Dean Baker's Blog, page 548

NYT Tries to Explain Why Unusually High Levels of Consumption Are Not Even Higher

One of the bizarre statements that is routinely repeated by people who should know better is that consumers are not spending and that is one of the reasons that the recovery has been so weak. The NYT has a piece along these lines this morning. The reason why this argument is bizarre is that consumption is still unusually high, not low.

The saving rate out of disposable income has been averaging just over 5 percent for the last 3 years. This is above the near zero rate at the peak of housing b...

Perry's Growth Failure in Texas

After getting my numbers wrong last time, I thought I would take one more look. Folks love to look at per capita GDP growth as a measure of economic progress. It's certainly not everything, but it does tell you something.

So how does Texas look under Governor Perry compared to his predecessors? Using data from the Bureau of Economic Analysis (I had to chain these two series), I get that in the years 1987-2000 per capita GDP growth averaged 2.2 percent in the U.S. as a whole. In Texas it...

The Post Gets It Right on the Debt Downgrade and the Stock Market

The Post featured an Outlook piece by Liaquat Ahmat, that made the obvious point that Standard and Poor's downgrade could not plausibly be blamed for the stock market plunge. The downgrade most immediately was an assessment of the creditworthiness of U.S. government bonds. These soared in price. The most obvious basis for the plunge in stock prices was the fear of the break-up of the euro and a financial freeze-up of the type that followed the bankruptcy of Lehman in the fall of 2008. 

Republicans Say That Tax Increases are "Job Killers," the WAPO Doesn't Know What They Believe

More journalism 101 for the Washington Post. It told readers in a front page story that tax increases on the wealthy

"are considered 'job-killing' and off-limits by many Republicans."

Of course Republicans call tax increases job killers, but politicians often say things that they do not believe to be true. Many members of Congress are old enough to remember the 90s when the economy created 3 million jobs a year even though the higher Clinton era tax rates were in effect.

The Post should...

Germany Uses Work Sharing

Roger Cohen has an interesting column touting the performance of Germany compared to the United States in the years since the onset of the crisis. He concludes by suggesting that Germany can save the United States with its ideas as to how to manage an economy and society.

While Cohen mentions several important differences between the United States and Germany, remarkably he did not mention Germany's work sharing system. Even though growth in Germany and the United States has been comparable s...

Did Rick Perry Sink the Texas Economy? (Corrected Version)

Sorry, folks I made a very bad mistake on this one. (Lesson: always double-check your commands in an Excel spreadsheet.) It turns out that Texas maintained and actually increased the gap between its rate of job growth and the rest of the country during the Perry years.

Over the years from 1987 to 2001, annual job growth in Texas averaged 2.8 percent. This is 0.8 percentage points higher than the growth rate for the economy as a whole. In the ten years since Governor Perry took office job...

Did Rick Perry Sink the Texas Economy?

That's what reporters should be asking now that he has entered the race for the Republican presidential nomination. Texas had been growing more rapidly than the overall economy for decades. There were three main factors. First, like other southern states it is a destination for retirees who want to escape the cold winters in the Northeast and Midwest. Second, as a border state it is the first destination for millions of immigrants. Third, it is a major oil and gas producer. The rising price o...

Why Does the NYT Think It's So Cool To Beat Up on Seniors?

The NYT decided to have a special dialogue around a letter to the editor that called on President Obama to take "decisive action" on the economy. Remarkably, only one item on the list of decisive actions, investing in infrastructure, would have any positive impact on jobs and even this would be limited. While investing in infrastructure is a very good idea, there are not very many people who can be usefully employed on infrastructure projects in the next two years.

It takes time to plan a...

Ratings Agency Miss the Boat on Debt Defaults

The WSJ has a nice piece that looks at the track record of the rating agencies in predicting defaults on government debt. It ain't pretty.

Morning Edition Tells Listeners That Large Budget Deficits Are Good

The folks at Morning Edition may not know that this is what they said, but in fact, this is exactly what a Planet Money segment on the dollar's status as a reserve currency implied. The segment told listeners that it was a good thing that foreigners demanded large amounts of dollars to use and hold as a reserve currency.

If foreigners increase their holdings of dollars then this means that the United States has a trade deficit. This is a logical implication of foreigners efforts to acquire...