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And We Know the Economy Is Picking Up Steam How?

Tuesday, 19 March 2013 07:02

Business news stories and op-ed columns are filled with comments about the economy picking up steam. The case is less obvious to those of us who look at the data. February's reported job growth of 236,000 wasn't bad, but it was not quite as good as the 271,000 job gain reported last February or the 311,000 new jobs reported for January of 2012. It pays to step back and look at the big picture. Most forecasts show growth under 2.0 percent in 2012. We have little reason at this point to assume that these forecasts are overly pessimistic.

Comments (4)Add Comment
written by liberal, March 19, 2013 8:21
What I want to know is why corporate profits are so high, given how weak the economy is.

The only things I can think of are (a) bottom lines fattened up by low, low interest rates, and (b) increasingly liberal accounting standards (not sure about that, but I don't think all that stuff got fixed post-Enron).
written by John Q, March 19, 2013 12:39
"What I want to know is why corporate profits are so high, given how weak the economy is."

Corporations are underpaying their workers relative to increases in productivity, and can get away with it because of the weakness of the job market and the destruction of union bargaining power.

Businesses should be increasing the pay of lower paid workers with their trillion dollar stash, not debating whether to use it to pay dividends or to buy back their own stock.
written by skeptonomist, March 19, 2013 2:55
Housing starts have definitely started up, apparently at an accelerating rate. They are not going to shoot up as they did in the 70's and 80's because they were artificially depressed then by the Fed, but a recovery rate like that in the 90's seems plausible. See Kevin Drum for some additional information.
housing starts
written by David, March 19, 2013 4:07
Some investors are fleeing the overpriced stock market and feel like investing in rental homes. This could be driving part of the flurry in the housing sector. And I agree with Shiller that the current surge in prices is probably not sustainable, given that vacancy rates are just now decreasing to pre-bubble trends. In addition, given the sluggish growth of the economy and of wages, there's not much to be excited by and plenty to worry about.

I guess the media is tired of reporting the same ol' same ol', but unless the House changes course, we've got another 6-10 years (at least) of this.

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About Beat the Press

Dean Baker is co-director of the Center for Economic and Policy Research in Washington, D.C. He is the author of several books, his latest being The End of Loser Liberalism: Making Markets Progressive. Read more about Dean.