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Good news for the middle class?

7/30/2014

Reformed Broker seems to like to taunt Bears. Does he think the economic decline of the middle class is a trend that is permanently set to reverse?

Anyways, he cites some news that looks positive for the middle class.

"The Conference Board’s measure of consumer confidence for July rose to 90.9 from 86.4, well above expectations of 85.4 and is at the best level since October ’07. The Present Situation rose 2 pts and the Expectations component was up by 6.3 pts. A key driver in the confidence improvement was question of whether jobs were Plentiful and that index rose 1.3 pts to the highest since May ’08. Those that said jobs were Hard To Get was unchanged but at the lowest since July ’08. Expectations for a pick up in income growth rose .6 pts to 17.3 but while it was 18 in May, it’s above the year ago level of 15.7. Positively within the data, almost all of the improvement in confidence came from those households that make under $75,000."

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Corporate taxes Quote VIA HBR

7/30/2014

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Justin Fox, “(C)orporate taxes resemble Prohibition in the late 1920s: a set of laws that have lost their legitimacy, and can be flouted with little or no loss of social status.”

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Cullen Roche thinks that consumers overestimate food inflation

7/23/2014

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See his post here.

I think it matters which reference point you pick and where you are in the income distribution. If you go back to 2000, average wages for a typical worker have risen 49% while food prices are up 129%. By that metric I would say complaining is warranted. Perhaps Cullen is a 1%er and his income growth has outpaced food inflation.

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Inflationary expectations are not formed via rational expectations

7/22/2014

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Via Econbrowser.

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I asked Scott Sumner some questions and here are his answers

7/13/2014

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"I am an instructor at the U of C Economics department. I have recently developed an appreciation of your ideas.I read your FAQs. I have the following questions:
Are there any practical limits to the quantity of assets a central banks may own?
How does your theory reconcile/account for the stagflation of the 1970s?
Do you think that sticking to a NGDP target might cause inflationary expectations to become unanchored?
If the BOJ cancels/monetizes the JGBs what will happen?
More broadly do you see limits to NGDP targeting if so what are they.

Thanks"

"Karl, There may be legal limits to what central banks can own, but they are not a factor for the US, at least in recent years. It may not be desirable for the central bank to have a very large balance sheet. This issue would play a role in determining the optimal NGDP growth rate.

The stagflation of the 1970s was mostly caused by rapid growth in the monetary base. As NGDP growth rose to about 11 percent a year, velocity also picked up a bit. RGDP grew at roughly the trend rate of 3 percent, while inflation was close to 8 percent.

With NGDP targeting, inflation expectations will move inversely to long run trend changes in RGDP growth. Those changes are likely to be small.

The effect of BOJ monetization of bonds is complicated. The faster the inflation/NGDP target path, the more likely that monetization would caused inflation to overshoot their target.

I don’t see technical limits to NGDP targeting, But the policy is less desirable when total labor compensation doesn’t closely track NGDP."

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Good news for the middle class?

Corporate taxes Quote VIA HBR

Cullen Roche thinks that consumers overestimate food inflation

Inflationary expectations are not formed via rational expectations

I asked Scott Sumner some questions and here are his answers

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