Semi-Daily Journal Archive

The Blogspot archive of the weblog of J. Bradford DeLong, Professor of Economics and Chair of the PEIS major at U.C. Berkeley, a Research Associate of the National Bureau of Economic Research, and former Deputy Assistant Secretary of the U.S. Treasury.

Monday, October 09, 2006

The Press Corps Drives More People Shrill

Daniel Gross is driven into shrill unholy madness by yet more journamalism from the Wall Street Journal:

Daniel Gross: October 08, 2006 - October 14, 2006 Archives: MORE NOMINAL SILLINESS: From the Wall Street Journal's editorial today:

Getting out of the statistical weeds, the news here is that the U.S. has a very tight labor market -- which is now translating into significant wage gains. Over the past 12 months wages have climbed by 4%, which is the biggest gain since 2001 and which economist Brian Wesbury points out is higher than the 3.3% average annual wage growth of the last 25 years.

Once again, the absurdity of talking only of nominal wage gains in a period of elevated inflation should be evident to anybody purporting to write about economic issues for an educated audience. So, too, should the absurdity of comparing nominal wage gains in today's period of elevated inflation to nominal wage gains in a recent period of depressed inflation. Four percent growth in wages in 12 months is indeed somewhat impressive, but not when inflation is up 3.8 percent in those same 12 months. If we all were paid in nominal dollars but paid bills only in real dollars, we'd all be really rich by now.

Angry Bear finds a ray of light in Brooke Masters:

Angry Bear: Brooke Masters writes:

Even the Dow's record is not quite as impressive as it seems. If inflation is taken into account, the Dow has to rise another 2,150 points before it will set an all-time high.It does seem that certain rightwingers are high-fiving over the fact that the Dow has reached 85% of its January 2000 level in real terms.

And finds Dean Baker driven into shrill unholy madness for a different reason:

Dean Baker adds this perspective:

One infuriating feature of business reporting is the constant cheering for a higher stock market. I have nothing against a higher market, but I know of no general public interest in a high stock market. In principle, the stock market represents the discounted value of the future profits of corporate America. If the value rises because the economy can now be seen as growing more rapidly, then this is certainly good news. But, if future profits are projected to be higher because of lower wages or lower corporate taxes (e.g. a higher tax burden on workers or fewer public services), why should the mass of the population, who own little or no stock celebrate?...

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