Tag Archives: US/Global Economics

by New Deal democrat Larry Summers: genius economist, failure at Psychology 101 One of my recurring themes is how macroeconomic theory, no matter how elegant mathematically, consistently errs because it fails to take into account basic psychology — i.e., how the human animal actually works. A big component of this failure is that humans, like other primates and apparently like just about every other social species, are hard-wired to inflict punishment on...

by New Deal democrat Do healthier longevity and better disability benefits explain the long term decline in labor force participation? A few weeks ago I took another deep dive into the Labor Force Participation Rate.  There are a few loose ends I wanted to clean up (at least partially). One of the most noteworthy things about the LFPR in the long term is that, for men, it has been declining relentlessly at the rate of -0.3% YoY (+/-0.3%) for over 60 years!...

by Sandwichman The “Cutz & Putz” Bezzle, Graphed by FRED anne at Economist’s View has retrieved a FRED graph that perfectly illustrates the divergence, since the mid-1990s of net worth from GDP: The empty spaces between the red line and the blue line that open up after around 1995 is what John Kenneth Galbraith called “the bezzle” — summarized by John Kay as “that increment to wealth that occurs during the magic interval when a confidence trickster knows...

Last week Timothy  Taylor at Convertible Economist did a very good post on  gross vs net capital spending. http://conversableeconomist.blogspot.com/2017/02/declining-us-investment-gross-and-net. He showed that in recent years the more rapid growth of  high  tech  spending has had an unanticipated impact.  The new high tech equipment has a much shorter life span that more traditional equipment. Consequently, more and more of gross capital spending is just...

by New Deal democrat Wages and household income vs. housing: which leads which? Sometimes I look into a relationship that doesn’t quite pan out, but it’s still useful to flesh out the process. That’s the story of real wage growth vs. housing. In the last few months I ‘ve pointed out that real wage growth has been slowing. In January, it went negative YoY.  Since, all else being equal, having less money to save for a downpayment, or to pay the montly mortgage...

From the Roosevelt Institute comes this graphic on the overall reality of macro policies: The Republicans’ underlying assumption—that corporations invest more and create more jobs only when they are relieved of burdensome tax rates—is false. American businesses already enjoy a historically low cost of capital, and they have more than enough cash on hand to invest, raise wages, and create jobs. Corporations are choosing to make dividend payments and stock...

by Barkley Rosser  (originally published at Econospeak) Saint Janet Yellen: The Best Fed Chair Ever? OK, so the immediate reaction of many to this title might be to laugh, but I challenge anybody reading this to name another Fed Chair who was clearly better than she is.  I do not think you can.  However, one reason why one may not think much about her is that things have been so inconsequential since she has been Chair.  Nothing much has happened.  She...

A little Ella Fitzgerald for you today. Kind of fits with what is going on in the US today. [embedded content] Over at Vox, Matt Yglesias has an interesting article on the Trump Transition Team ordering government economists to cook up rosy economic forecasts. With his far reaching economic “it will be great” promises during the election, delusional Trump has laid out a “blue skies” future which is likely unobtainable with the past economic growth of less...

by New Deal democrat The shallow industrial recession is fading in the rear view mirror A year ago the “shallow industrial recession” induced by the strong US$ and imploding oil patch was bottoming.  At that time I described the historical pattern: Typically new orders turn positive first (red, left scale in the graph below), followed by sales (green, right scale), and finally inventories (blue, right scale): At that time I concluded: If this is an incipient...

by New Deal democrat Industrial production: We’re DOOO …. oh, wait, it’s the global warming hoax At first blush yesterday’s negative industrial production print gives the lie to the proposition that the economy has left last year’s “shallow industrial recession” behind, as it looks to be going mainly sideways: But a closer examination shows that is not the case.  Industrial production is broken up into three groupings: manufacturing (by far the biggest),...