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Political Polarization

June 12, 2014 Leave a comment

A recent study by the Pew Research Center (the study may be found here) provides some interesting data on the public’s political views. The data reveals that there is increasing polarization among U.S. voters as compared to earlier polling that they have done. This is interesting because it reveals the causal link between the polarization in Congress and that of the public.

In an earlier blog post, I pointed out that elections are what economists call an agency problem. In that setting, the voters are the principals who elect agents, the politicians, to represent their interests. So it follows that if government is polarized, so too are the voters who elected them. The Pew study essentially provides the empirical support for this scenario.

Tooting my own horn, I told ya’ so!

Economic Growth Since the Last Recession

June 9, 2014 3 comments

First quarter 2014 economic growth was recently revised downward to -1.0 percent. The media response seemed to focus entirely on the effects of seasonality, with the argument that negative real growth was caused by the harsh winter that recently ended. This seasonality story obviously has some truth to it but the more compelling data is not one single data point for real growth. It is much more important to examine the trend in real growth because this is much more revealing about future living standards in the United States.

The last U.S. recession ended in June 2009 (got to nber.org for business cycle dates). In the table below, there is data on real economic growth at quarterly annualized rates taken from the government agency that reports NIPA (National Income and Product Accounts) data, bea.gov. The table suggests a pattern that should be a concern for all members of society. Read more…

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