Blog Post by: Benjamin Landy, on March 29, 2012
Although the American love affair with easy credit hit a rough patch during the recession as families delayed the purchase of new cars and ever-larger flat-screen TVs to collectively pay down nearly a trillion dollars in outstanding household debt, one sector of the credit market continued to grow unabated. Total student debt is up over 500 percent since 1999, and is predicted to reach $1 trillion this year, surpassing both total credit card debt and auto loans. By 2020, it could be as high as $1.4 trillion, leading some experts to warn that student loans "could very well be the next debt bomb for the U.S. economy.”
Blog Post by: Benjamin Landy, on March 20, 2012
A graph that purports to establish Bill Clinton and Barack Obama as the two most fiscally conservative presidents in modern history has been making its way through the blogosphere, after first originating on Century Foundation Fellow Mark Thoma's Economist's View blog. Thoma's submitter explains:
Seeing the Krugman commentary comparing real government spending under Obama and Reagan made me curious about what it looks like if you express it in per capita terms? In particular, how does the Obama period compare with other presidencies in terms of penury/austerity versus spendthriftness?
Ranking since Johnson (starting in 1968), and using the first-quarter comparisons, and calculating growth under Obama through 2011Q4, Clinton is the most austere, followed by Obama. The most spendthrift are (1) Nixon-Ford, (2) Reagan, and (3) Bush II.
So, the story one frequently hears on the right about the massive expansion of government spending under Obama—and liberal profligacy in general—just doesn't hold up to the facts. Still, there's been some pushback from commenters wondering about the role of inflation, or whether the story changes when you divide government spending into separate categories for national defense and human resources (employment and social services, Medicare, Social Security, veterans benefits, et cetera). So here is my own version of the graph, which shows annualized growth in government spending on national defense and human resources througout the last seven presidencies, from Q1 to Q1. All of the data is from the Office of Management and Budget historical tables.
Blog Post by: Benjamin Landy, on March 14, 2012
Few Americans are prepared for retirement, according to a national survey that finds nearly half of all workers with less than $10,000 in savings. Sixty percent of respondents to the 2012 Retirement Confidence Survey reported less than $25,000 in savings and investment (excluding their home and defined benefit plans) and 30 percent were living paycheck to paycheck with less than $1,000 in the bank.
Blog Post by: Benjamin Landy, on March 14, 2012
Something strange has happened in the U.S. economy. Nearly three years after the Great Recession officially ended in June 2009, unemployment remains stubbornly high at 8.1 percent and real wage growth is nonexistent, but corporate profits and GDP have never been higher. Six million workers have dropped out of the labor force in the last two years—twice the number of people who have found new jobs—but the Dow Jones and NASDAQ are trading above pre-recession levels as if nothing had ever happened. Economists like to call this incongruity a “jobless recovery,” but you might as well call it a recovery for the 1 percent: according to recent data, that small fraction of the nation’s wealthiest captured a stunning 93 percent of a income gains from 2009–10. Income growth for the bottom 99 percent was just 0.2 percent.
This unequal pattern of growth is highly unusual in recent history. For most of the post-war years, periods of economic recovery were defined by a rapid return to high employment and GDP growth. But for the past two decades, there has been an increasing disconnect between the strength of the economy and the health of the labor market. When the economy crashed in 2008, businesses aggressively laid off employees while demanding greater productivity from their remaining workforce. Without a union or effective labor laws to protect them—and with fierce competition for their jobs—many workers resigned themselves to more work for the same salary.
That's not how it used to be.
Blog Post by: Janice Nittoli, on March 12, 2012
There’s been a lot of talk about think tanks of late (and that doesn’t happen too often), spurred by the goings on at Cato and the Koch brothers’ bid to secure control over the Cato board, apparently to advance their partisan political agenda. Much of the concern has come from the right. Last week Cato staffer Julian Sanchez offered what he called a pre-resignation letter should the Kochs gain control. Sanchez made clear he loves his job and seems to consider getting to work at Cato a privilege. What he feels he would give up staying on under a Koch-controlled regime, however, is something more valuable: his academic freedom.
Blog Post by: Benjamin Landy, on March 8, 2012
The U.S. economy went on something of a crash diet during the Great Recession, cutting millions of Americans from the workforce and squeezing dramatic productivity gains from those who remained. Unit labor costs dropped and output per hour rose as busiensses became leaner and meaner. But slimming down can only increase efficiency to a point, and as the economy has recovered, the pendulum has appeared to swing back in favor of workers. Revised estimates released yesterday by the Labor Department show that productivity growth slowed to 0.9 percent annualized at the end of last year, down from 1.8 percent in the previous quarter. And unit labor costs rose 2.8 percent, more than doubling earlier estimates.
That bodes well for tomorrow's jobs report, which is expected to show modest gains throughout the economy. If productivity is slowing, than the only way businesses can expand output is to hire more people. Hopefully that will put sufficient pressure on wages, which have plenty of room to rise against price markup without any inflationary effect.
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