- "A Pact with the Devil."
- Fed Watch: Opportunistic Disinflation?
- Links for 2012-02-29
- "What a Difference a Decade Makes on Income Inequality"
Posted: 29 Feb 2012 12:39 AM PST
Did welfare reform work?:
Welfare Reform Worked, by Ron Haskins and Peter H. Schuck, Brookings: The primary election campaign has intensified a justified concern about inequality in America: People at the top are rising much faster than everyone else. Even low-income Americans consider relatively high levels of inequality acceptable if they have a decent opportunity to improve their condition. But because they may work fewer hours and at stagnant wages, their gains are very limited.
Among the poor, surprisingly, never-married mothers have gained the most in recent decades. Their story shows the best way to reduce poverty and inequality: by encouraging individuals to work more and by supplementing their earnings with tax credits, child-care subsidies and other benefits for low-income working parents.
The data refute these dire predictions....
See here for another view (scroll down to the section "TANF's Overall Record Belies Claims of Welfare Reform's Success").
Posted: 29 Feb 2012 12:24 AM PST
Of course, these are not perfect measures of inflation expectations, but they still tell an interesting story. Consider that in 2006 and 2007, the average five and ten year inflation expectations were 2.38% and 2.41%, respectively. Since 2010, the averages are 1.80% and 2.14%. A reasonably sharp 58bp decline at the five year horizon, and a smaller 27bp decline at the ten year horizon. So, at first blush, if the Fed is trying to raise inflation expectations to the pre-recession rates, they have not been particularly successful, especially in the near term.
The PCE price index is currently tracking below that trend, which would seem to open the door to more aggressive policy. But that trend represents inflation running at 2.3%, about 30bp above the Fed's target. Now fast forward 12 months and consider the trend since 2008:12:
That trend line represents a rate of inflation of just a bit above 2%, right in line with the Fed's target. And 30bp less than the pre-recession trend. Or about the same as the 30bp decline in the ten-year TIPS inflation expectation.
Posted: 29 Feb 2012 12:06 AM PST
Posted: 28 Feb 2012 11:43 AM PST
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