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Tag Archives: Economic growth

An Economic Survival Package, not a Stimulus Package

There continues to be enormous confusion about what we should be trying to accomplish in the next pandemic relief package. This is best demonstrated by Republicans’ obsession with getting people back to work, with a mixture of cuts to unemployment benefits and return to work bonuses. Ignoring the questionable economic logic (there is zero evidence of large numbers of jobs going unfilled), this approach also ignores the reality of the pandemic. At the start of April, both houses voted nearly...

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The Stock Market and MMT: The Dow Is Not Your Friend

It is standard for economic reporters to treat higher stock prices as good news. A rising stock market is often touted in the same way that job gains or GDP growth are touted, as evidence of a stronger economy. This can be true. When the economy is growing at a healthy pace, the stock market is usually rising also. But the link is far more tenuous than is generally recognized. The market is in principle a measure of expected future profits. Policies that redistribute from workers or...

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More Thoughts on the Recession, Stimulus, and Recovery

As we get more data in, it seems increasingly likely that we are looking at a horrible and prolonged recession, not a complete economic collapse of Great Depression proportions. The May employment report showed a substantial bounce back in employment, with jobs up by more than 2.5 million from the April level. Retail sales had a huge 17.7 percent jump in May, by far the largest on record, although they are still 6.1 percent below the May 2019 level. Mortgage applications also show a...

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The New York Times Doesn’t Like It When Workers Have Job Security: The Case of Japan

The New York Times had a fascinating piece pointing out that Japan’s unemployment rate has barely budged in response to the pandemic recession, even as the U.S. rate (adjusted for measurement issues) has topped 15.0 percent. But the piece comes with an important warning: “Critics say it makes companies reluctant to take risks in hiring new employees, reducing options for the country’s young workers. It may also make it more difficult for businesses to retool their work forces to...

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Can You Make Stagnating Incomes Go Away? The New York Times Wants You!

There is an endless market for pieces that tell us that the typical worker is doing quite well, in spite of all the gloom and talk we hear constantly. Michael Strain, who is actually a pretty good economist, took on the job in a column in the NYT yesterday. The gist of Strain’s piece is that we shouldn’t be upset about inequality because the great fortunes at the top are really helping to make us all richer. He contrasts the 1990s, when inequality grew a lot, with the period from...

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6/5/20: The Glut of Oil: Strategic Reserves

The Giant Glut of Oil continues (see my analysis of oil markets fundamentals here: https://trueeconomics.blogspot.com/2020/04/23420-what-oil-price-dynamics-signal.html) China strategic oil reserves have also surged. U.S. oil reserves are now nearing total capacity of 630 million barrels, and China's reserves are estimated to be about 90% of the total capacity of 550 million barrels. Japan's reserves similar (capacity of ca 500 million barrels). Australia is using leased U.S. strategic...

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Comment on the Recovery from the Shutdown

The Congressional Budget Office came out with its new economic projections and they look realistically bad to me. They show the economy declining at a 39.6 percent annual rate in the current quarter and then rebounding at a 23.5 percent rate in the third quarter and closing out the year with a 10.5 percent increase. Unemployment averages 14.0 percent in the current quarter and rises to 16.0 percent in the third quarter. It falls back to 11.7 percent in the fourth quarter, but still averages...

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23/4/20: What Oil Price Dynamics Signal About Future Growth

My column at The Currency this week covers the fundamentals of oil prices and what these tell us about the markets expectations for economic recovery: https://www.thecurrency.news/articles/15674/supply-demand-and-the-dilemma-of-trade-what-the-collapse-in-oil-prices-tells-you-about-post-covid-10-economy. Key takeaways:"...current futures market pricing is suggesting that traders and investors expect much slower recovery from the Covid-19 pandemic than the V-shaped one forecast by the...

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23/3/20: Private Consumption Gets the Virus. Heads to an ICU…

Via @bkollmeyer, Deutsche Bank's Research chart on discretionary spending across the global economy: I have no access to the primary data on this, but if the chart is true, the global economy is 'borked'. One notable line here is for Ireland. Ireland's economy is heavily dependent on personal consumption expenditure. Here are the latest data:    PC as % of     modified     total    demand        PC as %          of GNI*     1995-199958.857.6     2000-200754.755.2200754.156.7   ...

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