By Dean Baker, perhaps the best economist in the US. The takeaway is that we should see decent growth in the fourth quarter (consumption spending was very strong in November), but it is likely to be much closer to 2.0 percent than 5.0 percent, so folks may want to put that boom talk on the shelf for the moment. One final point, we continue to hear celebrations of the 0.4 percent growth in the average hourly wage reported for November. As noted previously, these data are highly erratic. The November number was primarily a bounce back from weak growth the prior two months. The annual growth rate for the three months (September, October, and November) compared with the prior three months was just 1.8 percent. Folks can believe that wage growth was really weak in September and October and then bosses suddenly coughed up big pay increases in November, or that the monthly data was mostly driven by measurement error and that there has been little change in the actual rate of wage growth over the last three months. Mr. Arithmetic and I believe the latter. cepr.net/index.php/blogs/beat-the-press/on-the-economic-boom-too-much-eggnog
Posted on: Fri, 26 Dec 2014 14:22:32 +0000
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