Dean Baker's Blog, page 293

Most People Are Not Doing Well in Today's Economy

That's not exactly news, but Neil Irwin does a nice job summarizing the data in the Fed's new Survey of Consumer Finance. The item that many may find surprising is that median wealth was lower in 2013 than it was in 2010 is spite of the boom in the stock market over this period. As Irwin explains, this is due to the fact that most middle income families own little or no stock, even indirectly through mutual funds in retirement accounts.

For people near the middle of the income distribution th...

Is Microsoft Leading the European Backlash Against U.S. Technological Dominance?

The NYT tolds readers that Google is the victim of a European backlash against U.S. technological dominance. In addition to anti-trust and privacy issues being raised with regard to Google, the piece also notes that Apple and Amazon are being investigated for their tax practices, taxi drivers have protested against Uber, and Facebook is being investigated for anti-trust violations. 

It's not clear that any of this amounts to an anti-American backlash. Apple and Amazon constantly face tax...

That Fracking Fueled Boom In Manufacturing in Youngstown Isn't Showing Up in the Data

The proponents of fracking have made many big claims about its economic benefits. In addition to lower cost electricity, we are also supposed to get energy independence and a boom in jobs. The NYT picked up this theme with an article that touted an "energy boom" that is lifting the heartland. The piece claims that fracking related jobs have revitalized Ohio's economy with Youngstown being at the center of the action.

The piece tells readers:

"Here in Ohio, in an arc stretching south from Youn...

The Money Wall Street is Making Off Rhode Island's Pension Funds Is Also an Issue

The NYT gave readers only part of the story in an article on the Democratic primary race for governor of Rhode Island. It notes that state Treasurer Gina M. Raimondo is currently the frontrunner.

It then told readers in reference to Raimondo:

"The 'tough choice' was her overhaul of the state’s pension system in 2011. She marshaled the state’s Democratic political establishment to increase the retirement age, cut benefits and suspend annual cost-of-living adjustments for state employees until...

Would History Have Judged Us Harshly If We Hadn't Invaded Iraq in 2003?

Robert Samuelson apparently believes it would have based on his column today calling for more military spending. There are a few points worth noting about this piece.

First Samuelson compares current spending at 3.4 percent to the post-World War II average of 5.5 percent of GDP. For most of the post-war period we were engaged in a military build-up to counter a rival super-power (the Soviet Union). The average also includes long periods of actual war (Korea, Vietnam, Iraq I and II, and Afghan...

Does the Average Hiker Spend $4,000 a Year on Equipment and Hiking?

I'm a big fan of nature and hiking, but that number doesn't sound quite right to me. The Washington Post had an article on the recreation business in which it told readers that the country spends $646 billion a year on outdoor recreation and related spending. This figures comes to a bit more than $2,000 per person. If we assume that half of the public doesn't really do anything that fits the bill, then this means the other half spend $4,000 per person per year on outdoor recreation. That come...

Economists Who Understand Economics Didn't See the August Jobs Report as an Outlier

The Washington Post article on the August job report, which showed the economy adding 142,000 jobs in August, told readers:

"Economists, however, were quick to caution that the weak jobs number is an outlier at a time of several other stronger measures of economic activity, including auto sales — which soared in August — and exports. Markets were little-changed on the news and ended the day in positive territory.

'I don’t believe the numbers,' said Tim Hopper, chief economist at TIAA-CREF. 'N...

The Pent-Up Wage Growth Story: Why Does Janet Yellen Say These Things?

Federal Reserve Board Chair Janet Yellen is a serious scholar of economics. That means that she wants to hear a range of arguments and consider them carefully. Unfortunately we don't live in a political world where such concern with the truth is the norm. 

For this reason it is unfortunate that Yellen speculated in her Jackson Hole speech last month that one reason for weak wage growth could be pent-up real wage declines. The argument is that if we think that firms would have lowered rea...

The Mythical Downward Spiral of Deflation

A useful NYT article on the latest moves by the European Central Bank's to try to prop up the euro zone economy included a comment near the end:

"Thursday’s moves signaled that at least one European institution is doing all it can to avert the threat of deflation — the pernicious downward spiral of prices that often leads to high unemployment."

Actually there is no basis for the fears of this sort of downward spiral. As the piece correctly points out, the euro zone economy is already sufferin...

Is Any High-Speed Rail Project "Ambitious?"

That's the question millions are asking after seeing the NYT article on the debate between California governor Jerry Brown and Neel T. Kaskari. The piece told readers:

"Again and again, Mr. Kashkari criticized the ambitious high-speed rail project from San Francisco to Los Angeles that Mr. Brown has pushed even as it has lost popularity with voters and some lawmakers, and even as Republicans in Washington have said they would refuse to fund it."

Other than giving us the NYT's assessment of th...