Noah Smith of Noahpinion generously offered to send this week’s newsletter to his subscribers. Make sure to check out the rest of his writing and subscribe.
I'll place the same comment here as I placed there. :)
“Productivity” is not a perfect measure of “Total Factor Productivity”
Another factor is, hopefully, that entrepreneurs now expect the Fed to keep us closer to real-income maximizing inflation than in the past. Pre-FAIT, the threat of a Phillips Curve-inspired, Fed-induced recession “to control inflation” always loomed. Maybe this is a bit of what the author means by “momentum.”
That the economy “remains” competitive should not explain a change in productivity.
I agree about AI.
There is, however a negative factor. Fiscal deficits are higher than in the past and this represents a larger shift than in the past of resources from investment to consumption. [This statement depends on believing that most expenditures do not have NPV >0 and that taxation reduces consumption less than borrowing reduces other investment, But I think those re reasonable assumptions.]
I'll place the same comment here as I placed there. :)
“Productivity” is not a perfect measure of “Total Factor Productivity”
Another factor is, hopefully, that entrepreneurs now expect the Fed to keep us closer to real-income maximizing inflation than in the past. Pre-FAIT, the threat of a Phillips Curve-inspired, Fed-induced recession “to control inflation” always loomed. Maybe this is a bit of what the author means by “momentum.”
That the economy “remains” competitive should not explain a change in productivity.
I agree about AI.
There is, however a negative factor. Fiscal deficits are higher than in the past and this represents a larger shift than in the past of resources from investment to consumption. [This statement depends on believing that most expenditures do not have NPV >0 and that taxation reduces consumption less than borrowing reduces other investment, But I think those re reasonable assumptions.]
https://thomaslhutcheson.substack.com/p/fiscal-policy-and-everything-else
Excellent
Excellent analysis; time will tell!
What about the long-term trends in demography?
Not concerned over the time frame we are talking here ~10 years. Very concerned over the longer horizon.
Thank you.