In a bit of shameless self promotion I want to point out just how right I have been. Any bias on my part in reporting or analysis should just be brushed under the rug.

Issue One: Monetary Policy

I made a call sometime ago for a higher inflation target in order to being about negative real interest rates. The Fed turned down that in favor of QE2, a policy that was inferior but still good. We saw interest rates go negative for a time and that was associated with increased asset values and a speed up in consumer spending.

FRED Graph

Yes growth hasn’t been as high as we would like but I can’t help it if the government keeps firing people.

Issue Two: Near Term Growth

In the last two months people have been getting sour on US growth because of some bad reports. I remained sanguine about the whole thing.

Now here are Dudley and Bernanke respectively

In part, this softness is related to factors that I expect will prove transitory. These factors include the rapid rise in gas and food prices that I noted earlier, supply disruptions associated with the earthquake in Japan, and severe weather and flooding in parts of the United States. All three suggest that the soft patch may not persist.


. . . with the effects of the Japanese disaster on manufacturing output likely to dissipate in coming months, and with some moderation in gasoline prices in prospect, growth seems likely to pick up somewhat in the second half of the year. Overall, the economic recovery appears to be continuing at a moderate pace, albeit at a rate that is both uneven across sectors and frustratingly slow from the perspective of millions of unemployed and underemployed workers.

Issue Three: Payroll Tax Cuts

I called for large Payroll Tax cuts early on as politically palatable and economically sensible.  We finally got a small one in late last year and now may be poised for another.

President Barack Obama’s advisers have discussed seeking a temporary cut in the payroll taxes businesses pay on wages as they debate ways to spur hiring amid signs that the recovery is slowing, according to people familiar with the matter.

Issue Four: Medical Screening

I have persistently questioned the usefulness of medical screening and preventive measures. Now it looks like we’ve been taking women’s ovaries for no good reason.

Calling into question the effectiveness of current ovarian cancer screening techniques, the researchers also found that more of the women screened annually had surgery to remove their ovaries and suffered complications related to false-positive test results — meaning a screening test suggested they had ovarian cancer when they really didn’t.

The finding is in line with other recent research that suggests annual screening doesn’t prevent deaths from the disease, which kills most women within 5 years of their diagnosis (see Reuters story of May 18, 2011.)

Issue Five: Taxes vs. Transfer Payments

I’ve said that its transfer payments not taxes that cause people to work less. Recently the NYT economics team has been on a tear about disability payments and labor supply. A sample

In the worst economic times of the 1950s and ’60s, about 9 percent of men in the prime of their working lives (25 to 54 years old) were not working. At the depth of the severe recession in the early 1980s, about 15 percent of prime-age men were not working. Today, more than 18 percent of such men aren’t working.

For growing numbers of these men, the federal disability program is a significant source of support.

Perhaps the worst thing about the disability program is that, once in it, many people never leave. They were eligible for disability because of a legitimate injury. But once they stop working, many become less appealing job candidates and less motivated to find work. Their chances of finding well-paying work shrivel. Relative to a low-paying job, especially if the job exacerbates a chronic injury or chronic pain, the modest monthly disability payment of about $1,100 on average can look appealing.

Issue Six: Housing Shortage

I have argued that there is coming housing shortage in the US and that the bubble in home construction wasn’t nearly that big.  People countered with vacancy rate and homeownership stats that were at record levels. Now those stats are being questioned

Here is housing economists Tom Lawler

My frustration with the conflicting data on US housing that comes from different reports from the Census Bureau, and the inability of Census analysts to explain the differences or even tell “private” analysts what time-series data they should use to analyze US housing trends, has existed for at least a decade. Occasionally that long-standing “frustration” has led me to write that it almost appears as if Census officials and analysts “don’t care” about the conflicting data.