Tom Keene has been doing a series for Bloomberg Radio this week on the new book, The Road Ahead for the Fed. You can listen to Tom’s interviews with me or three of the other authors who contributed to the book by clicking on a link below.
Richard Posner Misunderstands Numbers, Yet Again
Richard Posner displays his failure to understand the difference between expenditures (reported on Recovery.com) and tax rebates (not reported online, but have to be estimated).
Basic Math for the Math Challenged
Since Richard Posner has decided to exhibit his math skills again, I thought it useful to work through some math to see how one can obtain back-of-the-envelope estimates for the stimulus package. I’ll use Mr. Posner’s numbers to illustrate.
Monthly GDP Estimates: Stabilization and Upswing…for Now
Here are the latest reads on monthly GDP:
Honesty, Dishonesty and Competence: Comments on Posner’s Critique
Richard Posner has a critique of public intellectuals who work in the public sphere (with special reference to Christina Romer), either in government service, or in journalistic fora. Mark Thoma and Brad Delong have already made clear the (many) points at which Mr. Posner has gone astray. Parenthetically, I’ll add that I wonder about the analytical abilities of anybody who lumps Philip Glass (!) and Elliott Carter together into the highbrow music category (see page 18 in his tome Public Intellectuals: A Study of Decline (1991)). More substantively, I have a few of additional observations, some of which are amplifications of Brad Delong’s points.
Replay of 1930?
We know the glass is both half empty and half full. But the real question is whether liquid is being added in or draining out.
A Utilization-adjusted Measure of Productivity: Implications for the Output Gap
John Fernald and Kyle Matoba of the San Francisco Fed have just released a utilization adjusted total factor productivity series (data here). The importance of this development is clearly laid out by the authors:
This Economic Letter looks at potential output from the perspective of growth accounting, which assesses some of the key supply-side factors determining sustainable, noninflationary potential output. Perhaps most importantly, we find that the underlying pace of efficiency improvements — “technological progress,” broadly construed– has remained strong during the recession. This strength offers a reason for cautious optimism about potential output and the long-term health of the American economy. More immediately, stronger potential relative to the same observed output implies substantial slack in the economy.
Leading Indicators: Key Economies and the BRICs
A month ago, I examined the information content of the OECD’s Composite Leading Indicators. The August release (for June data) is out. There’s substantial variation in the implied outlook across economies.
Current economic conditions
This was another week when everybody but me sees an economic recovery in the works.
GDP, Potential, and Debt Forecasts — and Implied Multipliers
GDP Forecasts
The WSJ August survey indicates a resumption of growth in Q3. What was perhaps a bit surprising was the bump up in the Q3 q/q SAAR growth from about 1 percent to 2.4 percent. The out-quarters were little changed. These forecasts imply the following trajectory for GDP.