A cautionary tale for my undergraduate economics students
Reader Steven Kopits wonders why, in order to show the relative prominence of government spending, I don’t merely take the ratio of one real index to another real index. Specifically, he admonishes me:
I find this presentation confusing. … Is it not possible to present this data as a simple percent of GDP?
I happened to catch Americans for Prosperity‘s Tim Phillips talking about the ever growing government [1], in the context of the recent budget deal. Here’s what the actual data indicate:
Productivity outpaces real wages, deflated using the output deflator, or using the CPI.
The economy is slowly improving.
Today, I gave a presentation in the Wisconsin Alumni Association’s Global Hot Spot series, entitled America’s Macroeconomic Policies and the Global Economy. One figure from the presentation bears highlighting.
The Philadelphia Fed coincident indices for October are out. Figure 1 presents the log series, normalized to January 2011 = 0.
From Reuters:
China’s yuan currency overtook the euro in October, becoming the second-most used currency in trade finance, global transaction services organization SWIFT said on Tuesday.
Japan edition
Inflation and output are up. So too is gross fixed capital investment. The yen is weaker, and the real quantity of net exports is higher.
An interesting new research paper by Princeton Professors Alan Blinder and Mark Watson examines differences in performance of the economy under Democratic versus Republican presidents. The paper begins:
The superiority of economic performance under Democrats rather than Republicans is nearly
ubiquitous; it holds almost regardless of how you define success. By many measures, the
performance gap is startlingly large–so large, in fact, that it strains credulity, given how little
influence over the economy most economists (or the Constitution, for that matter) assign to the
President of the United States.
From Torsten Slok at Deutsche Bank:
[F]iscal drag in 2013 is 2.4%, ie if GDP growth in 2013 ends up being 1.7% then if we had not had the fiscal drag then GDP growth would instead have been 4.1% (=1.7% + 2.4%). ..