The Angry Bear

June 2019 personal income and spending The wage-earner/consumer remains in decent shape, and a lack of inflation (continued low gas prices!) continues to be able to hide a multitude of sins. That’s the message from this morning’s June report for personal income and spending. Nominally, income rose +0.4%, while spending rose +0.3%. Since inflation as measured by the PCE price index only increased 0.1%, that means both real income and real spending rose...

Climate Equity: What Is It? While action against climate change languishes, the rhetoric keeps getting more intense.  For several years now it hasn’t been enough to demand climate policy; we need climate justice.  We will not only eliminate fossil fuels in a decade or three, we will solve the problems of poverty and discrimination, and all in a single political package.  It sounds good, but what does it mean? You might look for an answer in new...

A Serious Problem For Dems It is that progressive Dems some time ago glommed onto the idea that protectionism is “progressive.”  It has been going on so long and has become so ingrained that Bernie Sanders has been running around bragging about how he is more protectionist than Trump.  Elizabeth Warren has been a bit more subtle about it, calling to renegotiate all existing US trade agreements to make them super strong on labor and environmental...

Barro’s Misstated Case for Federal Reserve Independence I guess I should applaud Robert Barro for standing up for the independence of the Federal Reserve and hoping it can resist political pressure to lower interest rates too much. But there are two aspects of his case that strike me as silly to say the least starting with his opening sentence: In the early 1980s, the chairman of the US Federal Reserve, Paul Volcker, was able to choke off runaway...

Trump’s trade wars can still lead to a producer led recession I wrote a piece last week for Seeking Alpha explaining that, while the consumer side of the economy is doing reasonably well, a recession could still come in via the producer side. A Producer-Led Recession Remains Viable As usual, clicking over and reading should be educational for you, and puts a penny or two in my pocket. Thus, the idea that no recession can happen absent a 20% YoY slide in...

I really enjoy Rick Wilson’s thoughts on the Republican Party, his former party until 3 years ago. I don’t know which part of his latest Washington Post Op-ed I like most but here goes As the saying goes, you had one job, Republicans. Now? Your job really isn’t representing your districts. It’s backfilling and wallpapering over your president’s latest excesses, outrages, racial arson and verbal Twitter dysentery. Every day is a new crisis, and every day...

by Joseph Joyce   (Joseph P. Joyce is a Professor of Economics at Wellesley College, where he holds the M. Margaret Ball Chair of International Relations. He served as the first Faculty Director of the Madeleine Korbel Albright Institute for Global Affairs.) The Change in the U.S. Direct Investment Position The U.S. has long held an external balance sheet that is comprised of foreign equity assets, mainly in the form of direct investment (DI), and...

Monetary policy is roughly the only issue on which I regularly disagree with Matt Yglesias. So it is boring to note that I agree with almost everything he wrote in his Vox article on the recently announced 0.25% Federal Funds target rate cut. His main assertions are: – it is a very reasonable move even though Trump advocated it and it will help Trump’s 2020 campaign. – The previous stance of normalizing interest rates because normal interest rates are...

Origin of the 2 Percent Inflation Target I have made most of these comments as comments on Econbrowser and Angry Bear (an excellent post by Robert Waldman), as well as on Econbrowser in response to a serious post by Jeffrey Frankel. I note that pgl has added useful comments on this matter in the other blogs. So it was 1990 that the New Zealand central bank became the first in the world to impose an inflation target of 0-0.002.  It worked out pretty...