Dean Baker
The Washington Post, August 20, 2019

Dean Baker
Truthout, August 19, 2019

Mark Weisbrot
The New York Times, 19 de agosto, 2019

Millions of Argentines remember the last depression and the role the IMF played. Many also remember the rapid improvement in people’s lives over the ensuing decade. That collective memory and consciousness may now determine the outcome of this recurring d

The stock market enjoys a mythological place not only among mainstream media types, but also among many progressives. For some reason this measure of expected future corporate profits is taken as a measure of economic well-being.

The fact that the media obsesses over the stock market hardly needs to be mentioned. If there is one item about the economy that we can be sure will be repeated every day, it is the movement in the Dow or the S&P 500. And, needless to say, an upward movement is good news and a downward movement is bad news.

But the view that the stock market is telling us something about the well-being of the economy goes far beyond just ill-informed media types. In the lead up to the 2016 election, Justin Wolfers, a University of Michigan economics professor, and a fellow at the Peterson Institute for International Economics, had several New York Times pieces arguing that the wise investors in the stock market recognized that Trump would be bad news for the country. He pointed to sharp declines in the market in response to events making a Trump win more likely.

The Wolfers hypothesis suffered a serious setback in the weeks and months immediately following the election. The S&P 500 was up more than 5 percent in the first month after Trump’s victory. It continued to rise throughout 2017, hitting a peak in January of 2018 that was more than a third higher than its value on the eve of the election.

Wolfers was far from the only one taking stock market movements as a measure of economic well-being under Trump. When the market slumped last fall, there were many Trump critics who seized on this as evidence of Trump’s failings as a manager of the economy.

This view that the stock market is a measure of economic well-being is bizarre, because it is so completely at odds with what the stock market is. The stock market is a measure of the expectations of future profits of companies that are listed in the exchange: full stop.

  This week the Department of Homeland Security (DHS) officially published regulations that radically expand the definition of an archaic immigration law term, public charge, to include various non-cash benefits that supplement earnings and other income,

With both Social Security and Temporary Assistance for Needy Families (TANF) having anniversaries this month — August 14, 1935 and August 22, 1996, respectively — it’s a good time to compare and contrast what they do for children and youth. If you listen

August 13, 2019

August 13, 2019 (Prices Byte)

Dean Baker
Truthout, August 12, 2019

Last month’s GDP report also included revisions to previously reported profit data for the last three years. The earlier reports showed a slight increase in the profit share in 2018; the revised data showed that the profit share of corporate income had fallen by 0.4 percentage points from the prior year. This is important both because it means that workers are now clearly getting their share of the gains from growth and also because of what it tells us about the structure of the economy.

On the first point, we have seen four decades during which the wages of the typical worker have not kept pace with productivity growth.[1] While productivity growth has not been great over much of this period, it was slow from 1979 to 1995 and again in the years since 2005, the median wage has generally lagged annual productivity growth over most of this period.[2] 

The one exception was the years of low unemployment from 1996 to 2001, when the wages of the typical worker rose in line with productivity growth. With unemployment again falling to relatively low levels in the last four years, many of us expected that wages would again be keeping pace with productivity growth.

The earlier data on profits suggested that this might not be the case. It showed a small increase in the profit share of corporate income, suggesting that corporations were able to increase their share of income at the expense of labor, even with an unemployment rate below 4.0 percent. 

The revised data indicate this is not the case. The low unemployment rate is creating an environment in which workers have enough bargaining power to get their share of productivity growth and even gain back some of the income share lost in the Great Recession. In the last few years, wage growth has exceeded the rate of inflation by roughly one percentage point annually. This is not spectacular wage growth, but it is in line with, if not slightly above the rate of productivity growth.[3]