Bob Murphy has responded to my latest comments regarding our differing views on the direction of the economy.
I continue to believe that Bernanke's huge money drops will impact the economy to the degree that the official unemployment rate in 12 months will be lower than it is right now. Murphy expects the exact opposite. I note that Murphy expects some of the positive employment to come from the flaky government "stimulus" programs. I concur that it is questionable that the private sector employment label should be applied, if, say, it is "...a new job making solar panels...if it's dependent on massive subsidies." But, my whole point right along has been that the government will maneuver to make the official data look good. The real economy will be a mess.
Murphy predicts that there will be no net growth in real GDP during 2009. Again, expect the real economy to be a mess, but real GDP will turn positive no later than sometime during the second half of 2009. I will have to go out on a limb to say GDP will show net positive growth for 2009 in its entirety, and unemployment is a lagging indicator, but in the interest of making this competitive, write me in for even better than expected unemploymnet.
Murphy expects CPI(urban) to rise to at least 8% over the course of 2009. While I fully expect an upturn in inflation in '09 and inflation at all levels to hit double digit rates at some point in the future, I'm not sure that this will occur in 2009. Thus, to remain consistent in my total disagreement with Murphy, I am going to say that inflation in 2009 will not hit an annualized rate of 8% for any three month period or longer. Obviously, a one month jump of 1% would put inflation at a 12% annualized rate. This could happen, but I don't think in '09 we will see 8% annualized inflation over any three month period.
Bob, I think we need to wager something on this. How about if I am more accurate, you have to come up to D.C. and buy me dinner (My choice of restaurant), if you are more accurate, I have to buy you dinner in Nashville (Your choice of restaurant)?
I think your side of the bet has much more upside. I.e. the most expensive restaurant in DC is surely pricier than in Nashville.
ReplyDeleteAlso, what happens if there isn't a clean sweep? Do we see who got 2 of 3 correct, or does that bet only kick in if someone is 3 for 3?
Finally, I note that you are going further on a limb than need be regarding the CPI call. I am not talking about an annualized rate for a given period, I am saying 8% from start of 09 to end of 09. I.e. you and I could both be wrong, so I don't know if you want to revise your CPI position.
Ok, Should we set a price limit?
ReplyDeleteI think we should go 2 out of 3.
Ok, it's 8% for the year, you yes, me no. (I love betting with honest economists.)
OK I agree to all of that, and let's cap it at $350. Of course if I'm right, that will get us a Happy Meal in January 2010.
ReplyDelete