I skimmed this Larry Mishel piece and what I saw looked roughly in line with my take on the situation. There is little evidence for the business uncertainty hypothesis.

However, I just want to make a quibble with something I noticed.

One can easily document (using NIPA Table 1.4.6 and mixing with population from NIPA 2.1) that the final per person demand for domestically produced goods and service in the spring of 2011 (2011:2) was still 0.7 percent lower than it was before the recession (last quarter of 2007).

One can do this but one probably should not do this. Final Sales to Domestic Purchasers is not a measure of how much stuff consumers bought in the United States. First, off final domestic purchases includes investment.

So if the point is that businesses aren’t willing to invest then final sales will be depressed.

Second of all, final sales also includes personal consumption expenditures. However much of PCE is imputed. That is, no one is actually buying anything. What the BEA is doing is trying to create a measure of what “consumption” in the US is. Well, I consume services from the house that I am living in though I am not paying rent to anyone.

I also consume banking services from Bank of America though I do not pay anything to Bank of America and indeed, Bank of America pays me. Both of these are examples of imputed consumption.

There are lots of other examples. For example, as office buildings in Detroit crumble, that is consumption of fixed capital structures. Though, no one is actually doing anything.

I actually think one of the better measures of what most people are thinking about as demand is retail sales. Those are market transactions. You tack new home sales on to that if you want depending on how you want to look at it and what you are after.

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