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Article Artículo

Economic Growth

United States

“이민 제한 큰 잘못… 트럼프 정책 100점 만점에 10점 ‘부자 감세’ 소비로 연결 안돼… TPP 탈퇴는 잘한 일”
딘 베이커 미 경제정책연구센터(CEPR) 공동 설립자 겸 소장은 미국의 대표적 진보 성향 경제학자답게 도널드 트럼프 행정부의 1년간 점수를 100점 만점에 10점으로 짜게 줬다. 감세나 규제 완화처럼 트럼프 대통령이 전면에 내세우고 있는 정책에도 비판의 목소리를 높였다.

Dean Baker / February 06, 2018

Article Artículo

Taking Issue with Paul Krugman, We're Still Not at Full Employment

I have to disagree with Paul Krugman on his assessment of the current state of the economy. While I would agree with most of his comments about the state of the stock market and housing market, and also the competence of the Trump administration, I think he is wrong in saying that we are at or near full employment.

There are a few points to be made here. First. Krugman rightly notes the aging of the population pushing down the overall labor force participation rates. However, employment-to-population rates for prime-age workers (ages 25 to 54) are still below pre-recession levels and well below 2000 levels. The falloff is pretty much across the board, applying to both men and women and both more educated and less educated workers (not all by the same amount) suggesting that a supply-side explanation is not likely. In other words, there is reason to believe that if there were more demand, more people would be working.

While the 4.1 percent unemployment rate is low by the standards of the last 45 years, it is worth noting that other major economies (e.g. Japan and Germany) now have far lower unemployment rates than almost any economist thought plausible just four or five years ago. I don't see any reason to believe that the US unemployment rate can't fall to 3.5 percent, and possibly even lower, without kicking off an inflationary spiral.

As evidence in the other direction, Krugman cites the quit rate, the percentage of workers who quit their job. He notes that this is almost back at pre-recession levels and not much below 2001 levels (the first year for which data are available). While this is true, much of the story here is a composition effect. A much smaller segment of the labor force is in sectors with low quit rates like manufacturing and the government. A larger share are in high quit rate sectors like restaurants and professional and business services. 

CEPR / February 06, 2018

Article Artículo

Affordable Care Act

It Actually Doesn't Feel at All Like 2006: Refusing to Learn the Lesson of the Housing Bubble

Heather Long had a column in the Washington Post telling us that "it feels like 2006." As someone who did his best to warn of impending disaster in 2006, I can say that it doesn't look at all like 2006. It is frustrating, but perhaps not surprising, that the economics profession and economic reporters have done their best to learn absolutely nothing about their enormous mistakes at that time. (Fortunately for them, economics is not an area where people are held accountable for the quality of their work, so this failure cost almost no one their job or even led them to miss a scheduled promotion.)

The basic story of real world 2006 was that the impending disaster was not hidden. It did not require some super-sleuth to figure out what was wrong. It required access to widely available government data and knowledge of third-grade arithmetic.

We had an unprecedented run-up in nationwide house prices. The national average had risen by more 70 percent since 1996, after adjusting for inflation. This followed a century in which house prices had just moved in step with inflation. And, this was a nationwide story. It was not just a few hot housing markets on the coasts, prices were soaring in Chicago, Minneapolis, and even Detroit.

Furthermore, this run-up was clearly not connected with the fundamentals of the market. Unlike the last five years, nothing was going on with rents. They were just rising in step with the overall rate of inflation. Furthermore, we already were seeing record vacancy rates even before the collapse of the market. In short, we had a gigantic neon sign hanging over the housing market saying "bubble."

I should also add that the bad loans fueling the bubble were hardly a secret either. The National Association of Realtors reported that more than 40 percent of first-time homebuyers put down zero or less (they borrowed to cover closing or moving costs) on their homes in 2005. And, there was widespread talk of "NINJA" loans, which stood for no income, no assets, no job.

CEPR / February 04, 2018

Article Artículo

The Stock Market Plunges, a Major Blow Against Inequality!

The stock market tumbled by 2.0 percent on Friday. Given that the top 1.0 percent hold a grossly disproportionate share of stock wealth, this means they took a big hit. Are we more equal as a society now?

Those who like to focus on wealth measures on inequality would have to say yes. And if the market continues to fall (not a prediction, but it certainly is possible that the correction will continue) then we will see a further gain on the inequality front. Suppose it falls 30 to 40 percent, bringing price-to-earnings ratios closer to historic averages. Will the country then look much different than it does today?

I'm inclined to say no, at least if the distribution of income has not changed. To my view, the major story on inequality over the last four decades has been the more than doubling of the share of income that goes to the 1.0 percent, from less than 10 percent in the 1970s to slightly more than 20 percent today. The top 0.1 percent have been the biggest gainers in this picture.

Wealth has not always followed the same pattern since so much of the wealth of the rich is tied up in stock. We had two big plunges in the stock market during this period, 2000 to 2002, when it fell by more than half, and again between 2007 and 2009. It's hard to see how the poor and middle class were doing any better at these troughs in wealth (2002 and 2009) than they were when wealth was at its peaks before the crashes.

CEPR / February 03, 2018