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from David Ruccio Neil Irwin is right: “Poor and working-class Americans have fallen behind over the last generation, receiving few of the gains of an expanding economy.” So, he wants to devise a tax plan to change that. The problem is, Irwin only looks at raising the income of the bottom 20 percent of families to where they would be if they shared equally in the gains since 1979.  So what would it all cost? The Tax Policy Center crunched the numbers: The policy would deplete federal...

Wednesday’s decision by the Federal Reserve to raise interest rates is unwelcome and unnecessary. As admitted in its statement, investment remains soft, growth is only moderate, and inflation expectations are little changed. Moreover, the economy confronts financial headwinds from the recent jump in long term interest rates and an even stronger dollar. The Federal Reserve seems [...]

Housing remains depressed, and not the driver of US growth that had been forecast by most analysts: Highlights Housing starts are being hit by huge swings. November starts fell 18.7 percent in November to a much lower-than-expected 1.090 million annualized rate following an upward revised gain of 27.4 percent to 1.340 million in October. There’s less volatility on the permits side where a roughly 30,000 undershoot in November, at 1.201 million vs the Econoday consensus for...

According to Polanyi: [T]he victory of fascism was made practically unavoidable by the liberals’ obstruction of any reform involving planning, regulation, or control. (Polanyi 1944, p. 257) The direction and content of socioeconomic development in the EU have been essentially determined by market laissez-faire, ultimately dictated by the financial markets’ irrational, manic-depressive psychology. The institutions and the economics of the orthodoxy, which form the constitutional...

Fed still failing to hit its 2% target after years of trying, and after years of forecasting that it would hit its 2% target: Highlights Inflation at the consumer level remains low. The CPI rose 0.2 percent in November with the year-on-year rate up 1 tenth to plus 1.7 percent. The core rate, which excludes food and energy, also rose 0.2 percent with this year-on-year unchanged at 2.1 percent. Food prices were unchanged in November though energy did move sharply, up 1.2...

November 2016 Retail Hiring Falls To 6-Year Low Dec 13 (Econintersect) — Retailers added fewer workers through the first two-thirds of the typical holiday hiring period – and is down nearly 10% from a year ago. The latest data from the Bureau of Labor Statistics (BLS) showed that employment in retail grew by 371,500 in November. That was down 9.3 percent from a year ago, when jobs in the sector increased by 409,500. It was the lowest November employment increase since 2010....

from David Ruccio My students are worried—many of them obsessed by the possibility—they’re not going to be better off than their parents. As it turns out, they’re right.   According to new research by Raj Chetty et al. (pdf), the rates of “absolute income mobility” (the fraction of children who earn more than their parents) have fallen from approximately 90 percent for children born in 1940 to 50 percent for children born in the 1980s. And the likelihood is, that rate is going to fall...

from Dean Baker Economists are not very good at economics. We repeatedly get reminded of this fact when we see the economy act in ways that catch the bulk of the profession by complete surprise. The most obvious example is the housing bubble, whose collapse gave us the financial crisis and the Great Recession. Almost no economists saw the bubble or the potential hazards posed by its bursting. But this is just the beginning of what economists got wrong in recent years. Not only did the...

Continues to decline. One less reason for the Fed to hike today… Highlights Rising interest rates continue to take their toll on mortgage activity, with purchase applications for home mortgages falling a seasonally adjusted 3.0 percent in the December 9 week, while refinancing applications fell 4.0 percent. The purchase index now stands just 2 percent above its reading a year ago, a 1 percentage point decline from the prior week. Reaching the highest level since October...

ht graph: @lugaricano The IMF is totally right: the EU is mistreating Greece – and the EU knows. The IMF is also right about this: Greece is – even within its budgetary confines – also mistreating its poor as too much money is flowing to the rich (graph). From the IMF website: The IMF is not demanding more austerity. On the contrary, when the Greek Government agreed with its European partners in the context of the ESM program to push the Greek economy to a primary fiscal surplus of 3.5...