The U.S. government can achieve great things quickly when it has to. In November 2020, the Food and Drug Administration granted emergency-use authorization to the Pfizer-BioNTech vaccine for COVID-19. Seven days later, a competing vaccine from Moderna was approved. The rollout to the public began a few weeks later. The desperate search for a vaccine had been orchestrated by Operation Warp Speed, an initiative announced by the Trump administration that May. Developing, testing, manufacturing, and deploying a new vaccine typically takes a decade or more. OWS, which accomplished the feat in months, belongs in the pantheon of U.S. innovation triumphs, along with the Manhattan Project and the Apollo moon-landing program. It’s a case study in how the U.S. government can solve complex, urgent problems, and it challenges the narrative that public institutions have lost their ability to dream big and move fast.

[Read: The one area where the U.S. COVID-19 strategy seems to be working]

That narrative, sadly, has ample basis in recent history. Many efforts to upgrade the nation’s transportation systems falter because, as the Biden administration declared in 2021, “America lags its peers … in the on-time and on-budget delivery of infrastructure.” NASA’s latest mega-rocket, the Space Launch System, took its first test flight in 2022, six years behind schedule, despite the investment of an astronomical $23.8 billion since 2011. Agency officials recently admitted to the Government Accountability Office that the SLS program is “unsustainable.”

Despite having pioneered much of the underlying technology, the U.S. has fallen behind other nations in deploying hypersonic missiles. In 2021, China launched a 15,000-mile-per-hour missile designed to evade traditional air defenses. General Mark Milley, who retired in September as the chair of the Joint Chiefs of Staff, warned in 2017 that the U.S. military had become “overly centralized, overly bureaucratic, and overly risk-averse.”

In a 2022 Pew poll, fewer than a quarter of Americans said they were “basically content” with the performance of the federal government. Unfortunately, the deep ideological split over whether the government should be bigger or smaller tends to obscure the question of how to make the government work better.

The federal government employs about 3 million Americans, a number that’s changed little since the late 1960s. One thing that has changed is the number of bureaucrats—people who are not directly providing services to the public but who instead oversee government programs, manage budgets, and ensure compliance with laws and regulations. According to our analysis of data from the U.S. Office of Personnel Management, the number of federal administrators ballooned by nearly 50 percent from 1998 to 2022. New York University’s Paul Light estimated in 2020 that the number of organizational layers in the largest federal agencies has grown nearly fivefold since the 1960s. He counted 1,070 deputy assistant secretaries, 236 assistants to the assistant secretary, 204 deputy deputy assistant secretaries, and 153 deputy assistant assistant secretaries.

This phenomenon, which Light describes as the “thickening” of government, is happening in the private sector too. Over the past 30 years, Bureau of Labor Statistics data suggest, the number of administrative and managerial jobs in the U.S. economy grew more than three times faster than the number of non-bureaucratic jobs. More administrators mean more rules, policies, and management layers.

[Derek Thompson: Why the age of American progress ended]

In theory, all of this extra supervision should yield smarter decisions and less downside risk; bureaucracies exist in part to promote standard practices and to limit the amount of damage that any individual employee can cause. But a thicker organization also produces longer lines of communication, slower response times, more turf battles, and less agility and innovation.

Operation Warp Speed was designed to avoid these problems. It had a ridiculously ambitious charter: Develop and deliver 300 million doses of a safe and effective vaccine by January 2021. Skepticism was warranted, given that only one in 15 potential vaccines that reaches the second phase of clinical trials ends up being licensed. A partnership between the Department of Health and Human Services and the Pentagon, the initiative was led by Moncef Slaoui, a scientist and former pharmaceutical executive, and General Gustave Perna, who was in charge of the U.S. Army Materiel Command. The staff included perhaps 600 HHS employees, plus about 100 from the Department of Defense. To defeat the virus, they would need to coordinate a wide network of partners, including drugmakers, logistics titans such as FedEx and UPS, medical distributors, and a plethora of supermarket and drugstore chains that would help administer the vaccines—all amid severe supply-chain constraints, a domestic shortage of technical talent, and the need for social distancing.

Slaoui and Perna had the benefit of an $18 billion budget that allowed them to fund large-scale trials and purchase millions of vaccine doses in advance. OWS was also able to leverage a preexisting body of research on an emergent vaccine technology, messenger RNA. Yet at the time, almost no one believed that those advantages foreordained success. In interviews to recruit a project leader, Slaoui had reportedly been the only candidate who thought the deadline might be realistic. His willingness to aim high proved to be essential.

So did a lean management structure. Slaoui and Perna, according to multiple accounts, had the authority to work across agencies, and they were seldom second-guessed by their political masters. They reported to a board, co-chaired by the secretaries of HHS and Defense, that not only provided oversight but also helped clear away obstacles. Working briskly, the board focused on approving major decisions, such as awarding multibillion-dollar contracts to drugmakers and eliminating supply bottlenecks via the Defense Production Act (which compels private companies to put government contracts at the head of the queue).

Slaoui, Perna, and their board also gave others authority to make important decisions in real time. Tasked with recruiting at least 30,000 participants to test each candidate vaccine—for some of the largest clinical trials in history—the OWS team members John Mascola and Matthew Hepburn had to identify people who were at risk of exposure to the virus even as pandemic hot spots waxed and waned unpredictably around the country. Fortunately, they were free to revise the trial plan on the fly. “People understood they had a lot of latitude and were accountable,” a former HHS deputy chief of staff named Paul Mango told us this summer. “The absence of micromanagement was highly energizing.”

OWS had to synchronize the work of hundreds of public and private entities.  Information circulated peer-to-peer rather than having to go up the chain of command. For each vaccine candidate, a product-coordination team met daily to set priorities and address problems that needed quick resolution. These teams worked with U.S. Customs and Border Protection to expedite equipment imports, with the State Department to secure visas for essential talent, and with the U.S. Army Corps of Engineers to build factories.

Rather than test one vaccine candidate at a time, OWS simultaneously placed bets on mRNA and two other technologies, tapping two developers for each type. Factories were retrofitted for mass production of vaccines while clinical trials were still in progress. Distribution teams were simultaneously developing packaging and securing local vaccination sites. The redundancies and overlapping timelines shaved years off the development process—and provided insurance amid great uncertainty about which vaccines would work.

Above all, Operation Warp Speed shunned complexity in favor of simplicity. Many private-sector executives are wary of doing business with government agencies, which typically impose elaborate, albeit well-intended, requirements on virtually every interaction and are slow to respond to the concerns of contractors and suppliers. In this case, private-sector vaccine suppliers were subjected to fewer rules than what the 2,000-page Federal Acquisitions Regulations manual spells out, and granted enhanced intellectual-property rights.

At every point, OWS staffers were encouraged to prioritize progress over process. Mango credited former HHS General Counsel Robert Charrow for setting the right tone. “He and his team,” Mango told us, “were pretty scrappy in finding ways to get things done and saying yes instead of no.”

Years after the darkest days of the pandemic, many people overlook the enduring importance of Operation Warp Speed. When then-President Donald Trump announced it, skeptics mocked its Star Trek–inspired name and worried that officials would cut corners on safety to produce a vaccine before the 2020 election. Since then, others have faulted it as overly generous to drug companies. OWS fell short of its manufacturing targets, and the vaccine shortages of early 2021 prompted more criticism of the initiative. Democrats have been loath to give any credit to Donald Trump and his underlings, while Republicans—many of whom were skeptical of the vaccine push—struggle to admit that the federal government can do anything right.

In fact, OWS offers powerful evidence that upending bureaucratic norms can, quite literally, save lives. If complex, hidebound institutions such as HHS and the Pentagon can exceed expectations, other agencies should also be capable of warp-speed performance. The most immediate applications might lie in inventing vaccines for other diseases and in advancing transformative technologies such as desalination, solid-state batteries, and carbon capture. But the basic approach of Operation Warp Speed—defining a specific problem, committing to an ambitious goal, and then giving people the freedom and the wherewithal to produce breakthrough solutions—could be used more expansively.

The Department of Defense might focus laserlike on reducing the development time for new major weapons programs by 50 percent. The Department of Transportation might set itself the goal of cutting the timeline and cost of major transit projects in half by streamlining and coordinating regulatory approval, funding, and procurement. The Department of Housing and Urban Development might devote itself to eliminating America’s 4-million-unit housing shortage, including by pushing local governments to reform land use and supporting the construction sector with financing, incentives for innovation, and lower taxes on inputs. Those executive-branch agencies, to be fair, are subject to budget restrictions and other congressional limits, but an OWS-like focus on results might persuade lawmakers to grant them more freedom.

[Annie Lowrey: Why isn’t the government doing more about the housing crisis?]

Americans got speedy access to vaccines because the harms of the pandemic—to the economy as well as to human health—were acute enough to warrant radical thinking. Many of the other seemingly intractable challenges that the U.S. faces, although less deadly than the coronavirus, warrant the same rule-busting audacity that made Operation Warp Speed a success.

The economy is hot, but the people are bothered. Americans think the country is in dreadful economic shape despite strong wage growth, low unemployment, and steadily declining inflation. We know this from survey after survey. What we don’t really know is how people formed those judgments. To find out, The Atlantic commissioned a new poll. When the results came in, one finding jumped off the screen: Americans are really, really unhappy about grocery prices.

Working with Leger, a North American polling firm, we asked 1,005 Americans how they felt about the economy. As with other recent polls, this one painted a gloomy picture. Only 20 percent of people said that the economy has gotten better over the past year, compared with the 44 percent who said it has gotten worse. (There was a big partisan split, but even among self-identified Democrats, only 33 percent said the economy has improved.) Then we asked them to choose, from a long list, what factors they consider when deciding how the national economy is doing. The runaway winner was “The price of groceries for your home”: Twenty-nine percent of people picked it as their top choice, and 60 percent of people selected grocery prices among their top three. Other than “inflation” itself, nothing else came close—not gas, not housing, not interest rates, not the cost of major purchases. And when we asked what people had in mind when they reported that their personal finances were getting worse, 81 percent chose groceries.

Americans’ economic attitudes used to track official statistics, including the inflation rate, pretty closely. That changed in 2020. When the pandemic hit, both the indicators and sentiment plummeted. But then, even as the economy recovered, sentiment remained low. Something broke the relationship between metrics and perception during the pandemic, and housing struck me as the likely culprit: Home prices, which are not included in the consumer price index, have gone absolutely bananas since 2020, rising far more than overall inflation in that time period.

[Annie Lowrey: Inflation is your fault]

But although the cost of housing may dominate the psyche of people like me—Millennial professionals who rent apartments in super-expensive cities such as Washington, D.C., and wonder whether we can ever afford to buy a house—nearly two-thirds of American households already own their homes, and a spike in prices makes them wealthier. “For a large share of households, the increased cost of housing prices is an increase in equity in their homes,” Betsey Stevenson, an economist at the University of Michigan, told me. “They’re not really complaining that the value of their house has gone up.” Housing costs are a real pain, but only for some people.

The poll cast doubt on a few other popular hypotheses. On the left, one argument posits that Americans are unhappy because they miss the generous government welfare payments enacted during the pandemic, such as the stimulus checks and the expanded child tax credit. But only 17 percent of our poll respondents said their finances were better during the pandemic. (Fifty-five percent said they were doing better before the pandemic, and 28 percent said they’re doing better now.) People with children at home were generally more positive on the economy than people without kids. That isn’t what you’d expect if Americans were fuming over the expiration of the expanded child tax credit.

What about the contagious power of negative vibes on social media? This is very hard to test, because people might not be good judges of what shapes their worldview. But, for what it’s worth, we asked where people get their news on the economy, and those who chose Facebook, Instagram, or TikTok expressed more positive views than people who didn’t. So, too, did those who say they read national and financial newspapers. The most negative sentiment was generally among older people, not Gen Z TikTokers, which is consistent with other surveys.

No single poll is definitive, and you can get answers only to questions you think to ask. We didn’t ask about restaurant prices, for example, or the cost of child care. What’s clear is that the biggest cause of America’s current economic discontent is the fact that prices are higher than they were before the pandemic. And groceries are, at the very least, one of the things that people are most upset about. Grocery prices increased by 11.8 percent in 2022, far ahead of the overall rate of inflation, which was 6.5 percent. And unlike with housing, few ordinary Americans benefit from higher grocery prices. Everyone buys groceries, but unless your last name is Kroger or Walton, you probably don’t sell them.  

Knowing that grocery prices drive negativity doesn’t, on its face, solve the puzzle of why sentiment has diverged from the economic indicators. Most Americans are making more money, even adjusting for inflation, than they were before the pandemic. If they were coldly rational, they would recognize that their income more than offsets higher grocery prices—they’re spending more, but they still have more left over.

Or maybe it isn’t much of a puzzle at all. We haven’t seen inflation like this since the 1980s; food prices in particular haven’t risen so fast since the late ’70s. The models, in other words, have been trained on four decades of low inflation. Asking them to accurately predict what happens when prices finally, suddenly jump doesn’t make a lot of sense. “Collectively, there’s still this coming to grips with the idea that we’re never going back to 2019,” Joanne Hsu, the director of consumer surveys at the University of Michigan, told me. “We’re in a new normal now, and we’re still adjusting to what that new normal feels like.” In this unfamiliar post-inflationary territory, people seem to care more about how much things cost than about how much money they have, even if economists insist that those things are symmetrically important.

[Rogé Karma: The 1970s economic theory that needs to die]

I should confess that I’m among the many Americans who experience prices as an atmospheric economic condition and income as something I earn. Early in the pandemic, I got in the habit of making an egg-and-cheese sandwich for breakfast pretty much every day. I recall a six-pack of Thomas English muffins costing about $3.50 at the time. Today, one costs $5.59 at my nearest Wegman’s and $5.29 at the nearest Safeway and Harris Teeter. An economist would probably say I shouldn’t worry about it. After all, since the start of the pandemic, I have changed jobs twice, and my income has risen more than enough to easily cover the extra $2 a week on English muffins. Still, I can’t bring myself to buy them. My higher income feels like something I accomplished through hard work and patience, but the higher price of English muffins just feels wrong. I settle for cheaper, inferior brands while waiting in vain for Thomas to go back under $5. (Or I grab them when I’m at Target, where for some reason they’re still only $3.49.) Unlike most poll respondents, I don’t conclude from this that the economy is bad. On the very specific dimension of egg sandwiches, however, I suppose I do feel worse off.

But perhaps not for long. Grocery prices seem to have finally stopped rising faster than the overall rate of inflation. In fact, according to the most recent government data, they have basically flattened out, increasing by only 0.1 percent in October. The bad news is that, once prices hit a certain level, they tend to stay there. According to Hsu, consumer sentiment has made up about half the ground it lost from the eve of the pandemic to its nadir in June 2022, when inflation was at its peak. How quickly we close the rest of the gap may hinge on how long it takes Americans to stop pining for 2019 prices that are never coming back. Personally, I still can’t wrap my head around paying $5.29 for six English muffins. Ask me again in six months.

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Many Americans—of both parties—have become untethered from reality. When the voters become incoherent, electing leaders becomes a reality show instead of a solemn civic obligation.

First, here are three new stories from The Atlantic:

The myth of the unemployed college grad Texas becomes an abortion dystopia. They do it for Trump.

National Hypochondria

It’s been a stormy Monday on the East Coast, but with all respect to the Carpenters, I happen to like rainy days and Mondays. So I promise that what I am about to say is not the result of the rain or any Monday blues.

Millions of American voters appear to have lost their grip on reality.

I have been thinking (and writing) about the problem of poorly informed citizens for a long time. Low-information voters are a normal part of the political landscape; in the 21st century, democracies face the added danger of disinformation efforts from authoritarians at home and hostile powers overseas.

But America faces an even more fundamental challenge as the 2024 elections approach: For too many voters, nothing seems to matter. And I mean nothing. Donald Trump approvingly quotes Russian President Vladimir Putin and evokes the language of Adolf Hitler, and yet Americans are so accustomed to Trump’s rhetoric at this point that the story gets relegated to page A10 of the Sunday Washington Post. Joe Biden presides over an economic “soft landing” that almost no one thought could happen, and his approval rating drops to 33 percent—below Jimmy Carter’s in the summer of 1980, when American hostages were being held in Iran, and inflation, at more than 14 percent, was well into a second year of double digits. (Inflation is currently 3.1 percent—and likely will go lower.)

My concern here is not that people aren’t taking Trump’s threat seriously enough (even if they aren’t) or that Biden isn’t getting some of the credit he deserves (even if he isn’t). Rather, the political reactions of American voters seem completely detached from anything that’s happened over the past several years, or even from things that are happening right now. We use vibes to talk about all of this: We’re not in an actual recession, just a “vibecession,” where people feel like it’s a recession.

But you can’t solve imaginary recessions with real policies, just as you can’t cure imagined diseases with real medicine. We are experiencing a kind of political and economic hypochondria, where our good test results can’t possibly be true.

Consider, for example, that last month, Americans felt worse about the economy than they did in April 2009. The key word is feel, because by any standard remotely tied to this planet, it is delusional to think that things are worse today than during the meltdown of the Great Recession. As James Surowiecki (a contributing writer for The Atlantic) dryly observed on X about the comparison to 2009, “It’s true that if you ignore the 9% unemployment rate, the financial system melting down, the millions of people being foreclosed on and losing their homes, and the plummeting stock market decimating people's retirements, it was better. But why would you do that?”

For many reasons, people often say things are bad when they’re good. Even during the best times, someone is hurting. But a simple and very human phenomenon, as I wrote a few years ago, is that people can feel reluctant to jinx the good times by acknowledging them. And of course, partisanship makes people change their views of the economy literally overnight. The media, especially, enables the obsession with bad news. Too many stories about good economic reports (especially on television) are tied to the trope that begins: Not everyone is benefiting, however. Here’s a town …

Such stories are in the name of not forgetting the poor, the dispossessed, the left-behind. The reader or viewer of such stories might be moved to say, “There but for the grace of God go I,” but more likely they will reach the conclusion that the good economic news is a fluke and the destitution before them is the ongoing reality.

A much deeper and more stubborn problem, however, is that Americans, for at least 30 years or more, have developed immense expectations and a powerful sense of entitlement because of years of rising living standards. They are hypersensitive to any change or setback that produces a gap between how they live and how they expect to live—a disconnect that is unbridgeable by any politician.

Trump deals with this disconnect by encouraging it. He indulges his base by talking about “carnage” and the collapse of America, about how terrible things are, how much better they were, and how they’ll be good again in a year. Biden and the Democrats, still tethered to reality, gamely respond with data. Hussein Ibish recently wrote in The Atlantic that Biden can win with this approach: “Biden should ask voters Ronald Reagan’s classic question: Are you better off today than you were four years ago? The answer can only be yes.”

But I think Ibish is being too optimistic. In general, reality-based voters would answer yes. But what if the voters say no?

Even in casual conversations, I find myself flummoxed by people who argue, with much conviction, that America is in fact worse off, even if their own situation is better. When I respond by noting that inflation is not going up, say, or that America is at full employment, or that wages are outpacing prices, or that pay is increasing fastest for the lowest-paid workers, none of it matters. Instead, I get a response that is so common I can now see it coming every time: a head shake, a sigh, and then a comment about how everything is just such a mess.

And yet, after all of the hand-wringing about all the mess, people aren’t acting as if they’re living in an economic crisis. As my colleague Annie Lowrey pointed out recently, few people are spending less, no matter how much they carp about inflation; in surveys, she notes, “people say that they are trading down because of cost pressures. But in fact they are spending more than they ever have, even after accounting for higher prices. They’re spending not just on the necessities, but on fun stuff—amusement parks, UberEats.”

Such paradoxes suggest that dumping on the economy has transcended partisanship or the news cycle and is now a fashion, a kind of expected response, a way of identifying ourselves—no matter what we really believe—as a friend of the downtrodden, a reflex that prevents people from saying that they are doing well and the country seems to be doing fine. No one, after all, wants to get yelled at by the local Helen Lovejoy.

For now, I am going to hope that what we’re seeing is the classic problem of lag: The data are good, but people are still thinking about their situation three months ago—you know, back when the 2023 economy was worse than the Great Recession—and that perceptions will catch up. Abraham Lincoln implored citizens in 1838 to rely on “cold, calculating, unimpassioned reason.” But if Americans are now stuck in the mode where nothing but vibes and feelings matter, much more is at risk than one or two elections. No democracy can long survive an electorate whose only guidance is emotion.

Related:

The bad-vibes economy Why Trump won’t win

Today’s News

The Vatican said that the Pope had allowed priests to bless same-sex couples but clarified that the new rule does not amend the Church’s traditional doctrine on marriage. A new ProPublica investigation reported that Justice Clarence Thomas made private complaints in 2000 about his salary, raising alarm across the judiciary and Capitol Hill that he would resign. Governor Greg Abbott of Texas signed a bill into law that gives law enforcement the power to arrest migrants suspected of illegally crossing the Mexican border. The law takes effect in March, but lawsuits against it are expected.

Dispatches

Galaxy Brain: Charlie Warzel asks: Why does nobody know what’s happening online anymore? Stuck in our own corner of the internet, the concept of what makes a trend viral is now up for debate.

Explore all of our newsletters here.

Evening Read

Hannah Price

In 2021, Wright Thompson wrote about the barn where Emmett Till was tortured.

The Atlantic article caught the attention of Shonda Rhimes, who today announced a donation to the Emmett Till Interpretive Center, which will buy the barn and convert it into a memorial.

Read Wright’s article.

More From The Atlantic

The curious SNL return of Kate McKinnon The new family vacation The little-known rule change that made the Supreme Court so powerful Give Russia’s frozen assets to Ukraine now.

Culture Break

Illustration by The Atlantic

Listen. Today, work isn’t done exclusively in the workplace. What if there are better ways to separate your personal and professional time? Becca Rashid and Ian Bogost discuss in the latest episode of How to Keep Time.

Read. Dan Sinykin’s Big Fiction, the most buzzed-about work of literary scholarship published this past year, explores the invisible forces behind the books we read.

Play our daily crossword.

Katherine Hu contributed to this newsletter.

When you buy a book using a link in this newsletter, we receive a commission. Thank you for supporting The Atlantic.

One of the defining characteristics of the second half of 2023 has been the gloominess of American consumers. Even as the economy remained unexpectedly robust—growing at a 5.2 percent clip in the third quarter—and inflation cooled, consumer sentiment as measured by the University of Michigan’s Consumer Sentiment Index dropped steadily from the summer through the fall, and its rating hit a low of 61.3 in November.

But then something surprising happened. In the December survey, released last week, consumer sentiment spiked upward by 13 percent, rising to 69.4, making up pretty much all the ground it had lost since August. Even more striking, consumers’ expectations of inflation over the year ahead fell dramatically, tumbling from 4.5 percent all the way to 3.1 percent. That finding ambushed analysts, who had forecast a trivial bump in sentiment. And Americans’ new, better mood could not be explained by the decline in overall inflation, which fell just a tenth of a percentage point last month.

One change could account for why people might be feeling more buoyant: Gasoline prices have been plummeting. According to the American Automobile Association, the average gas price nationally is about $3.10 a gallon, down from $3.83 a gallon in September; and about 60 percent of gas stations are now selling gas for less than $3 a gallon.

[Annie Lowrey: The annoyance economy]

That drop matters not just because of the economic impact of cheaper gasoline, but because no other product’s price has such an outsize effect on consumer sentiment. In a recent paper, for instance, the economists Carola Binder and Christos Makridis looked at the impact of gas prices on Americans’ feelings about the economy as measured by the Gallup Daily tracking survey, which from 2008 to 2017 asked roughly 1,000 adults a day the same two questions that are used to build something called the Economic Confidence Index.

Binder and Makridis found that increases in state gas prices made people more pessimistic about the national economy, regardless of what else was happening economically at the state or national level. They also noted that the response was very quick—negative sentiment peaked three days after a meaningful rise in gas prices.

This fits with previous studies of the relationship between gas prices and public sentiment. A 2012 study found not only that gas prices were negatively correlated with consumer sentiment, but that the relationship was causal: In other words, changes in gasoline prices led consumer sentiment. Higher gas prices have also historically been strongly correlated with presidential approval ratings. And an older study by Carol Graham and Soumya Chattopadhyay of the Brookings Institution showed that rising gas prices actually depressed Americans’ level of happiness.

Few things in life, it turns out, can make us feel gloomier than a spike in gas prices can. But on the flip side, judging from the new consumer-sentiment numbers, few things can make us feel more optimistic than falling gas prices.

This is in part because of the impact of gasoline prices on people’s pocketbooks. According to one study, people with longer commutes were more likely to hold the president accountable for rising gas prices. But it isn’t just about money: The drop in prices since August, for instance, has saved the average American driver maybe $20 to $30 a month. That’s not trivial, but it’s not a big enough boost to justify the spike in consumer sentiment we just saw.

The psychological impact of rising gas prices, then, is greater than their actual economic impact. Why? Well, the demand for gasoline is, at least in the short run, inelastic: People can’t significantly reduce the amount they drive in response to higher prices. And there is no substitute for gas: You can’t fill your tank with olive oil. So rising prices make people feel trapped and deprived of the ability to control their spending.

[Derek Thompson: How the recession doomers got the U.S. economy so wrong]

More important, because every gas station lists its numbers on a huge sign, the price of gas is impossible to avoid: Just driving around town means being bombarded with reminders of how much gas costs. When prices are rising, that’s guaranteed to bring you down. But when prices are falling, as they are now, you’re getting a subliminal message that things are improving.

We know from behavioral economics that when we form opinions or make decisions, we tend to focus on information that’s memorable and comes easily to mind, while ignoring less attention-grabbing data. And when it comes to the economy, nothing is more in your face than gas prices are.

Falling gas prices are good news for Joe Biden—which is presumably why Donald Trump gave a speech the other day in which he claimed that gas costs “$5, $6, $7, even $8 a gallon.” But the substantive lesson of the big spike in consumer sentiment is just how much psychological perception can shape our view of the economy. If America’s going to get out of its “vibecession,” lower gas prices are probably the way to start.

When inflation started to spike in 2022, the Federal Reserve made the only move it could: raising interest rates. Over the course of 18 months, rates shot from near zero to above 5 percent and have remained there since. Now inflation appears under control, having fallen steadily since July 2022. But while the Fed may be done raising rates, it’s not cutting them back to zero anytime soon.

According to the central bank’s most recent projections, rates will stay where they are for most of 2024 and will fall only slightly in 2025, ending the year at about 4 percent—more than twice as high as in late 2019. Activity in the bond markets suggests that rates could stay near that level for the better part of a decade. Wall Street has begun summing up the situation with a simple phrase: “higher for longer.”

As jarring as 5 percent interest may seem, by historical standards it is pretty modest and, believe it or not, represents a healthy adjustment. America since the Great Recession has been living through an anomalous period of super-low rates that contributed to widening inequality and speculative-asset bubbles. Higher-for-longer should herald a fairer, more sustainable economy. Americans just have to survive the transition. Because before we get to the good place, higher-for-longer is going to feel bad—or at least very weird. Rates haven’t been this high since George W. Bush was president and Taylor Swift was in elementary school. At this point, nearly every facet of the American economy has reshaped itself around near-zero interest rates. As with any dependency, withdrawal will be painful.

The core irony of raising rates to tame inflation is that higher rates can make major purchases—like a car or, especially, a house—more expensive, because most people take out loans to make them. In other words, the cure for inflation may itself be experienced as inflation. In January 2021, the interest rate on a 30-year fixed home mortgage reached a record low of 2.65 percent. Today, it is just over 7 percent. In theory, higher borrowing costs are supposed to cool prices. Instead, they’ve hardly budged. With rates spiking, many homeowners have decided to stay put to preserve the cheap mortgages they secured when rates were low. The resulting restriction of supply has led to the slowest pace of existing home sales since the height of the Great Recession, keeping sticker prices high even as the cost of a mortgage has ballooned. This double whammy has produced the most punishing housing market in at least a generation: Buyers can’t afford to buy, and owners feel stuck in place. As my colleague Annie Lowrey points out, the market could be bleak until the 2030s.

[Annie Lowrey: It will never be a good time to buy a house]

Higher borrowing costs can hurt in less obvious ways, too. Jesse Jenkins, who leads the Princeton ZERO Lab, estimates that higher-for-longer will increase the cost of renewable-energy projects by 20 to 30 percent. In just the past few months, two large offshore wind projects in New Jersey and three in New England—which together would have accounted for nearly one-fifth of President Joe Biden’s 2023 offshore wind-power target—have been canceled because of soaring costs. The world’s largest borrower is also feeling the squeeze. Thanks to rising rates, the U.S. government will pay $659 billion in interest on the national debt this year, nearly as much as it spends on Medicare or national defense.

But the most alarming potential consequence of higher-for-longer lies in the pressure it puts on the financial system. The collapse of Silicon Valley Bank, First Republic, and Signature Bank earlier this year was largely a story about interest rates: When rates went up in 2022, existing government bonds, which had lower rates, lost value. That inflicted huge paper losses on Silicon Valley Bank, triggering a bank run. A wider crisis was averted, but banks remain vulnerable to future shocks. Regulators worry that additional pressure on balance sheets—from, say, a collapse in commercial real estate—could trigger a larger round of bank runs, with damage spilling over into the broader economy. “Eventually,” says Mark Zandi, the chief economist at Moody’s Analytics, “something could break.”

And yet, higher-for-longer appears to be worth the risk. To understand why, it helps to go back to the origins of the previous regime. In 2008, during the depths of the financial crisis, the Fed cut interest rates to zero as part of a desperate bid to avert a second Great Depression. (It also began buying securities itself in an effort to push effective interest rates below zero, a program called “quantitative easing.”) This “zero interest-rate policy”—which became known as ZIRP—was meant to be a stopgap. But as it became clear that the economy needed more help, and a Tea Party–controlled Congress wasn’t going to pass any more stimulus spending, the Fed decided to keep ZIRP in place indefinitely.

The idea behind ZIRP was to encourage spending and, in turn, create new jobs. At the most basic level, the policy made borrowing money extremely cheap. But the flip side was that investors could no longer earn nice returns by simply stashing their money in safe assets such as U.S. Treasury bills. With rates at or near zero, they had to find riskier investments—things like publicly traded stocks or leveraged buyouts or luxury-condo developments. The Fed believed that this would trigger a flood of new investment that would send asset prices soaring and generate what economists call “wealth effects.” People who owned property or stocks would see the value of their portfolios rise, encouraging them to go out and spend more money, ultimately helping to speed along the recovery.

The Fed got the first part right. Almost every single asset class, whether real estate or private equity or cryptocurrency, soared in value in what became known as “the everything bubble.” The stock market more than tripled from 2009 to 2019, and the value of Netflix, Tesla, and Amazon each grew by more than 2,000 percent. But the robust recovery did not materialize. For much of the decade, GDP and wage growth were anemic. The share of working-age Americans with a job didn’t recover from its pre-crisis levels until the fall of 2019.

Instead, because assets like stocks and real estate are disproportionately held by the rich, ZIRP helped produce the largest spike in wealth inequality in postwar American history. From 2007 to 2019, according to calculations by the economist Austin Clemens based on Federal Reserve data, the wealthiest 1 percent of Americans saw their net worth increase by 46 percent, while the bottom half saw only an 8 percent increase. A report from the McKinsey Global Institute, not exactly known as a bastion of economic populism, calculated that from 2007 to 2012, the Fed’s policies created a benefit for corporate borrowers worth about $310 billion, whereas households that tried to save money were penalized by about $360 billion. The journalist Christopher Leonard wrote in his 2022 book, The Lords of Easy Money, that “no single policy did more to widen the divide between the rich and poor” than ZIRP.

ZIRP transformed the American business environment in jarring ways. With borrowing cheap and the market booming, established corporations realized they could exploit financial tactics such as stock buybacks to boost earnings per share without improving their underlying business. Meanwhile, riding a wave of cheap money, Uber, WeWork, and other start-ups burned through billions of dollars of venture capital, pushing entire industries toward hard-to-sustain business models in the process. The private-equity industry, infamous for its debt-heavy leveraged buyouts, began eating up more and more of the economy. Desperation for higher returns also allowed speculative assets including cryptocurrencies and NFTs to attract trillions of dollars, only to collapse spectacularly.

[Rogé Karma: The secretive industry devouring the U.S. economy]

The return of higher rates should help the economy course-correct. More money will flow to long-term investments and sustainable companies instead of speculative assets and impractical start-ups. Companies looking to boost their stock price will have to win new customers or develop better products instead of relying on financial engineering. The gains of economic growth will be more widely spread because less money will be funneled into assets owned mostly by the rich.

Today’s higher rates also signal an underlying economic health that the ZIRP era lacked. The Fed is only comfortable keeping rates higher for longer because America’s post-pandemic recovery has been so strong, thanks to a generous helping of fiscal stimulus. Unemployment has remained at historic lows. Manufacturing is off the charts. Wage gains for lower-paid workers have rolled back about 40 percent of the rise in income inequality that has occurred since the 1980s. In terms of growth, inflation, and employment, the U.S. is doing much better than other rich countries.

Americans used to cheap mortgages and a bonkers stock market understandably might not see all of this as good news. And the risk remains that higher rates trigger the kind of financial crisis that necessitated low rates in the first place. But we shouldn’t pine for the ZIRP era. That was the product of a crisis that our leaders failed to solve. As strange as it is to say, higher-for-longer is what it looks like when things are going right.

Now that Russian President Vladimir Putin finds himself in a war of attrition, his only chance at victory depends on outlasting both Ukraine and its military supporters. He isn’t merely counting on the demoralization of the Ukrainian people and on “Ukraine fatigue” in the West; he’s also assuming that his own country has the stamina for a long and brutal fight. Yet after nearly two years in which Putin has largely succeeded in insulating most of his subjects from the war, the effects of Western sanctions—coupled with the astronomical and growing human and monetary costs of the conflict—are finally beginning to cause pain for the Russian general public.

Immediately after the invasion of Ukraine early last year, when the United States, the European Union, and other democratic nations moved to disconnect Russia from global financial and trade networks, many Western commentators hoped that the country’s economy would quickly buckle, creating pressure on Putin to withdraw. That hasn’t happened. This year, the average Russian income is up, and the country’s GDP has grown by 2 percent. Unemployment is at a record low. Although widening, the budget deficit is still manageable at 2 percent of the GDP. Higher global oil prices have allowed Putin to avoid raising taxes on individuals while increasing levies on exporters and slapping a one-time windfall tax on corporate profits. Russia’s foreign-trade balance, while down from last year, is still net positive, despite the West’s sanctions.

[Annie Lowrey: Can sanctions stop Russia?]

Uninsured “gray fleet” tankers subvert the $60-dollar-a-barrel cap imposed by the West on the sale of Russian oil, which India and China continue to gobble up by the millions of barrels. Moscow spends some of this revenue in so-called parallel markets, such as Turkey and the former Soviet Central Asian republics, from where many sanctioned goods and technologies are shipped into Russia.

With time, though, Russia has begun to suffer from its isolation from the world’s wealthiest, most modern economies. The West’s sanctions are like a heavy boot on two hoses that sustained the Russian state and Russian society before 2022. One carries the oil and gas revenue, which constitutes close to half of the government’s budget, and the other brings imported goods that consumers, businesses, and military planners desperately need. The flows are impossible to choke off, but they are constricted.

Oil continues to bring billions of dollars, but China and India buy Russian exports at significant discounts from what European buyers paid before the invasion. Russia has also lost income from the sale of natural gas. Virtually all of the state-owned energy company Gazprom’s pipes run west, and building new ones takes years and an enormous amount of money.

Before the war, Russia imported most of its key commodities, and the parallel markets cannot make up for the loss of supplies since early 2022. Many necessities are more expensive, a lot are adulterated, and the quantities available typically are far smaller than before the war—sufficient to keep day-to-day operations going but not enough to ward off a steady degradation of economy and society. Made-in-Russia “replacements” have been falling short, and shortages and breakdowns are multiplying across the economy, involving products as varied as tires, printing paper, airplane parts, and cellular towers. Among the more painful privations is the disappearance of up to 65 percent of crucially important medicines in some large cities. The Ministry of Health has advised of a coming deficit of almost 200 essential drugs.  

Meanwhile, the direct consequences of Putin’s war and fiscal profligacy are becoming ever more evident. The military operation is squandering the Kremlin’s stores of money, supplies, and men. Already about 40 percent of the government budget, defense outlays are set to double next year. With an estimated $300 billion of Russian sovereign funds frozen in the West, the Kremlin has been forced to withdraw $38 billion from the rainy-day National Wealth Fund. That’s one-fifth of the fund and 2 percent of the country’s GDP. How long before Putin starts raising taxes and printing banknotes?

To combat the 7 percent inflation and shore up the ruble, which dipped to a record low of 100 per U.S. dollar at one point earlier this year, the central bank increased the interest rate to 15 percent, further depressing economic activity. In a sign of stagnation, if not yet recession, economic growth is projected to drop to 1 percent next year—or half this year’s rate, which itself was due mostly to the surge in weapons and ammunition production.

Making matters worse, Russian consumers may soon have trouble spending their money on their own needs. Along with claims that Russia is fighting Nazis in Ukraine, the Kremlin has resurrected another World War II trope: “All for the front, all for the victory!” (Vsyo dlya fronta, vsyo dlya pobedy!). The slogan is now being used to galvanize Russian society to donate “humanitarian” parcels to the soldiers in Ukraine, while private enterprises are pushed to switch to war production. The central bank’s governor, Elvira Nabiullina, has lamented the “inability” of domestic producers to satisfy consumer demand. For the first time since the 1990s, de facto price controls caused shortages of gasoline and diesel fuel in late summer and early fall, and greater scarcity and bottlenecks are certain to follow.

[David Frum: Can Putin recover from this?]

Nabiullina has also warned of a “sharp deficit” in the labor force. The trillions of rubles that the Kremlin is showering on the military-industrial complex cannot make up for the gaps in educated staff after hundreds of thousands of men ages 18 to 30 fled the country to escape the draft.

A still more troubling deficit is that of soldiers: The seemingly inexhaustible pool of potential conscripts is beginning to look rather shallow. Even as Putin sends an estimated 20,000 more men every month to fight in Ukraine, he is desperate to avoid a general mobilization—which is sure to be unpopular—before the presidential election next March. So he appears to be reaching for the bottom of the barrel. Conscripting prisoners into the Ukraine war started out as a bizarre campaign introduced by the Wagner Group, the ostensibly private military company led by the now-deceased former Putin crony turned mutineer Yevgeny Prigozhin, but has now become a standard practice. Incarcerated women too have been forced into military service. The prison population is down by an estimated 54,000 inmates. Rapists and murderers, some serving life sentences, are pardoned by Putin after six months in Ukraine.

[Tom Nichols: A very public execution in Russia]

Apparently still short of soldiers, the authorities have begun to press-gang many of the nation’s estimated 2.8 million migrant workers from predominantly Muslim countries in Central Asia. In the city of Moscow and the surrounding province of the same name—jurisdictions where at least 1 million Tajiks, Uzbeks, and Kirgiz now live—the police have raided mosques after services, forcing young men into buses that take them to military-induction centers.  

Up to now, Putin has tamped down domestic opposition to his war through a combination of repression, shrewd politics, and monetary largess. Criticizing the war—including by calling it a war, rather than a special military operation—is punishable by 15 years in jail. The Kremlin imposes high draft quotas on poor, rural Russians and on ethnic minorities in the north Caucasus and Siberia; it goes easy on large cities in central Russia, especially Moscow and St. Petersburg, to spare the sons of elites from military service. Soldiers who do end up in Ukraine are generously rewarded. This past July, a mobilized reservist’s starting monthly salary in Ukraine was 195,000 rubles ($2,200)—almost four times the national median income. The injury payout is 3 million rubles ($34,000), and the families of killed soldiers receive 5 million rubles ($54,600). These payments have buoyed veterans, their families, and even entire villages, but apparently they have not prompted a sufficient number of volunteers to replace the hundreds of thousands of soldiers who have been killed or wounded in Putin’s war.  

Putin’s resort to conscripting prisoners and immigrants, many of them undocumented, is unlikely to reverberate politically. But protests among ethnic Russians are another matter altogether. Last month, the wives and mothers of mobilized reservists staged a rally demanding the return of their loved ones who have spent a year in the trenches. “People are tired [of the war], and [it is] important [for the authorities] to demonstrate that nothing is threatening people’s normal lives,” the women wrote in a post on Put’ domoy (“The Road Home”), a Telegram channel with 25,000 subscribers. “But we are telling you, our friends: [your lives] are being threatened—and how! We have been fucked over and you will be fucked too. Here and now we are creating a foundation of societal unity against a mobilization of unlimited duration.”

Small and inchoate though it is, the Road Home movement signals more trouble for the Kremlin than the plunging ruble or a budget deficit. Wars of attrition are decided at least as much by the morale on the home front as by the advances and retreats on the battlefield.

In promoting his invasion of Ukraine, Putin has repeatedly evoked memories of World War II, in which the Soviet people made unimaginable sacrifices, while also sparing most of his citizenry from ill effects. But that won’t hold true forever. “You may not be interested in war, but war is interested in you,” the Communist revolutionary Leon Trotsky, who led the Red Army to victory in the Russian civil war a century ago, supposedly said. Putin’s efforts notwithstanding, the war in Ukraine is unlikely to leave the people of Russia alone.

Legacy admissions are in trouble. Applicants from the richest one percent of families are nearly twice as likely to be admitted to elite Ivy Plus colleges than similarly qualified low- or middle-class applicants, and many of these privileged students benefit from being the children of alumni or donors. Left-leaning groups recently filed a lawsuit challenging legacy admissions on civil-rights grounds, the Department of Education has announced an investigation into the practice, and, last month, the Republican Todd Young and the Democrat Tim Kaine introduced a Senate bill that would effectively ban it. The preference for legacy applicants may be the most visible symbol of unearned intergenerational privilege.

But that’s mostly what it is—a symbol. The truth is that banning legacy admissions wouldn’t level the college-admissions playing field at selective schools like Harvard, where I teach. My team’s research suggests that a ban would make a small impact at best. Elite colleges would replace some rich legacies with rich non-legacies, and little else would change.

This may seem counterintuitive, because legacy applicants receive a huge advantage in admissions at most elite colleges. Using internal admissions data from several Ivy Plus colleges (the Ivy League, plus MIT, Stanford, Duke, and the University of Chicago), we find that legacies are about four times more likely to be admitted as non-legacies with similar academic credentials. Concretely, this works out to be about 112 “extra” legacies in a typical Ivy Plus college class of 1,650 students.

[Annie Lowrey: Why you have to care about these 12 colleges]

And yet, eliminating legacy preferences without making any other changes would do little to improve economic diversity. My colleagues and I estimate that it would reduce the number of students from families earning more than $600,000 a year—that is, the top one percent—by only two percentage points, or about 35 students in a typical class. This is because the children of high-income families still enjoy so many other advantages. For example, they are far more likely to be recruited athletes, or to receive high extracurricular and other nonacademic ratings in the admissions process. And because the children of alumni are more likely than other applicants to be rich, they would continue to benefit from these advantages in a post-legacy world. Many of them would still get into their preferred institution, and those who didn’t would mostly be replaced with other wealthy students whose parents happened to attend different schools.

The broader point is that wealthy families will pursue every advantage in the high-stakes game of elite-college admissions. Consider the example of athletic recruitment. Are rich students so overrepresented in collegiate sports because they are innately better athletes? Probably not. Rather, recognizing that athletics can provide a competitive advantage, their parents enroll them in expensive year-round travel teams, pay for private coaching, and invest in sports such as fencing and squash that have lower participation, making it easier to stand out. If colleges stopped admitting recruited athletes but focused more on community service, rich people would find ways to game that too. College-coaching companies might offer curated experiences that provide the most compelling fodder for an application essay. Reforms that shut down one form of preferential treatment in isolation will just increase focus on the others. It’s privilege whack-a-mole.

So what would make a real difference? Over the summer, my colleagues and I published a report measuring the advantage that high-income applicants have in elite-college admissions. I was stunned by the attention our research received. After all, the fact that prestigious universities favor the rich was hardly new information. Still, simply quantifying this affirmative action for the rich more precisely was enough to trigger a big wave of media coverage and public outcry. The lesson is that if we want to fix the problem, the first step is to make that type of data available by default.

Universities have a long track record of making big changes to admissions in response to public pressure. During the civil-rights movement, for example, colleges dramatically increased the number of Black students they admitted over a period of just a few years. To make similar progress on economic diversity, we must be able to hold colleges accountable for results. Currently that’s impossible, because we know only a limited amount about the income diversity of college classes. Fortunately, there is a simple solution. The U.S. Department of Education should require colleges to add an application question about family income, perhaps reported in categories that correspond to different parts of the household income distribution, such as the top one percent. Colleges are already required to report race, ethnicity, gender, and other attributes through the DoE’s Integrated Postsecondary Education Data System, so adding income would be straightforward.

[Xochitl Gonzalez: Legacy for you, but not for me]

Better income data would ratchet up public pressure on highly selective colleges, whose leaders care deeply about their reputation. One encouraging recent example comes from efforts to use public data on the share of students who are eligible for federal financial aid to measure economic diversity. The Washington Monthly has long ranked colleges on how well they contribute to social mobility. Outlets such as U.S. News & World Report and The New York Times have recently followed suit by ranking schools according to the number of students receiving Pell Grants, which corresponds roughly to the bottom half of the income distribution. Elite schools such as Princeton and Yale have responded by increasing the proportion of their students receiving Pell Grants by more than 60 percent from 2011 to 2021. This shows that public pressure can work. But focusing on Pell eligibility has serious limitations. It doesn’t distinguish between families with comfortable middle-class incomes and the truly wealthy, and it encompasses only students who have applied for financial aid. We need better data.

Transparency alone is not enough, of course. Real reform will require sustained public pressure on highly selective private universities to start valuing economic diversity as much as other forms of diversity. That will make a much bigger difference than ending legacy admissions ever could.

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The holiday season is upon us—but before you power through your to-do list, decompress with these seven stories, selected by our editors.

A Sunday Reading List

Some of the below stories have narrated versions, if you prefer to listen to them; just click the link and scroll to the audio player below the image.

The Plight of the Eldest Daughter

By Sarah Sloat

Women are expected to be nurturers. Firstborns are expected to be exemplars. Being both is exhausting.

It Will Never Be a Good Time to Buy a House

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Maybe in 2030?

Life Really Is Better Without the Internet

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What happened after my wife and I removed Wi-Fi from our home

Have You Listened Lately to What Trump Is Saying?

By Peter Wehner

He is becoming frighteningly clear about what he wants.

Hipsters Were Always Hypocrites. Ask Frank Zappa.

By Daniel Felsenthal

Of the late musician’s many records, Over-Nite Sensation best crystallized his cutting satire of our country’s blank-eyed habits.

Why America Abandoned the Greatest Economy in History

By Rogé Karma

Was the country’s turn toward free-market fundamentalism driven by race, class, or something else? Yes.

My Father, My Faith, and Donald Trump

By Tim Alberta

Here, in our house of worship, people were taunting me about politics as I tried to mourn.

Culture Break

François Duhamel / Netflix

Read. Anthony Tommasini, the former chief classical-music critic for The New York Times, recommends books that can help us understand classical music better, including its history, its mechanics, and its great composers.

Watch. May December, now streaming on Netflix, is a movie about liars that is in and of itself deliciously deceptive.

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