Earlier today, booming housing numbers were announced. Now, the 50-state (and Washington DC) jobless numbers are out for November and they show a major drop in unemployed. Did Krugman see this reversal of the downturn? Hah! Here he is in his own words less than two weeks ago (My bold):
Nobody thinks that an economy operating somewhere near full employment can inflate its way to higher output. But under depression conditions — which is what we have now — inflation is very much a positive thing.Krugman has no clue on how to recognize a developing upturn, even when it is buddy Fed chairman Ben Bernanke pumping money like crazy to manipulate the economy higher. Wait until this money starts to hit the consumer sector and Krugman will appear even more clueless, since, get this, he has been warning about (hee hee) deflation.
As for the November unemployment numbers, unemployment rates dropped in 43 U.S. states and Washington DC in November from a month earlier, the Labor Department reported. Nationally, the unemployment rate declined to 8.6% last month from 9% in October. The U.S. unemployment rate is now at a 2-1/2 year low.
Some of the improvement in the U.S. unemployment rate, to be sure, is due to 315,00 people leaving the work force over the last four months, but a poll of households also showed that the country saw an increase of 1.28 million jobs over the same period.
Bottom line: The economy continues to trend upward. Keynesians, like Krugman, have been left in the dust with their faulty models.
I don't understand why you think "depression conditions" is some type of gotcha. The whole point of what Krugman was saying was that above normal fed driven inflation is only good as long as there's an output gap. Anytime there's an output gap, the economy is in "depression conditions." Even if Krugman fully agreed with you that we're experiencing accelerated growth, the economy would still be in "depression conditions" in Krugman's framework until full employment is reached.
ReplyDeletethe downside is Obama will start taking credit for the Fed-fueled upswing in time to win in November.
ReplyDeleteThe whole point of what Krugman was saying was that above normal fed driven inflation is only good as long as there's an output gap. Anytime there's an output gap, the economy is in "depression conditions."
ReplyDeleteHaha, by that definition, we've always been in a depression, since there has always been a positive difference between "potential" and "real" GDP.
Even the whole concept of "output gap" is flawed:
http://www.24hgold.com/english/contributor.aspx?article=3621515954G10020&contributor=Robert+P.+Murphy
"since there has always been a positive difference between "potential" and "real" GDP.""
ReplyDeleteNo there hasn't. Potential output is a long term concept. There's been plenty of times when the unemployment rate has been above the natural rate in the short run, which eventually readjusts because it's not sustainable. It's what happens in the 70s when the Phillips curve broke down for that reason.
Wow we went from, what , 23% unemployment to what, 22% unemployment, and you call that an upturn? Nothing goes up in a straight line.
ReplyDeleteGood to see major_freedom posting on here again. I am sure he will enjoy tearing apart these Krugman Keynesians just like wenzel has been doing!
ReplyDelete