Beat the Press is Dean Baker's commentary on economic reporting. Dean Baker is co-director of the Center for Economic and Policy Research (CEPR).

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Robert Samuelson used his column today to back up Fed Chair Janet Yellen’s claim that expansions do not die of old age. In a column titled “Janet Yellen is wrong. Expansions do die of old age,” Samuelson briefly recounted the history of recoveries and recessions over the last half century.

According to Samuelson’s account, they differed a great deal in length, with the economy experiencing four recessions over the twelve years from 1970 to 1982, as the Fed struggled to slow inflation by raising interest rates and pushing up the unemployment rate. The recessions in 2001 and 2007–2009 came about as a result of collapsed asset bubbles. The former came after an almost decade long expansion.

The obvious take-away from the evidence presented by Samuelson is that expansions don’t just die, they have to be killed. The most common way they get killed is by the Fed’s efforts to curb inflation with higher interest rates. The other leading cause of death is a collapsing asset bubble.

So the question is, does anyone think current rates of inflation warrant sharp interest rate hikes from the Fed? If not, then we need to find an asset bubble whose collapse will sink the economy. If neither of these stories seems plausible, we have good reason to expect this recovery to go on for some time longer, even if the speed may be considerably slower than many of us would like.

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That is the theme of an article in the NYT yesterday with the headline, “China’s foreign exchange reserves dwindling rapidly.” The gist of the piece is that there has been a large outflow of capital from China in the last year, which has caused them to lose as much as $800 billion from their foreign reserves. According to the piece, China is down to its last $3.2 trillion.

If the idea of a country with $3.2 trillion in foreign reserves worrying about empty coffers sounds silly, it should. China has many economic problems (who doesn’t), but a shortage of foreign reserves is not among them.

First, just to get oriented, let’s keep in mind why China has been losing its reserves. As the piece notes, it has been trying to keep its currency from falling. Note that for years, the United States and other countries have wanted China to raise the value of its currency. The argument was that it had accumulated vast amounts of reserves to keep the value of its currency low in order to maintain large trade surpluses.

Now the story is that if China decided not act — it did not use its reserves to buy up the currency being sold by people trying to get some of their money out of the country — the Chinese currency would fall against the dollar and other currencies. Would this be a problem for China?

A lower valued yuan would mean higher prices for the goods China imports and lower priced Chinese goods everywhere else in the world. While China recently saw a modest uptick in prices in January, the conventional wisdom is that the country is far more concerned about deflation than inflation. From this perspective, it’s hard to see how a rise in import prices is a problem.

The other side of the equation is that China’s goods and services would suddenly be much cheaper for people in other countries. This would lead to more exports. Since the rise in import prices will reduce imports, the net effect of a decline in the yuan would be a rise in China’s trade surplus. That would be bad news for the United States and other countries, but it is certainly not a problem for China.

In other words, there is no obvious economic reason that China could not just let its currency fall in value. It would make other countries unhappy, but China’s government presumably cares more about its own economy than the economies of its trading partners.

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Catherine Rampell joined the chorus of critics of the Gerald Friedman analysis of the economic impact of Bernie Sanders’ platform. For folks who missed it, Friedman is an economics professor at the University of Massachusetts who produced a 53 page paper that projects the budgetary and economic impact of Sanders’ proposals. (Friedman’s relation to the Sanders campaign is not clear.)

Many economists do not find the projections credible. Among other things, Friedman projects average annual productivity growth of 3.6 percent. This compares to a Golden Age average of 3.0 percent and a post-crash average of just over 1.0 percent. It also projects that the share of the population that is employed will reach new highs. This is in spite of the fact that the population will be considerably older at the end of Friedman’s projection period than at its previous peak and that Sanders also has a number of proposals that will make it easier for people not to work.

Rampell and other Friedman critics have rightly noted these elements of his program. Sanders proposes to increase Social Security benefits and have universal Medicare. This will make it easier for many people to retire earlier than might currently be the case. Sanders also proposes to make college free. This would likely reduce the percentage of college students who work, as well as increase the number of people who go to college.

These policies are both likely to lead to sharp reductions in labor force participation at both the older and younger ends of the age distribution. This highlights a point that many of us have made in comparisons of employment rates in European welfare states and the United States. The United States does better than countries like France (although worse than Germany and Denmark) when we look at employment rates for the population as a whole, but it looks pretty much the same if we focus on prime age workers (ages 25-54).

The difference is that France and other European countries have more generous pensions and universal health care coverage, which make it easier for older workers to retire. And college is either free or low cost (often with subsidies for students) so that it is not necessary for college students to work. As Rampell and others have acknowledged, these are not necessarily bad policies, but they do mean less work and less growth.

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In a Wall Street Journal column earlier this week, John Carney warned readers that the financial transactions tax (FTT) proposed by Senator Bernie Sanders “promises a smaller, slower market offering lower returns to investors.” He also warned that middle class investors will see higher costs in their mutual funds as a result of the tax.

While Carney treats the tax as a bit of a leap into the unknown, we actually have been there very recently. A FTT increases the cost of buying and selling shares of stock or other financial assets. We have had higher costs for buying and selling financial assets in the very recent past. The cost has fallen due to the rapid improvement in computer technology that has allowed for the price of trading to plummet in recent decades.

An FTT would raise the cost back to where it had been in prior decades. If a tax was structured along the lines being considered by European Union countries (0.1 percent on stock trades, 0.01 percent on derivative trades), then it would be raising costs roughly to where they were in the 1990s. These higher costs should then cause returns to investors to be comparable to what investors saw in the 1990s. (Past returns are no guarantee of future performance.) Markets don’t care if costs are higher due to a tax or less efficient technology, the impact is the same.

The amount of costs borne by middle class investors will depend on the extent to which their trading responds to higher costs. Most research indicates that trading will decline roughly in proportion to any increase in costs, meaning that most middle class investors would pay the same amount in trading costs after the tax as they did before the tax. (The recent study by the Tax Policy Center assumed that trading volume actually declined more than any increase in costs associated with the tax.)

The column also cited a study by the European Commission that purportedly showed a tax reducing GDP by 1.76 to 2.05 percent. Those numbers are from a preliminary study. A revised study found that the impact on growth would be less than 0.2 percent of GDP and that if the revenue was invested in the economy, it would be a positive 0.2 percent of GDP. That probably would not sound too scary to WSJ readers.

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A NYT piece headlined “left-leaning economists question cost of Bernie Sanders’ plans” may have misled readers about the extent of skepticism among economists who consider themselves left-leaning. I can say this as a card-carrying left-leaning economist who often talks to other card-carrying left-leaning economists.

While there are undoubtedly many left of center economists who have serious objections to the proposals Sanders has put forward, there are also many who have publicly indicated support for them. Remarkably, none of those economists were referenced in this article. In fact, to make its case on left of center economists’ views, the NYT even presented the comments of Ezra Klein, who is neither an economist nor a liberal, by his own identification.

It also misrepresented the comments of Jared Bernstein (a personal friend), implying that they were criticisms of Sanders’ program. In fact his comments were addressed to the analysis of Sanders’ proposals by Gerald Friedman, an economist at the University of Massachusetts who is not affiliated with the Sanders campaign.

It also presented the comments of Brookings economist Henry Aaron about the views expressed by “other economists in a ‘lefty chat group’ he joins online.” This would seem to violate the NYT’s usual policy on anonymous sources.

Sanders has a very ambitious agenda covering everything from universal Medicare, reforming the financial sector, paid sick days and vacation, free college, and universal childcare. If an economist, left-leaning or otherwise, can’t find some grounds for skepticism on any of these proposals they should probably be in a different line of work.

These are all big ideas, each of which will face enormous political opposition even if Bernie Sanders were in the White House. Sanders has not given a fully worked out proposal in any of these areas, nor is it reasonable to expect a fully worked out proposal from a candidate for the presidency. His campaign platform outlines general approaches. In the event Sanders got to the White House, it would be necessary to draft fully worked out legislative language which would almost certainly amount to hundreds of pages, and quite possibly thousands of pages, in each area. In addition, whatever he initially put on the table would have to be haggled over with Congress, even assuming that he had a much more sympathetic group than the current crew.

While it is nice that the NYT is subjecting Sanders’ views to serious scrutiny, it would be good if it also subjected the views of other candidates to the same scrutiny. For example, Secretary Clinton has indicated a desire to give more opportunity to African Americans and Hispanics, yet she has not commented on the decision by the Federal Reserve Board to raise interest rates at the end of last year. This rate hike was intended to be the first of a sequence of rate hikes.

The purpose of raising interest rates is to slow the economy and the rate of job creation, ostensibly to prevent inflation. The people who will be disproportionately hurt by slower job growth and high unemployment are African American and Hispanic. NYT readers would likely be interested in knowing how Secretary Clinton can reconcile her commitment to helping African Americans and Hispanics with her apparent lack of concern over the Fed’s decision to raise interest rates and deny them jobs.

Whatever standard of scrutiny the NYT chooses to apply to presidential candidates it should apply them equally. It is not good reporting to apply one standard to Senator Sanders, and even inventing credentials to press its points, and then apply lesser standards to the other candidates.

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Robert Samuelson really, really wants to cut Social Security and Medicare and he is not going to let the data get in the way. His column today complains about the lack of straight talk on the budget. He calls for candor when discussing the budget. Unfortunately he resists this standard himself.

The argument is the usual, rising Social Security and Medicare spending are going to crowd out other areas of the budget. As he tells us:

“The basic conflict posed by the budget is not between rich and poor but between workers and retirees. Present policy favors retirees over workers — the past over the present and future — because, politically, tampering with benefits is off-limits. The rest of government absorbs the fiscal consequences of an aging population.”

Okay, let’s inject a little straight talk and candor into Samuelson’s discussion. First, he tells us that he wants to free up money for other programs by:

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Ross Douthat used his NYT column to remind progressives of the 1990s and harangue them for not wanting them back. While he gets some of the points right, he misses a really big one: the 1990s prosperity was driven by a stock bubble, which would inevitably burst. Furthermore, Clinton’s policies lead to an over-valued dollar and a large trade deficit that persists to this day. This trade deficit has made it impossible to get to full employment without an asset bubble.

Just to briefly recount the good stuff, we saw the unemployment rate fall to 4.0 percent as a year round average in 2000. In the early and mid-1990s the consensus within the mainstream of the economics profession was that the unemployment rate could not get much below 6.0 percent without sparking inflation. 

The low unemployment rate disproportionately helped those at the bottom. This was the only period in the last forty years in which workers at the middle and bottom of the wage distribution saw sustained gains in real wages. African Americans were actually closing the earnings gap with whites and women were reducing the earning gap with men. 

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Neil Irwin had an interesting NYT Upshot piece on the use of negative interest rates by central banks as a way of boosting demand. There are three points worth adding to this discussion.

First, the Fed has other tools to try to boost the economy. The obvious one is to explicitly target a long-term interest rate. For example, the Fed could say that it will push the 5-year Treasury note rate down to 1.0 percent. It would then buy enough 5-year notes to bring the rate down to this level.

Since longer term rates have much more impact on the economy than short-term rates, this would more directly affect the economy than trying to bring down long-term rates with lower short-term rates. If the Fed was really concerned about inadequate demand in the economy, it is difficult to see why it would not consider this sort of targeting. For some reason targeting long-term rates has not featured in discussions of potential Fed actions.

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Paul Krugman used most of his column this morning to take some well-aimed shots at the Republican presidential contenders and congressional leadership. He points to their hostility to the Federal Reserve Board’s efforts to boost the economy because of fears of hyper-inflation. These fears have been shown to be completely ungrounded, as inflation continues to be far lower than the Fed’s target of 2.0 percent.

However, Krugman also takes a shot at Senator Bernie Sanders for supporting a bill to audit the Federal Reserve Board’s conduct of monetary policy. There are two points worth making here.

First, an outcome of an earlier version of this bill was an amendment to Dodd-Frank which required the Fed to disclose the beneficiaries of the loans from the special lending facilities it created at the peak of the crisis. At the time, the Fed was insisting that beneficiaries and the terms of the loans had to be kept secret.

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David Brooks used his column today to tell readers how Bernie Sanders' programs would destroy the dynamism of the U.S. economy. I don’t have time to go through the whole story, but it is important to make one point.

Brooks complains that Sanders' agenda would raise total spending at all levels of government from the current 36.0 percent to 47.5 percent. He argues this would require higher taxes on most people thereby depriving them of the freedom to spend their own money as they see fit.

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Morning Edition had a good piece this morning on Senator Bernie Sanders’ proposal for a financial transactions tax (FTT). There are a couple of additional points worth making.

First, while the piece noted a wide range of estimates of the amount that could be raised through such a tax, we do have some real world experience. As was noted, the United Kingdom has had a transactions tax on stock trades since the 17th century. This tax raises an amount equal to roughly 0.2 percent of GDP, which would be $36 billion annually in the current U.S. economy or roughly $400 billion over a 10-year budget horizon. This tax applies only to stocks, which allows traders to avoid it through options and other derivative instruments.

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Yesterday the Congressional Budget Office (CBO) corrected an error that it made in projecting the share of earnings that will be replaced by Social Security for those nearing retirement. In a report published last fall, CBO projected that for people born in the 1960s, the annual Social Security benefit for those retiring at age 65, would be 60 percent of their earnings for middle income retirees and 95 percent of earnings for those in the bottom quintile. The correction showed that benefits would replace 41 percent of earnings for middle income retirees and 60 percent of earnings for those in the bottom quintile.

This mattered a great deal because the originally published numbers were quickly seized upon by those advocating cuts in Social Security benefits. For example, Andrew Biggs, who served in the Social Security Administration under President George W. Bush, used the projections as a basis for a column in the Wall Street Journal with the headline “new evidence on the phony retirement income crisis.” The piece argued that benefits were overly generous and should be cut back, at least for better off retirees. (To his credit, Biggs quickly retracted the piece after CBO acknowledged the mistake.)

While this was a serious error, unfortunately it was not the first time that CBO had made a major error in an authoritative publication. In 2010, in its annual long-term budget projections it grossly overstated the negative effect on the economy of budget deficits. The 2010 long-term projections showed a modest increase in future deficits relative to the 2009 projections, yet the impact on the economy was far worse.

The 2010 projections showed a drop in GDP of almost 18 percent by 2025, compared to a balanced budget scenario. This was more than twice as large as the impact shown in the prior year’s projections. The sharp projected drop in GDP could have been used to emphasize the urgency of deficit reduction. As was the case with the recent Social Security projections, CBO corrected its numbers after the error was exposed.

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Yesterday the Labor Department released data from its December Job Openings and Labor Turnover Survey (JOLTS). One of the items that got lots of attention was a rise in the quit rate to its highest level of the recovery. In fact, it is now pretty much back to pre-recession levels. (This is especially true of workers in the public sector — interesting story for another day.)

While it is good news if workers feel they can leave a job where they are unhappy or which does not fully utilize their skills, the news may not be as good as it first appears. The weak labor market of the last seven years led to very low quit rates. This means that many people who would have left their jobs in a more normal labor market stayed at their job because they were worried about finding a new one. As a result, we should expect there are many more people at jobs they would like to leave in early 2016 than would be the case say in 2007 before the recession hit.

The implication would be that quit rates should not just be returning to their pre-recession level, but rather they should rise substantially above their pre-recession level, at least for a period of time. I’m not sure whether this makes sense or not. We don’t have data on quit rates prior to 2000, so we can’t look back at what happened after prior recoveries from a steep downturn.

Anyhow, it seems plausible to me that the quit rate should be elevated for a period of time to compensate for the unusually low quit rate of prior years. If someone wants to tell me why this is wrong, I’m listening.

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Yep, we have such clear warning signs of imminent disaster. I should probably also point out that the interest burden measured as a share of GDP (net of money refunded from the Fed) is at the lowest level since before World War II. You can see we are imposing a terrible burden on our children. At least the Post is honest and says that its deficit reduction means cutting Social Security and Medicare.

Oh well, here on Planet Earth low interest rates and low inflation are a very good market signal that the economy could use much more demand (i.e. larger budget deficits). The Post actually seems to support this, but tells us about the Congressional Budget Office's (CBO) projection of higher deficits in future years. As we pointed out yesterday, those higher deficits are the result of CBO's projection that interest rates will rise sharply. They have a great track record of being badly wrong on this score six years in a row. I suppose seventh time could be a charm, but I wouldn't bet on it.

Anyhow, serious people would be worried about boosting the economy now and putting people back to work. People are suffering today and our children our suffering. This is both because we have plenty of money so that they don't have to drink lead and also because putting their parents out of work is a horrible thing to do to kids.

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By Dean Baker and Nick Buffie

The Peter Peterson gang has been hard at work lately trying to get people worried about the budget deficit. After all, with interest payments on the debt as a share of GDP at a post-war low and an interest rate on long-term Treasury bonds of almost 2.0 percent, things look pretty bleak. (That’s sarcasm.)

But the Washington deficit hawks (great name for a NFL team) have never let the real world interfere with their ranting about deficits, which invariably turn to the need to cut Social Security and Medicare. Unfortunately, they are getting some support in this effort from the folks at the Congressional Budget Office (CBO).

While the CBO forecasts don’t look exactly like the sky is falling end of the world stuff, they do show that the debt and deficit will both rise as a share of GDP. And, if the debt is rising as a share of GDP, and we never do anything, then at some point it will do real damage to the economy.

Most of this logic is beyond silly in a context where the economy is still far below its full employment level of output. Debt or deficits can only be an issue when the economy is close to full employment, until that point the only problem with deficits is that they are not large enough. Cutting deficits when the economy is below full employment means slowing growth and throwing people out of work.

But that is not the point I wanted to make. I thought it was worth showing why CBO is projecting that deficits will rise over the next decade. If we turn to Table 1-2 of the latest CBO Budget and Economic Outlook, we find that the deficit for this year is projected to be 2.9 percent of GDP. This should leave the ratio of debt-to-GDP more or less constant, depending on the exact growth and inflation numbers for the year.

However if we look out to 2026, the end of the CBO projection period, the deficit is projected to be 4.9 percent of GDP. At that level, the debt-to-GDP ratio would be rising, and we would be down the road toward higher interest payments leading to higher deficits, leading to higher interest payments and pretty soon, Zimbabwe.

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Binyamin Appelbaum has an NYT piece arguing that many economists oppose a draft. At the risk of losing my economist card, let me raise a couple of points of dissent.

First, Appelbaum dismisses the argument that requiring everyone to share the risk of fighting a war, regardless of class, as being a deterrent to politicians’ adventurism. He refers to research that shows this is not true.

While I have not seen the research, I would be skeptical. Even if the children from wealthier families can ultimately escape a draft, forcing them to jump through hoops still means they pay a price for a war, even if not as great a price as the children from poorer families who actually have to fight. (Bill Clinton’s letter to his ROTC colonel is an excellent example of this sort of price. ROTC was a way to escape the war for those lucky enough or connected enough to get in.) Certainly protests of the Vietnam War seemed to fall off sharply when Nixon stopped sending draftees there, as the piece notes.

The other point is that the military has historically been an important source of upward mobility, at least for men, when it involved near universal service. This meant that children from disadvantaged backgrounds had the opportunity to meet, and occasionally make connections with, people who grew up in families with far more resources. (It is also good if people who will subsequently hold positions of responsibility at least have some contact with people who grew up in working class and poor families.)

These benefits are even more concrete when veterans enjoy benefits like low-cost or no-cost college tuition and access to low interest mortgages. Congress is more likely to support generous veterans benefits when they apply to nearly the whole population, rather than a subset of relatively low-income people who have little alternative to the military as a promising career opportunity.

For these reasons a draft might not be a bad idea, in spite of the standard economic arguments against it.


Correction: An earlier version incorrectly said that the piece had claimed that "all" economists opposed the draft.

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Steve Eisman, the hedge fund manager of Big Short fame, argued against breaking up the big banks in a NYT column today. His basic argument is that we now have things under control because the regulators have effectively limited the banks’ ability to leverage themselves. He also says that even if we wanted to break up the banks, we don’t know how to do it:

“Furthermore, no advocate of a breakup has come forward with a plan on how to do it. Large banks are global, complex, integrated institutions. Breaking them apart would be incredibly difficult, long and disruptive, and the banks might have to freeze loan growth during the process, slowing our economy even further.”

Hmmm, “no advocate of a breakup has come forward with a plan,” sounds a bit like nobody saw the housing bubble.

Okay, first Eisman raises a good point in that regulation is much better today than it was before the crisis. But those of us who are in favor of downsizing the behemoths question whether that will always be the case. After all, there is a lot of money to be gained from being able to outmaneuver the regulators.

And I’m not sure that many people would want to bet the health of the financial system on Washington bureaucrats staying a step ahead of the Wall Street gang. And in spite of improved regulation, I don’t think many people believe that the government would let J.P. Morgan or Goldman Sachs go under if they faced bankruptcy.

But let’s leave aside the merits of breaking up the banks and ask whether it could be done. There is in fact a simple way to break up the banks; let the banks do it themselves.

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Okay, I’m not going to get in the habit of responding to everything Paul Krugman writes on Bernie Sanders, but there are a few quick points worth making about his latest post on Sanders’ electability.

1)     Krugman is raising an entirely reasonable point that voters should consider, so no one should be upset at him for putting the issue on the table. (No, he is not looking for a job in the Clinton administration.)

2)     We should be clear on the question being asked. If the issue is keeping the Republicans out of the White House, then the question is not whether Bernie Sanders could beat the Republican nominee. The question is how likely is it that Sanders could defeat Clinton for the nomination, and then lose a general election that Clinton would have won?

In this respect, it is important to recognize how much the nomination process is stacked towards Clinton. It is not just a question of her having the vigorous support of a former Democratic president and largely controlling the Democratic National Committee. She is also likely to have the overwhelming support of the super-delegates (Democratic members of Congress, state office holders, and other prominent Democrats).

The super-delegates are just under 15 percent of the total number of delegates. If Clinton wins this group by a margin of 80 percent to 20 percent (she has more than 95 percent of the super-delegates who have already made a commitment), then Sanders would have to capture more than 55 percent of the elected delegates to get the nomination.

This means that Sanders could not get the nomination just by scraping by in the primaries; he would need a decisive victory. The question then is, if Clinton were to lose decisively in the primaries to a candidate who has all the weaknesses touted by the experts to whom Krugman referred us, how likely is it that she would have been able to win the general election if Sanders had not gotten in her way?

The point is important, because if the argument is that Sanders can’t win an election that Clinton would not have won either, then we aren’t arguing over control of the White House, we are arguing over who gets to make the concession speech on November 8th. There is the issue that the margin would be smaller with a Clinton candidacy and this would help Democrats lower down on the ticket. This is an important issue worth considering, which is point 3).

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The Washington Post had an article on a vote in West Virginia to make it a “right-to-work” state. This means that workers cannot sign enforceable contracts with employers, which require that workers covered by the contract pay the union their share of its operating costs.

The piece refers to a study that purported to find that states with “right-to-work” (RTW) laws had more job growth than other states. This study was fundamentally flawed in its design, since it was treated as a time series study, using years as individual observations, when it really was a cross section study.

Only one state actually switched from being non-RTW to being RTW in the period analyzed. (The study wrongly has both Texas and Utah making this switch, when in fact they just adopted stronger RTW laws.) This means that they really only have data on the 50 states, not separate observations for each year for each state. Treating the analysis as a time-series in this way gives an illusion of having much more data than is actually available. This makes it possible to get statistical significant results when it almost certainly would not be possible if the analysis were done correctly.

To see this point, imagine the study had used monthly data instead of annual data. This would give them twelve times as many data points, even though there was no additional information on the relevant variable. If a test finds statistically significant results in this context, which would not be present in a simple cross section analysis, then these results are clearly being driven by other factors, not a state’s RTW status.

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In most ways the January employment report was weaker than most economists had expected (not me, my jobs prediction was 140,000). However, many reporters seized on the 12 cent reported rise in wages in January to say that wages are finally starting to rise at a healthy pace. This was indeed a large one-month jump, but the 2.5 percent rise over the last year was pretty much the same we had been seeing for many months. (The Post piece took the 2.9 percent annual rate over the last six months to claim a more solid rise.)

There are two points to make on this wage growth. First, the monthly numbers are extremely erratic. The Labor Department reported zero growth in the hourly wage for December. It is almost inconceivable that average wages didn’t rise at all in December and then suddenly jumped 12 cents (0.5 percent) in January. This is why it is best to do some averaging.

The six month average used by the Post is better than taking a single month, but can also be misleading. If we had done six month averages last year, we would have been happy to see a rise of 2.6 percent over the prior six months in August, only to be disappointed when it dropped to 2.2 percent in September. My preferred approach is to compare the average wage of the last three month period (Nov to Jan in this case) and compare it to the average for the prior three month period (Aug to Oct). That produces an annual rate of 2.45 percent in this case. Not much evidence of an acceleration of wage growth in this story.

The other point is that the rise in January was almost certainly helped by the effect of a rise in many state and local minimum wages at the start of the year. The average hourly wage in the leisure and hospitality sector rose by 0.8 percent in January. This is important to note, since we will not see this effect repeated in future months. In short, we should hold the applause on wage growth until we see it confirmed by more data. (On this point, it is worth noting that the Labor Department’s Employment Cost Index for the 4th quarter showed no evidence of any acceleration in the growth of wages or compensation.)

It is striking that the bad news in this report has been largely overlooked. In the addition to the slower than expected jobs growth, some of the measures on the household side were not good. Both the average and median length of unemployment increased, as did the share of long-term unemployed. Also, the percentage of unemployment due to voluntary job leavers fell. At 9.9 percent, it is at a level that would be expected in a recession, not a strong labor market.

In short, while not a terrible report, this is not one that should have prompted celebration.

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In a piece on the difficulty that many people are having in paying their rent, Morning Edition told listeners that rents have risen back to their levels of the housing bubble years. Actually rents didn’t rise in the housing bubble, rather they pretty much tracked the overall rate of inflation. The sharp divergence between house sale prices and rents was one of the reasons that people who pay attention to data were able to recognize the bubble.

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