The Fed Provides “Forward Guidance” on the Taper and May Be, Once Again, Too Optimistic
Federal Reserve chairman Ben Bernanke did not say anything today about taking away the famous punch bowl. He didn’t even say that he and his Fed colleagues, who’ve been pouring $85 billion per month of punch into that much expanded bowl, were going to start to slow down the juice flow. He said that when [...]
OTE Live!: Talking Reset with CAP’s Michael Linden
As I noted in this post, I thought CAP’s Michael Linden made some compelling arguments about the facts of our current fiscal case and what, in a reasonable world, such facts would imply. He was kind enough to sit down with me and run through the key points. See his full piece here.
CBO’s Positive Immigration Score: A Tiny Bit of the Econ Behind It
Much more to be said about this topic, but I’m already getting some questions as to the economic assumptions behind the CBOs score of the immigration bill. (Getting ready to go on the Diane Rehm radio show to talk sequestration’s impact). How, for example, do you explain the budget agency’s finding that in the first [...]
Text and Subtext Over at the NYT’s Economix Blog
Check it out: http://economix.blogs.nytimes.com/2013/06/17/the-current-u-s-economy-text-and-subtext/
Moving Wealth Effects
The wealth effect is what economists call the changes to income and spending that occur when asset values go up or down. In this regard, a key factor behind both the recession and recovery was the sharp decline and now the increase in home values. However, in a dynamic I’ve written about before, these values [...]
Reminder of an Important Graph
I gave a presentation the other day and re-used the figure below from this important speech by Fed vice-chair Janet Yellen back in February, showing the current and historical impact on real GDP of fiscal stimulus or drag in recoveries. I reprint it here because a) I think it’s so important, b) it’s a very intuitive [...]
Weekend Papers, Part IV: Policy Matters…A Lot
[Uh-oh—the sun is out and I really have no excuse for not digging up weeds and pruning bushes. So let me be brief here.] I found this piece on different rates of job growth in different countries to be an interesting survey but it somehow skirted a central point, perhaps because it’s so obvious that it doesn’t [...]
The Facts of the Case and Why We’re Not Following Them
Michael Linden of the Center for American Progress has an excellent piece out this AM which simply collects a bunch of facts about trends in fiscal and economic variables that have moved in ways that should inform the DC debate. But that debate is impenetrable to such changes for the simple reason that the ideologues [...]
A Word About Skittish Markets
Prepping for co-host slot on CNBCs Squawk Box tomorrow, and scratching the old bean a bit re stock market volatility of late. Along with the general nervousness about earnings in a climate of some uncertainty re growth (Asia, Europe, even here), there’s this extra layer of anxiety around the Fed and interest rates. MarketWatch re today’s [...]
Four Trends in the Recovery, Two of Which You Don’t See Enough
Last week brought numerous reports on how the US economy is faring, with a general flavor of optimism is most of the reporting. Here are some of the key points, of all which are grounded in the data: –home prices/sales/starts, the stock market, consumer confidence are all trending up, supporting the recovery; –GDP and jobs [...]
Don’t Forget the Fed!
There’s a spate of articles out today on the improving housing market, with reference to its positive impact on the overall economy. The latest sign [of the housing recovery] emerged Tuesday as the Standard & Poor’s Case-Shiller home price index posted the biggest gains in seven years. Housing prices rose in every one of the [...]
Jason Furman to Chair the CEA?
Well, well—I see from the Twitterverse that Council of Economic Adviser Chairman Alan Krueger is going back to Princeton, to be replaced Jason Furman. That’s a great choice—Jason will make an excellent CEA chair. Even though economic policy isn’t going anywhere fast these days given Congressional gridlock, the CEA chair is an important post. S/he [...]
The 4% Inflation Target: Two Other Points
I’m a little late to this 4%-inflation-target party set off by the economist Lawrence Ball (whose work shows up here at OTE more than random chance would predict) and picked up by Paul K. I have a few things to add to the discussion, but first, a very brief recap of this simple, sensible argument. Ball [...]
Japan’s Latest Challenge: Rising Bond Yields
Some facts about the impact of Japan’s aggressive stimulus program to inject $1.4 trillion into the economy over the next two years: –Real GDP up: 3.5% in Q1, beating expectations (which hasn’t happened much there for a long while…) –Equities up: the Nikkei is up 88% from its 2012 low; bank stocks have about doubled; [...]
Low Demand, Low Inflation
Running off to an EPI event to share my take on Bob Kuttner’s great new book, Debtor’s Prison (I’ll post comments later), but first, check out the tanking rate of inflation, as per the BLS this AM. The index has actually declined over the past two months, and prices are up only 1.1% over the [...]
Full Employment Series, #3: More on the Automation/Unemployment Nexis
Check out this Wonkbook interview with Kevin Drum on the question of whether there’s been an acceleration of labor saving technology in the workplace. I think “maybe.” Drum thinks “definitely.” WaPo: The obvious economic story is that AI reduces the need for human labor, so the demand for it falls and wages fall in turn. [...]
Tax Reform: As Usual, We’re Going About it All Wrong
I really don’t like to be cynical—therein lies the way to dark and gnarled soul—so I apologize in advance for this cynical statement (but keep reading…hope is on the way): whatever DC is debating right now, you can rest assured that it’s mostly BS, and I don’t mean Bowles-Simpson. To state the glaringly obvious, lobbyists [...]
More on the Cost of Moderate Payroll Growth
In my last post I told you how a) payroll growth is just moderate, not fast, and b) that means the unemployment rate comes down a lot slower than many of us would like. I noted that if we look at the relationship between the annual change in payrolls and that of unemployment, and plug [...]
Jobs Report, Good News, Less Good News, and a Warning
Now that I’ve had a chance to calm down—these early morning releases get me all atwitter—here are three observations from this morning’s jobs report: Good news: First, April’s payroll number along with the upward revisions of the prior two months should dispel, at least for now, the idea that there’s some kind of spring swoon [...]
The Trouble with Low Inflation
The Fed announced today that they’ll continue to be the only ones in town trying to do something about the stubbornly high unemployment rate: The Federal Reserve said Wednesday that its stimulus campaign would press forward at the same pace it has maintained since December, putting to rest for now any suggestion that it was [...]
The Costs and Benefits of QE
I’m here at the Milken Institute’s Global Conference, where tomorrow (Tues) I’ll be joining a panel on tax reform (I’ll be sure to post it—they do an excellent job of recording the sessions). I stopped by a session today on the Federal Reserve’s quantitative easing (QE: large-scale asset purchases—LSAPs—by the Fed in order to bring down [...]
R&R Shoot Back…with a Popgun
There’s no question that Reinhart and Rogoff have been excessively pilloried for the mistakes in their influential paper on how high debt/GDP ratios allegedly slow growth. Very few economists get the “honor” of the Colbert treatment (may I never, ever be so honored…). It’s fair to say that they and their benighted paper have become [...]
GDP Up 2.5%, But Underlying Weakness Evident
As expected, the economy grew more quickly at the beginning of this year than at the end of 2012, according to this morning’s GDP release. Real GDP was up at a yearly rate of 2.5% over the first quarter, compared to a mere 0.4% in the prior three months. But only slightly beneath the surface, [...]
The Unbearable Brilliance of Colbert: Reinhart/Rogoff Takedown
OMG–this is an absolute master at the top of his game, explaining the Reinhart/Rogoff mistake, and in the next clip, interviewing the very cool young grad student who discovered it. As someone who spends his life trying to explain this stuff, I stand in slack-jawed awe at Colbert’s mastery of doing so in ways that [...]
Jared Bernstein’s areas of expertise include federal and state economic and fiscal policies, income inequality and mobility, trends in employment and earnings, international comparisons, and the analysis of financial and housing markets.
