[Guest post by Matt O’Brien] It’s certainly not the best of times, but the January jobs report is the latest sign that the economic recovery is accelerating. The headline unemployment rate declined 0.2 percentage points to 8.3 percent on the strength of 243,000 net jobs added during the month—with 60,000 additional jobs gained from upward revisions to past months. This was not a case of statistical quirks making the numbers look better than reality. The labor force actually expanded, and broader measures of unemployment fell as well.
[Guest post by Matt O'Brien] I’m not sure this qualifies as a quiet room, but let’s talk about inequality anyway. More specifically, let’s discuss the taxes that some of the super-rich pay. The much-anticipated release of Mitt Romney’s tax returns confirmed what was widely assumed: He pays less of his income in taxes—13.9 percent to be exact—than do many middle-class households.
Editor's note: As I was thinking about Sunday's New York Times article about iPhone manufacturing, I e-mailed a few economists to see what lessons they drew from it. One was Andrew Samwick, of Dartmouth, who pointed me to a post at his new blog. There, he stresses, among other things, the importance of "agglomeration": Manufacturers like to build new plans in close proximity to suppliers.
[Guest post by Harold Pollack and Vivek Murthy] Forbes has published another slam against health reform. This one is written by Sally Pipes, president, CEO, and Taube Fellow in Health Care Studies at the Pacific Research Institute. She is the author of a forthcoming book, The Pipes Plan: The Top Ten Ways to Dismantle and Replace Obamacare, put out by the conservative publishing juggernaut, Regnery. This follows Pipes’ previous volume, The Truth About Obamacare.
I’ve been making my way through Dylan Ratigan’s new book, Greedy Bastards, and can report that it includes a number of truly sensible thoughts on everything from health care to energy policy. (Also, there’s the occasional cultural nugget I somehow missed—like the fact that butlering has apparently become a major U.S. growth industry.) But one of the more intriguing ideas comes courtesy of Dick Grasso, the former New York Stock Exchange chairman who was ousted in 2003 amid a compensation scandal, and who Ratigan spoke with for the book.
It’s tempting to believe that anything that boosts Mitt Romney’s rivals is bad news for Romney himself. In fact, that’s not the case, and today’s Boston Globe endorsement of Jon Hunstman illustrates why. According to the latest Suffolk University tracking poll, Romney has a 23-point lead in New Hampshire over Ron Paul, his closest competitor. Barring a near-miraculous turn of events, Romney will win next Tuesday’s primary contest. The real question, as I noted yesterday, is whether any of the non-Paul contenders can use New Hampshire to establish himself as a credible alternative.
[Guest post by Matt O'Brien] This finally might be an economic recovery worthy of the name. There have certainly been several headfakes before (remember "green shoots" and "Recovery Summer"), but, to borrow a dangerous phrase, this time might be different. Economic data has surprised on the upside for the past few months, and the December jobs report continued this positive trend.
Last night we re-learned an important lesson from 2008: In Iowa, the Republican candidate with momentum way exceeds his final poll numbers; the Republican candidate named Mitt Romney ... doesn’t. In 2008, Mike Huckabee exceeded his final polling average by about five points; Romney actually dropped off by about a point-and-a-half. This time out, Rick Santorum exceeded his final polling average by almost ten points. Romney was up about two-and-a-half. In both cases, the explanation was pretty obvious: Romney was well known heading into caucus night and not much loved.
Just a quick word about Jeremy Stein, the Harvard financial economist Obama is nominating to serve on the Federal Reserve Board. I suspect critics on the left (and perhaps on the right) will seize on the fact that Stein was close to Larry Summers, who brought him into the Obama administration to work at the NEC. For what it’s worth, I actually became pretty familiar with Stein’s track record while researching my forthcoming book on the Obama economic team. I can report that he’s an absolutely terrific choice.
The daily research report from the economists at Goldman Sachs asks a question I grappled with as I finished my forthcoming book: How should we apportion blame for the 2-2.5 percentage points by which growth fell short of most economists' expectations this past year? The Goldman team divvies it up as follows: The supply shocks that arose from the Arab spring (in the form of higher gas prices) and the Japanese earthquake (which wreaked havoc on supply chains) shaved 3/4 of a percentage point off GDP growth. Shrinking state and local budgets crimped GDP growth by 1/2 of a percentage point. The