Today’s Big News Isn’t What You Think It Is

From the moment the Supreme Court handed down its decision in Students For Fair Admissions, Inc. v. President and Fellows of Harvard College, it has dominated the political discussion for the day (June 29). I would argue, however, that the bigger news came earlier in the morning from the Bureau of Economic Analysis: the third estimate of recent GDP growth.

Court Ruling: Less Than Meets The Eye

Let’s get the Court’s decision out of the way. While both the majority and dissenters used high-minded and high octane language for what this decision means, an actual college admissions officer had this to say about it.

IMO Harvard/UNC opinion is much narrower than I expected it to be and impact will be much less than I see a lot of people suggesting — and possibly give institutions MORE ability to curate classes based on diversity interests

The implicit question here and the one the justices disagree on is this: Can race be a proxy for experience? Harvard/UNC/dissent says yes, majority says no, these can be bifurcated: race can’t be a proxy, but an individual story of how race has shaped person CAN be considered

…it seems to me that in making more explicit *how* a students’ background impacts experience/perspective, schools will have a much easier time DEFENDING why race mattered in admitting that person…and test scores, etc. become less of the comparison point

My point is that this decision seems to be giving MORE latitude for subjective and holistic admissions decisions, as long as they are defensible on a case by case basis. It becomes harder to argue that X should not have been admitted over Y, as SFFA did here

In other words, colleges can probably keep doing what their doing, just with students of color providing more detail of the impacts of non being White in America. Legal MAGA-world’s only option at that point will be to demand White quotas in admissions – and if the Court ever grants them, that will be a major decision.

GDP Figures: Growth Still Strong As Inflation Fades

By contrast, the BEA numbers provide more evidence that the country is moving from inflationary growth to disinflationary growth.

Real gross domestic product (GDP) increased at an annual rate of 2.0 percent in the first quarter of 2023 (table 1), according to the “third” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.6 percent.

The GDP estimate released today is based on more complete source data than were available for the “second” estimate issued last month. In the second estimate, the increase in real GDP was 1.3 percent.

Keep in mind, before today, we thought the anti-inflationary measures taken by the Fed had cut economic growth in half during the winter. The new numbers tell us growth was considerably stronger, meaning the current recovery has a better chance to survive the Fed’s current (and possibly continuing) tightening.

Regarding that tightening, the report also gave the Fed reason to stop.

The increase in real GDP in the first quarter reflected increases in consumer spending, exports, state and local government spending, federal government spending, and nonresidential fixed investment that were partly offset by decreases in private inventory investment and residential fixed investment.

Residential fixed investment is home/house buying. If that’s lower, we can expect a reduction in the Shelter part of inflation indices. As shelter is presently the biggest inflation driver here in the spring, that’s a big deal.

Amidst all the factors that would impact Election 2024, the one least discussed is the state of the economy. The data is fairly clear, however: an incumbent presiding over disinflationary growth is always the favorite to win re-election. We saw this in 1984, 1996, 2004, and even 2012 (although the growth was slower than the previous three). By contrast, inflationary growth (1968 and 1976) tends to be more problematic for the party in power (to say nothing of recessions).

SFFA v. Harvard (and the companion SFFA v. UNC) may get all the attention today, but the BEA figures are telling us how next year’s election could go.