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Tilting at Windmills

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June 15, 2006
By: Kevin Drum

STAGFLATION....The LA Times is worried:

With inflation heating up amid the prospect of another interest rate hike from the Federal Reserve, some economists said Wednesday they were beginning to worry about a ghost from the past: stagflation.

Maybe so. My instinct tells me that rising oil prices are more important than most economic models make them out to be, and there are certainly plenty of other reasons to be worried too.

Still, are worries about stagflation really up? Acording to Nexis, mentions of "stagflation" have declined recently, trending downward from 181 in 2005 (through June 15), to 101 for the rest of 2005, to 68 this year (through June 15). If there's a genuine concern floating around out there, it hasn't made much of an impact on the news media yet.

NOTE: I did a Nexis search on all news sources using the search term stagflation w/20 ("fed" or "federal reserve").

Kevin Drum 12:32 PM Permalink | Trackbacks | Comments (74)

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Comments

This ties in rather neatly with your last post. Instead of saying 'some economists', the LA Times should provide the names of two or there economists who take that position, and then those economists can defend why they think stagflation is coming back, and people can make their own decisions. Similarly, instead of a "government official", a name should be provided, regardless of what that person says. It's the only way we can make informed decisions.

As it is now, all we know is that the LA Times asserts that "some econimists" are worried about it, but gives us absolutely no hint on how to do our own research, or what those economists suggest should be done.

It really is a shame that high school students are held to a higher standard of citation than the national news media.

Posted by: American Hawk on June 15, 2006 at 12:35 PM | PERMALINK

A contrarian worries more about what isn't on everybody's mind because "the pack is always wrong."

Posted by: Paul Hinrichs on June 15, 2006 at 12:38 PM | PERMALINK

Howard?

Posted by: theCoach on June 15, 2006 at 12:40 PM | PERMALINK

Well, the stagnation part is there. Wage growth is pretty flat for most people.

Posted by: demisod on June 15, 2006 at 12:48 PM | PERMALINK

Inflation is bound to heat up, given the massive overspending and overborrowing by this Administration. It remains to be seen whether it will go out of control and become hyperinflation, but that simply opens the door to even heavier handed fascism ala Germany in the 1930s. The Dem mantra should be:

The United States cannot borrow it's way to prosperity.

Posted by: Stephen Kriz on June 15, 2006 at 12:52 PM | PERMALINK

It could just be a passing linguistic fad. Have you looked to see if fears of inflation, recession, and a falling housing market are up?

Posted by: rewolfrats on June 15, 2006 at 12:53 PM | PERMALINK

Watch. What was a mortal sin for Jimmy Carter will turn out to be a virtue for George W. Bush.

I can hardly wait to hear the pundits of NPR tell us why.

Posted by: olvlzl on June 15, 2006 at 12:53 PM | PERMALINK

Well, the stagnation part is there

And the inflation can't be far behind. Volatile gas prices usually get discounted in the economic reports, but if the near term outlook is already high and rising more then that will affect the cost of many goods.

Posted by: tomeck on June 15, 2006 at 12:53 PM | PERMALINK

It could just be a passing linguistic fad.

No, it was invented by the Republicans and their kept press to help bring down Jimmy Carter. I'm pretty sure that's when I first heard it. They certainly used it against him.

Posted by: olvlzl on June 15, 2006 at 12:54 PM | PERMALINK

The United States cannot borrow it's way to prosperity.

SZ, Oh yes we can. You just watch this administration try to for the next 3 years, and then hand the mess off to whomever comes after them.

Posted by: cyntax on June 15, 2006 at 12:56 PM | PERMALINK

Watch. What was a mortal sin for Jimmy Carter will turn out to be a virtue for George W. Bush.

So exactly spot on.

If only Carter had been smart enough to compare himself to Truman...

Posted by: craigie on June 15, 2006 at 1:01 PM | PERMALINK

How clumped is the data?

If Greenspan had said "there is no spectre of stagflation on the horizon" in 2004, you would probably see a few hundred articles using the word in a news cycle. The same effect would be seen to a lesser extent if a prominent CEO or economist used the term.

Posted by: rewolfrats on June 15, 2006 at 1:01 PM | PERMALINK

I had to refresh my memory on the subject. I assume others do, as well. note the Wikipedia reference to OIL as an example. For numerous posts on the subject of Peak Oil as well as the housing boom and their role in this scenario; see
ClusterFuckNation.


Stagflation is a term in macroeconomics used to describe a period characteristic of high inflation combined with economic stagnation, unemployment, or economic recession.

Stagflation is thought to occur when there is an adverse shock (a sudden increase, say in the price of oil) in a country's aggregate supply curve. The effects of rising inflation and unemployment are especially hard to counteract for the central bank. The bank has one of two choices to make, each with negative outcomes. First, the bank can choose to pursue a loose money policy to stimulate the economy and create jobs by increasing the money supply (by lowering interest rates) and exacerbate the inflation problem further. Or second, pursue a tight money policy (by increasing interest rates) to try and rein in inflation at the cost of perhaps increasing unemployment further.

In the 1960s it was thought that the Phillips curve, which was associated with Keynesian economics suggested that stagflation is impossible because high unemployment lowers demand for goods and services which lowers prices. This results in low or no inflation. However, in the 1970s and 1980s, when presented with actual stagflation, it was realized that the relationship between inflation and employment levels was not a constant, but could be shifted, and that the Phillips relationship was better seen through payroll surveys (Current Employment Statistics) of employment rather than household surveys (Current Population Survey) ([1]

Posted by: Semanticleo on June 15, 2006 at 1:04 PM | PERMALINK

Methinks the historic stagflation of our recent past was a product of an economy troubled by a dying manufacturing sector. Since a good deal of that part of our economy has been aborted, that particular problem will not be repeated in the same way.

The question is how will the new generation of economic pathology manifest itself?

Posted by: Keith G on June 15, 2006 at 1:08 PM | PERMALINK

"Some economists:"

Peter Morici, a University of Maryland business school professor.

Dean Baker, co-director of the Center for Economic and Policy Research.

Posted by: data on June 15, 2006 at 1:12 PM | PERMALINK

Kevin:

You should know that sentiments of any economic phenomenon in the major press is a contrary indicator. Anyone check out one of the June 2005 covers of Time magazine? Anyone want to bet that we'll we'll be marking that point as the peak in the housing cycle?

Posted by: mrjauk on June 15, 2006 at 1:15 PM | PERMALINK

Before guessing the uncertain future, one should describe the present. Our media haven't done that very well. That's why a majority of Americans think the economy is bad, when it's actually quite good. The traditional measures of economy -- unemployment rate, inflation rate, job growth, GDP growth -- have been excellent, but most people don't know that.

Posted by: ex-liberal on June 15, 2006 at 1:19 PM | PERMALINK

Instead of saying 'some economists', the LA Times should provide the names of two or there economists who take that position...

Spelling aside, that's a very interesting and valid point.

Yesterday at his Welcome Back George press conference, Dubya said "Now, I recognize some in the country don't feel that same sense of urgency I do. But al-Qaeda is real; their philosophy is a real philosophy; they have ambitions." [see The Carpetbagger for more]

Instead of saying 'some in the country', the Preznit should provide the names of two or three folks who take that position.

Have a nice day.

Posted by: Pierre Asciutto on June 15, 2006 at 1:22 PM | PERMALINK

good grief. is the economy stagnant? If so, where is all that extra tax revenue coming from?

Obviously, the economy is not stagnant. Manufacturing has increased 17 months in a row (the longest such span during the Clinton boom was 9 months), and unemployment is near its 50-year lows. The economy is never "rosey", but even mentioning "stagnation" is absurd.

The United States cannot borrow it's [sic] way to prosperity.

And yet, the US ran a negative current account balance for the entire 19th century, borrowing from Europe to build its industrial base, and borrowing to pay for the Civil War. What matters most is what the US spends its borrowing on. A curious detail: Chinese banks are thought to have a collective $1trillion in bad loans; people in China who have sufficient wealth increasingly find it worthwhile to park their wealth in American investments and West Indies banks. Apparently they are afraid that the government-led investment boom in infrastructure will lead to a bust.


Posted by: republicrat on June 15, 2006 at 1:24 PM | PERMALINK

Job growth is not excellent, ex lib, worse is that job security is shakey at best, wages have stagnated, benefits are piss poor. So yes, the common man and woman are worried.

Posted by: Keith G on June 15, 2006 at 1:26 PM | PERMALINK

It really is a shame that high school students are held to a higher standard of citation than the national news media.
Posted by: American Hawk

Funny, when the Wash Times reported that "some dems" were not happy about killing Zarqawi without sourcing any dems who said that, I don't recall American Chicken(shit)hawk complaining then.

That being said, I don't think stagflation is more than a very remote possibility. Oil prices are largely responsible for the recent rise in inflation, and they seem to have stabilized a bit, so I think the price increases across the board have already taken into account higher energy costs.

However, another oil shock (like if Bush is dumbya enough to bomb Iran) will spell trouble.

Posted by: MeLoseBrain? on June 15, 2006 at 1:31 PM | PERMALINK

You can't examine minute subjects in a vacuum without considering the interactive nature of the economy. Everything affects everything else exponentially like the Butterfly Effect.

Durable goods has been driving this economy for at least the past decade, peaking with the pinnacle of the housing boom which just passed us. Mortgage Re-Fi's and the inevitable cashouts went for toys and bigger homes, not savings or even paying down unsecured debt. Manufacturing (jobs) have the momentum because of that inflated rise in real estate values. Admittedly, it is a water level that has been lagging behind European real estate value, but that doesn't mean the value is stable. What is stabel is crushing debt which has a date certain for paying the Piper. New housing starts are down, because the limits of debt load (100% of value) has been reached. That means toys and houses are slowing with the reduced need for durable goods (stuff to make stuff). Better have those canned food stores stocked and rotated! It won't be pretty when food riots visit the american landscape.

Posted by: Semanticleo on June 15, 2006 at 1:44 PM | PERMALINK

As for the media's complicity with the Fed in keeping optimis m at a high so the Markets don't collapse, are you bewildered by that?

Most media types don't worry about the price of gas. They are more concerned with sustaining their upscale lifestyle. They know the suckers who listen to MSNBC are funding their ride. Why should they blow it?

Posted by: Semanticleo on June 15, 2006 at 1:47 PM | PERMALINK

What matters most is what the US spends its borrowing on.

...unfortunately, the Republicans have that part ass-backwards as well.

Posted by: Gregory on June 15, 2006 at 1:49 PM | PERMALINK

Keith G - Your putdown of job creation illustrates my point that our current economic well-being isn't well known. The Bureau of Labor Statistics preliminary May, 2006 total non-farm payroll employment was 135,106,000 as compared with 129,979,000 in December, 2003. That's over 5 million more jobs in just under 2 1/2 years. This isn't quite as good as some of the boom years in the 1990's, but it's excellent by historican standards. It's outstanding compared with Europe.

Posted by: ex-liberal on June 15, 2006 at 1:49 PM | PERMALINK

...current economic well-being isn't well known.

The jokes write themselves.

Posted by: nut on June 15, 2006 at 1:51 PM | PERMALINK

nut: The jokes write themselves.

Which makes unemployment even worse, by putting comedians out of work. Talk about a vicious cycle!

Posted by: alex on June 15, 2006 at 1:57 PM | PERMALINK

Kevin Drum: If there's a genuine concern floating around out there, it hasn't made much of an impact on the news media yet.

So it hasn't made much of an impact in the media. So what? Neither have the Downing Street memos. Or the trade (current account) deficit.

Back in the mid-80's that was the hot media topic. But then it peaked at 4%/GDP when Reagan finally started to do something about it. Now it's 6.5% (2005) and climbing fast. Bush does nothing. The media says nothing (or dismisses it with some silly hand waving reference to "globalization" or "dark matter"). Talk about an elephant in the living room.

Posted by: alex on June 15, 2006 at 2:07 PM | PERMALINK

Ex-Lib said:

...The Bureau of Labor Statistics preliminary May, 2006 total non-farm payroll employment was 135,106,000 as compared with 129,979,000 in December, 2003. That's over 5 million more jobs in just under 2 1/2 years....

While accurate, those are purely selective statistics ... you're comparing from a trough to a crest.

Take the entire Bush administration...2001 to present ... and non-farm job growth is 131,000,000 to 135,000,000, easily the slowest five-year period of job growth in modern history. Even spanning the Carter stagflation years or the 1991-92 recession, you can't pick out five years with slower growth.

Citation: ftp://ftp.bls.gov/pub/suppl/empsit.ceseeb1.txt

Posted by: Truthy on June 15, 2006 at 2:10 PM | PERMALINK

The Bureau of Labor Statistics preliminary May, 2006 total non-farm payroll employment was 135,106,000 as compared with 129,979,000 in December, 2003. That's over 5 million more jobs in just under 2 1/2 years.

Which almost makes up for the total that were lost during 2000-2003. Additionally, gross number of jobs doesn't take into account the increased in total workers. Nor does it factor in the stagnating (or decreasing real wages) of working class America.

Yes, those nifty electronics from Japan & China are cheaper, but that chunk makes up a very small percentage of a typical family's budget. Household costs (mortgage & energy) are increasing, along with healthcare, which makes a bigger dent in a steady or decreasing salary.

But you're a fucking troll, so why bother?

Posted by: ChrisS on June 15, 2006 at 2:15 PM | PERMALINK

Which almost makes up for the total that were lost during 2000-2003. Additionally, gross number of jobs doesn't take into account the increased in total workers. Nor does it factor in the stagnating (or decreasing real wages) of working class America.

Someone used misleading statistics to dishonestly defend the Bush Administration? I'm shocked! Shocked!!

Posted by: Gregory on June 15, 2006 at 2:24 PM | PERMALINK

Gregory: I'm shocked! Shocked!!

Yeah, there's also a dirty rumor about gambling at Rick's.

Posted by: alex on June 15, 2006 at 2:34 PM | PERMALINK

ChrisS "Which almost makes up for the total that were lost during 2000-2003. Additionally, gross number of jobs doesn't take into account the increased in total workers. Nor does it factor in the stagnating (or decreasing real wages) of working class America."

Yes, Chris, a lot of jobs were lost during 2000-2003. So, what's your point? We were discussing the current job-creation situation, which is excellent. (BTW note that Clinton was President into 2001. If Clinton had cut taxes in 2000 the way Bush did in 2003, we might not have lost all those jobs.)

The figures don't support your point about the increase in total workers. The statistics show that job creation outstripped the increase in total workers. That's why the unemployment rate went down from 6.0% to 4.6%. (It's true that the total population has gone up more than the total number of workers. That's because more people are choosing not to work.)

You have a point that real wages have barely gone up, although when one includes the cost of fringe benefits, there is some growth in wages+benefits.

Posted by: ex-liberal on June 15, 2006 at 2:43 PM | PERMALINK

From Bernanke's speech today:

"In the short run, sharply higher energy prices create a rather different and, in some ways, a more difficult set of economic challenges. Indeed, a significant increase in energy prices can simultaneously slow economic growth while raising inflation."

And I think he qualifies as an economist.

Posted by: gab on June 15, 2006 at 2:58 PM | PERMALINK

Which almost makes up for the total that were lost during 2000-2003.

There are now 2.5 million more non-farm payroll jobs than there were during the previous peak in February of 2001.

Additionally, gross number of jobs doesn't take into account the increased in total workers.

The unemployment rate (currently 4.6 percent) does.

The unemployment rate didn't get this low during the Clinton adminstration until November of 1997. The last time before that the rate got as low as 4.6 percent was 1973.

Posted by: bls on June 15, 2006 at 3:09 PM | PERMALINK

It's Ba-a-a-ack

--------- Still, are worries about stagflation really up?

Yes. Since yesterday's release of the May CPI figures.

We now have 2 months in a row where 1 year core inflation has remained about 2.0-2.1. (That is, the numbers came in at 2.3 and 2.4% respectively for April and May IIRC).

So inflation is up: 2 consequtive months imply that this isn't just a blip on the screen. So the Fed has to increase rates further. But the economy is slowing. So they risk recession.

Look, we're experiencing an oil price shock, partly due to expanding demand from China, partly due to disappointing output from Iraq and other countries. Some combination of higher price growth and lower output growth should be expected.

Posted by: Measure for Measure on June 15, 2006 at 3:13 PM | PERMALINK

bls: The unemployment rate (currently 4.6 percent) does.

Not very well. Look at EPOP for a better picture (as even Alan Greenspan had to admit made sense). EPOP ain't so pretty. The disparity is called "discouraged workers".

Posted by: alex on June 15, 2006 at 3:15 PM | PERMALINK

bls

Perhaps one also has to take into account the number of discouraged workers for proper comprison, as the unemployment rate does not take that statistic into account.

The economy was so good during the Clinton years that everyone found or looked for a good paying job. Conversely, people are too bummed out during the Bush decline to even bother looking.

Posted by: nut on June 15, 2006 at 3:16 PM | PERMALINK

Sorry alex. didn't see your post before writing mine.

And of course, comprison-> comparison. (When will someone program a self-correcting text area for HTML?)

Posted by: nut on June 15, 2006 at 3:23 PM | PERMALINK

Can someone explain when and why the CPI was "adjusted" to exclude food and energy prices? Of course the explanation for why could include both the rationale and the real reasons for doing so.

Posted by: Another Bruce on June 15, 2006 at 3:26 PM | PERMALINK

Above, I looked at the latest price data. Now let's consider economic growth.

The last leading indicator figure was reported on May 18th. It showed a decline.

http://quote.bloomberg.com/apps/news?pid=10000006&sid=aa3RBXMyRWkk&refer=home

``There's softening in the economy, but it's not collapsing,'' said Anthony Chan, chief economist at JPMorgan Private Client Services in Columbus, Ohio. ``This is what the Federal Reserve has been looking for, to see whether its actions would cool the economy.''

That was opined before the less friendly inflation data came out. Higher oil prices are feeding in through the remainder of the economy: Bernanke will feel obliged to tighten further, notwithstanding the softening of the economy.

Posted by: Measure for Measure on June 15, 2006 at 3:27 PM | PERMALINK

Can someone explain when and why the CPI was "adjusted" to exclude food and energy prices? Of course the explanation for why could include both the rationale and the real reasons for doing so.

No problem.

The Bureau of Labor Statistics reports literally hundreds of price numbers per year. "Headline" inflation includes food and energy. It is a good measure of changes in the cost of living.

For my purposes here, I report "Core inflation": which weeds out the volatile food and energy numbers. It indicates whether the economy's underlying inflation is shifting.

So, there haven't been any changes in reporting by the BLS.

Posted by: Measure for Measure on June 15, 2006 at 3:31 PM | PERMALINK

bls, the Bureau of Labor Statistics measures discouraged workers. "Total unemployed plus discouraged workers, as a percent of the civalian labor force plus discouraged workers" was 4.8% in May, 2006, down from a high of 6.6% in June, 2004.

That's a nice improvement.

Posted by: ex-liberal on June 15, 2006 at 3:34 PM | PERMALINK

As mentioned above, EPOP is the more revealing number. According to the data here (scroll down to the Figure B) the EPOP has declined by 2.84% during the period between 2001 (Quarter 1) thru 2005 (Quarter 3).

With regard to unemployment, the conservatives' record has been less than stellar, as with any other measure of their performance.

Posted by: nut on June 15, 2006 at 3:36 PM | PERMALINK

BTW note that Clinton was President into 2001.

Yeah, for 21 days! I'm sure all of those jobs were lost in the 21 days Clinton was in office in 2001.

Smarter trolls, please.

Posted by: MeLoseBrain? on June 15, 2006 at 3:50 PM | PERMALINK


American Hawk, if you're not a troll, you are clueless.

Posted by: Andy on June 15, 2006 at 3:59 PM | PERMALINK

nut, you are correctly quoting the Economic Policy Institute, but with all due respect, I offer the following points:

1. The EPI is a leftist source. Although their figures may be correct, they spin them to their desired point of view, which appears to be making Bush look bad. That's why I prefer the federal Bureau of Labor Statistics.

2. EPI (and you) say that EPOP (ratio of workers to population) is more revealing. That would be true only if there were no change in the percentage of population who wanted to work. But, we know that this percentage has dropped. That is, there's been a drop in the ratio of
..... (employed+unemployed+discouraged workers)/population

That's why the unemployment rate has been getting steadily better, despite a worsening in EPOP.

3. EPI says their statistics are "Counting over the full course of the Bush Administration..." If their goal is to measure the results of Bush's policies, that's the wrong time period. It's can never be certain how much any President's policies affect the economy, but it is certain that his policies couldn't possibly affect the economy until they were in effect. Bush's tax cuts came into effect pretty near the bottom of the economy, so that's a fair point from which to measure their effect.

However, cause and effect is tricky. It's possible, but not proved, that Bush's tax cuts were responsible for the economic improvement that followed them.

Posted by: ex-liberal on June 15, 2006 at 4:03 PM | PERMALINK

Whether or not you want to call it stagflation there is reason for concern. Part of it depends on the importance you place on the Federal Reserve Rate moves. During Bush's first term, the Fed lowered rates to historic lows, so far that there was essentially no room to go any further. Now the rates are coming back up we might be in for a bumpy ride, but only time will tell. The 30 year mortgage rates are on their way back up already now back to where they were in 2002 when they were on the way down.

From the perspective of the typical wage earner the last five years have already been stagnant already with median wages that have fallen behind inflation.

republicrat: "unemployment is near its 50-year lows." Where do you get your statistics, this is the only one I checked and its not even close by any reasonable statistical defintion of near. You seem to have confused 3 year low with 50.

2005: 5.1%

2001: 4.7%
2000: 4.0%
1999: 4.2%
1998: 4.5%
1997: 4.9%
1969: 3.5%
1968: 3.6%
1966 & 67: 3.8%
1965: 4.5%
1956: 4.1%
1955: 4.4%
1957: 4.3%
1953: 2.9%

Posted by: Catch22 on June 15, 2006 at 4:05 PM | PERMALINK

Can someone explain when and why the CPI was "adjusted" to exclude food and energy prices?

Because they make the numbers look worse. Whether or not you think that's a good thing depends on whether you're being judged on the economy's performance. Whether or not you're being judged on the economy's performance depends on whether you're claiming responsibility for it (as BushCo is). It's actually in any administration's best interest to use such "Enron Style" accounting to make the economy look better. The debate on CPI and unemployment computation has raged quietly in this nation for the past 30+ years. Few economists want it to change, because the more realistic stats (Inflation including food and energy, and Unemployment including unemployed who have fallen off the radar, including the underemployed) statistics are available to economists who want them. What this REALLY is about is why these are the statistics that the Press uses when describing the economy to it's viewership. Hm. Why *would* the American Corporate Newsmedia be interested in making the Military/Media Industrial Complex-based economy look good?

It's said that a Recession means your neighbor got laid off, and a Depression means YOU got laid off.

Posted by: Osama_Been_Forgotten on June 15, 2006 at 4:06 PM | PERMALINK

It's possible, but not proved, that Bush's tax cuts were responsible for the economic improvement that followed them.

"Possible, but not proved," indeed. Anyone who seeks to credit Bush's reckless tax cuts without giving due credit to the housing boom and resulting equity windfalls is simply dishonest.

Of course, we still have Bush's tax cuts (for now), whereas the housing market has cooled off. And yet the Dow is still struggling to maintain 11,000. We'll see what an economic engine Bush's tax cuts truly are.

No matter though -- they've served their intended purpose and provided windfalls for the right people, eh?

Posted by: Gregory on June 15, 2006 at 4:09 PM | PERMALINK

Props to Catch-22 for covering the same points.

Posted by: Gregory on June 15, 2006 at 4:11 PM | PERMALINK
Acording to Nexis, mentions of "stagflation" have declined recently, trending downward from 181 in 2005 (through June 15), to 101 for the rest of 2005, to 68 this year (through June 15). If there's a genuine concern floating around out there, it hasn't made much of an impact on the news media yet.

Number of mentions, alone, is a pretty poor (but easily measurable) proxy for its importance to the news media (if there are fewer mentions, but in more prominently placed stories in more prominent outlets, is that really less attention?), and the "impact on the news media" itself is a poor proxy for the degree of concern among people who actually have any knowledge of the subject matter, so I'm not sure what the point of this observation is.

I mean really, the LA Times reports that some economists say that they are more concerned about stagflation. And your response is along the lines of "one the one hand, my instincts say that oil prices are pretty significant, so this could be a valid concern, on the other hand, well, there hasn't been all that much talk in the media about it." WTF?

The first note, while not all that substantive, is somewhat relevant, the second is, well, I don't get it. What's the point?

Posted by: cmdicely on June 15, 2006 at 4:13 PM | PERMALINK

The traditional measures of economy...have been excellent, but most people don't know that.

That's because the benefits of that economy aren't going to most people.

Posted by: Jenna's Bush on June 15, 2006 at 4:20 PM | PERMALINK

Something is afoot.

In Tucson... the housing market is stagnating.
If fact, for the first time in years I've seen realtor signs advertising: Price cuts.

I know of some utterly incredible neighborhoods (of nonpareil location) with 5 homes simultaneously for sale.

That's utterly unheard of since the last boom went bang.

Posted by: koreyel on June 15, 2006 at 4:29 PM | PERMALINK

The traditional measures of economy...

...are bollocks.

That's the whole point of this conversation. It all boils down to each side wanting to believe that the relevant measures are those which happen to make their side look good.

However, there are some immutable facts here that are overlooked at everyone's peril:

- record low savings rate.
- record high bankruptcy rate.
- lower personal income.
- lackluster jobs growth.
- high budget and trade deficits.
- high energy costs.
- declining value of the dollar.
- flat market growth over the past 6 years.

None of these are good signs.

Posted by: Osama_Been_Forgotten on June 15, 2006 at 4:29 PM | PERMALINK

Also - coupled with the "cherry-picked metrics" issue I mentioned above, is the propensity to blame bad things on external causes (like 9/11, Clinton's penis, Katrina, etc.) and take credit for good things (Bush's tax cuts).

Posted by: Osama_Been_Forgotten on June 15, 2006 at 4:36 PM | PERMALINK

---Can someone explain when and why the CPI was "adjusted" to exclude food and energy prices?

Osama: "Because they make the numbers look worse."

No. Inflation that includes food and energy prices is still reported. The latest 1 year figure is 4.2%. It is the highest profile inflation figure -- they call it "Headline inflation".

The core inflation number actually looks *better*, since it doesn't reflect skyrocketing energy prices: the latest figure is 2.4%

Posted by: Measure for Measure on June 15, 2006 at 4:37 PM | PERMALINK

I don't know about "EPOPS."

The civilian labor force participation rate (The labor force as a percent of the civilian noninstitutional population) is also available at the BLS statistics site. It was about 59 percent in 1963, and climbed steadily since then. Since 1985 it has hovered between 65 and a bit over 67 percent, peaking at 67.3 in 2000. Currently it's at 66.1, 1.2 percent lower than the peak, and still higher than at any time prior to 1988.

Posted by: bls on June 15, 2006 at 4:37 PM | PERMALINK

Face it, if it takes a page of math and equations to explain to voters why the economy, in spite of all the numbers, really stinks, it's not going to make a good election platform.

Posted by: bk on June 15, 2006 at 4:40 PM | PERMALINK

There is a difference between rising prices and inflation. Inflation is a decrease in the buying power of money. Usually caused by too large an increase of the money supply. That isn't the case with the price of oil. Which for the most part has been driven up by futures trading. Much the same as the dot com bubble during the Clinton era.

I look on the oil price rise as a good thing. Hopefully it will help the ethanol industry and we can become more energy independent.

I drive an E85 car but have to wait for walmart to put in E85 pumps to go green.

After all being a conservative I believe in conservation.

Posted by: TruthPolitik on June 15, 2006 at 4:40 PM | PERMALINK

sure enough: http://news.bbc.co.uk/2/hi/business/5084018.stm

must be economic stagnation.

Posted by: republicrat on June 15, 2006 at 4:46 PM | PERMALINK

catch22, I took my unemployment rate, 4.6%, from this site:http://www.bls.gov/.

Thats close to the 50 year lows that you printed. Note that 1953 is 53 years ago.

Posted by: republicrat on June 15, 2006 at 4:52 PM | PERMALINK

A contrarian worries more about what isn't on everybody's mind because "the pack is always wrong."

contrarians are always wrong too, they are just wrong in different ways.

Posted by: republicrat on June 15, 2006 at 4:53 PM | PERMALINK
Face it, if it takes a page of math and equations to explain to voters why the economy, in spite of all the numbers, really stinks, it's not going to make a good election platform.

Contrariwise, if it takes a raft of numbers to explain to the voters why the economy is doing well inspite of their declining perceptions of both the current economic situations and its future prospects, well, then the side arguing that the economy stinks won't have to work to hard, and the other side will face difficulties.

Posted by: cmdicely on June 15, 2006 at 5:25 PM | PERMALINK

A start in the right direction
Thanks GWB

http://www.fmwonline.com/headlines/2006/020706.htm

Posted by: TruthPolitik on June 15, 2006 at 5:48 PM | PERMALINK

It is possible but not proved that ....

Well, sorry for the inane repetition, but the jokes write themselves.

Posted by: nut on June 15, 2006 at 6:00 PM | PERMALINK

--------- Still, are worries about stagflation really up?

Wow, and some 66 posts without stating the obvious. Yes, stagflation has been the number one issue on the minds of the financial markets since mid May. While US markets fell 10% or more, Asian markets (that don't really have many fundamental problems right now, but are concerned about the US leading a global downturn), are down as much as 20% since mid May. I work in stock markets, but I didn't realize I was in such a bubble till I read this question.

Posted by: razdoctor on June 15, 2006 at 8:20 PM | PERMALINK

it hasn't made much of an impact on the news media yet.

Which is exactly what scares me?

Posted by: justmy2 on June 15, 2006 at 11:52 PM | PERMALINK

Cheers to Gregory. He called it stagflation 2 years ago. Of course we all knew it would happen sooner or later. Massive deficits equals printing massive dollars which equals inflation. And conservative mental deficients blame it on raising the minimum wage. Duhhhh...........

Posted by: MRB on June 16, 2006 at 1:33 AM | PERMALINK

I wouldn't be the slightest bit concerned, except that the mention of stagflation has gone down. When people stop worrying about highly unlikely bad things, that's usually when they happen.

Posted by: aaron on June 16, 2006 at 4:09 AM | PERMALINK

I feel better after reading razdoctor, if financial markets are worried about you can take that as a guarentee it ain't happening.

Don't think you're in a bubble at all raz, I've been hearing about this for quite a while too and I'm not in the markets.

Posted by: aaron on June 16, 2006 at 4:14 AM | PERMALINK

Bush supporters still cherrypicking statistics.

Unemployment of 4.6% is not statistically "near" 3.5% in 1968 nor 4.0% that it was in 2000. Each tenth of a % makes a huge difference, let alone over a half %. Dont let the numbers fool you.

Furthermore, the unemployment doesnt include discoraged workers, and the employment rate is lower than it has been in over a dozen years.

Finally given the monetary policy and the enormous deficits that have been run up over the past 5 years, when all is said and done America is lot worse off now than it was in 2000.

Posted by: Catch22 on June 16, 2006 at 10:20 AM | PERMALINK

Now your trying hard to make us laugh catch.

Do you remember what 2000 was like?!

Posted by: aaron on June 16, 2006 at 2:12 PM | PERMALINK

aaron: Do you remember what 2000 was like?!


sure...the dow was a bit below where it is right now...

the u-s had a projected surplus and a balanced budget...

and the fed. debt was around 5.6-trillion...

compared to today...where...

the dow is a few hundred points higher...

the last 3-budgets from bush and the gop have set new records for size of deficits...

and the fed. debt is over 8.2 trillion...

and dispite all that spending and debt...

has bush hit that goal he set...4-years ago?

of helping to create 7-million new jobs...

nope..

happy days are here again...

Posted by: thisspaceavailable on June 18, 2006 at 5:39 AM | PERMALINK




 

 

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