Economists and Economics Reporters Continue to Be Surprised by the Economy

David Leonhardt tells us that consumer demand is still surprisingly weak. This should have drawn a big "huh?"

The savings rate through most of the post-war period was around 8.0 percent. This began to fall at the end of the 80s and more rapidly in the 90s as the stock bubble generated trillions of dollars of bubble wealth. The wealth effect, which economists have known about for a century, predicts that consumers would spend 3-4 cents more for additional dollar of stock wealth. By the peak...