More evidence of significant changes in the behavior of American consumers.
Taylor rules, exchange rates, and the speculation about the dollar/euro rate
As Europe teeters on the edge of recession [0], and the United States remains mired in slow growth, expectations of what interest rates, and hence exchange rates, are shifting. Here’s a familiar depiction of where policy rates in the US and the euro area have been, and where they are predicted to go.
Oil prices and economic fundamentals
Oil was selling for $123 a barrel on May 7, and that’s where it closed this week. Sounds like a calm and rational market, except for the fact that just last week it was going for $145.
Implications of adjustment to riskier dollar assets in a portfolio balance framework, illustrated in three steps
Consider a hypothetical world economy with assets denominated in dollars and euros.
Why a lot of people think the CPI is not representative of their experience … and are right. At least partly.
Government statistics, particularly the CPI, have been in the news (e.g., [0]). Following up on my previous posts [1], [2], I want to take a stab at the question posed in the title.
This post focuses on issue separate from the mathematics of the index formulation, and has to do with what the typical weights at any given instant in time should pertain to. Should one use the expenditure weights that pertain to all the households aggregated in the economy? Or should one use the expenditure weights that pertain to the “typical” household? Kokoski (2003) [updated link] summarizes the distinction thus:
In the democratic index, the expenditure pattern of each household counts in equal measure in determining the population index; in essence, it is a case of “one household–one vote”. In the plutocratic case, the contribution of each household’s expenditure pattern is positively related to the total expenditure of that household relative to other households–in essence, “one dollar, one vote”.
Quarter 2 may come out OK, but challenges remain
At least that’s the assessment of Federal Reserve Bank of San Francisco economist John Fernald (hat tip: Mark Thoma).
IMF on the Global Macroeconomy, CBO on US-China Trade
The IMF released an update to it’s World Economic Outlook yesterday.
IMF Gloomy on Growth, Sees Rising Inflation Threat
- Global economic growth to slow significantly in second half of 2008.
- Rising energy, commodity prices have boosted inflationary pressure
- Need to adapt to shift in purchasing power from commodity users to producers
New estimates of the high school dropout rate
I was shocked by today’s report that the high school dropout rate in California has reached 24%.
The Expansion: Retrospect and Prospect, Whine-Free
The President’s press conference yesterday was meant to buttress consumer and investor confidence. I will leave it to others to evaluate whether he was successful in this endeavor [0]. I will also ignore his disingenuous remarks concerning how allowing drilling offshore and in ANWR [1] would somehow affect gasoline prices today in a noticeable manner, and focus instead on his repeated emphasis on the fact that the economy is still growing (although he never mentioned at what pace).
Did Fannie and Freddie cause the mortgage crisis?
Some thoughts about the role played by the GSEs in the run-up in mortgage debt and house prices.