Harvard economics professor Martin Feldstein, who made himself famous by predicting in 1993 that Clinton tax increases would not raise any revenue, strikes out big time in his proposal for the housing market in the New York Times. He tells readers: House prices are continuing to fall because of the wave of foreclosures; That consumers […]
Author Archive | Dean Baker
Health Care Employment Drives Weak Job Growth
The Labor Department reported that the economy added 103,000 jobs in September. This increase, together with upward revisions to the prior two months’ data brought average job growth over the last three months to 99,000 per month, almost exactly the number needed to keep pace with the growth of the labor force. Consistent with this […]
House Prices Have Another Strong Increase in July
The Case-Shiller 20-City index rose 0.9 percent in July after rising by 1.1 percent in June. It has now increased at a 13.1 percent annual rate over the last three months; although it is still down by 4.1 percent over the last year. Eighteen of the 20 cities had prices increases, with only Phoenix and […]
Why Do the Bankers Decide How Many People Will Be Unemployed?
The Federal Reserve Board’s Open Market Committee (FOMC) met today and decided on a modestly expansionary monetary policy. It decided to unload $400 billion worth of short-term assets over the next 9 months and replace them with longer-term government bonds. The idea is that this would place some downward pressure on long-term interest rates. The […]
Work Sharing Should Be Part of the President’s Job Program
It is encouraging that President Obama recognizes his obligation to take steps to restore the economy to full employment. The government alone has the power to lift the economy out of this downturn. Eventually, the private sector will be able to absorb the unemployed, but there are no remotely plausible projections that show private sector […]
Zero Job Growth in August, as Unemployment Rate Remains Stable
The Labor Department reported that there was no growth in jobs in August, while it revised down its job growth numbers for the prior two months by 58,000. Job growth over the last three months has now averaged 35,000, well below the 90,000 needed to keep pace with the growth of the labor force. The […]
The Canadian Oil Pipeline: Good for 2 Days’ Worth of Jobs
Robert Samuelson urged President Obama to support the building of an oil pipeline to Canada which would facilitate the import of oil from Canadian oil sands. One of his arguments is that: “TransCanada, the pipeline’s sponsor, says the project should result in 20,000 construction and manufacturing jobs. Most would be American, because 80 percent of […]
All 20 Cities in Case-Shiller Index Report Price Rises in June
The Case-Shiller 20-City index rose by 1.1 percent in June. This is the third consecutive increase following eight months of decline. All 20 cities showed increases in June, with some of the largest gains in the badly hit Midwest markets. The biggest gains in June were the 3.2 percent month-to-month increases reported for both Chicago […]
The Morality of the Other Side in the Class War
The Washington Post and Robert Samuelson did their part in publicly passing along the marching orders from the rich and powerful to Ben Bernanke and the Federal Reserve Board. The word from these folks is “No Inflation!” If that means millions more people will suffer unemployment for a few more years, that’s a price that […]
What Does S&P’s Downgrade of Japan’s Debt Mean?
The New York Times reported on S&P’s downgrade of Japanese government debt to the 4th highest level. It explained the downgrade by noting Japan’s continued weak growth, political problems, and concerns about deflation. These are factors that might concern the Japanese public when they vote for their leaders, but it is difficult to see what […]
Shorter Weeks, Longer Vacations
The United States is suffering the enduring effects of a collapsed housing bubble, not a financial crisis. This is an important distinction, because it points to the necessity of relying on shorter workweeks and longer vacations to return to full employment. The financial crisis is largely irrelevant to the economy’s current weakness. The problem is […]
Why Does the New York Times Think It’s So Cool to Beat Up on Seniors?
The New York Times decided to have a special dialogue around a letter to the editor that called on President Obama to take “decisive action” on the economy. Remarkably, only one item on the list of decisive actions, investing in infrastructure, would have any positive impact on jobs and even this would be limited. While […]
What Sent the Stock Market Tumbling? It Wasn’t the S&P Downgrade
Time to beat up on really, really bad news reporting. The stock market doesn’t tell people why it does what it does. We have commentators who bloviate on what they think caused the market to rise or fall, but they don’t really know and they could be completely wrong. That is why it was incredibly […]
Productivity, Profits, and Job Growth
An AP article on the latest productivity data from the Bureau of Labor Statistics (BLS) was a bit confused on the relationship between productivity, profits, and job growth. The article noted the 0.3 percent decline in productivity reported for the second quarter. This followed a decline of 0.6 percent in the first quarter. It suggested […]
On the S&P Downgrade
The decision by Standard & Poor’s to downgrade U.S. government debt reflects its own failings as a credit rating agency. It says nothing about the creditworthiness of the U.S. government. The Treasury Department revealed that S&P’s decision was initially based on a $2 trillion error in accounting. However, even after this enormous error was corrected, […]
