Longtime reader Ricardo (aka Dick/DickF/RicardoZ) writes:
…Our government is doing a serious disservice by falsifying the employment condition in our country. Policy changes that could actually help are being delayed with false information.
The October employment release was much in line with expectations. I will focus my observations on a few observations:
(1) Alternative indicators indicate better improvement than headline (estimated) nonfarm payroll employment; (2) estimated nonfarm payroll employment has been revised upward over the past couple months; (3) estimated employment compensation growth remains muted, especially after taking into account catch-up and estimated productivity gains.
Reader Tom argues that economic discourse should not include discussion of variables that are unobservable, to wit (or at least indicate that it’s an estimate):
You announce somebody’s estimations of a theoretical, unobservable phenomenon as “the output gap” or “the actual output gap” as if you and they actually know them to be the output gap.
If we used this criterion, what variables would be ruled out from polite conversation? A lot…let’s just take the real interest rate.
On progress in implementing the minimum wage.
Last week the U.S. Federal Reserve closed a chapter on the experiment with quantitative easing, just as the Bank of Japan opened a new one. Seems like a good time to comment on some of what we’ve learned so far.
Yesterday’s advance GDP release for 2014Q3, covered by Jim, was welcome news, and was something Jeff Frieden and I predicted at the beginning of the year . However, while growth seems to be firming, it is far too soon to take away stimulus. Figure 1 shows that the degree of economic slack remains large. [edits 11/6 to accommodate reader Tom’s critique]
The Bureau of Economic Analysis announced today that U.S. real GDP grew at a 3.5% annual rate in the third quarter. That combines with a 4.6% annual growth rate now reported for the second quarter, giving us an average growth rate for the last six months that is solidly above the postwar average.
And California and Minnesota surge ahead of the US. I know this sounds like a broken record, but the numbers are the numbers. And reader Patrick R. Sullivan suggests I move to Kansas, based on a Tax Foundation analysis (the same Patrick R. Sullivan who refuses to admit that his assertion that the depth of the downturn in Canada was less than that in the US during the Great Depression is wrong.) Here’s at least one reason why I don’t plan to. From today’s release of leading indices by the Philadelphia Fed, combined with last week’s release of coincident indices.
Or, the self-rehabilitation effort continues. In a WSJ op-ed entitled “Government Forecasters Might as Well Use a Ouija Board”, he writes:
My analysis of 1999-2013 reveals that the CBO’s real GDP growth forecasts for the next year were off, on average, by 1.7 percentage points, either too high or low. Administration forecasts were similarly off by a slightly larger 1.8 percentage points on average, also to high or too low. Given that the average growth rate during this period was only 2.1%, errors of this magnitude are substantial.