Dean Baker's Blog, page 248

Media Overlook Weak Manufacturing Numbers, Consistent with Rising Trade Deficit

For some reason major news outlets like the NYT and WaPo chose not to report on the Federal Reserve Board's release of data on industrial output for April. This release showed that manufacturing output was flat in April leaving output roughly half a percentage point below the November level. Meanwhile capacity utilization, which is often a forerunner of investment in new plant and equipment, dropped to 77.2 percent, 0.9 percentage points below its November level.

The weakness is manufacturing...

Don't Be Sure that Powerful People Want the Economy to Return to Normal

Tyler Cowen warns readers in his Upshot piece that we may be entering a new era in which growth is weak and the bulk of the workforce, including those with college degrees, see stagnant or declining wages. The warning is well taken, but what's missing is a serious discussion of the policies that are driving this outcome.

Cowen begins his story by pointing out that universities are replacing tenured faculty with low-paid adjuncts. He points out that major manufacturers are doing something simi...

The Economic Analogy to the War on Iraq Is the Housing Bubble, Not Paul Ryan

I'm afraid that I have to take some issue with Paul Krugman's claim that the economic equivalent of accepting nonsense about WMDs to support the war in Iraq was taking seriously the deficit hawks concerns about high interest rates and soaring inflation. While Krugman is right in calling many of these people frauds and cranks, this distracts attention from the real Iraq moment in economics: ignoring the housing bubble.

The accepted view in elite circles is that the crash in 2007-2008 was some...

Economists Who Believe the Fed's Holdings of $3 Trillion in Assets Affects Interest Rates Must Believe China's Holdings of $4 Trillion in Reserves Affects Exchange Rates

The Washington Post told readers that China's government is no longer acting to keep the value of the dollar up against its currency:

"Economists say that over the past several years, China’s currency has risen to a fair value, no longer providing Chinese exporters with a leg up on U.S. businesses."

After citing several economists who support the claim that the currency is at or near a market value, it then reports that it's trade surplus is within a normal range.

"Nick Lardy, a Peterson econ...

Question for Fareed Zakaria: Can We Stop the Trade Deal Hype Machine?

That's the inevitable question people would ask after reading his column headlined, "you can't stop the trade machine." The piece conflates trade, which obviously is not going to be stopped, with the Trans-Pacific Partnership (TPP). There is of course no direct connection, but if you're trying to promote the TPP, why not?

Whether or not the TPP passes, trade between the United States and the countries in the region will continue to grow. It's not even clear that it will grow faster with the t...

Mind Reading on TPP at the New York Times

Do newspapers like the NYT test applicants for reporting jobs on their ability to read minds? It seems they must, since so many of them seem to have this skill. Today's article on the senate's approval of a motion to debate fast-track authority at several points told readers what various actors think or believe.

My favorite assessment of inner thoughts was in reference to demands that the Trans-Pacific Partnership (TPP) include currency rules:

"But the White House fears that making the accele...

The Moral of the Chicago Pension Situation: Stock Bubbles Are Not Cool

Alan Sloan and Cezary Podkul have a piece in ProPublica that tries to explain the origins of the serious pension shortfalls in Chicago, Illinois, and several other state and local governments. The basic story is that governments went many years without making required contributions, which eventually leads to a serious shortfall.

However there is another part of this story which is worth adding. In the late 1990s, most pensions were viewed as very well funded. This was due to the extraordinary...

Washington Post Calls Senators Names If They Oppose TPP

Everyone knows that the Washington Post supports the Trans-Pacific Partnership (TPP), but does it really have to resort to name calling in its news pages to refer to people who disagree with its position? That's what readers of its front page piece on the Senate vote to block the discussion of a bill authorizing a fast-track are wondering.

The piece referred to Senator Sherrod Brown and other staunch opponents of TPP in its current form as "anti-trade hard-liners." Of course Senator Brown and...

David Brooks Cheap Caricature of Progressive Positions: The Left Must be Winning

David Brooks used the victory of the Conservative in the United Kingdom to celebrate the "center-right moment in his column this morning. To make his case he largely creates a caricature of the left to argue for the greater wisdom of the center-right. He tells readers:

"Over the past few years, left-of-center economic policy has moved from opportunity progressivism to redistributionist progressivism. Opportunity progressivism is associated with Bill Clinton and Tony Blair in the 1990s and May...

Did Nike Say 10,000 Jobs If TPP Passes? Why Not 20,000?

In keeping with the Washington elite's practice that it is fine to say any nutty thing in the world to push a trade, Nike promised to create 10,000 jobs in the United States if the Trans-Pacific Partnership (TPP) passes. As Post reporter Lydia DePillis notes, this is a dubious promise.

Her piece notes that Nike relies almost exclusively on foreign manufacturers for its products. Furthermore, it continues to go in the direction of more outsourcing as one of its suppliers just announced that it...