Business news stories and op-ed columns are filled with comments about the economy picking up steam. The case is less obvious to those of us who look at the data. February’s reported job growth of 236,000 wasn’t bad, but it was not quite as good as the 271,000 job gain reported last February or the 311,000 new jobs reported for January of 2012. It pays to step back and look at the big picture. Most forecasts show growth under 2.0 percent in 2012. We have little reason at this point to assume that these forecasts are overly pessimistic.
Business news stories and op-ed columns are filled with comments about the economy picking up steam. The case is less obvious to those of us who look at the data. February’s reported job growth of 236,000 wasn’t bad, but it was not quite as good as the 271,000 job gain reported last February or the 311,000 new jobs reported for January of 2012. It pays to step back and look at the big picture. Most forecasts show growth under 2.0 percent in 2012. We have little reason at this point to assume that these forecasts are overly pessimistic.
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That could have been the title of a Washington Post editorial that criticizes the budget produced by Senate Democrats because it doesn’t address the possibility that we will have a rising debt to GDP ratio in 2023. After all, millions of lives are being ruined by the high unemployment that resulted from the ineptitude of the people that the Post views as experts on the economy. The Post is completely unconcerned about this crisis. Instead it is very upset that Senate Democrats are not worried about projections for 2023 and beyond of a rising debt to GDP ratio.
It is worth remembering that back in 2000 there was a major debate in Washington over the date at which the federal government would pay off the national debt. The Washington Post was a major actor in this debate.
Btw, the Post has this classic included in its list of ways to deal with Social Security:
“a more realistic inflation adjustment.”
Of course the Washington Post does not have a clue as to whether its preferred price index better reflects the rate of inflation seen by Social Security beneficiaries. All it knows is that it will show a lower rate of inflation and therefore cut benefits. You’ve gotta love these folks.
That could have been the title of a Washington Post editorial that criticizes the budget produced by Senate Democrats because it doesn’t address the possibility that we will have a rising debt to GDP ratio in 2023. After all, millions of lives are being ruined by the high unemployment that resulted from the ineptitude of the people that the Post views as experts on the economy. The Post is completely unconcerned about this crisis. Instead it is very upset that Senate Democrats are not worried about projections for 2023 and beyond of a rising debt to GDP ratio.
It is worth remembering that back in 2000 there was a major debate in Washington over the date at which the federal government would pay off the national debt. The Washington Post was a major actor in this debate.
Btw, the Post has this classic included in its list of ways to deal with Social Security:
“a more realistic inflation adjustment.”
Of course the Washington Post does not have a clue as to whether its preferred price index better reflects the rate of inflation seen by Social Security beneficiaries. All it knows is that it will show a lower rate of inflation and therefore cut benefits. You’ve gotta love these folks.
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The NYT had an interesting piece on new research from the Urban Institute showing that young people are faring very poorly in the economy. In presenting the list of problems facing young workers it included the collapse of the housing bubble.
In fact this was great news for young people in terms of their ability to buy homes. (The impact on the economy was of course devastating.) Since the overwhelming majority of young workers were not homeowners prior to the collapse of the bubble, the drop in prices means that they can buy a home for close to 30 percent less than what they would have paid 6 or 7 years ago. This is effectively a transfer of tens of thousands of dollars from older generations to the young. This is very good news for them.
The NYT had an interesting piece on new research from the Urban Institute showing that young people are faring very poorly in the economy. In presenting the list of problems facing young workers it included the collapse of the housing bubble.
In fact this was great news for young people in terms of their ability to buy homes. (The impact on the economy was of course devastating.) Since the overwhelming majority of young workers were not homeowners prior to the collapse of the bubble, the drop in prices means that they can buy a home for close to 30 percent less than what they would have paid 6 or 7 years ago. This is effectively a transfer of tens of thousands of dollars from older generations to the young. This is very good news for them.
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Paul Howard celebrates the lower than projected cost of the Medicare prescription drug program and attributes it to the role of private insurers. In fact, the main reason that Part D has cost less than projected is that the rate of increase in drug prices overall has been far less than projected. This in turn is attributable to a sharp fall in the number of breakthrough drugs.
If Howard wants to blame the collapse of innovation on the use of private insurers to deliver the Medicare drug benefit then he may have a case that the private insurers were central to controlling costs. Otherwise, he’s killing electrons for nothing.
Thanks to Robert Salzberg for calling this one to my attention.
Paul Howard celebrates the lower than projected cost of the Medicare prescription drug program and attributes it to the role of private insurers. In fact, the main reason that Part D has cost less than projected is that the rate of increase in drug prices overall has been far less than projected. This in turn is attributable to a sharp fall in the number of breakthrough drugs.
If Howard wants to blame the collapse of innovation on the use of private insurers to deliver the Medicare drug benefit then he may have a case that the private insurers were central to controlling costs. Otherwise, he’s killing electrons for nothing.
Thanks to Robert Salzberg for calling this one to my attention.
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The Washington Post had an article that touted Ireland’s success with its austerity program, which has allowed it to sell long-term bonds in financial markets at reasonable interest rates. The article questions whether Ireland can be an example for the rest of Europe with the first sentence posing the question:
“In Europe’s grand battle over growth vs. austerity, has Ireland proved that austerity works?”
While it is undoubtedly good news that the Irish government can re-enter credit markets, it is worth noting that the unemployment rate in Ireland is still 14.7 percent, down very slightly from its recession peak. This is still 10 full percentage points above the pre-recession level. This is supposed to prove that austerity works?
The Washington Post had an article that touted Ireland’s success with its austerity program, which has allowed it to sell long-term bonds in financial markets at reasonable interest rates. The article questions whether Ireland can be an example for the rest of Europe with the first sentence posing the question:
“In Europe’s grand battle over growth vs. austerity, has Ireland proved that austerity works?”
While it is undoubtedly good news that the Irish government can re-enter credit markets, it is worth noting that the unemployment rate in Ireland is still 14.7 percent, down very slightly from its recession peak. This is still 10 full percentage points above the pre-recession level. This is supposed to prove that austerity works?
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Yes, boys and girls and Arnold Schwarzenegger fans everywhere, a strong dollar does not mean a healthy economy, contrary to what Neil Irwin told us today in the Washington Post. In fact, fans of arithmetic and believers in accounting identities know that an over-valued dollar is at the root of our current economic problems. While believers in the Confidence Fairy think that investment will reach new highs as a share of GDP, and/or consumers will spend even when they have little wealth, those of us who follow data know that the only way to make up the demand shortfall created by trade deficit is with a large budget deficit. However, the Serious People say that we can’t have a large budget deficit, so that means we get high unemployment.
The only serious way to get the trade deficit down is get the dollar down. That will make our exports cheaper to people living in other countries and make imports more expensive for people in the United States. That means more exports and fewer imports, and therefore a smaller trade deficit. (For those folks who were looking to the trade agreements, the idea that these will reduce the trade deficit is just something that the Serious People tell to children.)
Anyhow, it is easy to show there is no direct relationship between the health of the economy and the strength of the dollar. In fact, the recovery in the first half of the Clinton administration was based to a substantial extent on the idea that a lower deficit would lead to a lower valued dollar and therefore more net exports. And, this largely worked as shown below.
Then Robert Rubin took over at Treasury and pushed his high dollar policy giving us record trade deficits along with a stock and housing bubble. You know the rest of the story.
Yes, boys and girls and Arnold Schwarzenegger fans everywhere, a strong dollar does not mean a healthy economy, contrary to what Neil Irwin told us today in the Washington Post. In fact, fans of arithmetic and believers in accounting identities know that an over-valued dollar is at the root of our current economic problems. While believers in the Confidence Fairy think that investment will reach new highs as a share of GDP, and/or consumers will spend even when they have little wealth, those of us who follow data know that the only way to make up the demand shortfall created by trade deficit is with a large budget deficit. However, the Serious People say that we can’t have a large budget deficit, so that means we get high unemployment.
The only serious way to get the trade deficit down is get the dollar down. That will make our exports cheaper to people living in other countries and make imports more expensive for people in the United States. That means more exports and fewer imports, and therefore a smaller trade deficit. (For those folks who were looking to the trade agreements, the idea that these will reduce the trade deficit is just something that the Serious People tell to children.)
Anyhow, it is easy to show there is no direct relationship between the health of the economy and the strength of the dollar. In fact, the recovery in the first half of the Clinton administration was based to a substantial extent on the idea that a lower deficit would lead to a lower valued dollar and therefore more net exports. And, this largely worked as shown below.
Then Robert Rubin took over at Treasury and pushed his high dollar policy giving us record trade deficits along with a stock and housing bubble. You know the rest of the story.
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