Relevant and even prescient commentary on news, politics and the economy.

income mobility

The Treasury recently came out with a study of income mobility in the US that is receiving a lot of play in the Wall Street Journal and in several blogs. Income mobility studies are very difficult to do properly and often are very misleading because they incompletely adjust for different factors. The biggest factor driving […]


I see the history rewriters are tying to develop a new meme about FDR and the depression. They are now trying to argue that FDR scared businessmen and capitalist so badly that they were unwilling to invest and this was why the recovery was so weak and the depression lasted so long. As usual, they […]

No single approach to the dollar works all the time. But the most important is interest rate spreads. The reason the dollar appreciated so much in the early 1980s is that interest rate spreads exploded upward to attract the foreign capital needed to finance the structural federal defictit created by the Reagan tax cuts. Int […]

Average hourly earnings

Earlier this week Econlog and Marginal Revolution had a good discussion about an article byTerry J. Fitzgerald in the Minneapolis Fed Review. The article goes into a great deal of detail about the weak performance of average hourly earnings in recent years. One point in the discussion was the new experimental measure of average hourly […]


There is a widespread belief that the destruction of industry in Japan and Europe played a major role in US economic growth in the 1950s. While the war time destruction did play a role in the lack of competition in the 1950s, the data says that it did not make a significant contribution to real […]


Since the early 1980s the US economy has undergone a significant shift with the old 3-4 year business cycle giving way to much greater economic stability as since 1984 the US has experienced only two minor recession. It appears that the US has shifted from having a recession roughly every 4 years to one every […]


GREENSPAN There was a discussion of Greenspan as a Fed Chairman earlier today. Different people were making various claims with no evidence to support their positions. So I though I would put in my two cents worth, but provide a chart to show why I take the position on Greenspan I do. The first chart […]

PRODUCTIVITY Productivity growth is clearly slowing, and the key question is, is this a purely cyclical development or is it signaling a slowing in the long term trend growth rate. Slowing productivity is a normal cyclical development and it is such a strong pattern, that historically, it has been a very good leading indicator. But […]

Government VS private waste

In looking at the question of whether business or government is more wasteful it might actually be possible to use the pro-business argument to demonstrate that business is actually more wasteful. The argument is that government does not have competition to force it to quit doing something so it continues to do things when they […]