Dean Baker

Recent Articles

Manufacturing Output: Which Way Is Up?

The Post article on the Fed's monthly industrial production report told readers that "February's numbers gave economists other signs that manufacturing would continue to recover this spring, as the capacity utilization -- portion of plants used for production -- climbed to 72.7 percent from 72.5 percent." Umm no, that's not quite right. Overall industrial production did rise, but that was due to increases in mining and utility output. Manufacturing output actually fell by 0.1 percent in February from a level that was revised down by 0.1 percent from its previously reported level. Capacity utilization in manufacturing fell from 69.1 percent in January (previously reported as 69.2 percent) to 69.0 percent. This decline was undoubtedly in part attributable to bad weather, but the Fed's data certainly is not pointing towards an uptick in manufacturing. --Dean Baker

Job Growth: Morning Edition Makes the Consensus the Dissenting Opinion

The projections from the Fed, the Congressional Budget Office and the Obama administration all show the unemployment rate remaining unusually high for years into the future. This may cause listeners to wonder how the pessimistic view of employment growth from Lawrence Mishel, the president of the Economic Policy Institute (my former boss), became the " dissenting opinion ." --Dean Baker

Pension Fund Cashes in Treasury Bonds: AP Screams "Crisis"

Okay, it's not exactly a pension fund, it's the Social Security trust fund that is cashing in some of the government bonds that it holds to pay benefits. This is the way the trust fund was designed to work, but AP somehow cannot find a reporter (or editor) who understands even the most basic facts about Social Security or for that matter Treasury bonds, which get called "IOUs" in the headline and four times in the article. (When GE has its next bond issue, will AP report on the auction of "GE IOUs?") The whole purpose of building up the trust fund was to help defray the cost of the retirement of the baby boom cohort. This meant that at some point it would be necessary to sell some of the bonds to pay benefits. This has happened somewhat sooner than had previously been predicted due to the economic crisis created by inept policy and Wall Street corruption. It is not clear why anyone should see this as a crisis for Social Security. The article also includes this non-sequitur: "Now the...

NYT Spreads Nonsense on China Buying U.S. Debt

The NYT told readers that: "China is the biggest buyer of Treasury bonds at a time when the United States has record budget deficits and needs China to keep buying those bonds to finance American debt." Nope, this is nonsense. People can get the real story from today's Krugman column , China has an unloaded water pistol pointed at our heads. --Dean Baker

Krugman on China and the Dollar

Paul Krugman is absolutely right in describing the economic relationship between the U.S. and China ; the United States has nothing to fear from a decision by China to stop buying U.S. government debt. However, the discussion of the U.S-China relationship may not be quite right. Krugman has the United States meekly asking China to raise the value of the yuan since 2003, with little effect. This certainly has been the public position of both the Bush and Obama administrations. However, negotiations don't take place in public. When the United States negotiates with China, there are many items on its list. Both the Bush and Obama administrations have pressed China about increased protection for U.S. patents and copyrights. They have pressed China for increased access for U.S. films and openings for the entertainment industry more generally. They also want to open the Chinese market to Citigroup, Goldman Sachs and other big financial firms. No one ever expects to get everything on their...