, as Sweden did, you try and help everyone who needs it).
I think it’s important to note that on Sunday, four out of five Swedes will vote for a party that is not anti-immigration; “only” one in five will make immigration their key issue.
In the newspapers, it can feel as if it's the other way around.
The latest polling data: