Just in case you missed the tirade launched by Jim Cramer on the Federal Reserve, Matt Yglesias brings us a humorous play on it. Poor Jim, his speculative plays will not be bailed out by the FED. But Lawrence Kudlow is hoping Main Street will bail out Wall Street:
Main Street was focused on the real economics of our nation. To this day, the American labor force is going to work, running the millions of small owner-operated companies that provide the wellspring of our prosperity. And Main Street is benefiting from an unprecedented global boom that is stocking our stores with affordable goods and creating plentiful new jobs as U.S. firms service the rise of new export markets. With a record 146 million men and women working, and the unemployment rate at a historically low 4.6 percent, the American labor force has increased its after-tax real income by a whopping $257 billion. Nominal wages for non-supervisory workers alone have sprouted by $296 billion over the past year, according to Wall Street economist David Malpass. Average compensation per hour has grown 5.2 percent.
Where to begin with Kudlow’s incessant stupidity? Real wages for non-supervisory workers as of June 2007 were at the same level they were as of December 2002. The employment to population ratio has declined from its 64.4 percent as of December 2006 to 64.0 percent. The labor market is not quite as strong as Kudlow would have you believe.
And I’m sure you are wondering about his claim that we are enjoying some sort of export boom. If one compares the export to GDP ratio for 2007QII, which was 11.58 percent, to this ratio for 2000QIV, which was 11.21 percent – it does turn out that export growth has been slightly greater than GDP growth. But average real GDP growth has been rather anemic over the past six and a half years. Kudlow omits the fact that the import/GDP ratio has risen from 15.27 percent as of 2000QIV to 16.83 percent as of 2007QII. To suggest that the U.S. is enjoying a net export boom, which is creating a lot of new jobs, is simply dishonest. But hey – that’s Kudlow’s job: lie to the readers of the National Review.