We are looking at a prolonged period of high unemployment because economists with degrees from places like Harvard and M.I.T. could not see an $8 trillion housing bubble. The economics reporters who work for outlets like the New York Times, National Public Radio, and the Wall Street Journal all lacked the ability to think independently and largely accepted at face value the assertions from the well-respected economists that there was no problem in the housing market. And the politicians -- well that's not worth mentioning. So, what does David Brooks tell us in his column ? "This recession has exposed America’s social weak spots. For decades, men have adapted poorly to the shifting demands of the service economy. Now they are paying the price. For decades, the working-class social fabric has been fraying. Now the working class is in danger of descending into underclass-style dysfunction." Of course Brooks is right. Working class men are ill-prepared to deal with the effects of...

AP broke with standard news practices by circulating what can only be considered an opinion piece on the deficit as a news story. The article exclusively presents the views of deficit hawks and misrepresents many fundamental issues about the budget. After noting the Greek budget crisis, the second sentence tells readers: "In the world's largest economic and military power, there's a far more serious debt dilemma." The piece continues: "For the U.S., the crushing weight of its debt threatens to overwhelm everything the federal government does, even in the short-term, best-case financial scenario — a full recovery and a return to prerecession employment levels. The government already has made so many promises to so many expanding "mandatory" programs. Just keeping these commitments, without major changes in taxing and spending, will lead to deficits that cannot be sustained. Take Social Security, Medicare and other benefits. Add in interest payments on a national debt that now exceeds $...

The NYT told readers that China's central bank is raising reserve requirements rather than the central bank lending rate because it is worried that if raised its lending rate, the higher interest rates would pull more foreign money into the economy. This explanation does not make sense because raising reserve requirements would also lead to higher interest rates. The mechanism is very simple. Higher reserve requirements reduce the supply of money. A lower supply leads to higher interest rates. The article also asserted that the Federal Reserve Board signaled that it would raise its interest rates in months, based on strong growth. It certainly is not clear that the Fed has plans to raise interest rates any time soon, although it has not explicitly ruled out this possibility. It is worth noting that the 5.7 percent growth rate was driven mostly by inventories. Final demand likely grew by less than 2.0 percent after recent revisions to data are incorporated. Few economists are...

In the U.S. economic growth measures are always presented at annual rates. There is no magic to using annual rates, but it is the convention. This is why it is infuriating to see the NYT use quarterly growth figures in an article reporting on Europe's growth rate for the fourth quarter of 2009. The use of quarterly growth rates will undoubtedly confuse the vast majority of readers. It is a simple matter to convert France 0.6 percent quarterly growth rate in the 4th quarter to a 2.4 percent annual rate. Readers who read through this article quickly are unlikely to make this calculation and instead walk away confused about European growth rates. The reporter should have the time to make this simple adjustment. --Dean Baker

That is what USA Today claims . It told readers that the Obama administration believes that current saving rates are impairing economic recovery: "It [job growth] will be even tougher if Americans continue to save at high rates — somewhere in the 4% to 7% range — as the White House report predicts they will until the financial services sector eases lending." Actually, the current saving rates are close to half of historic saving rates. Savings rates plummeted in the 90s and the 00s as the wealth created by the stock bubble and then the housing bubble led to consumption booms. This growth path was of course unsustainable and eventually led to the crash in 2008. The obvious path to sustainable growth would be to get the dollar down in order move the trade deficit closer to balance. However, this article implies that the Obama administration is instead seeking to return to bubble driven growth. That should have been the headline of this piece. It is also ironic that the Obama...

The NYT had a piece on a deal that Amazon.com made with book publishers which could raise the price of some e-books by as much as 50 percent. At one point the article asserts that readers who might resist this increase don't understand the economics of publishing: "To consumers who do not pay much attention to the economics of publishing, though, such arguments are trumped by the fact that e-books have been available for $9.99 for more than a year." Actually, the consumers who object to the higher price of e-books likely understand the economics of publishing very well. The marginal cost of an e-book is essentially zero. Economic theory holds that efficiency is maximized when goods sell at their marginal cost. That is why they get so upset over government policies like 20 percent tariffs on Chinese tires. In this case, the government granted copyright monopoly is allowing the publisher to charge a substantial price for an item that would be free in the absence of government...