- Paul Krugman: Apologizing to Japan
- Links for 10-31-14
- 'BEA: Real GDP increased at 3.5% Annualized Rate in Q3'
Posted: 31 Oct 2014 12:15 AM PDT
What are the lessons we should learn from Japan?:
Apologizing to Japan, by Paul Krugman, Commentary, NY Times: For almost two decades, Japan has been held up as ... an object lesson on how not to run an advanced economy. After all, the island nation is the rising superpower that stumbled. One day, it seemed, it was on the road to high-tech domination of the world economy; the next it was suffering from seemingly endless stagnation and deflation. And Western economists were scathing in their criticisms of Japanese policy.
I was one of those critics... And these days, I often find myself thinking that we ought to apologize. ...
The ... West has, in fact, fallen into a slump similar to Japan's — but worse. And that wasn't supposed to happen. In the 1990s, we assumed that if the United States or Western Europe found themselves facing anything like Japan's problems, we would respond much more effectively... But we didn't, even though we had Japan's experience to guide us. ... And Western workers have experienced a level of suffering that Japan has managed to avoid.
What policy failures am I talking about? ... Japanese fiscal policy didn't do enough to help growth; Western fiscal policy actively destroyed growth.
Or consider monetary policy. The Bank of Japan ... has received a lot of criticism for reacting too slowly to the slide into deflation, and then for being too eager to raise interest rates at the first hint of recovery. That criticism is fair, but Japan's central bank never did anything as wrongheaded as the European Central Bank's decision to raise rates in 2011, helping to send Europe back into recession. And even that mistake is trivial compared with the awesomely wrongheaded behavior of ... Sweden's central bank, which raised rates despite below-target inflation and relatively high unemployment, and appears, at this point, to have pushed Sweden into outright deflation. ...
As for why the West has done even worse than Japan, I suspect that it's about the deep divisions within our societies. In America, conservatives have blocked efforts to fight unemployment out of a general hostility to government, especially a government that does anything to help Those People. ...
I'll be writing more soon about what's happening in Japan..., and the new lessons the West should be learning. For now, here's what you should know: Japan used to be a cautionary tale, but the rest of us have messed up so badly that it almost looks like a role model instead.
Posted: 31 Oct 2014 12:06 AM PDT
Posted: 30 Oct 2014 07:22 AM PDT
BEA: Real GDP increased at 3.5% Annualized Rate in Q3: From the BEA: Gross Domestic Product, Third Quarter 2014 (Advance Estimate)
Real gross domestic product -- the value of the production of goods and services in the United States, adjusted for price changes -- increased at an annual rate of 3.5 percent in the third quarter of 2014, according to the "advance" estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 4.6 percent. ... The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), exports, nonresidential fixed investment, federal government spending, and state and local government spending that were partly offset by a negative contribution from private inventory investment. Imports, which are a subtraction in the calculation of GDP, decreased.
The advance Q3 GDP report, with 3.5% annualized growth, was above expectations of a 2.8% increase.
Personal consumption expenditures (PCE) increased at a 1.8% annualized rate - a slow pace. ...
Overall this was an OK report, however PCE was weak (I expect stronger PCE going forward).
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