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October 31, 2006
Fisking Philip Ball
A few days ago Mark Thoma posted an article by Philip Ball, "consultant editor of Nature", taking economists to task for, well, being economists. Although Mark handled the rebuttal quite nicely, and there was lots and lots of fine commentary on Mark's site (a good chunk of which is summarized by Dave Iverson), I found the article so wrong-headed that I just can't help myself from commenting. So, a-commenting I go:
Baroque fantasies of a most peculiar science, by Philip Ball, Commentary, Financial Times (free): It is easy to mock economic theory. Any fool can see that the world of neoclassical economics, which dominates the academic field today, is a gross caricature in which every trader or company acts in the same self-interested way – rational, cool, omniscient. The theory has not foreseen a single stock market crash and has evidently failed to make the world any fairer or more pleasant.
It is true that neoclassical economists tend to be the methodological children of Milton Friedman, heirs to a positivist tradition that directly connects explanation and predictability. But predictability in this sense is conditional: If X occurs then, all else equal, Y will follow. As a matter of logic, large forecast errors may only prove that the arrival of X is especially uncertain, and that economists are not clairvoyant (a trait that I think is shared with physicists and other human beings).
To be fair, if Y equals a stock market crash, I cannot really tell you what X equals. I am unaware of any serious economist who claims they can. Even those economists who express knowledge of a "bubble" in some asset market or another shy from taking definitive stands on when and how the bubble will burst. I do know this, however: Economists have devoted a lot of energy to thinking about the lessons delivered by the Great Depression. At least part of the conventional wisdom formed from that thinking is that it is a very bad idea to restrain liquidity when liquidity is most desired. For an example of that wisdom in practice, I refer to you to the actions of the Federal Reserve in the aftermath of the 1987 market crash in the United States. I'll stick my neck out and claim that the world was more pleasant as a result of putting that lesson into action.
The usual defence is that you have to start somewhere. But mainstream economists no longer consider their core theory to be a “start”. The tenets are so firmly embedded that ... it is ... rigid dogma. To challenge these ideas is to invite blank stares of incomprehension – you might as well be telling a physicist that gravity does not exist.
That is disturbing because these things matter. Neoclassical idiocies persuaded many economists that market forces would create a robust post-Soviet economy in Russia (corrupt gangster economies do not exist in neoclassical theory)...
Economists accept -- insist, actually -- that institutions matter, and nobody would argue that market forces alone can create a "robust" economy absent well-defined property rights, functioning legal systems, and the like. If you doubt that, check out the latest John Bates Clark award.
Neoclassical economics asserts two things. First, in a free market, competition establishes a price equilibrium that is perfectly efficient: demand equals supply and no resources are squandered. Second, in equilibrium no one can be made better off without making someone else worse off.
Wrong. Mr. Ball is thinking of the concept of Pareto efficiency, which does indeed describe a situation in which "no one can be made better off without making someone else worse off." But there is no presumption among economists that free markets and competition will deliver such an outcome. Any time an economist speaks of asymmetric information (conditions in which one person knows something another does not), externalities (things like pollution that is not paid for by the polluters), inflexible prices or wages, or taxes on any sort of economic activity, he or she is starting from the presumption that the free-market outcome is not efficient. In fact, any time an economist speaks it is quite likely they are contemplating a world in which free-market outcomes are not efficient. To not recognize this is demonstrate a startling ignorance of what economics is actually about.
The conclusions are a snug fit with rightwing convictions. So it is tempting to infer that the dominance of neoclassical theory has political origins.
... the foundations of neoclassical theory were laid when scientists were exploring the notion of thermodynamic equilibrium. Economics borrowed wrong ideas from physics, and is now reluctant to give them up.
This error does not make neoclassical economic theory simple. Far from it. It is one of the most mathematically complicated subjects among the “sciences”, as difficult as quantum physics. That is part of the problem: it is such an elaborate contrivance that there is too much at stake to abandon it.
Well, OK, economics has become pretty mathematical, which does sometimes make it hard for non-economists to join the conversation. Shoot -- there are some papers that I can't figure out. But that does not equal an "error." (And I still think quantum physics is a lot harder -- and every bit as abstract.)
It is almost impossible to talk about economics today without endorsing its myths. Take the business cycle: there is no business cycle in any meaningful sense. In every other scientific discipline, a cycle is something that repeats periodically. Yet there is no absolute evidence for periodicity in economic fluctuations. Prices sometimes rise and sometimes fall. That is not a cycle; it is noise. Yet talk of cycles has led economists to hallucinate all kinds of fictitious oscillations in economic markets.
It's true -- economists do not define business cycles as things that repeat periodically in a deterministic way, like sine and cosine waves. Business cycles are instead defined somewhat loosely in terms of the co-movements of various aggregate variables (like GDP, employment, prices, etc., etc, etc.) If we want to get a bit more statistically formal, we might define a business cycle in terms of co-movements of aggregate variables within particular windows of time (say two to eight years, meaning that we are ignoring very short-run and very long-run fluctuations in the economy). And if want to define particular episodes of contraction (or recession) and expansion, we ask a committee to decide.
However we do it, the point is to identify a set of particular facts that can then be subjected to analysis, both theoretical and empirical. Don't like calling it a cycle? Fine. Call it Aggregate Fluctuations. Call it Co-Movement In Business Statistics. Call it a Kumquat. Just don't pretend a picky semantic point is serious criticism.
Meanwhile, the Nobel-winning neoclassical theory of the so-called business cycle “explains” it by blaming events outside the market. This salvages the precious idea of equilibrium, and thus of market efficiency. Analysts talk of market “corrections”, as though there is some ideal state that it is trying to attain. But in reality the market is intrinsically prone to leap and lurch.
I presume that Ball is referring to Real Business Cycle Theory. Let me try a very simple description of real business cycle theory: The business cycle -- those co-movements in macroeconomic variables that occur over certain frequencies (i.e windows of time) in the data -- result from random shocks that hit the economy combining with the intrinsic structure of the economy in such a way that those shocks are translated into ups and downs in GDP, employment, prices, etc., etc., etc.
What is Ball's criticism of this view of the world?
One can go through economic theory systematically demolishing all the cherished principles that students learn... [I]t is abundantly clear that herding – irrational, copycat buying and selling – provokes market fluctuations.
There are ways of dealing with the variety and irrationality of real agents in economic theory. But not in mainstream economics journals, because the models defy neoclassical assumptions.
Oh, I see. Maybe he missed this paper. And this paper. Or is unaware that conversations like this one, among economists who would otherwise describe their basic orientation as "neoclassical", are a part of any good macoeconomist's basic training.
There is no other “science” in such a peculiar state. A demonstrably false conceptual core is sustained by inertia alone. This core, “the Citadel”, remains impregnable while its adherents fashion an increasingly baroque fantasy. As Alan Kirman, a progressive economist, said: “No amount of attention to the walls will prevent the Citadel from being empty.”
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October 30, 2006
Bottoming Out? Part 4
From today's Wall Street Journal (page A2 in the print edition):
The maximum impact of falling home construction may have hit the U.S. economy in the third quarter, some economists say. But that doesn't mean the housing market is on the verge of a miracle recovery. Construction is expected to fall further as builders struggle to shed a glut of unsold homes. And many economists expect house and condominium prices to continue falling for at least an additional six months to a year in parts of the nation where speculators went wild.
For now, the consensus among economists is that the housing downturn will remain a drag on the economy but probably won't sink the U.S. into a recession next year.
Offsetting the housing damage are several positives. Gasoline prices and mortgage interest rates have fallen in recent months. The stock-market rally has made some people feel richer, even as those who trust only in real estate feel poorer. And job growth, though unspectacular, continues at a "solid" pace, says Scott Anderson, an economist at Wells Fargo in Minneapolis.
With home prices flat to lower in much of the country, Americans already have less ability to tap their home equity to finance spending. But it is unclear how much effect that will have on consumer spending.
Some of the optimists' arguments are dubious. To bolster its position that the housing market is stabilizing, the National Association of Realtors last week trumpeted a 2.4% decline during September in the number of previously occupied homes offered for sale through multiple-listing services. But the Realtors' news release didn't mention that listings almost always decline in September, when the back-to-school season means fewer people are moving. Over the past 20 years, listings have declined an average of 3.4% in September, says Ivy Zelman, a Cleveland-based housing analyst for Credit Suisse.
In addition, and with a hat tip to University of Chicago XP-77er Ken Sutton, there is this to think about, from Bloomberg:
An unexpected increase in auto production last quarter was a statistical fluke that will be reversed, making current U.S. economic growth even weaker, according to a former Commerce Department economist.
Last quarter's annualized 26 percent increase in motor vehicle production shocked Joe Carson, now director of economic research at AllianceBernstein LP in New York. Without the gain, the economy would have grown at an annual rate of 0.9 percent, not the 1.6 percent the Commerce Department reported today.
The reported increase in output came despite cutbacks announced by General Motors Corp., Ford Motor Co. and others. A drop in the wholesale price of SUVs and light trucks as the automakers cleared leftover 2006 models made production look stronger than it actually was, said Carson. The economic fallout from the auto-industry cutbacks will instead come this quarter, he said.
"Last quarter was weak even with the benefit of this mismatch and the fourth quarter will now also be weak because it's going the other way,'' Carson said.
Even an optimist would have to admit that the fourth quarter begins with a few pretty big challenges.
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October 29, 2006
Oops! (Yuan Edition)
Trading expert, economic commentator, and soon-to-be newly-minted Chicago Exec-MBA grad Jeff Carter sent me a heads-up on this story, from Bloomberg:
China's State Administration of Foreign Exchange banned banks operating in the country from trading yuan derivatives in the offshore markets, according to a document issued to lenders.
"Without SAFE's approval, no institutions or individuals on the mainland can participate in outbound renminbi foreign- currency derivatives trading,'' the regulator said in the document dated Oct. 25 obtained by Bloomberg News. "Banks should provide to clients products and services to hedge renminbi currency risks within the business scope allowed by the regulator.'' A SAFE spokesman said he was unaware of the document.
Foreign banks use the offshore forwards market to make bets on the yuan and avoid restrictions placed on onshore trades by the central bank. Domestic banks have been using the offshore market to hedge positions...
The SAFE document referred to "the need to prevent China's economy from exchange-rate risks and facilitate designated banks for foreign-exchange businesses in providing currency-risk- hedging products and services.'' It gave no specific reason for the ban.
Without that "specific reason", interpretations of the ban are necessarily speculative. But the following seems like a reasonable set of possibilities: (a) The yuan peg is under some pressure; (b) The Chinese banking system remains in a precarious state; (c) The Chinese government is as determined as ever to slow the pace of yuan appreciation; (d) All of the above.
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October 28, 2006
Was It Really That Bad?
From the Wall Street Journal (subscription required):
U.S. gross domestic product growth slowed to an annual rate of 1.6% -- the slowest pace in three years -- during the third quarter as the slump in the housing market took its toll on the overall economy. Economists had expected a much larger 2.2% growth rate.
Actually that 2.2% guess was higher than a lot of people were guessing -- Larry Meyer's Macroeconomic Advisers, for example, had been projecting 1.8% and, frankly, 1.6% was better than I was expecting. One reaction to the report, from the WSJ opinion round up:
[T]his report actually was not as bad as the headline number would have you believe. The major reason for the sharp deceleration in growth was that the housing sector took over one percentage point out of growth. … Basically, you really don't have a weak economy if consumers are consuming, businesses are investing, exports are growing and imports are strong. -- Joel Naroff, Naroff Economic Advisors
That seems about right to me:
There are doubters, of course:
Expect today the usual spin with the soft-landing optimists … This fourth-quarter rebound has, so far, no base or data behind it: residential investment will be falling at a faster rate in the fourth quarter … nonresidential investment that was, until now, growing very fast will sharply decelerate … residential and nonresidential construction will directly affect retail activity where employment has already started to fall. … I thus keep my forecast that fourth-quarter growth will be between 0% and 1% and that the economy will enter into an outright recession by the first quarter of 2007 or, at the latest, second quarter. -- Nuriel Roubini, Roubini Global Economics
Well, OK. But facts are facts, and forecasts are forecasts. And thus far the facts, so far as we know them, are not showing substantial weakness outside of residential housing.
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October 27, 2006
Good News, Bad News, Take Your Pick
You might guess that there would be little good to say about a large drop in the median price of new homes sales in September. But then maybe you're not trying hard enough. From the Wall Street Journal (subscription required):
The newspaper headlines will blare that new-home prices fell by 9.7% year over year, the largest drop since 1970. Admittedly, this is a shocking headline, but do not make too much of it.
First, as we have noted many times, the mix changes every month so that these price numbers do not pertain to a comparable mix of homes over time. If people are scaling back their desires, if the regional mix changes, etc., then the numbers get skewed...
"The median new home price fell by 1.7% [in the third quarter] across the nation. However, the median sales price rose in each of the major geographic regions (Northeast +19.3%, Midwest +4.0%, South +0.7%, West +1.6%), which suggests that some of the home price decline is due to a shift in the regional pattern of sales toward lower-priced regions." --Bear Stearns Economics
Orders for durable goods -items meant to last three or more years - leaped a much greater-than-expected 7.8 percent in September on a rush of civilian aircraft orders, a Commerce Department report showed.
But orders rose a smaller-than-forecast 0.1 percent when volatile transportation orders were stripped from the total...
And, despite the caveats in the housing report, nobody is suggesting that all is well. Again from the Wall Street Journal:
The price decline] exaggerates the extent of the weakening price picture. Because sales in the more expensive Northeast fell sharply while sales in the South rose, the mix of homes sold shifted toward those priced at under $200,000, while sales of pricier homes fell as did the relatively small subset of homes prices at under $150,000. Nonetheless, the stronger sales helped builders pare inventories by about 1.9% but the stock of unsold homes remains at an uncomfortably high level that would still require 6.4 months to liquidate at the current selling rate. Summing Up: New home sales rose a "surprising" 5.3% in September BECAUSE builders were more aggressive in cutting prices. --Nomura Economics Research
Still, the sense of the day was relatively upbeat. From Reuters:
"It is hard to say but it looks like we are in for the soft (economic) landing," said Stephen Gallagher, chief U.S. economist at Societe Generale in New York. "It is telling me that the worst is over for housing"...
Former Federal Reserve Chairman Alan Greenspan said on Thursday the U.S. economy was pulling away from a sharp housing-sector downturn and that the outlook for growth was "reasonably good." But, he noted in a speech delivered before the government released the home sales figures, that the sector's woes were "not over."
"Most of the negatives in housing are probably behind us," Greenspan said at a Washington conference. "The fourth quarter should be reasonably good, certainly better than the third quarter"...
"Outside of the volatile aircraft orders, manufacturing is still subdued and that's consistent with an economy that's growing moderately," said Gary Thayer, chief economist at A.G. Edwards and Sons in St. Louis.
You will, of course, have no trouble finding skeptics.
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October 25, 2006
Bottoming Out? Part 3
... this paper addresses the first three moments of investors' expectations for home prices in particular and the broader housing sector in general. In other words, first, what is the mean expectation for the path of home prices? Second, how uncertain are investors about that mean projection? And, third, do investors see the risks to the outlook for housing as considerably skewed to the downside as opposed to the upside, which might be consistent with the perception of a bubble?
CME housing futures currently suggest that market participants expect home prices to decelerate sharply or actually decline a little within the next year, although the anticipated drop is mild compared to some estimates of the purported overvaluation of the housing market. In addition, market participants seem more uncertain about the trajectory of home prices, as implied volatilities on the few CME options that have traded thus far are generally greater than the realized historical volatilities on the underlying indexes. Finally, probability density functions (PDFs) implied by options on select homebuilders' shares are only marginally negatively skewed at the present time. Moreover, the current skew of these densities is broadly comparable to that of the equity market as a whole, and skewness has not noticeably increased over time for these firms. Caveats about this proxy notwithstanding, this suggests that market participants do not in fact view the risks to home prices or, perhaps more accurately, to the broader housing sector as especially tilted to the downside.
So, the housing market has probably not reached its trough yet, people are not sure what the trough will look like, but the consensus is not rushing to the view that a free fall is in the offing.
Sales of U.S. existing homes dropped for the sixth month in a row in September while median sales prices fell for the second straight month, the National Association of Realtors said Wednesday.
Inventories of unsold homes fell for the second straight month, a sign that the market is correcting, said Laurence Yun, a senior economist for the realtors group.
That last bit of news sounds like a positive ...
But economists said the decline in inventories was normal this time of year. The inventory figures are not adjusted for seasonal factors, as the sales figures are. "When adjusting for the seasonal factors, inventories actually continue to climb," said Celia Chen, an economist for Moody's Economy.com.
On the other hand:
"This is likely the trough in sales," said David Lereah, chief economist for the realtors group..."Some indicators, such as pending home sales and mortgage applications, have suggested that sales may be starting to stabilize, but the latest figures continue to show a decline in activity," said Michael Moran, chief economist for Daiwa Securities America.
In other words, that uncertainty noted in the Durham analysis seems well justified, but the data is not yet sending clear enough signals to make either pessimists or optimists repent.
Calculated Risk has suggested that this focus on whether the housing market is balancing itself or not is misguided:
... the significant impact of the housing bust will come from housing related job losses, the loss of mortgage equity extraction (used fro consumption), and any financial stress associated with falling housing prices and tighter lending standards.
There is a significant lag between when a housing boom ends, to when housing related employment starts to decline precipitously.
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October 23, 2006
A fair amount of (gleeful?) keystroking was instigated last week by a Washington Post article that included this "confession":
Robert Carroll, deputy assistant Treasury secretary for tax analysis, said neither the president nor anyone else in the administration is claiming that tax cuts alone produced the unexpected surge in revenue. "As a matter of principle, we do not think tax cuts pay for themselves," Carroll said.
In fact, one of the reasons to have some confidence that the most recent round of tax cuts in the United States did not pay for themselves is that the hard work of incorporating those incentive effects upon which the Laffer curve hinges has been done. Kash had the story, at The Street Light:
The tax cuts may indeed have stimulated some economic growth. In 2003 the Republican Congress convened a panel of economists (under the authority of the Joint Committee on Taxation, or JCT) to estimate exactly how much of a positive impact on tax revenues this feedback effect would provide, using a technique called "dynamic scoring" to measure the overall cost of the tax cuts.
This JCT study concluded that there would indeed be positive revenue effects from the economic growth that the tax cuts would stimulate, to the tune of some $30 or $40bn per year. But it turns out that the negative revenue effects of the tax cuts are a bit larger than that.
The "bit larger" there is facetious. And, I think, the presumption that tax cuts won't pay for themselves is a good general principle. But it is does have its limits. Alex Harrowell, for example, unearths this interesting tidbit at A Fistful of Euros:
... the Socialist government of Ferenc Gyurcsyany came up with a simple plan to cut the deficit from 10.1 per cent of GDP to something more reasonable.
Essentially, he decided to tax the rich until the pips squeaked. More accurately, he decided to tax industry until the pips squeaked, introducing a new 4 per cent “solidarity tax” on company profits...
The first results don’t look good. In fact they look disastrous. Volkswagen-Audi has reacted to this by cancelling €1 billion worth of investment at its plant in Gyor, which produces 20,000 Audi TT sports cars a year. The Gyor plant is Hungary’s biggest exporter, all on its own. VW had been planning to double its output. It is fair to say that essentially all the extra cars would be exported.
This particular anecdote does not, of course, indicate that Hungarian revenues will fall as a result of this tax hike. But in this specific case, it doesn't seem implausible.
Invoking a different example, both Mark Thoma and The New Economist reference a recent IMF paper that studies the aftermath of reforms in various countries that have implemented "flat taxes." The conclusion:
... there is no sign of Laffer-type behavioral responses generating revenue increases from the tax cut elements of these reforms..."
I take no issue with that conclusion, but this, from the paper, bears emphasis:
But this paper—like the practical developments it addresses—is not about the HR flat tax.
Particularly in the United States, the term “flat tax” is associated with Hall and Rabushka (1983 and 1985; HR)... In effect, the HR flat tax is a consumption-type, origin-based value-added tax (VAT) collected by the subtraction method, supplemented by a (nonrefundable) tax credit against labor income.
And that really, really matters. Several years back, I was part of a team that simulated the effects of the HR flat tax, and similar forms of fundamental tax reform. We found that in the most straightforward version of this type of tax reform, the shift from something like our present income-based tax system to an HR-like consumption-based system would require a tax rate on labor-income of 21.4 percent in order to keep revenues from falling. Over time, as the growth effects of removing capital taxation took hold in our experiments, the tax rate required to maintain revenue neutrality fell by 2 percentage points. (The payroll tax rate required to finance social security benefits fell slightly as well). In these experiments, then, really fundamental reforms did indeed generate "Laffer-type" effects, at least in the long run.
What's the moral to the story? I guess it's that, even though the conventional wisdom is usually right, we probably shouldn't take for granted that it is always so. There's a good reason to keep playing the game.
UPDATE: Kash notes that the flat tax experiments I describe are about the efficiency gains of revenue-neutral fundamental tax reform and not that general cuts in tax rates raise revenues. And right he is. We are both agreed that the answer to what happens to revenues after any particular tax change depends on the both the nature and context of the change. And I'll agree that once that point is recognized, the Laffer curve is not an idea that conveys much additional insight.
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October 20, 2006
Bottoming Out? Part 2
The latest newsletter from Goldman Sachs US Economic Research just arrived in my inbox, with this to say:
The point of maximum deterioration in housing activity has probably passed. The sharp downturn of the past year seems to have brought total housing starts single-family starts, multi-family starts, and mobile home shipments close to the level justified by the underlying demographics (as best we can measure them).
This is not to say that residential investment will stop falling anytime soon...
Still, the fact that the US economy has bent but not broken during the fiercest onslaught of the housing downturn is encouraging. It suggests that real GDP growth probably bottomed for the cycle at the 1% (annualized) pace that we now estimate for the third quarter of 2006. While the headwinds from the direct and indirect effects of the housing bust will remain substantial, a sequential pickup in real GDP growth is now likely.
Yeah, that's what I was thinking.
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The view under The Street Light is that things may be headed south for the U.S. economy, and at Econbrowser Jim Hamilton is spot on regarding the equivocal picture being drawn by the incoming data. Still, I'm feeling oddly optimistic. I guess I'm not alone. From The Wall Street Journal (page A10 in the print edition):
Leading economic indicators pointed to slower U.S. economic growth in September.
Separate reports showed that factory activity in the Philadelphia region was flat in a mid-October reading even as manufacturers remain optimistic, and that weekly U.S. jobless claims hit a four-month low.
The Conference Board reported Thursday its index of leading indicators edged up just 0.1% to 137.7 in September, but noted that consumer expectations have improved. The index fell by a revised 0.2% in August. Economists had expected a more robust 0.3% advance last month.
"The economy has slowed but the evidence to date doesn't suggest it will stall or go into a recession," said Ken Goldstein, an economist with the private research group. "To the contrary, the economy retains considerable strength," given the rise in stock prices and drop in energy prices, he said. Mr. Goldstein also noted that employment remains robust and inflation relatively low.
It's not that we are lacking negatives, of course:
The group noted that the leading index has fallen in five of the last eight months, and from March to September, the index is down by 0.9%, a 1.7% annual rate decline.
The Federal Reserve Bank of Philadelphia reported that a gauge of manufacturing activity in its region slipped to -0.7 in a mid-October reading from -0.4% in September... Negative readings indicate a contraction in activity.
But we know that the third quarter was bad, and this is relevant too:
The findings of [September Philadelphia report], however, weren't borne out in other regional manufacturing surveys, or in the Institute for Supply Management's national report...
Expectations for future manufacturing growth improved after last month's sharp decline. Indicators for future orders, shipments and employment were all higher.
And that's the thing that keeps sticking in mind. In my line of business I have the opportunity to hear from a lot of people who are, as they say, close to the ground -- folks actually making stuff, hiring people, extending loans, putting together deals. My thoroughly unscientific sense is that the distribution of beliefs out there suggests things are more likely to get better than get worse.
That does not apply to the housing market, of course. But, for reasons I'll detail in a later post, I'm beginning to wonder about the reach of developments in that sector. I'm not quite ready to take the anti-Roubini bet with the degree of confidence that Nouriel himself puts on his recession call. But I'm getting there.
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October 19, 2006
Hat tip to Mirra at BudgetBlog for bringing to our attention the brand new Open Budget Index, designed to "rate countries on how open their budget books are to their citizens." The initial publication includes ratings for 59 countries, chosen to be a broadly representative global sample. The index is based on questionnaires, the answers to which are made available for each country, along with very useful links to each country's key budget documents.
Here's how the ratings stack up (click on the picture for a better look):
Among us types who harbor interests in fiscal affairs, it is not uncommon to engage in extended discussions about what should and shouldn't be included when calculating a measure like "the deficit". (For example, should contributions to Social Security trust funds be excluded or not?) I've always had a suspicion that, in this conversation, economists and p-wonks often make much ado about not a whole lot. In the United States, all the information is there in its full glory: On-budget deficits, off-budget deficits, projections of entitlement expenditures and receipts; basically more than enough information to knock yourself out answering whatever question you think budgetary concepts really ought to answer. The information may not be absolutely perfect, but the Open Budget Index suggests its pretty darn good.
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- Hitting a Cyclical High: The Wage Growth Premium from Changing Jobs
- Thoughts on a Long-Run Monetary Policy Framework, Part 4: Flexible Price-Level Targeting in the Big Picture
- Thoughts on a Long-Run Monetary Policy Framework, Part 3: An Example of Flexible Price-Level Targeting
- Thoughts on a Long-Run Monetary Policy Framework, Part 2: The Principle of Bounded Nominal Uncertainty
- Thoughts on a Long-Run Monetary Policy Framework: Framing the Question
- What Are Businesses Saying about Tax Reform Now?
- A First Look at Employment
- Weighting the Wage Growth Tracker
- GDPNow's Forecast: Why Did It Spike Recently?
- How Low Is the Unemployment Rate, Really?
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