Rush Limbaugh – the President Should Fire People

Newt Gingrich has taken a page from the Occupy Wall Street crowd as he goes after Mitt Romney. While I say welcome to our side Newt, Rush Limbaugh is quite upset. Fair enough but Democrats should really highlight this:

"So Romney is out there saying that he likes being able to fire people. Folks, don't we want somebody in the White House who's gonna fire people? How are we going to reduce the size of government? Don't we want somebody who loves firing people in the White House? Isn't that what we're all talking about here?" Limbaugh said.

So according to Rush – we need to layoff even more government workers. Isn’t that part of the problem, however? We are practicing Herbert Hoover economic policy by reducing government employment during a period of slack aggregate demand?

Economics and Fracture

On the plane back from Chicago I started reading Age of Fracture, the new book by Dan Rodgers on US intellectual history since the 1960s.  I had high hopes, since Atlantic Crossings, his earlier work on the origins of Progressive-era American policy activism in European (mostly German) reform, was a fantastic read.  And, to be honest, Rodgers kept me engaged on a redeye to Copenhagen, a layover, and a second leg to Amsterdam.  You can measure a book’s readability that way.

All the same, I felt misgivings on several fronts:

Making an ASSA out of U and ME

The 2012 ASSA meetings have come and gone, and I guess I’ll have to add my reactions to the heap already beginning to accumulate in the blogosphere.

Kudos—really!—to the AEA for its new ethics policy.  Using the publication lever is exactly right, in my opinion, and I hope the disclosure requirements are copied by non-AEA journals.

My worst experience—nothing else comes close—was attending a panel of economics bloggers.  Actually, it began well with an interesting, thoughtful and directly useful presentation by Jennifer Imazeki of Economics for Teachers.  I urge everyone who teaches this stuff at any level to check out her work.  After that it was pretty dismal.  None of the other panelists seem to have thought seriously about the practical issues involved in integrating blogs and teaching.  There was little reflection on the issue of boundary-busting, that entering the blogosphere means sharing intellectual space with people coming from different academic/cognitive/experiential backgrounds.  Quit the opposite: the other panelists (Alex Tabarrock, Jodi Beggs and especially Steve Leavitt) argued that the mission of economics bloggers should be to systematically push the viewpoint of incentives and markets because that’s what econ has to offer.  There was an amusing moment in which Leavitt, noting the disconnect between the arguments economists make on the web when they discuss current issues and the parade of models in the textbooks, considered the possibility that the textbooks might be irrelevant.  That moment lasted no more than ten seconds; he dismissed the heresy and recommended that teachers spend more time on the textbooks and less on the blogs.

I congratulate myself for not getting cranky.  I made a comment which was intended to be entirely constructive.  One point was that none of the panelists had mentioned Mark Thoma’s Economist’s View, which is an essential aggregator.  I considered mentioning that one of the virtues of Mark’s site is that he links to noneconomists that economists ought to be interested in, like Andrew Gelman, the Bayesian statistician, but decided not to in order to spare the feelings of Leavitt.

As usual, however, the real action was in the hallways and over dinner.  I got more gossip about the inner workings of the Bank and the Fund than I can hope to remember, and I met lots of actual human beings corresponding to the names I recognized from books, papers and blog posts.  One standout was a fascinating conversation with a prominent economist, who will go unnamed, who has knocked himself out to inject some rationality and honesty into policy debates and who now appears to have largely given up.  His discouragement was hard to argue with—but there were hordes of young, proto-rabble-rousers at many of the sessions and receptions I attended that left me with the feeling that a significant energy recharge is taking place in the world of dissident economics.

Incidentally, Europe is really not looking good, and a Europe/US financial decoupling is absolutely impossible.  2012 augurs to be a wonderful year for bloggers, if not for humans.

The Fed Is Financing the ECB's Support For European Banks

Perry Mehrling will probably be blogging on this soon, but I cannot resist getting this news out now. I saw him at Maurice Obstfeld's Ely lecture yesterday here at the AEA/ASSA meetings in Chicago. Obstfeld spoke on "Does the Current Account Still Matter?" Answer: It no longer determines overall balance of payments because of disconnect from ever larger capital flows, but does still matter in that a country with a current account deficit may be subject to a bop crisis, whereas a surplus country is not. But that is not what this post is about.

I asked Perry if the Fed was doing what it did for a period following the Sept. 2008 crisis, taking on ECB assets onto its balance sheet. The answer from him was yes, and this is a recent development, only a month old. He pulled it up on his android: as of Jan. 5 the Fed had acquired $99.8 billion in ECB assets, all within the past month. This is not small change.

I suspect what is going on is that the European banks are really struggling to adopt to the Basel III capital requirements in the continuing recessionary environment in Europe. Given the threat they face on sovereign debt, and the ECB wanting to limit its support for the sovereign debtors directly, it has been pumping money into the banks to keep them afloat. But this has become such a difficult enterprise, they have drawn on the old facility with the Fed that was renewed some time ago. Perry may disagree, but it looks to me that this is what lies behind this very striking and important recent development.

Belated In Memoriam

RIP Christopher Hitchens. I've always loved his writing. I think he went off the rails supporting Bush on Iraq, but I am reminded of what Auden wrote about Yeats:


Time that is intolerant
Of the brave and the innocent,
And indifferent in a week
To a beautiful physique,

Worships language and forgives
Everyone by whom it lives;
Pardons cowardice, conceit,
Lays its honours at their feet.

Time that with this strange excuse
Pardoned Kipling and his views,
And will pardon Paul Claudel,
Pardons him for writing well.

Romney’s Tax Proposal

The Tax Policy Center provides its review of which taxpayers will pay more and which ones will pay less under the tax proposal introduced by Mitt Romney. A really short summary goes as follows:


(a) The well to do will pay less in taxes;

(b) The working poor will pay more in taxes; and

(c) Overall tax revenue will be significantly reduced.

But wasn’t that also the case for the Herman Cain tax proposal as well as any other tax proposal from the Republican candidates for President? And the Republicans claim they are for fiscal responsibility!

There ought to be clowns

From today's Times: "The Federal Reserve will begin later this month to publish the predictions of its senior officials about their own decisions..."

FOMC minutes: February 2012

Chairman Bernanke predicted that he would start the meeting promptly at 10 and, indeed, his forecast was correct -the meeting started at 10. Yellen began with a forecast that she would be getting into it with Plosser and Kocherlakota soon if they persisted with their standard nonsense about inflation threats and "it's all structural so what's the big deal." Plosser forecast that he would in fact claim that it's all structural, so that Yellen's forecast was a good one. He then stated "it's all structural, ladies and gentleman. Our work is done." Yellen then got into it with him, as she had predicted. At this point, Bernanke predicted that he would be stepping out in a minute to use the gents, but predicted that he would be right back. After a minute, Bernanke proceeded to step out. But he came right back and predicted that the meeting would resume, as it did. Evans then forecasted that he would forecast that he would forecast that he would forecast that he would forecast.......... (People began to file out)


Respectfully Submitted With a Forecast That I will Sign my Name But Inadvertently Misspell it,

Kavin Quenn

War Whooping on Iran

So, it is bad enough that GOP pols like Santorum are calling for bombing Iran and that reportedly 50% of the US population agrees with this, but we also have the Obama administration about to implement a seriously intensive sanctions policy on the Iranian central bank that has gotten the Iranians all worked up and making threats about closing the Straits of Hormuz. Some of this is clearly just politics, with the US in an election year and war whooping on Iran popular, while Iran is coming up on a parliamentary election on March 2, with similar sorts of tough guy strutting going on there as well as here. Needless to say, Iran is unlikely to follow through on its threat, but enjoys watching oil prices spike with the threats, thus threatening the economic recovery Obama needs for his reelection.

Let us remember certain things. While the latest US National Intelligence Estimate moved somewhat away from its previous firm denials of there being any Iranian nuclear weapons program, that movement amounted to saying that they maybe had one going on longer than we had previously thought, but continued to say that there is not one going on now. The more recent IAEA report that seems to lie behind Obama's plicy basically only amplified that somewhat, with some more recent reported simulations by some scientists of nuclear explosions and some evidence of not being fully forthcoming in certain areas. Neither report says that they have an active program to build nuclear weapons, so the vast majority of the current talk is basically hysteria, less credible than the claims that Iraq had WMD.

While Juan Cole has long argued that they would like to have the capability to build nuclear weapons, what they have done so far is completely legal according to the NNPT to which they are a party. They have a civilian nuclear energy program, which they are allowed to have, and their ongoing uranium enrichment program is fully consistent with it and not the higher levels associated with a nuclear weapons program. IAEA inspectors are still in the country, and Cole points out that we would be able to figure out if they went active because of a variety of things the inspectors and other sources would observe. And, although many dismiss this, the supreme military commander and supreme leader, Vilayat-el-faqih, Khamene'i has issued fatwas against nuclear weapons. As long as he does not undo those and remains in charge, there will be no nuclear weapons program in Iran.

What I confess to being a bit mystified about is the attitude of some of the Western European countries, who seem to be quite eager for these heightened sanctions and this confrontation. I can sort of understand that they might fear more any possible nukes from Iran due to proximity, just as Israel does. But I also think that there intel agencies ought to be able to figure out what the US intel agencies know, and that reportedly the Isreali ones do as well, even though they get majorly ignored by their politicians, that there is no nuclear weapons program in Iran.

Indeed, I am really not at all clear what Obama or anybody else thinks is going to be acheived by these heightened sanctions. Are we actually demanding that they shut down their perfectly legal civilian nuclear weapons program? Presumably a negotiation would involve some sort of deal where they are allowed to have their civilian program if they promise not to have a military program. But that is already what they are doing and repeatedly declare that they are doing. Is this really about trying to achieve regime change? This will also not work, as sanctions simply reinforce the arguments of the hardliners, just as the US sanctions have done with regard to Cuba for a half a century. The only place I know where sanctions worked was maybe in South Africa, but they had a real problem and undid it, whereas what is being demanded of Iran is for them to stop doing something that they are not doing. Really, this war whooping is getting seriously out of hand. Do we really need to go into Iran now that we finally just got out of Iraq?

Oh, and hope to see some of you in Chicago, :-).

Oy! Deja-Voodoo Economics, and some Horn-Tooting

Here we go with the RE means fiscal policy is impotent meme again! Well, this blog was on the case early - PGL and I, along with Nick Rowe in the comments, sorted the whole thing out back when the Stimulus was being enacted, I think. And now, surely, it is a stylized fact that that the stimulus was effective compared to the counter-factual - no?

On a completely different subject: remember back in the campaign Obama made noises about raising revenue by lifting the cap on the payroll tax? That still seems like a good idea to me, and something that might have political legs in the wake of Occupy and all that. I await evisceration at the hands of my fellow bloggers, at least, who IMS didn't cotton much to the idea at the time.

Oh and Happy New Year!

A Modest Case for Guarded Optimism in 2012

I think that there is reason to think that economic performance in the US and many portions of the world will do better in 2012 than has been forecast by many recently. Basically, recently many trends seem to be doing better than what has been forecast, coming out of a long period of fear of various catastrophes (and many very real problems), which have been deeply embedded into the forecasts and the markets as well. A way of looking at this is to consider the analysis in the Sunday Washington Post New Year's article by Neil Irwin, "Could 2012 be better?'

Irwin lists five factors that will determine how things go.
1) US political system behavior
2) Can European leaders balance every country's demands?
3) Performance of US housing market
4) X-factor
5) Can China manage a soft landing?

Irwin thinks that things are pretty shakey still on many of these, but is mildly optimistic that things will be better than in 2011. I think they might even be better than does Irwin.

1) This may be the one that I am least optimistic about, particularly given that this is an election year. However, it may be that the worst is past on this front, and that was manifested in the debt ceiling conflict last summer when the tea party pushed things right to the edge of a default for the first time since the US became the first and only country ever to impose a nominal debt ceiling back in 1917. The sign may well be the collapse of the House Republicans at the end of this past year over the payroll tax issue. Now, I am not sure that I agree with the payroll tax cut, given my old position that the whole social security system should have been left alone. But, in terms of politics, it seems that the tea partiers are now aware of the impact of the OWS and the fact that they were blamed substantially for the bad economic performance after the debt ceiling fiasco. Indeed, ironically, the fact that this is an election year may keep their noses to the grindstone a bit more and increase their caution regarding engaging in really outrageous actions with regard to the economy. Too many people are watching very closely.

2) I think the situation in Europe may be better than many think. I have been off and on arguing here and elsewhere that the freakouts over Italian deficits were ridiculously overblown, and now the markets seem to have figured this out, with interest rates on their borrowings having declined even further even yesterday. Despite all the recessionary trends, Germany has reported increased manufacturing. No, Europe is not going to be booming, but I think the threat of a full-blown euro collapse is largely past. The carrying on about the end of the euro by many US commentators is looking increasingly likely to be a big embarrassment, once again (some of these folks have been at this since before it was adopted, snore). Curiously, I think the biggest drag on Europe will be the effort to meet the Basel III capital requirements for banks, which is definitely restricting lending in the EU, not just in the eurozone. Europe will have a bad first half of the year, but once this Basel adjustment is in place, things may improve, if gradually.

3) Housing prices continue to decline in the US, and foreclosures continue at a high rate in much of the country, with something like a quarter of mortgages still under water. I do not see much change in any of those. However, we have seen an uptick in construction of multiple unit housing in many areas of the country, fairly steadily since the middle of last year actually. With very little construction for basically the last half a decade, there is good reason to believe that there is pentup demand and that this increase in construction can continue, even if it is limited to certain regions. Construction was the first part of the aggregate US economy to go down. Having it rising again steadily is important and may provide one of the more important foundations for keeping the US economy growing this coming year, even if not enough to really noticeably dent the unemployment rate.

4) The X-factor is the unknown shock, you know, those Minnesota real business cycle folks with their technology shocks and so on. Whatever. Well, yes, maybe the Mayan calendar people are right and the world will end on Dec. 21. But at least maybe we'll luck out before then and not have too many more natural disasters as bad as the last couple of years. Even if we do have some, it looks to me that there is more of a foundation for continuing growth now than previously, although heck, maybe the Mayan doom will hit even earlier in the year (and no, I am not being pollyanna here about some longer term problems such as global warming, although in the near term global warming actually helps the US economy on net as the reduced heating bills outweigh rising costs in other parts of the economy).

5) China does have a property bubble, with housing prices having more than tripled since 2005 along with sharp rises in price to rent and price to income ratios. For a pathetic story about what is going on, with prices now falling hard in some parts of China, see http://www.chinalawblog.com/2011/12/the_impacts_of_chinas_real_estate_crash_a_hard_rain_is_gonna_fall.htm . So, there is reason to believe that China is facing some slowdown in its growth rate. However, besides the fact that manufacturing rose in December above forecasts, there are other reasons to think this may have less impact there than has the housing crash in the US. Housing is a smaller part of the economy for one thing. Another is that China has had several quite sharp crashes of its stock markets in recent years with little impact on economic growth. China is planning for some growth slowdown, which would probably be a good thing and inevitable, but China is in much better shape to use macro policy tools including fiscal policy to offset a decline coming out of a property crash to some extent at least. This could be a problem, but for now much of East Asia seems to be performing above predicted levels.

So, all in all, folks, I think there is reason to think that 2012 may do better than many have been forecasting, although this may in the end prove to be wishful thinking on my part, even as I have a history of often forecasting doom and gloom.

Is Alex Tabarrok Saying Unpleasant Monetarist Arithmetic is Identical to Complete Crowding Out?

I am puzzled by this.

Paul Krugman has already replied noting that Brian Riedl is arguing complete crowding-out even as the economy is far from full employment. Go figure. And I have to really wonder how Brian Riedl thinks the problem is too little savings as if consumption was allegedly soaring.

But let me just add what I said in Alex’s comment box:

Krugman’s 2003 writing strikes me as the same type of concern that was contained in Sargent and Wallace’s Unpleasant Monetarist Arithmetic. Which I thought was an excellent discussion. Simply put – the long-run government budget constraint has to be honored somehow. And if markets are ever convinced that our political masters have decided to spend and spend without raising taxes – inflation would soar, which I think Irving Fisher in 1907 claimed would drive up nominal interest rates. So what is so bizarre about this argument again?

As I read what Paul has written at various times, his arguments strike me as quite clear and hardly inconsistent.

Shopping Is Not a Perfect Substitute for Politics

The New York Times has an interesting piece today on the shortcomings of organic agriculture in its current, commercialized form.  They describe vast monocultures, drawdowns of aquifers, wasteful attempts to prevent natural blemishes and deformation of vegetables, and long-distance shipping in the off-season.

A few of their criticisms are spurious; for instance, it is better ecologically to ship tomatoes and basil from Mexico to the US during the winter than to try grow them in greenhouses, and trying to persuade consumers to remove such things from their diet for half the year is not a reasonable strategy.  Nevertheless it is quite true that an organic label does not guarantee that the agriculture that brought the food to your table is sustainable, ecologically or socially.

The roots of the problem lie with the idea that agriculture can be fixed by establishing labels like organic or fair trade, so that shopping does the work of social change.  Of course, shopping can be better or worse.  You can have no labels at all and drift inexorably to the lowest common denominator in all aspects of food production outside the purview of the consumer.  Or you can have labels like the ones we have today and give shoppers a choice in how much social responsibility they want to trade off for price, product differentiation or other consumerly objectives.

Don’t expect these labels to do everything, however.  They have to be kept simple and standardized, so they can’t address all the practices that arise in different environmental conditions.  Also, they are assigned to production on a producer-by-producer basis, so they can’t take into account the interactions at a regional or sectoral level.  For instance, even if it were possible to insert language about sustainable water withdrawals into the organic standards, what constitutes sustainable depends on what other users sharing the same groundwater resources are doing.  An individual farm may simply be the wrong unit of observation.

Real solutions require regulation and coordination, stuff like water and soil conservation districts.  Reducing the burning of fossil fuels in food production and distribution requires a systematic control over carbon emissions, such as the permit system I’ve pushed in the past (such as here and here).  And better labor practices require better labor laws and healthy unions to enforce them.  You shouldn’t expect shopping to take care of all this.

So why is all the burden placed on labeling and consumerism?  Because we’ve given up on politics, at least for now.  If you don’t think the rules of the game can be changed through collective action, all you’ve got left is shopping.  But remind yourself from time to time that this is duct tape, not real repair.

Partisan Misrepresentation of Ricardian Equivalence is Nothing New

Paul Krugman catches Robert Lucas (not to be confused with Robert Barro - thanks for the comment David) misrepresenting Barro’s claim to fame:

But, if we do build the bridge by taking tax money away from somebody else, and using that to pay the bridge builder — the guys who work on the bridge — then it’s just a wash. It has no first-starter effect. There’s no reason to expect any stimulation. And, in some sense, there’s nothing to apply a multiplier to. (Laughs.) You apply a multiplier to the bridge builders, then you’ve got to apply the same multiplier with a minus sign to the people you taxed to build the bridge. And then taxing them later isn’t going to help, we know that.

Let’s get back to this after this abbreviated explanation of Ricardian Equivalence from David Andofatto. OK David, we know that in a life cycle world where households understand the long-run government budget constraint that households view all tax cuts (even the 1981 and Bush43 tax cuts) as mere tax surcharges that have to be repaid. But this model goes well beyond this. If fiscal policy involved a permanent increase in government consumption, it also involves a permanent increase in taxes which would be a wash as Barro alleges. So if the Obama Administration passed a law where we built a bunch of bridges every summer only to tear them down every winter for the rest of time, then maybe Barro’s claim makes sense.

But this is not the correct policy experiment. The building of a bridge is a temporary blip in spending intending to invest in the public infrastructure where the benefits will be long-term. The financing requirements can be met either by a blip in taxes or very low taxes each year over the future. And in either case, the fall in private consumption in the first year will be small in proportion in the rise in government spending to build this bridge (which it does not intend to subsequently tear down).

One would think this logic was well known. The reason for this blog post, however, is to note that Republican hacks have grossly misrepresented Ricardian Equivalence before. Recall all the fuss over why the Bush43 tax cuts would be better aggregate demand stimulus if that were to be made permanent as opposed to temporary? While that might be good life cycle theory if we could ignore a lot of other economic propositions – such as the long-run government budget constraint (and of course Ricardian Equivalence). Yet some Republican hacks even went so far as to dismiss any concern about crowding-out (even as the FED was already raising interest rates) based on the proposition that tax cuts do not raise interest rates ala Ricardian Equivalence and that Paul Evans AER 1985 paper entitled “Do Large Deficits Produce High Interest Rates”. But wait a darn second – the Ricardian reason for all of this is the assertion that tax cuts don’t encourage more consumption. This incredible dishonest mishmash was most evident when Victor Canto claimed in what National Review November 2002 piece that the Bush tax cuts would be more powerful in encouraging consumption if made permanent, while in another National Review November 2002 piece he used Ricardian Equivalence to argue that the tax cuts would not raise interest rates. To be fair to Mr. Canto – the National Review expects such brazen dishonesty if it is in defense of its rightwing agenda.

I should say that the Evans AER 1985 paper always puzzled me because the Reagan tax cuts did raise aggregate demand by raising consumption during a period when government spending was not reduced. And while nominal interest rates may have declined, real interest rates rose. In other words, we got classical crowding-out from a mix of expansionary fiscal policy and the Volcker tight monetary policy. Now if you wanted to remain a true believer of Ricardian Equivalence, I guess you could have argued that households expected the Reagan revolution to eventually get around to reducing government spending. Domestic spending after all was trimmed a bit even as defense spending soared. But we did eventually get that good old Peace Dividend – in the 1990’s.

Does The Italian Bond Sale Mean The Eurocrisis Is Over?

Yesterday Italy sold bonds for a little over 3% compared to over 6% in late November. Does this mean the eurocrisis is over? Not necessarily, but it may well mean that the markets have finally figured out that Berlusconi really is gone, that Italy is one of four countries in the eurozone that is running a primary budget surplus (Germany, Belgium, and Luxembourg are the others), and a much higher proportion of its debt is held domestically by the high saving Italians.

The worst ongoing problem in the zone is Greece. It is caught in a downward spiral that is hard to see an end to other than an exit from the eurozone. While some worry what will happen "if Greece defaults," the hard fact is that it has already effectively done so. The wholse argument over the size of the "haircuts" on its sovereign debt is really just an argument over how bad the default will be and exactly who will end up having to bear the cost of their default. But for all the worry about linkage and contagion if Greece defaults, by now it looks like the ECB's plan to support European banks will probably work to keep the dominoes from falling down in a row as a result. Maybe Portugal might also have to depart, but both Spain and Italy have better budget fundamentals than either the UK or the US. Probably the eurocrisis will end with all that.

What we may be looking at is a better than expected scenario. I find it increasingly amusing to read and listen to commentators who note that Christmas sales did better than expected and that gasoline prices keep dropping, but who then warn that all this will probably turn around next year. Well, yes, maybe it all will. The eurozone has pretty much fallen into a recession that will probably continue into the next year, and more worryingly China is clearly slowing down with its property bubble seriously cratering. But it may be that the US will return to its old role as the engine of growth for the rest of the world, at least somewhat. Probably the biggest fly in the ointment may be the purely artificial crisis being ginned up over sanctions on Iranian oil to stop their nonexistent nuclear weapons program (despite all the hoopla, the IAEA report did NOT report an actual nuclear weapons program there, despite some new findings of some past research regarding a potential to have one).

Daring To Disagree With Dean?

That would be Dean Baker, briefly a co-blogger on the old maxspeak, who warns that the recent upbeat reports on housing are not reliable, with them being too much based on highly volatile changes in multi-family housing. For details see http://www.cepr.net/index.php/blogs/beat-the-press/erratic-patterns-in-monthly-housing-starts as well as the closely related http://www.cepr.net/index/blogs/beat-the-press/housing-is-back. Dean must be taken seriously on these matters since his being the first to call the housing bubble all the way back in 2002.

I am not disagreeing with him very much. I agree that for much of the year the hype over a possible double dip in the US has been overdone, which partly explains the sudden surge of enthusiasm we are now seeing at recent high GDP growth rates, which are probably overdone due to being heavily driven by inventory adjustments that are likely to halt after the first of the year, not to mention the continuing likelihood of a European recession with a Chinese slowdown that will put a drag on externally, although those fears have been the main source for all the moaning and groaning in the markets for much of the past few months. And Dean is right on part of the details: single family home construction is barely above its pit in 2009 and not moving; nearly all of this recent increase in housing starts has been for multi-family dwellings, and that is a highly volatile monthly series.

Nevertheless, if one looks at the charts he provides and those he links to, there is a clear upward trend since spring, despite the month-to-month volatility, even if it is mostly in multiple family units. It is also true that it is regional, mostly in the Northeast and West, but any apparently sustained movement should be welcomed. In the chart he shows, with January 2002 as 100, there was a peak in mid-2006 at around 140. The pit in late 2009 was around 20, and it was below 40 this spring. But the November number is at 80. This will probably show declines in coming months, but if the general upward trend continues, this will mean that for the first time since 2006, housing will be a net positive contributor to the US economy, even if only somewhat weakly so.

The newspaper reports have it that rents have been rising in the regions where construction has been rising, reflecting an increase in household formation, with this rising demand finally crashing against the long-depressed supply. Overall housing starts remain far below where they once were, but the issue is direction, and that does appear to be upwards, if erratically and not throughout the US. Dean links to data on rents, but that does not show the most recent that has been reported in the papers.

So, this is at most a mild disagreement with Dean, but in fact I am willing to say that the news on the housing front is improving, at least in terms of a trend for multi-family construction, even if there is a continuing problem in foreclosures and in the single-family home portion of the market. So, while Dean threw in a mention of celebrating Hanukah, I'll throw in one for celebrating Christmas as well, :-).