Let the good times roll again! -- 274,000 new jobs

[Adam Smith]

Not at all clear. The unemployment effects can go either way, and are cyclical. The inflation effects almost all go the same way, and are not generally cyclical.

[Rufus T. Firefly]

It's interesting to note that according to the Bush administration's own statistics, median household income declined or flatlined every year of the Bush administration, while the number of people living in poverty rose every year.

I'm no economist, so I have to ask: if hundreds of thousands of new jobs are created every month, but median household income keeps going down and the number of people living in poverty keeps going up, what, exactly, is there to be excited about?

[Ted Striker]

That I can get a job at Jack in the Box with no problem and support a family of 4 with that income duh Rufus!

DONT GET IT TWISTED

[DanS]

It's interesting to note that according to the Bush administration's own statistics, median household income declined or flatlined every year of the Bush administration

On a real basis, using the CPI inflation index as the measure of inflation (see Adam Smith's discussion above).

[DanS]

Originally posted by Colonâ„¢
GDP figures are inherently unreliable as well.

No doubt. No doubt.

Economic activity may in fact be 10% higher or lower than it's measured by in the GDP data, but since there's no reason to assume you can have quarter after quarter of increasingly higher previously unmeasured economic activity being measured, we can believe that the American economic in fact is growing at a certain rate.

I don't think we can believe it is growing at a certain rate. There might be very meaningful deviations from reality in a short to medium timespan.

Similarly, there's no reason to assume the drop in the participation rate in fact is indicating month after month of proportionally higher overestimation of the population. The aggregate numbers may be higher or lower, but it doesn't affect the trend. The sustainability of the direction the data is taking, especially when backed up by other data, is what differs a trend from a fluke.

Again, there might be very meaningful deviations from reality in a short to medium timespan. One saving grace is that the census enumeration is done every 10 years, from which we know that the deviation during the last decade was meaningful.

[Colonâ„¢]

As AS already said, it can go either way, hence you got no grounds to argue the deviation is going the way of understating participation. Especially since you got other data that are also pointing into the direction of a labour market that has been underperforming.

And if you're going to insist that the participation rate should be ignored until the next census, you at least ought to be consistent and not draw any conclusions from payroll figures since you'd not be able to place them into context.

[Kidlicious]

Originally posted by Adam Smith
You do realize that the CPI overstates inflation by about one percent per year....

That's just crap. Sorry. True inflation is well above the CPI.

[Adam Smith]

Dear Kid:

You should at least read the Boskin Commission report before making such silly pronouncements. HERE is a short summary put out by Stanford University.

Among the highlights:

Boskin wants real shoppers' habits to show up quicker in the nation's consumer price index (CPI), the official measure of inflation. That, he says, will lower the nation's official rate of inflation by 1.1 percent.

"Instead of falling by 13 percent, American real average earnings have risen by 13 percent from 1973 to 1995," he says. "Real median income over the same period grew 36 percent, not 4 percent. The poverty rate would be substantially smaller." Because components of the CPI are used to calculate the national income, "real growth in gross domestic product is understated."

Much of the change in the CPI that the Boskin commission proposes is relatively without controversy among economists. It relates to the fact that the index was never intended to be a cost-of-living measure but is used as if it was.

(AS: the author should not have bothered including the word "relatively" in this sentence.)

[Imran Siddiqui]

Ouch!

[Lawrence of Arabia]

They should use the GDP deflator to figure out inflation.

[Kidlicious]

Originally posted by Adam Smith
Dear Kid:

You should at least read the Boskin Commission report before making such silly pronouncements.

Dear AS:

What is the inflation rate? How much less do consumers get for their dollars every year? You can never really measure that. The CPI is just the CPI, and it is increasing faster than wages. What isn't measured in the CPI is how much less the goods and services we buy are worth every year because of all the cost cutting that is done. Costs are cut, and so is quality, but we pay the same amount. So the CPI doesn't overestimate inflation, it underestimates it.

[Adam Smith]

Originally posted by Kidicious
Costs are cut, and so is quality, but we pay the same amount.

The Boskin Commission found just the opposite, especially with respect to computers, electronics, automobiles, pharmaceuticals, and housing. You should take a look at the report.

[Kidlicious]

Maybe they've never bagged their own groceries or waited in line at Wal Mart for an hour.

I'll look at it though.

[Adam Smith]

Actually, the growth of stores like Walmart is another reason for understatement. The sample used to construct the CPI has not yet caught up with the fact that more people are now buying at Walmart (even if they have to wait in line ) instead of at older, higher priced stores.

[Kidlicious]

Originally posted by Adam Smith
Actually, the growth of stores like Walmart is another reason for understatement. The sample used to construct the CPI has not yet caught up with the fact that more people are now buying at Walmart (even if they have to wait in line ) instead of at older, higher priced stores.

Doesn't it just survey households? I assume some of them shop at Wal Mart.