• Debt and GDP Growth: Reinhart and Rogoff, One More Time

    Our friends at the Economic Policy Institute have already done a pretty good job burying the claim from Reinhart-Rogoff that high ratios of debt to GDP will lead to lower growth, but in DC, no bad theory stays dead for long.  With that in mind, let’s throw a little more dirt on the grave. The […]

  • Has the Congressional Budget Office Joined the Push for Cutting Social Security?

    Over the last three decades the Congressional Budget Office (CBO) has built up a reputation for solid impartial analysis of economic and policy issues.  While the party controlling Congress gets to select the head of the agency, both parties have generally turned to the CBO’s respected academics who did not attempt to use the agency […]

  • Post-Tax-Credit Downward Pressure on Home Prices to Come

    The Case-Shiller 20-City index rose by 1.1 percent in May, its second consecutive increase.  Prices rose in 19 of the 20 cities, with Las Vegas being the only city with a price decline. Minneapolis had the sharpest jump in prices, with prices rising 2.8 percent in May.  This is the second consecutive monthly increase after […]

  • The Fed Can Just Hold Mortgage-Backed Securities, Reducing Interest Burdens

    The NYT portrayed the Fed as facing a serious dilemma in dealing with its portfolio of mortgage-backed securities (MBS).  It argued that it can either start selling them now and risk slowing the economy or wait until the economy has recovered more and risk losing money by selling them in a higher inflation environment. There […]

  • The Fear of Secular Stagnation

    I love the prospect of secular stagnation (raised by Bob Reich) primarily because the answers are so easy: Let’s keep our eyes on the ball.  The problem in this picture is that we are capable of producing more goods and services than we want to consume.  It’s a problem of too little money chasing too […]

  • If Business Confidence Explained Lack of Hiring, Then Hours Per Worker Would Be Increasing

    Business people always want more money.  That is part of being in business.  (Has Goldman Sachs or General Electric ever said they want lower profits?)  This means that their spokespeople can be counted on to complain about taxes, regulations, wages, or anything else that costs them money.  Sometimes what they say is not true. This […]

  • Can the European Welfare State Survive?  Can National Public Radio Survive?

    NPR wants to convince listeners that the European welfare state is on its last legs.  While it tells listeners this, nothing in the piece actually supports this case. For example, it implies that growth is grinding to a halt in Europe because of its generous welfare state, noting that Europe is expected to grow just […]

  • Competent Economists Were Not Kept Awake Worrying about “a Collapse in the Value of the Dollar and of U.S. Government Securities”

    In a discussion of trade imbalances the Washington Post told readers that: “it was that risk — of a collapse in the value of the dollar and of U.S. government securities — that kept many economists up at night.”  Actually, competent economists were not terribly worried about this nearly impossible scenario. China and other countries […]

  • US Economy: Decline in Labor Force Leads to Drop in Unemployment

    The Labor Department reported that 652,000 people left the labor force in June, causing the unemployment rate to edge down to 9.5 percent, even as the number of employed reportedly dropped by 301,000.  The establishment survey showed a gain of 100,000 jobs, excluding the 225,000 Census workers who lost their jobs in June.  The establishment […]

  • Mortgage Applications Index at Lowest Level since 1997

    The Case-Shiller 20-City index rose by 0.8 percent in April, the first increase since last September.  Prices rose in 18 of the 20 cities, with only New York and Miami reporting price declines.  The biggest increases were in Washington, DC, where prices rose by 2.4 percent, San Francisco, with a 2.2 percent increase, and Dallas, […]

  • Robert Samuelson: Economics Is Hard

    That seems to be the main point of Robert Samuelson’s column today.  It might be a bit easier with a bit more careful thought. For example, Samuelson tells readers that the debt burdens of major countries are rapidly approaching “financial and psychological limits” that prevent further fiscal stimulus.  He then cites the 92 percent debt […]

  • Fun with Money

    The deficit hawks have been working themselves into a frenzy in recent weeks over the prospect that the country will come out of the recession with a huge debt.  They have convinced much of the policy elite (admittedly, a very gullible crew) that the United States is on the edge of becoming Greece, unable to […]

  • US Economy: The Future Is Not Bright

    The unemployment rate fell to 9.7 percent in May, primarily as a result of 411,000 temporary Census jobs.  The Census hires pushed total job creation for May to 431,000; however, the addition of 20,000 non-Census jobs is down sharply from the 217,000 reported for April.  Excluding the temporary Census hires, the economy has generated 132,000 […]

  • House Price Decline Accelerates, Led by Weakness in Midwest Markets

    The Case-Shiller 20-City index showed a decline for the sixth consecutive month in March, as 13 of the 20 cities reported a drop in prices.  The drop in the seasonally unadjusted index was 0.5 percent, bringing the annual rate of decline over the last quarter to 6.8 percent.  (The unadjusted index is preferred in the […]

  • Unemployment Rises to 9.9 Percent, Driven by Jump in Labor Force Participation

    Nominal wage growth has averaged just 1.1 percent over the last quarter. The Labor Department reported that the unemployment rate rose to 9.9 percent in April as 805,000 people entered the labor force.  Even with the economy generating 290,000 new jobs according to the establishment survey, this was not sufficient to keep the unemployment rate […]

  • Sustained Downward Pressure on House Prices

    The Census Bureau reported on Monday that the vacancy rate edged up to 11.0 percent of all housing units in the first quarter of 2010, slightly above the year-round average of 10.9 percent for 2009.  The data showed a slight decline of 0.1 percentage points in the vacancy rate for ownership units compared with the […]

  • Why the Right to Rent Is Superior to HAMP and HAFA

    Testimony before the Subcommittee on Housing and Community Opportunity Hearing on “Recently Announced Revisions to the Home Affordable Modification Program (HAMP),” 14 April 2010 Thank you, Chairwoman Waters, for giving me the opportunity to present my views to the subcommittee on the success of the Homeowner Affordability Modification Program (HAMP) and prospects for the recently […]

  • State and Local Governments Have Shed 72,000 Jobs since December

    The establishment survey (CES) showed the economy adding 162,000 jobs in March, the biggest increase since March of 2007.  The household survey (CPS) showed the unemployment rate remaining steady at 9.7 percent with the employment to population ratio edging up to 58.6 percent, an increase of 0.4 percentage points from its low last November.  There […]

  • Housing Tax Credit Continues to Support Housing Market

    Mortgage applications are running below the depressed levels of 2009. The Case-Shiller index showed house prices continuing to rise at a modest pace in January, with the 20-city index rising by 0.3 percent.  Over the last quarter, the index has risen at a 3.2 percent annual rate.  The index is almost flat over the last […]

  • On the Obama Administration’s Housing Initiative

    The latest Obama Administration initiative aimed at easing the nation’s foreclosure crisis may be well-intentioned, but fails to give proper consideration to the state of the housing market.  The biggest winners are likely once again to be the banks.  In particular, holders of second mortgages are likely to see this program as a huge bonanza. […]