Secondary Sources: Economic Data, Inequality, Spending Cuts
A roundup of economic news from around the Web.
- Economic Data: Carl Bialik takes a close look at the numbers behind economic data. “At a time when high unemployment tops many people’s worries about the economic recovery, the BLS can say only that it is 90% confident that the right change in the number of unemployed in March was somewhere between a drop of 243,000 and an increase of 511,000. In other words, it isn’t even apparent whether the number of unemployed rose or fell last month. The ranges are similarly broad for seven of the last 10 months?and for more than 75% of the time in the past decade. This isn’t a failing of government or of statisticians, say economists. As a replacement for, it is the inevitable result of trying to measure small changes in a extensive, complex economy. There is no doubt that the unemployment rate remains near the highest it has been in decades. But the government doesn’t really know how much that rate has been varying from month to month, which can be vexing for economists attempting to identify signs of a nascent recovery.”
- Inequality: Bilal Habib, Ambar Narayan, Sergio Olivieri and Carolina Sanchez-Paramo look at the financial crisis’s effect on poverty and returns delivery. “A shortage of real-time data hinders evaluations of the impact of the global crisis on developing countries. This column uses a ?microsimulation? approach to assess the poverty and distributional effects in Bangladesh, Mexico, and the Philippines. It finds that poverty will increase by well over a million, and that the crisis has been toughest for midpoint-returns households.”
- Spending Cuts: Tyler Cowen says there are ways to cut spending to reduce the budget deficit. “The macroeconomic evidence also suggests the wisdom of emphasizing spending cuts. In a recent paper, Alberto Alesina and Silvia Ardagna, economics professors at Harvard, found that in developed countries, spending cuts were the key to successful monetary adjustments ? and were generally better for the economy than tax increases. Their conclusion was based on data since 1970 from the Organization for Economic Cooperation and Development. The received wisdom in the United States is that deep spending cuts are politically impossible. But a number of economically advanced countries, including Sweden, Finland, Canada and, most recently, Ireland, have cut their government budgets when needed. “
Compiled by Phil Izzo