Tag Archives: great-recession

A West Virginia Miracle? I’m Not Feeling It.

by ZacTzbnwtiujmn Posted on April 18, 2017

Mother Jones

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Tyler Cowen shocks us all today by suggesting that West Virginia has been the site of a productivity miracle lately. He admits he’s mainly trying to provoke us, since West Virginia is unquestionably one of the poorest states in the nation. But it made me curious. How much has the West Virginia economy grown compared to neighboring states and to the US as a whole? I chose Maryland since it’s next door and no one considers it especially poor. Here’s what things look like:

In terms of growth, West Virginia has done OK since the start of the century. It was affected less by the Great Recession than the US as a whole—no surprise since West Virginia didn’t suffer from the housing boom and bust—but its growth rate since then has been a little below average. Ditto for median household income, which has been flat since the end of the recession.

As for cost of living, this site says West Virginia is 3 percent lower than the US. It’s a little cheaper on average to live in West Virginia compared to the rest of the country, but not by enough to matter.

So the bottom line is that West Virginia is poor; its growth rate since 2000 is above average thanks to insulation from the housing bust but below average since the end of the recession; and its cost of living is about average. That’s not terrible, but I guess I’m not feeling the miracle.

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A West Virginia Miracle? I’m Not Feeling It.

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Urban vs. Rural Recovery From the Great Recession: Another Look

by KandyMais35749 Posted on April 15, 2017

Mother Jones

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Thomas Edsall writes that as we recovered from the Great Recession, big cities did pretty well but rural areas didn’t. “The fact that people living outside big cities were battered so acutely by the recession goes a long way toward explaining President Trump’s victory in the last election,” he says, which he illustrates with this chart:

I don’t think there’s much question that Edsall is right in general, but this particular chart seemed off somehow. It combines both population growth and employment rate in a confusing way, and it covers the whole country, so it doesn’t account for the way different states responded to the recession. I pondered for a while what I’d rather see, and decided to examine the unemployment rate in California counties. California has a good mix of big cities and rural counties, including a lot of farming counties that voted heavily for Trump, and every county benefited from identical state policies since they’re all in the same state. Here’s the chart, which compares unemployment at the peak of the last expansion to today:

There are four points I can make about this:

If you draw an overall trend line (light gray line), it turns out that that unemployment declined a bit more in smaller counties than in larger counties.
The big cities (purple) all fall into a very small cluster, showing declines between about -1 percent and 0. The smaller counties (orange) are scattered all over the place, from -3 percent all the way up to +4 percent.
The average drop in unemployment is roughly the same in both big cities and the rest of the state. Big cities (-0.39 percent) did marginally better than everyone else (-0.25 percent).
The main farming counties have done poorly. Their unemployment rate has increased by +1.0 percent.

This is just one state, and I’m not trying to pretend that this data offers anything conclusive. What’s more, Edsall has some other facts and figures to back up his point. Still, I’ll toss out two guesses:

Big cities may have recovered better than rural areas, but only modestly. The difference isn’t huge, and by itself doesn’t really explain why Trump won.
The large effect Edsall sees may be due to differing state responses to the recession. I suspect that rural red states shot themselves in the foot by adopting conservative policies (cut taxes, slash spending) that hurt their recovery. This may have been an especially big factor in the 2008-09 recession, since the federal government did less than usual to cushion the blow.

I don’t know if anyone with real econometric chops has tested my second guess. If I find anything, I’ll follow up.

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Urban vs. Rural Recovery From the Great Recession: Another Look

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Immigration and the Economy

by Marylou74S Posted on April 5, 2017

Mother Jones

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This post isn’t about immigration and the economy. It’s about immigration. And it’s about the economy. First up, here’s a survey from Pew Research about positive attitudes toward the economy:

Here’s the interesting part. It’s normal to assume that people think better of the economy when one of their own is president. But is it true? During the recovery from the Great Recession, Republicans consistently rated the economy worse than Democrats. When Trump took over, their views suddenly skyrocketed, with a full 61 percent now having a positive view of the economy. Apparently Republicans do indeed view the economy through a partisan lens.

If Democrats followed that pattern, their view of the economy would have plummeted in 2017. But it didn’t. It went up again, at about the same rate as previous years. Democrats, it turns out, don’t view the economy solely through a partisan lens. If you’re looking for an explanation, my guess is Fox News and the rest of the conservative disinformation machine. You can take your own guess in comments.

And now for immigration. Last month, DHS Secretary John Kelly bragged that illegal border crossings were down. This month he crowed about it again. But a sharp-eyed reader pointed out that there’s really nothing unusual about the latest numbers:

Border apprehensions in March have been on a steady downward trend for nearly two decades. This year’s numbers are just following that trend. Last month I thought that President Trump’s fear campaign might be having a real impact, but now I doubt it. There’s no special reason at all to think that anything he’s doing is having much effect at all.

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Immigration and the Economy

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Are Conservative Economists Too Influential? Nah. It’s Worse Than That. But Also Better.

by Fbvisitsmy Posted on April 1, 2017

Mother Jones

Brad DeLong is unhappy that his faction of economists had so little influence on public policy during the Great Recession. But I think he makes a fundamental error:

Alesina and Ardagna and Reinhart and Rogoff each had more influence on what policymakers and journalists thought about the effects of fiscal policy than did Paul Krugman and company, (including me). While the Federal Reserve went full-tilt into quantitative easing (but not stamped money or helicopter money), it did so in the face of considerable know-nothing opposition. And the ECB lagged far behind in terms of even understanding its mission. Why? Because economists Taylor, Boskin, Calomiris, Lucas, Fama, and company had almost as much or even more impact as did Paul Krugman and company.

….The most salient relatively-recent example was provided by Carmen Reinhart and Kenneth Rogoff who argued that it was risky for a country to have a debt-to-GDP ratio greater than 90 percent….I think we have by far the better of the argument. There is no tipping point. Indeed, there is barely a correlation, and it is very hard to argue that that correlation reflects causation from high initial debt to slower subsequent growth.

Yet it is very clear that even today Reinhart and Rogoff—and allied points by economists like Alberto Alesina, Francesco Giavazzi, et al., where I also think we have the better of the argument by far—have had a much greater impact on the public debate than my side has.

Brad’s error is in thinking that any of these economists influenced public policy. They didn’t. Politicians and central bankers wanted to do certain things, so they highlighted research from economists who happened to agree with them. Roughly speaking, when Congress wanted to spend more money, it asked for testimony from the Brad DeLongs of the world. When it wanted to cut spending, it asked for testimony from the Reinharts and Rogoffs. Likewise, central banks have their own models and their own political pressures, and they responded to them. They didn’t really care what any academic economists happened to say about it.

This may sound depressing if you’re an economist. Who wants to be nothing more than a handy mouthpiece for whichever politician happens to like the policy implications of your particular beliefs? But in fact, the news isn’t so bad after all.

Brad’s post is titled, “Why Were Economists as a Group as Useless Over 2010-2014 as Over 1929-1935?” But they weren’t. If we had responded to the 2007-08 financial crisis the same way we did to the 1929-32 financial crisis, we’d still be waiting for a rerun of World War II to pull us back to normal. The reality was far less grim. We might not have responded ideally, but we responded a helluva lot better than we did in 1931. That’s why it was a Great Recession, not a Great Depression.

And the reason for that is economists. Over the past 70 years they’ve had a tremendous impact on public policy. Compared to 1931, even the austerians are basically ultra-liberals who are just a few degrees less ultra-liberal than DeLong and Krugman. For better or worse, economists have enormous influence, but it’s influence exercised over the course of decades. On that score, the Keynesians are overwhelming winners who have moved the center of gravity of the profession far to the left. It’s only within the current center of gravity that conservatives seemed influential on public policy in 2009-10. But that’s almost always the case. Wherever the Overton Window happens to be, the conservative end is usually ascendant. What really matters, though, is where the window is.

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Are Conservative Economists Too Influential? Nah. It’s Worse Than That. But Also Better.

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Raw Data: Field Worker Wages Since the Great Recession

by QuentinZtf Posted on March 19, 2017

Mother Jones

Apropos of nothing in particular, I got curious this morning about illegal immigration and field workers. About half of all field workers are undocumented, so if there’s been a surge of illegal immigration lately, as some have speculated, you’d expect to see the wages of field workers decline. But how would you measure that?

I’m not sure what the best approach is, but I decided to compare the wages of field workers to the wages of all nonsupervisory workers. Here’s what I got:

Relative wages for field workers were flat all through the aughts, as illegal immigration was climbing, and declined a bit during the Great Recession. However, since 2012 they’ve risen three percentage points. In 2016, field workers earned nearly 57 percent of the average nonsupervisory wage.

Based on this, I’m willing to bet that that illegal immigration hasn’t surged over the past couple of years. Just the opposite, maybe, which would be consistent with the rise in field worker wages since 2012.

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Raw Data: Field Worker Wages Since the Great Recession

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Here’s a New, Simpler Unemployment Rate For Our New, Simpler President

by BonnyMcclellan8 Posted on January 26, 2017

Mother Jones

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Donald Trump thinks the official unemployment rate is “fiction,” so Jordan Weissmann suggests we judge him by a different metric. Instead of a complicated measure that tries to divine whether someone “wants” to work, or whether they “want” full-time work but can’t get it, or any of that nonsense, let’s use a simpler measure for this new, simpler era:

The BLS even produces a data point that Trump himself might like: The employment-to-population ratio for adults between the ages of 25 and 54—or “prime-age EPOP.”…It gives us a raw look at the employment rate, without any fancy caveats about who is and isn’t part of the labor force. And because it only tracks workers 25 to 54, it isn’t really distorted by the wave of retiring boomers or growing college attendance. It’s a simple snapshot of the portion of the population we most need to worry about….Best of all, from Trump’s perspective at least, prime-age EPOP has plenty of room for improvement….If Trump wants to argue that Obama left him an economy that was still hurting, this is one stat that will easily help make the case.

Fine. But we don’t really want to know how many people are working, we want to know how many people aren’t working. So here’s the inverse prime-age EPOP, since 1990:

IPA-EPOP1 fell steadily during the postwar period as more and more women left the (unpaid) household workforce and entered the (paid) market workforce, but it’s been relatively stable since 1990. That means we can think of the period from 1990 until the start of the Great Recession as sort of a baseline for normal. The average during this period was 20.2 percent, and right now we’re still 1.6 percentage points away from that. As Weissmann says, this gives Trump some room to show improvement.

Now, naysayers are going to complain that this doesn’t really make sense. After all, this number includes lots of people who don’t want to work, mostly stay-at-home mothers and fathers. Shouldn’t we take them out of this calculation? Sure, we should, but then we’re back to that whole tedious discussion of who’s in the labor force and who’s just given up and all that stuff. We want simple: working or not working, end of story. And in fairness, when the economy is hot, wages go up and more stay-at-home parents are drawn back into the workforce. That makes this an OK measure of economic hotness.

So there you have it. Trump’s starting point is an IPA-EPOP of 21.8 percent. In four years we’ll see if he’s managed to bring that down.

1Rolls right off the tongue, doesn’t it?

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Here’s a New, Simpler Unemployment Rate For Our New, Simpler President

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Fox News Screws Up Its Latest Lie

by CarmaDickson Posted on December 28, 2016

Mother Jones

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This post starts out in an all-too-familiar way: with a Fox News headline. Here it is:

Food Stamp Fraud at All-Time High: Is It Time to End the Program?

Now, the obvious response to this is twofold. First, they’re just lying, aren’t they? And second, this is like a headline that says, “Traffic Deaths at All-Time High: Should We Ban Cars?”

But at this point the story takes a strange turn. First, I have no idea where Fox’s $70 million figure comes from—and I looked pretty hard for it. The Fox graphic attributes it to “2016 USDA,” but as near as I can tell the USDA has no numbers for SNAP fraud more recent than 2011.1

But that’s not all: $70 million is a startlingly low figure. In the most recent fiscal year, SNAP cost $71 billion, which means that fraud accounted for a minuscule 0.098 percent of the program budget. Even if this is an all-time high, the Fox high command can’t believe this is anything but a spectacular bureaucratic success.

And it would be, if it were true. But it’s not. If you look at inaccurate SNAP payments to states, the error rate since 2005 has decreased from 6 percent of the budget to less than 4 percent. However, this isn’t fraud anyway: It’s just an error rate, and most of the errors are eventually corrected. SNAP “trafficking”—exchanging SNAP benefits for cash—is fraud, but it’s been declining steadily too, from 3.8 percent in 1993 to 1.3 percent in 2011 (the most recent year for which we have records):

So in any normal sense, the Fox story was a lie. SNAP fraud isn’t at an all-time high. It’s been declining for years. But here’s the thing: The fraud rate in 2011 may have been low, but this was in the aftermath of the Great Recession, when total SNAP payments were very high. So although the percentage is low, the dollar value of fraud clocked in at $988 million. Fox could have used this far higher number, which is, in fact, an all-time high. It’s only an all-time high because SNAP was helping far more people, but still. In the Fox newsroom, that would hardly matter.

Bottom line: Yes, Fox is lying in any ordinary sense of the word. But they’re also vastly understating the amount of SNAP fraud. Even when they’re trying to deceive their audience, it turns out, they’re also incompetent.

1SNAP = Supplemental Nutrition Assistance Program = food stamps.

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Fox News Screws Up Its Latest Lie

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Living At Home Has Become Steadily More Popular Since the 1960s

by VioletLJGnnihr Posted on December 21, 2016

Mother Jones

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According to the Wall Street Journal, millennials are living in their parents’ basements at record rates:

Almost 40% of young Americans were living with their parents, siblings or other relatives in 2015, the largest percentage since 1940, according to an analysis of census data by real estate tracker Trulia.

Despite a rebounding economy and recent job growth, the share of those between the ages of 18 and 34 doubling up with parents or other family members has been rising since 2005. Back then, before the start of the last recession, roughly one out of three were living with family.

Hmmm. “Rising since 2005.” I’ll assume that’s technically true, but take a look at the chart that accompanies the Journal piece. The number of young adults living with their parents rose in the 70s. And the 80s. And the aughts. And the teens. Basically, it’s been on an upward trend for nearly half a century. That seems more noteworthy to me than the fact that it failed to blip slightly downward after the Great Recession ended.

Part of the reason, of course, is that people have been getting married and settling down later in life. According to the OECD, the average age at first marriage has increased nearly five years just since 1990, and ranges between 30 and 35 around the world:

The United States is still at the low end of the world average.

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Living At Home Has Become Steadily More Popular Since the 1960s

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Am I Still Bitter Over Republican Perfidy in 2009? Oh Yes.

by Autumn04Gmhnkp Posted on December 16, 2016

Mother Jones

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The Economic Report of the President is out, and we should probably take a look at it, if only for old time’s sake. The rumor mill says that the next chairman of the CEA will be supply-side TV blatherer Larry Kudlow, and God knows what we can expect from him. Probably a ten-minute YouTube video. Or maybe a tweetstorm. Who knows?

Anyway, this year’s report is stocked full of the usual number of interesting charts, but I’m going to highlight their version of my favorite chart. This one shows state and local spending following the Great Recession:

Normally, spending increases after a recession, and this is one of the things that powers the recovery. This time that didn’t happen. Thankfully, we at least had a bit of help at the federal level:

Needless to say, Republicans feverishly opposed all attempts at economic stimulus because they didn’t want the economy to get too much better. That might have helped Obama’s reelection chances, you see.

Oh well. Bygones. I’m sure Trump will fix everything.

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Am I Still Bitter Over Republican Perfidy in 2009? Oh Yes.

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When it Comes to Helping the Poor, Block Grants Are an Epic Failure

by AdeleWight46509 Posted on August 30, 2016

Mother Jones

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I remain agnostic about the 1996 welfare reform act, simply because I haven’t studied it enough. But Ron Haskins, a former Republican congressional staff director, points out one very conspicuous failure:

Haskins said the reform has had important successes — improving day-care programs, helping local authorities collect child-support payments from absent fathers, establishing the value of work in American culture with an unequivocal statement by Congress and the president.

At the same time, Haskins said, the reform has done too little to help the worst off. Clinton’s reform gave states authority to use federal money to help parents train and find work, but many states used the money for other purposes, he said.

“This group of moms at the bottom needs help,” he said. “It’s disappointing to me that the states have not tried harder.”

I assume Haskins is sincere, but this is what happens when you leave social welfare programs up to the states, as Republicans have been hellbent on doing for decades. This usually takes the form of “block grants,” where federal programs are eliminated and money is instead given to states with only moderate strings attached.

Because of they way they’re funded, block grants are a handy way of ensuring that spending on the programs will never increase much: in the case of TANF, funding for the block grants was fixed forever at $16.5 billion. In inflation-adjusted terms, this means that funding has decreased from $21 billion to $16 billion since 1996. Even during the Great Recession, TANF funding only barely rose—for two or three years—to 1996 levels. This was despite the fact that the number of poor during the Great Recession far exceeded the number in 1996.

But that’s not all. Block granting also allows states more freedom to do what they want, and the plain truth is that there are a lot of states that don’t really want to do anything. So they do their best to game the system in every possible way, spending their block grant money on anything except helping the poor. As the CBPP chart on the right shows, only about 26 cents of every block grant dollar goes to cash assistance for the poor, and only half goes to core welfare programs at all.

This is especially ironic in the case of welfare reform, which was largely the result of experiments by states in the late 80s and early 90s. Some of those experiments had been pretty successful, which allowed the states to argue that they could handle welfare programs better than the sluggish federal bureaucracy. But once welfare reform was passed, the experiments ended. Instead, many states began pushing the envelope as hard as they could to redirect their block grant money away from poor people and into other programs. They argued—and continue to argue—that these programs help the poor more than actual welfare programs do, but in most cases this is obvious sophistry. They’re just plugging budget holes with welfare money and telling the poor to pound sand.

Of course, there are other ways states can show their contempt for the poor even more transparently. Obamacare allowed states to expand Medicaid for virtually no cost. It was a no-brainer. But lots of states didn’t want to help the poor, and when the Supreme Court gave them the opportunity to reject the free federal money, they did. This hurt their hospitals and hurt their economies, but no matter. Their hatred for spending money on the poor is so red hot that they pulled out of the expansion program anyway.

Whatever else you think about welfare reform, there’s one clear lesson we’ve learned: federal programs should remain federal programs. Lots of states actively hate spending money on the poor, and if you give them money they’ll do everything they can to avoid spending it on the people it’s designed to help.

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When it Comes to Helping the Poor, Block Grants Are an Epic Failure

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