DataPoints

As the U.S. recession has given way to recovery, so our former Recession Watch feature has been updated as well. It's now the Recovery Tracker -- a feature page designed to be a kind of GPS for the economic road back.

Here you'll find a real-time look at the most important indicators of recovery, as selected by Chief Economist Mark Zandi, and also a comprehensive look at how the current sitution compares with past U.S. business cycles. For instance: How does employment growth today compared with severe and mild recessions since World War II? Our charts will tell you.

From here you can also follow the links to our popular U.S. Recovery Status and Global Recovery Status maps, providing a snapshot of economic progress around the world or state-by-state for the U.S. And you'll also find links to the latest relevant news and commentary from Dismal Scientist analysts.

"...we never had a sufficiently strong conviction about the risks that could lie ahead. As I noted earlier, we had been lulled into a state of complacency by the only modestly negative economic aftermaths of the stock market crash of 1987 and the dotcom boom. Given history, we believed that any declines in home prices would be gradual. Destabilizing debt problems were not perceived to arise under those conditions."

Alan Greenspan, from "The Crisis" — forthcoming from the Brookings Institution

Makes we want to reach for my Fedspeak dictionary. Is "gradual" longer than "extended period" ? How about "for some time" ? Could the entire financial crisis have been avoided if somebody had just been a little more concrete in his terminology?

I don't begin to understand their math, but these researchers have certainly come up with a plausible sounding model for the current mess in Washington:

Ideologues: Explaining Partisanship and Persistence in Politics (and Elsewhere)

This paper provides an explanation for why political leaders may want to adopt ideological positions and maintain them over time even in the face of conflicting evidence. We study a dynamic framework in which politicians are better informed than the voting public about an underlying state of nature that determines the desirability of a given policy measure. The issue itself is nonpartisan (everybody has the same policy preferences) but voters attach ideological labels to both candidates and available policy alternatives. We show that both sides may be caught in an ideology trap: because voters expect the perceived ideology of office holders to determine their political actions, politicians are tempted to act according to their perceived ideology, resulting in political failure.

(An ungated version is here.)

John Cassidy, writing in this week's New Yorker, rethinks the financial bailout:

More specifically, Cassidy notes that the Obama administration now looks smart for resisting calls to nationalize the nation's largest banks:

Many financial experts who aren’t aligned with either party now believe that Geithner was right. “The people who were against nationalization have been vindicated: such a policy was not necessary,” Nariman Behravesh, the chief economist at IHS Global Insight, a leading economics consultancy, said. Mark Zandi agreed. “Of all the various policy efforts to stabilize the financial system, none has worked better than the bank stress tests,” he said. (During the 2008 election, Zandi advised John McCain, but he regards himself as an independent.) Together with the original decision to inject public money into the banks, he said, the tests “put an end to the panic and stabilized the system. Geithner got it about right. Nationalization would have caused havoc.”

Back story, meta-narrative, secular trend: whatever term your discipline favors, the idea is the same. It's all about the larger context in which we frame current events. A helpful convention, but one that can lead to stereotypes and inside-the-box thinking. So I personally cherish those moments when the context changes, or some piece of news threatens to change the narrative. News like this (from last Friday's New York Times):

Just a year after laying off millions of factory workers, China is facing an increasingly acute labor shortage...unskilled factory workers here in China’s industrial heartland are being offered signing bonuses. Factory wages have risen as much as 20 percent in recent months...

Some manufacturers, already weeks behind schedule because they can’t find enough workers, are closing down production lines and considering raising prices...

The immediate cause of the shortage is that millions of migrant workers who traveled home for the long lunar New Year earlier this month are not returning to the coast... China has drained its once vast reserves of unemployed workers in rural areas and is running out of fresh laborers for its factories.

And then there's this, (from the National Bureau of Economic Research):

The conventional wisdom that Africa is not reducing poverty is wrong... We show that: (1) African poverty is falling and is falling rapidly; (2) if present trends continue, the poverty Millennium Development Goal of halving the proportion of people with incomes less than one dollar a day will be achieved on time; (3) the growth spurt that began in 1995 decreased African income inequality instead of increasing it; (4) African poverty reduction is remarkably general: it cannot be explained by a large country, or even by a single set of countries possessing some beneficial geographical or historical characteristic.

A friend of Generation-X years believes with some passion that most of the troubles facing her cohort can be laid the feet of the Baby Boomers. Soaring debt, stagnant employment, endless Woodstock and Beatles reunions—you get the idea.

Well she, as well as all the other Gen-X, Gen-Y and Millennials coming up, could have the last laugh. Or so it occurred to me after reading this blog post, containing the arresting one-liner:

“Inflation is the young’s revenge on their elders for over-spending."

Think about it. And remember, if you're old enough, who complained loudest about the miseries brought on by high inflation in the 1970s. Hint: It wasn't us baby boomers, then in our teens & 20s. Old folks, with fixed-income pensions and 3% yields on their insurance annuities, were the ones then taking the brunt.

'Nuff said.