Beat the Press is Dean Baker's commentary on economic reporting. He is a Senior Economist at the Center for Economic and Policy Research (CEPR). To never miss a post, subscribe to a weekly email roundup of Beat the Press.

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No, I'm not being a Trump cheerleader, I am just looking at the numbers. This piece in the Washington Post noted the lack of real wage growth and indicated the future prospects were dubious.

The year-over-year rate of inflation was 2.9 percent in July, slightly exceeding the 2.7 percent rate of growth in the average hourly wage. However, this figure was inflated by jumps in oil prices last August and September. In the next two months, these jumps fall out of the 12-month window.

If we assume that inflation will be 0.2 percent in each of the next two months, and the 12-month rate of growth of nominal wages remains at 2.7 percent, year-over-year real wage growth will be very slightly positive next month and will be 0.3 percent in September. That is hardly great wage growth, but it is positive. That is not much for Trump to brag about, but it would be wrong to say that real wages are stagnant. 

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Austin Frakt had an NYT Upshot piece complaining that the cost of the Medicare prescription drug plan to taxpayers has been soaring:

"But the stability in the premiums belies much larger growth in the cost for taxpayers. In 2007, Part D cost taxpayers $46 billion. By 2016, the figure reached $79 billion, a 72 percent increase."

This is a peculiar complaint because the plan is actually costing the government far less than had been projected. The 2004 Medicare Trustees report projected that Part D would cost 1.01 percent of GDP in 2015 and rise to 1.31 percent of GDP in 2020 (Table II.C21). If we interpolate, that means the plan should have cost 1.13 percent of GDP in 2017. That would come to roughly $250 billion.

The 2018 report shows that Part D cost $100 billion in 2017 (Table III.D1), less than half of what had been projected in 2004. The main reason for the lower than projected expenditures is that drug costs have increased far less than had been expected, primarily due to a slowdown in the development and approval of new drugs.

In any case, if there are any surprises with the Medicare drug program it has been the slower the projected growth of costs, not the opposite.

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Politicians like to take credit for things they have little to do with it. Serious newspapers point this fact out when it happens.

The Washington Post fell down on the job in a piece that quoted Wisconsin governor Scott Walker saying, "There are more people in the workforce in Wisconsin than ever before in the history of the state."

This is a pretty empty claim since it will be true most of the time (except recessions) for most states. Since populations generally grow, unless there is a downturn, in most months the state will have more people in the workforce than ever before.

A more serious analysis would look at the percentage of the population in the workforce. This is not at an all-time high. In June, 54.6 percent of Wisconsin's population was in the workforce. This compared to more than 55.0 percent in 2000.

It is possible that this drop is explained by demographic changes (more older people and children today), but the percentage of people in the workforce would be the real question, not the number. The Post should have pointed this out to its readers so they would not be deceived by Walker's nonsense boast.

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That might have been worth mentioning in this NYT piece on Wisconsin's political situation. The piece notes the conservative policies put in place by the state's Republican governor, Scott Walker. It then notes that the unemployment rate has fallen below 3.0 percent.

In this context, it might have been worth mentioning that Minnesota, Wisconsin's neighboring state, has an unemployment rate of 3.1 percent. Minnesota has been led by a liberal Democrat. This suggests that Wisconsin's relatively strong labor market might be more the result of regional factors than Mr. Walker's policies.

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I am not in the habit of defending Democrats (it's not part of my job description), but come on folks. The central graph in this piece shows little change in the views of Democrats on the economy pre- and post-2016. It shows the percentage of Republicans who rate the economy good or excellent jumping from around 20 percent to 77 percent in the most recent reading.

This is a story of Republican attitudes reflecting who is in the White House. It shows the exact opposite for Democrats. We know this is the era of Trump, but please let's have reporting reflect the facts that are in front of our faces.

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I see that Glenn Kessler, the Washington Post fact checker, is being pretty liberal in dishing out the Pinocchios over Democrats' claim that a study from a right-wing think tank found that a Medicare-for-all system would save $2 trillion over the course of the decade. Kessler's main complaints are that these savings assume that providers accept a 40 percent reduction in payments and that Democrats' have ignored the study's projection that Medicare-for-all would add $32.6 trillion to the federal budget over the decade. For these omissions, Kessler awarded three Pinocchios. This seems excessive to me.

First, Kessler argues that a 40 percent reduction in payments to providers is unrealistic. This is true, based on the historic balance of power in these debates where doctors hospitals, drug companies, and medical equipment suppliers all have very powerful lobbies. But if there was a committed majority in Congress for providing universal Medicare, it is possible that these lobbies could be defeated.

In this context, it would be helpful to point out that providers in other wealthy countries do get 40 percent, and sometimes even 50 percent or 60 percent less than providers in the United States. There is little doubt that providers would scream bloody murder over the prospects of large pay cuts, but what would be their option if there was the political will? Would doctors change careers and become shoe salespeople?

Kessler is, of course, right that the study projected a large increase in government spending under Medicare-for-all, and that was its main point. This does raise important political problems, but the biggest chunk of this increase comes from replacing employer payments for insurance with government payments. Would people really be that upset if the money that their employer sent to an insurance company was instead sent to the government to pay for health care?

It seems to me that the prospect of saving $2 trillion over a decade (roughly $15,000 per household) might be worth having more money go through the government. That is, of course, unless one has an ideological distaste for the government or wants to see insurers, drug companies, doctors, and equipment suppliers have more money.

As an economist and certified numbers geek, I can sympathize with Kessler's complaint that the Democrats aren't giving the full story. But is this really a three Pinocchio offense when we have many leading politicians, like the president, who literally just make things up and just deny well-established facts?

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Prior to the collapse of the housing bubble and the resulting financial crisis there was little interest in major news outlets in pieces warning about the bubble and the risks it posed to the economy. These days there seems to be a large demand for such pieces. Unfortunately, in choosing these pieces, news outlets seem little better informed today than they were in the housing bubble years.

Today’s contribution comes from William D. Cohan and appears in the New York Times. The center of his story is corporate debt. The argument is that we have a large amount of debt that has been taken on at very low interest rates. If interest rates go up, then many debtors will be unable to pay their debts and we will be back in the 2008 financial crisis.

To get the ball rolling, Cohan pulls off one of the best bait and switches I have seen for a long time. He tells readers:

“The $30 trillion domestic stock market seems to get all the attention. When the stock market sets new highs, we instinctively feel things are good and getting better. When it tanks, as happened in the initial months of the 2008 financial crisis, we think things are going to hell.

“But the larger domestic debt market — at around $41 trillion for the bond market alone — reveals more about our nation’s financial health.”

This is a great bait and switch because he uses the $41 trillion figure for the bond market, but the rest of the piece is essentially devoted to corporate debt. Most of the $41 trillion in bonds either comes from the federal government ($17 trillion), Fannie and Freddie ($6.7 trillion), and state and local governments ($3.1 trillion). The portion that is attributable to non-financial corporations, which is the focus of the piece, comes to $6.2 trillion.

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We all know how hard it is to get help these days. Companies are shelling out $15 or $20 million a year for CEOs who can't seem to figure out how to tie their own shoes. Marketplace radio ran a piece on how companies are turning to older workers, people with prison records, and people who failed drug tests to find workers. While this is great news, since these people are now getting opportunities as a result of the low unemployment rate, companies seem to be ignoring the most obvious place to find workers: their competitors.

For some reason, the possibility of pulling workers away from competitors never seems to occur to employers. We have been treated to endless pieces about how trucking companies can't find workers, or how manufacturing workers can't get people with the right skills.

These people are out there in large numbers, they just happen to be working elsewhere. But there is a way to get workers to change employers: offer them higher pay. We do see this process in action sometimes. When a baseball team wants to get a great pitcher, they offer them really high pay. Universities will do this to attract star academics. And, this is ostensibly how CEO pay got pushed up into the eight-figure range.

For some reason, these same CEOs just can't figure out how to raise wages when it comes to attracting ordinary workers. According to data from the Bureau of Labor Statistics, the average hourly wage for production and non-supervisory workers in both trucking and manufacturing have risen 2.7 percent over the last year, just even with the rate of inflation. This means that real wages are not rising at all in these sectors, in spite of employers alleged difficulty in finding workers.

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Donald Trump provides no shortage of grounds for criticism, but the NYT is really grasping at straws in it editorial headlined, "clouds darken Trump's sunny economic view." The confusion that characterizes the piece starts in the first paragraph when it tells us "the stock market seemed unimpressed" by the 157,000 jobs reported for July.

This is bizarre for two reasons. First, a major complaint of the piece is that workers are not getting their share of productivity gains, instead, it is going to profits. While this is true (although the revised data do show a substantial shift from profits to wages in the last three years), the story of stagnant wages and rising profits should lead to a higher stock market, other things equal.

If shareholders believe that Trump policies will shift income from wages to profits, this would be a reason for the market to rise. If we are supposed to be impressed by the market's decline then this could mean shareholders are worried about future profits. This is again a case where it is worth pointing out that the stock market is not the economy.

The other point is that monthly jobs data are erratic. It is common for bad months to be followed by good months and vice versa. This is why economists typically focus on job growth over several months, as opposed to a single month.

We created 268,000 jobs in May and 248,000 jobs in June. Both numbers were revised upward with the July data. This gives us an average of 224,000 new jobs over the last three months. That is a pretty damn good story by any measure.

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Last week I noted the Trump administration's professed concern that higher mileage standards would lead to more traffic deaths because fuel efficient cars make it cheaper to drive, therefore people will drive more. As I pointed out at the time, if Trump wants to discourage people from driving then shifting to pay by the mile insurance policies would have create much more disincentive than having them drive fuel inefficient cars.

I gave some links to the relevent literature in that blog post, but here are some newer ones.


I'm sure the Trump administration will soon be leading the charge on this issue.

Thanks to Mark Brucker for the references.

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The NYT had a front page piece on how two major steel companies with close ties to the Trump administration are having enormous say on which companies are granted exemptions to his steel tariffs. While there is nothing in principle wrong with the affected companies giving their input on whether exemptions should be granted, given the lack of transparency and financial disclosure by top officials in the Trump administration, it is difficult to have confidence that these decisions are being made on the merits alone.

This issue has been noted earlier by the NYT. Tariffs and exemptions to them provide enormous opportunities for the Trump administration to practice crony capitalism. That is not necessarily an argument against all tariffs, but such favoritism is an inevitable problem associated with tariffs or other forms of protectionism (like patents and copyrights). This does show the need for having a transparent process in which the individuals making decisions do not have a financial interest in the outcome.

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This recovery has not been great for workers. They have seen modest real wage gains over the last five years, but these gains have not come close to making up the ground lost in the recession and the first years of the recovery.

Nonetheless, real wages have been growing for most of the last five years. The last month has been an exception to this pattern, not because nominal wages have grown less, but because we had a large jump in energy prices, which has depressed real wage growth. Here's picture for the last five years.


As can be seen, there is a very modest acceleration in the rate of average hourly wage growth over this period from just over 2.0 percent in the middle of 2013 to 2.7 percent in the most recent data. Real wage growth, which is the difference between the rate of wage growth and the rate of inflation, as measured by the Consumer Price Index, has mostly been positive, with the exception of a few months at the end of 2016 and beginning of 2017 and last month.

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One of the truly amazing aspects of Donald Trump's trade war with China is how all the pundits agree that we have a legitimate beef with China over stealing "our" intellectual property. This is true pretty much across the board, even among the harshest critics of Trump and his tariffs. As I have argued almost alone, this one needs a bit more thought.

First, the "our" part of the story needs some examination. The vast majority of us don't own any substantial amount of intellectual property that is being compromised by China's practices, Somehow we are supposed to be concerned that Boeing, Microsoft, Pfizer, Disney, and the rest are seeing lower profits because China doesn't follow the rules they want them to follow.

Sorry folks, these are not the homes teams that we are supposed to root for in baseball. These are huge multinationals that have made their largest shareholders and top executives incredibly rich. The rest of us are supposed to want to stick it to China to make these people even richer?

It's actually even worse. The simple story is that if China has to pay less money to Boeing et al. for their intellectual property claims they will have more money to buy other things from the United States, like soybeans and whiskey. Tell me again about "our" intellectual property.

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I know that we shouldn't be telling readers what political figures think, but in this case, it logically follows from their claim that weakening fuel efficiency standards would save more than10,000 lives over the course of a decade. They gave several reasons for why weakening standards would save lives but the most important was that more fuel efficient cars would make it cheaper to drive, and therefore people would drive more and therefore be in more accidents. They assumed a very strong relationship between the cost of driving and the number of miles driven.

In getting to their calculation of lives saved, the Trump administration was comparing a standard of 50 miles a gallon with the 37 miles a gallon standard that would be locked in place after 2021 under their plan. This implies a 35 percent reduction in gas cost per mile.

The idea of pay-by-the-mile auto insurance is to take what is largely a fixed cost that doesn't directly change with the number of miles driven (insurance premiums) and replace it with a per mile charge. To get a rough idea of the charge, the average premium is somewhat over $1,000 per year, but let's round to $1,000. The average car is driven close to 10,000 miles a year, which gives us a cost of 10 cents per mile.

If a car gets 30 miles per gallon, then the current gas cost per mile driven would be about 10 cents, assuming that gas is $3.00 a gallon. This means that pay-by-the-mile auto insurance would effectively double the per-mile cost of driving. This compares to the Trump administration's plan which would only raise the cost by 35 percent against the baseline.

This means that if the Trump administration plan would save more than 10,000 lives in traffic accidents then pay-by-the-mile auto insurance would easily save two or three times this amount. (For an extra dividend, the state could convert their car registration charges into per-mile fees.)

Anyhow, this is obviously the next step the Trump administration will take if it is concerned about preventing traffic deaths. Of course, if the point is just to reverse something the Obama administration did to slow global warming, then maybe not.

For those interested, here are some references on pay-by-the-mile auto insurance.

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When I saw the Bureau of Labor Statistics' Employment Cost Index (ECI) numbers for the second quarter this morning, I sent a note to some friends joking about how wage growth is skyrocketing, in the sense that it isn't. The report showed compensation rose 0.6 percent in the second quarter, this is actually a modest slowing from prior quarters.

As a practical matter, the numbers are erratic enough and the changes are small enough, that I wouldn't necessarily argue that wage growth has slowed based on the new ECI data, but the key point is that it sure does not look like it is accelerating. Here's picture over the last decade.

Employment Cost Index: Total Compensation


Source: Bureau of Labor Statistics.

Given what the data showed I was surprised to find a tweet from Donald Trump announcing "worker pay rate hits highest level since 2008." It turns out this was actually the headline of a CNBC piece touting the 2.8 percent year over year growth shown in the ECI.

While Donald Trump's confusion with the data is hardly surprising (we know he has trouble with numbers), the CNBC piece is more than a bit off the mark. First of all, it would be useful if it could distinguish rates of growth from levels. Wages and compensation are virtually always rising, which means they set new highs every month and quarter.

The headline should have indicated that this was the fastest rate of increase since 2008. Also, this was not just a problem of a confused headline writer, the first sentence of the piece tells readers:

"Compensation for workers rose to a nearly 10-year high in the second quarter as inflation pressures continued to percolate in the U.S. economy."

Interestingly, the very next sentence gives the new data showing the slowdown in compensation growth to 0.6 percent in the quarter, although it never points out this is a slowing, instead highlighting the increase in the twelve-month growth rate to 2.8 percent, even as the new data actually goes in the opposite direction.

It also would have been useful to note that even this twelve-month rate of compensation growth does not imply any increase in workers' real pay, as inflation over this period was also 2.9 percent. In short, this tweet from Donald Trump, like most of his tweets, didn't make much sense, but at least, in this case, he could blame the error on someone else.

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Okay, I'm going to plead guilty to playing lawyer without a license. The NYT reports that the Trump administration is proposing to unilaterally (as in no congressional action) change the way that capital gains are calculated for tax purposes.

The plan is to allow people to index capital gains for inflation. For example, under current law, if you bought 100 shares of stock for $100 per share ten years ago, and sell the shares today for $200, you would pay the capital gains tax on the full difference of $10,000. (100* $200 = $20,000, 100* $100 = $10,000. $20,000 minus $10,000 = $10,000)

Under the Trump administration's plan, you would be able to adjust the original $10,000 purchase for the inflation in the last decade. Let's say that the inflation over this period has been a total of 20 percent. This means that instead of deducting $10,000 from the current sale price to calculation your gain you would deduct $12,000. This would leave a taxable gain of $8,000 instead of $10,000.

In this case it means a 20 percent reduction in the tax rate on capital gains. The reduction would be greater for longer held assets and less for assets held a short period of time.

In case there is any doubt, almost all of the savings would go to rich people. The article cites an analysis showing that 97 percent of the savings would go to the top 10 percent of the population and more than two thirds would go to the richest 0.1 percent.

And, just to be clear, don't be foolish enough to think this is about helping the middle class Joe and Jane with their 401(k)s. These suckers have the capital gains in their 401(k)s taxed as ordinary income. They won't be helped one iota by this change in the tax law. As the Republican motto goes, "tax cuts are for rich people."

Now for my cheap legal thoughts. Congress has repeatedly changed the tax code with the understanding that a capital gain was defined as the difference between the selling price of an asset and the purchase price. This is one reason why the tax rate on capital gains is so much lower than the tax rate on wage income. (The top tax rate on capital gains is 20 percent, compared to 37.0 percent on wage income.)

In effect, the Trump administration would be saying that Congress didn't know what it was doing when it was setting capital gains tax rates. That they actually meant for the gains to be indexed to inflation, it was just some weird misunderstanding that persisted for all these decades that caused capital gains to be measured by just taking actual purchase price.

I suppose this would be surprising, but given the open contempt that the Trump administration routinely shows for the rule of law, inventing a huge tax break for the richest people in the country is pretty much what we have come to expect. After all, if they didn't get to lie, cheat, and steal, how could rich people get by on today's rapidly changing economy?

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I'm beginning to feel like the mouthpiece for the complacency lobby, but we continue to see baseless articles in prominent places telling us that another financial crisis is imminent. The latest entry comes from Steven Pearlstein at the Washington Post, warning us that "The junk debt that tanked the economy? It's back in a big way."

The villain in this story is collateralized loan obligations (CLO). These are securities that put together a variety of loans and then are sold off in tranches. The tranches are ranked with the more senior ones getting the first claim to payments and least senior ones getting the last claim. This way a pool of risky loans can be used to create senior tranches with top investment grade ratings. The least senior tranches will be very risky and carry junk ratings but will offer a high rate of interest.

Pearlstein warns that the growth in CLOs has been explosive.

"Because the market seems to have an insatiable appetite for CLOs, leveraged lending and CLO issuance through the first half of the year are already up 38 percent over last year’s near-record levels."

Sounds really scary, but how much is 38 percent above last year's levels? Pearlstein never gives us a number, but a little digging tells us that the CLO market is just over $1 trillion. So how worried should we be?

Let's call in Mr. Arithmetic. Suppose that 40 percent of these CLOs go bad, an extremely high percentage. That would be $400 billion in CLOs that could not be paid off in full. Of course, most people would still be getting their payments, since most of the loans in a CLO would likely still be paid. Let's assume a loss rate of 40 percent on this $400 billion, a very high loss rate. That translates into $160 billion in losses.

Is this another financial crisis? We have a GDP of $20 trillion, making these losses equal to 0.8 percent of GDP. Arguably, our total wealth of close to $100 trillion is the better denominator, putting the losses at 0.16 percent of total wealth. Are you scared yet?

The story of the financial crisis was one of loans that were directly linked to a seriously over-valued asset that was widely held (housing). When the housing market collapsed, the loan supporting the market also collapsed, creating a downward spiral where falling house prices led to greater default rates, which also undermined the market for home purchases, further depressing prices.

The collapse in housing led to both a huge plunge in construction of 5 percent of GDP ($1 trillion annually in today's economy) and a plunge in housing wealth driven consumption of almost 3.0 percent of GDP ($600 billion in today's economy). That is what tanked the economy as it is not easy to find a way to replace lost demand equal to 8.0 percentage points of GDP.

This is hugely different than Pearlstein's absurd story about CLOs crashing the economy in 2008. Of course, it doesn't mean that we should not be worried about this risky loans. It is likely that lenders are making big bucks selling tranches to people who do not understand the risk. This is not a way to promote economic growth. This rip-off finance is a pure waste to the economy and diverts resources from productive uses. But it will not crash the economy.

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The NYT had an interesting piece on how the tight labor market is forcing trucking companies to reach out to women and minorities to hire as truckers. Trucking is an industry that had historically been dominated by white men, but with fewer white men willing to work as truckers, the article argues that the industry has no choice but to look to other demographic groups.

This is a great example of how a tight labor market disproportionately benefits the more disadvantaged segments of the population. This is why people who want to combat racial and gender inequality should be especially attentive to the policies of the Federal Reserve Board. If it needlessly raises interest rates to slow the economy, reduce job creation, and weaken the labor market, disadvantaged groups will be the main victims. 

It is also worth noting that trucking companies don't seem to be working as hard to increase pay to attract drivers as this piece implies. According to the Bureau of Labor Statistics, the average hourly wage for truckers has risen by just 2.3 percent over the last year, less than the rate of inflation.

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Donald Trump has gotten some well-deserved ridicule his boasts about the "amazing" economy. While the 4.1 percent growth figure reported for the second quarter is impressive, it is hardly qualifies as amazing. There were four quarters in the Obama years with faster growth. Going back before the Great Recession, there were many quarters with much more rapid growth. My favorite is the second quarter of 1978, back when Jimmy Carter was president, and the economy grew at a 16.4 percent rate.

But getting beyond Donald Trump's conception of "amazing," the real issues are whether the rate is sustainable and whether Trump's policies deserve credit. On the second point, his tax cut almost certainly deserves some of the credit for the quarter's growth. The tax cut is putting more than $150 billion into people's pockets this year. While it is true that the bulk of this money is going to the rich, who will spend a smaller share of their tax cut than a middle-income household, the extent to which they will increase their spending is not zero.

A quick check on whether people are spending their tax cut is the saving rate. If people are not spending the tax cut, the saving rate should jump. There has been a modest increase, with an average of 7.0 percent in first half of 2018 compared to 6.7 percent for 2017. This would suggest that people are spending the bulk of their tax cuts. This assessment requires an important qualification: savings data are subject to very large revisions, so when we have the final data for the first half of 2018, it may look very different from what the numbers show now.

Consumption increased at a 4.0 percent annual rate in the quarter, making it the largest contributor to the quarter's growth. This is largely a bounce back from weak growth of 0.5 percent in the first quarter. The two-quarter average is 2.3 percent, which is respectable, but hardly exceptional. It is certainly plausible that consumption will continue to grow at roughly this pace.

Non-residential investment grew at a 7.3 percent annual rate, adding 0.98 percentage points to growth for the quarter. This is a respectable rate, but hardly in keeping with the investment boom story that provided the rationale for the corporate tax cut.

Furthermore, the biggest factor in the jump in investment was an increase in investment in mining structures (primarily oil and gas drilling) of 97.1 percent. While this increase may be partly attributable to Trump's drill everywhere policy, the more likely cause is the increase in world oil prices from around $40 a barrel three years ago to close to $70 today.

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The headline of the piece told readers "Wages are rising in Europe. But economists are puzzled." Yes, well it does seem pretty puzzling, since it's not clear what wage increases the piece is talking about.

Here is the key paragraph:

"When official data last month showed that hourly wages in the eurozone rose 2 percent in the first three months of 2018 — finally — the central bank got the signal it was looking for. It announced it would end its main stimulus measure at the end of the year. At its meeting on Thursday, the Governing Council is expected to reaffirm that plan."

Okay, 2.0 percent growth in the average hourly wage over the last year. This appears to be nominal wages, which in the context of the eurozone's 2.0 percent inflation, translates into exactly 0.0 percent real wage growth.

I double-checked this looking at the eurostat data and it did, in fact, show that average hourly wages in the eurozone had gone up 2.0 percent over the last year in nominal terms. In other words, zero increase in real wages. Furthermore, while the 2.0 percent year-over-year increase shown in the first quarter was up from 1.4 percent in the fourth quarter of 2017, the increase had been 1.8 percent in the second quarter of 2017 as well as the first quarter of 2016.

If we use the first quarter 2016 figure as a reference point, the rate of wage growth has accelerated 0.2 percentage points in two years or 0.1 percentage point annually. This merits a major NYT story? Yes, I am puzzled.

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I see that Trump seems to be claiming victory in his trade war based on a deal with the European Union to negotiate lower tariffs. I want to take some credit for calling this one based on an oped I wrote two weeks ago, but couldn't get printed. Here's the version I drafted on July 12th.


The End Game in Donald Trump’s Trade War

Like many economists, I have been puzzled over the likely endgame in the trade war that Donald Trump has initiated with most of our major trading partners. He has escalated his rhetoric and put together a large list of imports to be hit with tariffs. His demands are vague and continually shifting. This doesn’t look like the way to win a trade war.

But then I remembered we are talking about reality TV show host Donald Trump. Winning a trade war for this reality TV show star doesn’t mean winning a trade war in the way that economists might envision.

It’s not a question of forcing concessions from trading partners that will improve our trade balance and the overall health of the economy. It’s a question of being able to hold something up that allows Trump to declare victory. That doesn’t require much.

If it is hard to imagine Trump celebrating concessions that were either never made or agreed to long ago, then just look at what happened at the NATO summit. Our partners in NATO had agreed back in 2014 to gradually increase their military spending to 2 percent of GDP by 2024. Apparently, they are still on this course.

Trump boasted of a huge victory for his leadership, pointing to their $33 billion projected increase in military spending for next year. He touted this increase, which comes to 0.16 percent of our NATO partners’ GDP, as “really amazing.” (Most of this was simply due to inflation.)

This is not the only area in which Trump has invented things out of thin air. He has gotten tens of millions of his followers to become incredibly fearful of being killed by the MS-13 street gang. In reality, most people in this country probably stand a greater risk of death from shark attacks than MS-13, but he used these fears as the basis for his crackdown on immigration.

Donald Trump is a person for whom reality matters little, if at all. Is there any reason that he wouldn’t just proclaim victory over China in the trade war a month or two before the election? He can announce that President Xi has committed the country to allowing most US goods to enter China with little or no tariff, something to which China is already committed to do under the rules of the World Trade Organization.

He can do something similar with Canada. Trump can announce that Justin Trudeau agreed to import over $600 million worth of dairy products tariff-free each year, describing the pre-trade war status quo as a great victory.

And, we can expect something similar with the European Union. Maybe he will announce that because of his tough measures the European Union will allow US made cars to enter almost tariff-free, something that is already the case.

Is there any reason to think that Trump couldn’t get away with just declaring the pre-trade war status quo a huge victory?  After all, he has Fox News, his quasi-official media outlet, to head up the cheerleading, and no shortage of Twitter followers to get the good news directly from the top.

We also already know what he will say about the sore losers who try to challenge his victory in the Great Trade War with facts. This will all be “FAKE NEWS!”

This scenario seems so obvious that it’s amazing anyone ever thought any other outcome was possible. For a president who invents his own reality, why would he not just invent a victory in a trade war that looks likely to turn out badly based on the course he has taken?

Many years ago, George Aiken, a distinguished Republican senator from Vermont, came up with the idea of declaring victory in Vietnam and going home. The proposal was largely in jest, but it stemmed from a reality that we seemed to be mired in an endless war that served no obvious purpose. In that context, a meaningless declaration of victory, coupled with an ending of the war would have been a very good plan.

Half a century later, we are entering a trade war that serves no productive purpose over imaginary wrongs. We can all be happy if Trump ends the war before there is too much damage to the economy and people’s lives. His declaration of victory will be less laudable than Senator’s Aiken’s, but at least this pointless war will have come to an end. 

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