Payroll growth for the last couple months over 300k, productivity growth spiking. GDP growth over the second half of 2023 was like 4% annualized. Inflation is back to having a 2 handle all that time...that's a booming economy.
yes:) it's all public data and not hard to find. The 4% is real growth (which means inflation factored out), jobs are by definition real. And the second half of last year was not comparing to a trough. Really, an intelligent critique please. This is meant to be a serious blog by a serious economist.
The 4.9% is the 3rd quarter number of 2023. The 4th quarter GOP growth was already down to 3.3%. The whole year of 2023 was only 2.5%. I believe that serious economists will read the whole report from the BEA not just to troll on others.
well yes, I said 4% real growth for the second half of 2023. The second half is the 3rd and 4th quarters. I could be mistaken but I suspect the average of 4.9 and 3.3 is over 4. I am sure a real economist such as yourself will correct me if I'm wrong there. My last 2 sentences stand as stated.
Nice that you point to Adam Smith in the week that existentialcomics does the same.
EC ... "In order to modernize, societies essentially had to get rid of the feudal lords and put all of their money into the hands of capitalists as much as possible, to kick start this kind of economic growth."
i.e. the capitalists would do stuff that re-employed the people who were displaced by innovations that increased productivity and put people out of jobs. Whereas the feudal lords would take any surplus and turn that into personal luxuries for themselves. Let's not allow our capitalists to become feudal lords.
Which came first, John, a reduction in aggregate demand or an increase in aggregate demand? FRED answers that question succinctly -- see https://fred.stlouisfed.org/graph/?g=1hT8C . Up to Fe 2020 inflation was trending up and the FOMC o/n rate was following it. From Fe 2020, inflation declined from 2.8% p.a. to 1.4% p.a. in Fe 2021 which was its nadir. From Fe 2021 inflation rose to 2.558% p.a. in June 2021, dipped to 2.33% p.a. Au 2021 and from there rose steadily to 6.538% p.a. in De 2022 which was its zenith. From De 2022, inflation rolled over and declined to 4.55% p.a. in De 2023. Data: "Sticky Price Consumer Price Index less Food and Energy" series CORESTICKM159SFRBATL .
The "Helicopter Drop" in 2020 had little immediate effect -- demand was curtailed by the governments' pandemic measures. The money was "banked" and only essential spending and payment of taxes dominated consumer expenditures. As the governments relaxed the pandemic restrictions, consumer spending picked but was still measured and cautious. With full reopening, the consumer splurge took up the slack but supply remained curtailed and unemployment levels reflected the dislocations caused by government curbs on normal economic transactions which rebounded only modestly. More "Helicopter Drops" occurred in early 2021 and highly accommodative FOMC added to the "pump priming" activities.
"Aggregate Demand" ("AD") and "Aggregate Supply" ("AS"), Keynesian concepts, do not determine inflation. When AD declines in response to government restrictions on normal consumer transactions, AS adjusts in response as firms curtail output as we saw first-hand or read about second-hand or heard about third hand during 2020. With the lifting of government restrictions AD recovered albeit slowly at first then rapidly. AS was slower to respond, as we saw with the major automobile manufacturers, and readily substitute but inferior products were substituted at greatly increased prices to balance supply with the then temporary demand. Dislocations caused by government policy coupled with non-Richardian fiscal measures and accommodative monetary policies contributed to the bump in aggregate price index levels that we confuse with AD-AS caused inflationary pressures.
Who says that the fiscal authority is not committed to running primary surpluses in the future? Your own work re the FTPL that the real value of government bond issues equals the appropriately discount present value of the future sequence of fiscal real primary surpluses from tomorrow until Judgement Day (a.k.a "Infinity"). If today's measure of the real value of government bonds, notes, and bills, is non-negative then we are assured by the FTPL that there is a positive conditional expectation of positive real primary surpluses in the future, almost surely. If not then the FTPL must be empty, a.s.
The IMF publication ranks with Time, Forbes, and Fortune magazines. Interesting ideas that consume little intellectual effort to read and digest. If economics is a science then it follows the scientific method; if not, then it is mere philosophy and fungible, taking on myriad forms and flavors. Which is it to be?
re: "US growth fell by half after 2000." In macroeconomics, it is an accounting truism that banks don't lend deposits. Secular stagnation and stagflation were both predicted in “Should Commercial Banks Accept Savings Deposits?” Conference on Savings and Residential Financing 1961 Proceedings, United States Savings and loan league, Chicago, 1961, 42, 43.
It's no happenstance that we got secular stagnation, as the volume and percentage of bank-held savings hit record highs. Today, that paradigm has partially reversed.
Mr. Cochrabe, I discovered you while watching the "Good Fellows," and have learned to enjoy economics. Wish during my college days I had studied some economics! The rambling thoughts of an old hermit.
Sorry to send this as a comment, but I couldn't find an email address
Dear Prof. Cochrane,
I agree with much, but not all, of what you say in your March IMF article. I wanted to share some of my Substack posts on the subjects you address. I apologize if some of my comments sound a bit, well, self-promotional.
1. In your article, you refer to the “unexpected resurgence in inflation”. In "Ain't Nothin' but a Party" from March, 2021, I predicted a “serious, if not existential” inflation problem (and for all the right reasons.) I’m not aware of anyone else who made such a forecast. https://charles72f.substack.com/p/aint-nothin-but-a-party
2. I strongly disagree with your assessment of the banking industry and bank regulation. "Basel: Faulty" discusses some of my reasons for disagreement, and, in the bargain, reveals the true cause of the 2007-8 financial crisis. It seems as though I’m the only one who knows, although the cause is obvious. https://charles72f.substack.com/p/basel-faulty-the-financial-crisis
3. On the subject of “how economics must change” I team up with Friedrich Hayek to explain what’s gone so horribly wrong with economics.
I clicked on the IMF link and started reading, but when I clicked on a link in the article and returned, it said "access denied"!
"We tried it. We got inflation, not boom."
Seems to me we got both.
I think only the stock market boomed…
Payroll growth for the last couple months over 300k, productivity growth spiking. GDP growth over the second half of 2023 was like 4% annualized. Inflation is back to having a 2 handle all that time...that's a booming economy.
Have you factored out the inflation effect before you talked about all those growths? Also, if compared to a trough, everything booms
yes:) it's all public data and not hard to find. The 4% is real growth (which means inflation factored out), jobs are by definition real. And the second half of last year was not comparing to a trough. Really, an intelligent critique please. This is meant to be a serious blog by a serious economist.
The 4.9% is the 3rd quarter number of 2023. The 4th quarter GOP growth was already down to 3.3%. The whole year of 2023 was only 2.5%. I believe that serious economists will read the whole report from the BEA not just to troll on others.
well yes, I said 4% real growth for the second half of 2023. The second half is the 3rd and 4th quarters. I could be mistaken but I suspect the average of 4.9 and 3.3 is over 4. I am sure a real economist such as yourself will correct me if I'm wrong there. My last 2 sentences stand as stated.
All it took for those 6 months of (to be revised down) growth were 7 pct deficits and 6 million illegals. Fantastic!
Great job. The words "fiscal probity" identify what is needed. I wish this was more widely understood.
Nice that you point to Adam Smith in the week that existentialcomics does the same.
EC ... "In order to modernize, societies essentially had to get rid of the feudal lords and put all of their money into the hands of capitalists as much as possible, to kick start this kind of economic growth."
i.e. the capitalists would do stuff that re-employed the people who were displaced by innovations that increased productivity and put people out of jobs. Whereas the feudal lords would take any surplus and turn that into personal luxuries for themselves. Let's not allow our capitalists to become feudal lords.
Which is misleading because it was not broad just the Mag 7
Which came first, John, a reduction in aggregate demand or an increase in aggregate demand? FRED answers that question succinctly -- see https://fred.stlouisfed.org/graph/?g=1hT8C . Up to Fe 2020 inflation was trending up and the FOMC o/n rate was following it. From Fe 2020, inflation declined from 2.8% p.a. to 1.4% p.a. in Fe 2021 which was its nadir. From Fe 2021 inflation rose to 2.558% p.a. in June 2021, dipped to 2.33% p.a. Au 2021 and from there rose steadily to 6.538% p.a. in De 2022 which was its zenith. From De 2022, inflation rolled over and declined to 4.55% p.a. in De 2023. Data: "Sticky Price Consumer Price Index less Food and Energy" series CORESTICKM159SFRBATL .
The "Helicopter Drop" in 2020 had little immediate effect -- demand was curtailed by the governments' pandemic measures. The money was "banked" and only essential spending and payment of taxes dominated consumer expenditures. As the governments relaxed the pandemic restrictions, consumer spending picked but was still measured and cautious. With full reopening, the consumer splurge took up the slack but supply remained curtailed and unemployment levels reflected the dislocations caused by government curbs on normal economic transactions which rebounded only modestly. More "Helicopter Drops" occurred in early 2021 and highly accommodative FOMC added to the "pump priming" activities.
"Aggregate Demand" ("AD") and "Aggregate Supply" ("AS"), Keynesian concepts, do not determine inflation. When AD declines in response to government restrictions on normal consumer transactions, AS adjusts in response as firms curtail output as we saw first-hand or read about second-hand or heard about third hand during 2020. With the lifting of government restrictions AD recovered albeit slowly at first then rapidly. AS was slower to respond, as we saw with the major automobile manufacturers, and readily substitute but inferior products were substituted at greatly increased prices to balance supply with the then temporary demand. Dislocations caused by government policy coupled with non-Richardian fiscal measures and accommodative monetary policies contributed to the bump in aggregate price index levels that we confuse with AD-AS caused inflationary pressures.
Who says that the fiscal authority is not committed to running primary surpluses in the future? Your own work re the FTPL that the real value of government bond issues equals the appropriately discount present value of the future sequence of fiscal real primary surpluses from tomorrow until Judgement Day (a.k.a "Infinity"). If today's measure of the real value of government bonds, notes, and bills, is non-negative then we are assured by the FTPL that there is a positive conditional expectation of positive real primary surpluses in the future, almost surely. If not then the FTPL must be empty, a.s.
The IMF publication ranks with Time, Forbes, and Fortune magazines. Interesting ideas that consume little intellectual effort to read and digest. If economics is a science then it follows the scientific method; if not, then it is mere philosophy and fungible, taking on myriad forms and flavors. Which is it to be?
Gods of the copybook headings…..
re: "US growth fell by half after 2000." In macroeconomics, it is an accounting truism that banks don't lend deposits. Secular stagnation and stagflation were both predicted in “Should Commercial Banks Accept Savings Deposits?” Conference on Savings and Residential Financing 1961 Proceedings, United States Savings and loan league, Chicago, 1961, 42, 43.
It's no happenstance that we got secular stagnation, as the volume and percentage of bank-held savings hit record highs. Today, that paradigm has partially reversed.
Mr. Cochrabe, I discovered you while watching the "Good Fellows," and have learned to enjoy economics. Wish during my college days I had studied some economics! The rambling thoughts of an old hermit.
Sorry to send this as a comment, but I couldn't find an email address
Dear Prof. Cochrane,
I agree with much, but not all, of what you say in your March IMF article. I wanted to share some of my Substack posts on the subjects you address. I apologize if some of my comments sound a bit, well, self-promotional.
1. In your article, you refer to the “unexpected resurgence in inflation”. In "Ain't Nothin' but a Party" from March, 2021, I predicted a “serious, if not existential” inflation problem (and for all the right reasons.) I’m not aware of anyone else who made such a forecast. https://charles72f.substack.com/p/aint-nothin-but-a-party
2. I strongly disagree with your assessment of the banking industry and bank regulation. "Basel: Faulty" discusses some of my reasons for disagreement, and, in the bargain, reveals the true cause of the 2007-8 financial crisis. It seems as though I’m the only one who knows, although the cause is obvious. https://charles72f.substack.com/p/basel-faulty-the-financial-crisis
3. On the subject of “how economics must change” I team up with Friedrich Hayek to explain what’s gone so horribly wrong with economics.
https://charles72f.substack.com/p/the-pretense-of-knowledge
I hope you can find time to take a look at these articles. I would greatly appreciate whatever comments you might have.
Best regards,
Charles Cranmer
Exton, PA
610-574-0165