Dean Baker's Blog, page 192

Doesn't Anyone Pay Attention to Bad News from the Fed?

No, I'm not talking about its decision not to raise interest rates yesterday, I mean the release of May data on industrial production. The data showed a decline in manufacturing output in May of 0.4 percent. The output levels for both March and April were also revised downward. Over the last three months production has been declining at a 2.4 percent annual rate.

This indicates that the manufacturing sector continues to be a drag on the economy and is likely to mean further job losses in the...

It's Hard to Raise Interest Rates When the Economy Is Weak

There have been several pieces in the media complaining that the Fed is having a hard time raising interest rates from their current unusually low level. This is true, but the basic story here is quite simple: the economy remains very weak.

The growth rate has averaged just 2.0 percent for the last five years and may well fall below that pace in 2016. That is not an environment in which it makes sense for the Fed to be raising interest rates.

The recent news reports make it sound like the pro...

Robert Samuelson Resumes the Attack on Social Security

It undoubtedly was very disappointing for Robert Samuelson, the Washington Post, and the rest of the Very Serious People (VSP) to see President Obama's call for increasing Social Security. For the time being, their plans to attack Social Security and Medicare seem completely dead in the water. After all, President Obama had earlier been a grand bargainer, willing to put both Social Security and Medicare on the table, now he actually wants to increase benefits. And even Donald Trump, the presu...

10 Years on the Beat

That’s right, CEPR Co-Director Dean Baker has been Beating the Press for 10 years now (and that doesn’t include the commentary on economic reporting he did for 10 years before that).

This means 10 years of waking up every morning — even on weekends! — at 4:30AM, combing through The New York Times, The Wall Street Journal, The Washington Post (or as he has been known to say, Fox on 15th street) and other major new outlets. 10 years of dismantling bogus economic theory. 10 years of uncovering t...

I Am Out of Here: Vacation 2016

I'll be back on Tuesday, June 14th. Remember, until then don't believe anything you read in the newspaper.

What Does China's Demographic "Problem" Mean?

The NYT has another piece that talks about China's demographic problem due to an aging population. (In fairness, this is really a sidebar, the piece is mostly arguing that China has failed to get itself on a sustainable growth path.) I went through the arithmetic on this last week.

The basic point is simple: China has had extraordinarily rapid productivity growth over the last three and a half decades. The impact of this growth on raising wages and living standards swamps any conceivable nega...

How Bad Was the May Jobs Report?

The May jobs report was worse than most analysts (including me) had expected. We are now seeing a lot of columns asking how bad was it? My answer is pretty bad.

First, to get an obvious source of overstated weakness out of the way, we lost 35,000 jobs in the communications sector due to the Verizon strike. Those jobs will come back in the June report. If we add that number in we get 73,000. That’s better, but hardly a great report.

Furthermore, this bad report wasn’t hugely out of the line w...

The Mortgage Interest Tax Deduction

Neil Irwin has an interesting piece in the Upshot section of the NYT noting factors that people may not consider in deciding between renting and buying their home. One item I would add to the list is the tendency to overstate the value of the mortgage interest tax deduction. 

It is common for realtors to push houses on prospective buyers by telling them that their mortgage interest is tax deductible. This is true, but the value of the deduction is only equal to the difference between the...

Does Raising Drug Prices in TPP Countries Scare China?

Roger Cohen tells us it does. In a column drafted in Vietnam, he tells us that the Trans-Pacific Partnership (TPP) is all about shoring up East Asian countries in their resistance to China. 

That's an interesting thought. After all, the hardest battles at the end were about getting longer and stronger patent-related protections for the pharmaceutical industry. It's not obvious how that helps us gain solidarity among the people of the region against China.

There is much else in the deal t...

Reporters Raise $6 Million for Veterans: Pressure Politician to Make Good on Pledges

That is a headline I would love to see. Of course, Donald Trump would threaten to have them investigated.