In Latest Data on Economy, Experts See Signs of Pickup by Annie Lowrey
Very Bakeresque contrarian take on the direction of the economy by Ezra Klein's wife. Also she's reporting in essence what Jared Bernstein has been saying.
Birthday Boasts by Dean Baker
As a practical matter, investment in equipment and software is already pretty much back to its pre-recession level measured as share of GDP. Given the large amounts of excess capacity in many sectors this is a very strong pace of investment. If surveys can be trusted, the National Federation of Independent Businesses tells us that their members see a lack of demand as the major factor restraining hiring and investment, not uncertainty about entitlement programs.
In short, the Post doesn't seem to have any obvious source of demand to show Mr. Arithmetic that would replace whatever demand the Fed might be able to stimulate. Many economists would point to the last part of the equation, X-M, as the way to boost the economy. This could be helped by additional quantitative easing from the Fed, since that would put downward pressure on the dollar.
In a system of floating exchange rates, the way in which countries with large trade deficits like the United States are supposed to see their deficits move toward balance is to have their currencies fall in value. The Fed could play a large role in this process. If the dollar fell enough to bring the trade deficit into balance, it could generate close to 5 million new jobs in manufacturing. That would be a solid boost to the economy and to middle class living standards.
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