Please, Secretary Chu, Retract your Retraction. High Gas Prices are Good. You Were Right the First Time.

Why would a president want to bring an eminent scientist like Energy Secretary Steven Chu into government? In the hope, one would suppose, that he would speak truth to power.

Sadly, that hope seems to have been been dashed in the case of Secretary Chu.  In 2008, before becoming part of the cabinet, he had said that as part of the effort to protect the environment and wean the U.S. economy from its energy addiction, "Somehow we have to figure out how to boost the price of gasoline to the levels in Europe." But earlier this week, at a hearing of the Senate Energy and Natural Resources Committee, Chu caved to political pressure, saying  "I no longer share that view." Digging himself in deeper, he explained that he and the president felt consumers’ pain at the pump, and were doing everything they could not just to hold the line on gasoline prices, but to reduce them. Read More>>>

US Employment Data: February Jobs Market Report shows Across the Board Strength

The latest report from the BLS shows across the board strength in the U.S. jobs market. Data on payroll jobs, unemployment rates, and labor force participation all showed a gradually strengthening economy.

The headline increase of 227,000 new payroll jobs (233,000 in the private sector) was down a little from the January report. However, that slight decrease was more than offset by strong upward revisions to previous reports. Job growth for December, first reported at 200,000, has now been revised upward to 223,000. January’s number was raised from 243,000 to 284,000, which makes that month’s gain the strongest since May 2010. Read more>>>

Follow this link to view or download a classroom-ready slideshow with charts of the latest employment data

Finally, Proof (Real Proof, not Just Data) of What Inflation has done to Our Economy

Anyone who has ever risked blogging about inflation knows there are two kinds of commenters out there. First, there are those who are sure that inflation, although quiet lately, is poised for a big breakout that will destroy the economy. Second, there are those who are sure inflation has already done so, and that anyone who believes government  data to the contrary is a real sucker.

This post is for the benefit of the second group. I’ve based it on material from a wonderful website, www.wishbookweb.com, that I ran across by chance while doing research for the national accounts chapter of my econ textbook. The site archives full-color, page-by-page images of dozens of old mail order catalogs from as far back as the 1930s. Read more>>>

This post is a sneak preview from the forthcoming 5th edition of Introduction to Economics by Edwin G. Dolan, BVT Publishing

Latest Data Suggest Output Gap is Closing but Employment Gap is Closing Faster

The latest GDP data from the Bureau of Economic Analysis indicate that the output gap narrowed in Q4 2011 at a slightly more rapid pace than previously estimated. The second estimate, released February 29, showed US real GDP growing at a 3 percent annual rate last quarter, up from the 2.8 percent advance estimate released at the end of January.

Growth was revised upward for all major sectors of the economy. Read more>>>

Click here to view or download a classroom-ready slideshow with additional GDP charts.

Candidates' Budget Plans Don't Add Up and Other Links for your Classroom

• The bipartisan Committee for a Responsibe Federal Budget has published a new analysis of the fiscal policy plans of the GOP presidentia candidates, Primary Numbers: The GOP Candidates and the National Debt. It finds that by and large, their budget plans don't add up. They rely on excessively optimistic growth projections and other unrealistic assumptions, and are too short on specifics of spending cuts and loophole closing. Under Romney's, Santorum's, and Gingrich's plans, the national debt would continue to increase as a share of GDP. Ron Paul's plan is the only one that would actually cut the debt if enacted, but it, too, relies on unrealistic assumptions, especially regarding spending cuts.
• It is hard to keep up with all the news about China's economy. If you have to read just one thing, the latest post from Michael Pettis is always a good choice. In When Will China Emerge from the Global Crisis? Pettis explains that China is beginning to suffer a hangover from the investment surge it used to paper over the early effects of the global crisis. Now the hard steps of structural reform are needed, including a big reduction in the role of state-owned industries.
• GDP candidate Mitt Romney often accuses President Obama of wanting to turn the United States into a European-style welfare state. In this New York Times column, David Brooks explains that if you include a full accounting for tax expenditures such as tax breaks for employer-sponsored health insurance, the United States already has a welfare state of comparable size to most European countries.
• Megan Greene visits Greece regularly. In this recent blog post, she reports that sorrow and bitterness are growing at all levels of greek society. Greeks still want to have it both ways: They want to enjoy the benefits of euro membership but not to bite the bullet on the deep structural reforms needed to go along with cuts to wages and pensions.

When Does “It Will Hurt the Poor” Outweigh “It’s Good for the Environment?”

“Nearly every environmental policy hurts the poor the most,” say Iain Murray and David Bier of the Competitive Enterprise Institute. Writing recently in the Washington Examiner, they don’t limit their criticism to absurdities like federal tax credits for the $100,000 plug-in Fisker Karma (“a bold expression of uncompromised responsible luxury.”) The two analysts have it in for any environmental policy that would raise the price of anything—cap-and-trade programs for carbon emissions, clean energy mandates, light bulb regulations, the works.

To be sure, some of the policies they list have their flaws, as I would be the first to concede. What I would like to focus on here, though, is when “it will hurt the poor the most” is an independently valid objection to otherwise sound, market-based environmental policies. I am inclined to say that it never is. Here is why: Read more>>>

Updated Seasonal Factors Remove Much of the Volatility from 2011 Monthly CPI Data

2011 was a roller coaster ride for U.S. consumer price inflation—or was it? If you went by the releases from the Bureau of Labor Statistics, monthly CPI inflation, stated as annual rates, bounced from over 6 percent in February, down to under -2 percent by June, and then back up over 6 percent in July. That made life hard for policy makers, forecasters, and anyone trying to use the CPI to index payments.

It turns out, though, that inflation was not so volatile after all. As part of yesterday’s CPI report for January, the BLS released revised seasonal adjustment factors. When we apply the new adjustment factors to data for the last two years, much of the month-to-month variation in inflation disappears. >>>Read More