Dean Baker's Blog, page 459

Robert Samuelson's Generation Squeezed is Victimized by the One Percent, Not their Parents

Ding, ding, ding! Robert Samuelson has just written the 1 millionth piece to appear in the Washington Post claiming that an aging population will undermine our children's prosperity. He gets awarded a miniature golden baseball bat to symbolize his and the newspapers decades of bashing the elderly and trying to take away their Social Security and Medicare.

Arithmetic fans know that if our children and grandchildren live worse than we do it will be because the folks at the top grabbed away all...

The Fed and the Job Numbers: The Fed Looks at the Establishment Survey

Catherine Rampell had an interesting discussion of the Fed's likely course of action at its September meeting based on the July numbers. While the piece acknowledged the July jobs number from the establishment survey was somewhat better than expected, it concludes that the Fed is likely to move based on the weakness of the data from the household survey.

I'd have to disagree with that assessment. The household survey is far more erratic than the establishment survey. For example, it shows a j...

NYT Tells Readers that President Obama's Economists Don't Believe in Economics When it Comes to Trade

The NYT ran a lengthy story on the possibilities of manufacturing electronics in the United States. Near the end of the piece it discusses divisions in the Obama administration on measures to try to bring more manufacturing back to the United States.

On the one hand, it notes the view of Ron Bloom, who had been the president's senior advisor on manufacturing policy, that the U.S. should take steps to push down the value of the dollar in order to make manufacturing in the United States more co...

The Post Still Has Not Heard About the Housing Bubble

A piece that noted the slow pace of the recovery and compared it to other recessions never once mentioned the housing bubble. The fact that this recession was brought on by the collapse of a housing bubble, as opposed to the Fed raising interest rates to slow the economy, makes it qualitatively different from prior post-war recessions with the exception of the 2001 downturn that was brought on by the collapse of the stock bubble. It would have been worth making this point instead of turning t...

Fun With Bill Keller and Jim Kessler about Baby Boomers Abusing Their Kids

Yes, on this great day when we hear the unemployment rate is 8.3 percent, NYT columnist Bill Keller is still pressing on the need to curb Social Security and Medicare spending and calling on his fellow baby boomers to rise to the occasion. He has even brought in Jim Kessler, the senior vice-president for policy at Third Way, to help him make the case.

I'm sure that Keller and Kessler would consider my mention of the 8.3 percent unemployment rate to be rude, after all what does that have to do...

Unemployment Insurance Claims Do Provide Information

It used to be common for stories in the business press to make a big deal out of the weekly unemployment insurance claims numbers. And, it used to be common for me to beat up on them for exaggerating the importance of a weekly number that is highly erratic and subject to large revisions.

On the other hand, these numbers do provide information, especially when we see a trend over a number of weeks. That has been the case in the last five weeks as the average weekly claims number reached a reco...

NPR Flunks Causal Relations 101 on S&P Downgrade and the U.S. Stock Market

NPR told listeners that Standard & Poors downgrading of U.S. government debt caused the stock market plunge last summer:

"A year has passed since the debt ceiling debacle in Washington, D.C. The showdown cost the U.S. its AAA credit rating and sent the stock market and President Obama's approval ratings plunging."

Is that so? Let's try a little logic 101 here. S&P downgraded U.S. government debt, meaning in principle that there was a greater risk that there would be a default on this debt. Le...

Bowles-Simpson Would Raise Taxes on Dividends and Capital Gains, Romney Would Not

When it comes to tax plans, it's all just so confusing. Or at least that's what the NYT seems to be telling us.

The NYT ran an article that reports on a study by the Tax Policy Center that showed Governor Romney's tax plan would lead to a large reduction in taxes for the wealthy, while raising taxes for everyone else. It then cites Romney's claim that his tax plan is similar to the one developed by Morgan Stanley director Erskine Bowles and former Senator Alan Simpson, the co-chairs of Presid...

Seasonal Fun With Job Numbers

Binyamin Appelbaum has an interesting piece reminding readers of the importance of the seasonal adjustments in the job numbers that are released each month. It points out that July has the second largest positive seasonal adjustment, after January, of any month. (I don't quite understand the chart, which seems to show positive seasonal adjustments for every month.) For example, last year the seasonal adjustment added 1.3 million jobs to the raw data, turning the seasonally adjusted number int...

Manufacturing Did NOT Shrink for the Second Consecutive Month In July

The first sentence a Washington Post article told readers:

"American manufacturing unexpectedly contracted in July for a second month, reflecting a drop in orders that threatens to undercut a mainstay of the recovery."

As the article then explains, this statement is referring to an index from the Institute for Supply Management which showed a reading of 49.8 percent in July. A reading of less than 50 is associated with contraction in the sector.

However this is a broad index that assesses man...