During the Q&A following Chairman Bernanke’s testimony before the Joint Economic Committee today, Senator Sanders said he was preparing legislation to prohibit the payment of interest on excess reserves, and, indeed, to require banks to pay to hold excess reserves. The idea was to “unlock” the excess reserves held by the banking system and get [...]
Jesse Eisinger, in a provocative article in today’s New York Times, purportedly summarizes an argument on Fed policy between hedge fund managers and economists. “After several such managers at a recent conference denounced the aggressive money-printing policies of Ben S. Bernanke . . . the economic blogosphere rose up to mock them.” According to the [...]
The treatment of foreign trade statistics in the GDP estimates is tricky, confusing, and may contribute to an unwarranted aversion to imports. The reason is that we add categories of spending to get to GDP, but we subtract imports. For example, we add Consumption spending to Investment spending to Government spending to spending on Exports, [...]
Casual consumers of economic data, i.e. normal people, probably understand instinctively that the details behind the headline numbers matter. However, they can at least rest assured that such a large increase in the real GDP estimate as we had from the 4th quarter to the 1st quarter—from plus 0.4% to plus 2.5%–at least gets the [...]
This morning we learned that the Consumer Price Index declined at a 0.2% annual rate in March for an increase of 1.5% over the past year. Last week we learned that the Producer Price Index declined 0.6% in March for an increase of only 1.1% over the past year. The latest GDP price deflator, for [...]
As I listen to commentary on cable TV about the Fed’s quantitative easing, I find it amazing that people smarter than I, as well as better trained and more knowledgeable about many things, keep making the same mistake they have made for the past three or four years. Their predictions of an inflationary break-out and/or [...]
The direct way fracking can reduce the budget is by stimulating economic activity and thus tax revenues. This is obvious. This piece is about another, less obvious, less intuitive, indirect way fracking can reduce the budget deficit. It is based on the fact that the sum of the budget deficit, the capital inflow to finance [...]
In anticipating the President’s State of the Union speech, I asked myself what I consider it to be. I’m sorry to say that the first thing that came to mind was the Ogden Nash quote, “I find it very difficult to enthuse over the current news.” In my decades of trying to keep track of [...]
In the war of words between the Governors of Texas and California over the obvious advantages of the Texas business climate, the latter went nuclear and singled out Lubbock as the Texas weak spot. He missed the mark. I will concede California’s climate advantage (non-business) over Lubbock, but that’s about it. Lubbock has adequate air [...]
Okay, so the negative 0.1 percent real GDP number surprised me, even though I was expecting weakness. After arguing that recent GDP numbers were worse than the headline, primarily because of inventory accumulation, I’m happy to report the opposite this time around. Without inventory runoff, the number would have been up 1.1 percent, still [...]