All posts by admin46x

No. 473: September Employment and Unemployment, August Construction Spending, PCEDeflator

(SGS Subscription required) • Phony Unemployment Rate Drop? Here Is How It May Have Happened
• With Deliberately-Inconsistent Numbers, Only the BLS Can Clear-Up the Reporting
• September Unemployment: 7.8% (U.3), 14.7% (U.6), 22.8% (
• September Payroll Gain Was Statistically Insignificant
• M3 Annual Growth Notches Higher Again

Guest Post: Regime Uncertainty And The Fallacy Of Aggregate Demand

According to the Paul Krugman, the “confidence fairy” is the erroneous belief that ambiguity over future government regulation and taxation plays a significant role in how investors choose to put capital to work. To the Nobel laureate, the anemic economic recovery in the United States shouldn’t be blamed on this “uncertainty” but rather a “lack of demand for the things workers produce.” The theory which puts a lack of aggregate demand as being the cause of economic recessions has the issue backwards.  Demand by itself doesn’t add to the stock of goods in society; only production does.  Because economic theory deals with the interactions of mankind it needs to be applicable to all times and places.  On a desert island, only a true charlatan would insist that a “lack of demand” is holding the primitive economy back from its full potential.  Desert islands are no different from today’s economy; both are still dominated by scarcity.  If the world economy is ever going to recover, the obstacles put in business’s place have to be lifted to make way for investment in real, tangible goods and services.  Consumption will come after.


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