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• What Causes Employment to Lag Output in Recoveries?

  By Mark Thoma | Nov 20, 2009 | 5 comments

  In a previous post, I showed that after a recession ends, the recovery of employment lags the recovery of output, and that the lag has increased substantially in recent recessions. The delay in the recovery of employment has increased from about one quarter prior to 1990 to more than a year in the [...]

• What’s Wrong With the Dodd Proposal to Restructure the Fed

  By Mark Thoma | Nov 20, 2009 | 2 comments

  A proposal from Senate Banking Committee Chairman Christopher Dodd changes the selection process for key positions within the Federal Reserve system. Unfortunately, this proposal makes the selection process worse, not better. If this proposal is passed into law, it would further concentrate power within the Federal Reserve system, and it would [...]

• Housing Starts Fall

  By Mark Thoma | Nov 18, 2009 | 0 comments

  Housing starts fell unexpectedly last month. The Census report gives the details: Privately-owned housing starts in October were at a seasonally adjusted annual rate of 529,000. This is 10.6 percent (±8.7%) below the revised September estimate of 592,000 and is 30.7 percent (±8.3%) below the October 2008 rate of 763,000. Single-family housing starts [...]

• Data on Production and Producer Prices Will Not Change Fed Policy

  By Mark Thoma | Nov 17, 2009 | 0 comments

  Data on industrial production, capacity utilization, and the producer price index were released today. Turning first to the price data, the seasonally adjusted data for the producer price index rose 0.3% on an annual basis, but when food and energy prices are removed to get the core measure of inflation, the measure [...]

• Ben Bernanke’s Outlook for the Economy

  By Mark Thoma | Nov 16, 2009 | 0 comments

  A few quick reactions to Ben Bernanke’s speech today where he talks about something of concern recently–namely, how the Fed will view changes in the value of the dollar. If the dollar begins to fall, that will increase the price of imported goods and materials used in production and that, in [...]

• How To Prevent the Next Financial Crisis

  By Mark Thoma | Nov 16, 2009 | 4 comments

  What caused the financial and economic crisis? Understanding what went wrong is important because it provides a guide to the best types of legislative and regulatory responses to use to minimize the chances of this happening again. I think we understand the broad outline of what happened, and I agree with Federal Reserve Bank [...]

• Why We Need an Individual Mandate for Health Insurance

  By Mark Thoma | Nov 13, 2009 | 14 comments

  There’s a similarity between used cars and health care. Let’s start with used cars. “The Market for Lemons” by George Akerlof is a famous paper in economics demonstrating how markets can break down when buyers and sellers are differentially informed. For example, suppose that there are 1,001 used cars worth from [...]

• Today’s Unemployment Report: Both Good and Bad News

  By Mark Thoma | Nov 12, 2009 | 0 comments

  I’m between classes, but just a quick note on the new unemployment insurance claims figures that came out today: In the week ending Nov. 7, the advance figure for seasonally adjusted initial claims was 502,000, a decrease of 12,000 from the previous week’s revised figure of 514,000. The 4-week moving average was 519,750, [...]

• Why The Federal Reserve Needs To Be Independent

  By Mark Thoma | Nov 12, 2009 | 4 comments

  There are several bills that have been proposed in Congress directed at the Federal Reserve. The two most prominent proposals are Senate Banking Committee Chairman Christopher Dodd’s bill to take away most of the Fed’s regulatory authority, and Congressman Ron Paul’s bill to force the Fed to allow its monetary policies [...]

• Will There Be a ‘New Normal’ For Unemployment?

  By Mark Thoma | Nov 11, 2009 | 7 comments

  In my last post, I wrote about the longer than usual time period I think it will take for unemployment to return to its normal, or full employment level, but I didn’t define what normal unemployment is. An important question for policymakers is whether there will be “a new normal” for unemployment once the recession [...]

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