The Brookings Institute has just come out with a new paper seeking to explain the decline in labor’s share of national income. The paper is titled, The Decline of the U.S. Labor Share. It was written by Michael W. L. Elsby, Bart Hobijn, and Ayşegül Şahin. Here is a video of Justin Wolfers explaining the […]

Were Lawrence Summers what his critics say he is—a political hack with an inflated sense of his own skills that is matched only by his sense of entitlement, accompanied by a grotesquely non-realistic view of his accomplishments—this is precisely the letter he would write. Felix, who was The Voice of Reason on this  before and […]

Nick Rowe at Worthwhile Canadian Initiative asks a question… “What happened in 2008? Why didn’t the cut in interest rates prevent Aggregate Demand from falling? Was it just that the cut in interest rates wasn’t big enough? Or is the rate of interest the wrong thing to look at? Because it’s only a relative price, […]

Via Vox come these thoughts on the interface between the language of economists and general media and audience. Deadweight Loss Re-defined Economists usually think of taxation as inefficient. This column argues that the anti-tax rhetoric evident in much lay discussion of public policy draws considerable support from the prevalent negative language of professional economic discourse. […]

The FOMC statement has just come out… They have decided to not change the policy of buying $85 billion in bonds per month. “The bigger they are, the harder they fall.” … The next recession will be interesting.

The transmission mechanisms that distribute liquidity to consumer demand labor are broken. More QE just feeds the supply-side of the economy making it more and more top-heavy. There is evidence of a bubble forming from Tim Duy. The Fed is making the economy more and more unstable as time goes by. The imbalance between capital […]

In Part 1, [here at AB] I looked at factors that tie closely with Total Capacity Utilization (TCU), and saw no reason to believe that TCU is about to surge.  In Part 2 I’ll be looking at more general ideas that reinforce my lack of optimism.  My underlying assumption is that for TCU to surge, […]

In case you missed it, Panera Bread CEO Ron Shaich (founder) is taking the SNAP Challenge. “in an effort to find out how the other half lives by limiting grocery purchases to the average benefit amount shelled out by the Supplemental Nutrition Assistance Program. It’s not much. A typical food stamp recipient receives just $4.50 […]

In the previous post, capacity utilization is low and steady, and inflation is too. Low inflation is a sign that labor has a liquidity disadvantage to capital. Explanation below. Here is inflation (all items less food and energy on a quarterly basis). Link to graph #1. Quarterly inflation. Is this a problem? Well… One way […]

Here is the latest reading on capacity utilization. Data for August 2013 released yesterday. Link to graph. It has been flat-lining for over a year and a half. Look familiar? Similar thing was happening before the crisis. Note: To really appreciate capacity utilization, here is a table giving the sectors of industrial output involved and […]