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from Dean Baker Over the past two decades, the economics profession has compiled an impressive track record of getting almost all the big calls wrong. In the mid-1990s, all the great minds in the field agreed that the unemployment rate could not fall much below 6 percent without triggering spiraling inflation. It turns out that the unemployment rate could fall to 4 percent as a year-round average in 2000, with no visible uptick in the inflation rate. As the stock bubble that drove the...

No houses built without a permit: Highlights Strength in single-family permits leads a mostly favorable housing starts report for February where however the headlines are mixed, at a 1.288 million annualized rate for starts and a 1.213 million rate for total permits. The results compare with Econoday expectations of 1.270 million for both. Permits for single-family homes, where building costs and sale prices are the highest, rose 3.1 percent in February to an 832,000 rate...

from Erik Reinert, Jayati Ghosh and Rainer Kattel and WEA Commentaries We have recently co-edited a book (The Handbook of Alternative Theories of Economic Development, Edward Elgar 2016, also available as an e-book on http://www.ebooks.com/95628740/handbook-of-alternative-theories-of-economic-development/reinert-erik-s-ghosh-jayati-kattel-rainer/) that seeks to bring back the richness of development economics through many different theories that have contributed over the ages to an...

from David Ruccio   One of the courses I’m offering this semester is A Tale of Two Depressions, cotaught with one of my colleagues, Ben Giamo, from American Studies. It’s a comparison of the conditions and consequences of the two major crises of capitalism during the past hundred years, the 1930s and the period after the crash of 2007-08.* It just so happens the Guardian is also right now revisiting the 1930s. Readers will find lots of interesting material, from some evocative street...

The seasonally adjusted Purchase Index increased 2 percent from one week earlier. The unadjusted Purchase Index increased 3 percent compared with the previous week and was 6 percent higher than the same week one year ago.Read more at http://www.calculatedriskblog.com/#rYAGsCBZRKvRLYa4.99 Depressed and moving sideways for over a year:Prior month revised up, but current month worse than expected, and I suspect the seasonal adjustments a nominally small increase in sales to...

from Lars Syll As I see it, a rational predictor should use a combination of theory and empirics. But theory should also be informed by data – there are lots of theories, and in general they can’t all apply to the same situation, so you need evidence to tell you which one(s) to use. So a rational predictor’s predictions should always be tied as closely as possible to empirical evidence. Discounting empirical evidence … seems inevitably to lead to the use of casual intuition (or to even...

Trumped up expectations falling off some,and the details don’t look so good: HighlightsThe small business optimism index fell 0.6 points in February to 105.3, retreating slightly from the lofty levels reached in the previous months after the post-election surge in November and the largest increase in the history of the survey in December that shot the index to the highest reading since December 2004. The small decrease was in line with expectations and the fact of the index...

from Peter Radford The Congressional Budget Office is the latest victim of the intensity of Washington politics. The CBO is the organization we rely on to “score” legislation so that Congress and the White House know roughly what impact their policies will have on the country. As you can imagine being the CBO during times such as these when alternative facts have become the primary way of explaining things is perilous. Worse: being the CBO when one party wants to cram through some...

from Asad Zaman In my paper entitled “Empirical Evidence Against Neoclassical Utility Theory: A Survey of the Literature,” I have argued that neoclassical utility theory acts as a blindfold, which prevents economists from understanding simple realities of human behavior. The paper provides many examples of this phenomenon, which I will illustrate briefly with one simple example in this post. Consider the two player Ultimatum Game. The Proposer (P) has ten dollars in single dollar bills....