March 25, 2015
Just when you thought economics reporting could not get any worse, the NYT leads the way. The headline of a news article told readers that “Japan’s recovery is complicated by a decline in household savings.” The piece reports that consumption is now increasing (barely), but because real wages have not risen, it has led to a decline in household savings. The household saving rate in Japan is now negative. It then tells us that businesses are big savers, but that money is needed to finance the government’s budget deficit.
Okay, now if the NYT could find someone who had taken an intro econ course that person could explain to its reporters and editors that if consumers, businesses, or the government spends more money, it will lead to additional income and employment, and additional saving. If the economy is below full employment, its spending is not limited by its current saving. (If it’s not below full employment then it doesn’t have a problem with a recovery, by definition its economy would have already recovered.)
Anyhow, that’s what folks who learned economics would say.
Comments