Asymmetrical Information

Dowd Virus Contagious

Paul Krugman's been sitting next to Maureen for too long and started imitating the "Poppy & Jr." thing. Go ahead, have a look. I'll wait.

Now, have a look this graph of unemployment trends from the BEA. Notice that what Krugman calls "increasingly dismal" is two full percentage points better than the peak unemployment rate a full year and a half into the recovery in late 1992. That's right, employment tends to lag in recovery as excess capacity is used up first.

Krugman fudges this by saying lots of people have "given up" looking for work. Did this not happen in other recessions? Can he back it up? We know Canada's numbers are terribly polluted by this phenomenon, but there's no case that our unmeasured unemployment is any worse now than in 1991 or any other recession. Dreck is tempted to observe that Krugman's assertions about how bad it "feels" may have to do with the massive layoffs made by Merrill Lynch in his hometown, or just the generally depressed feeling on West 43rd Street. Perhaps he and Maureen should go out for a run.

Now look at this table of macroeconomic indicators across five recessions. Scan your eye across the table. Isn't the real story is why this last recession was so mild compared to the others? Isn't it amazing that consumption actually grew? How has economic volatility been dampened so? (I have had some thoughts on this).

Krugman would rather forecast a double-dip (with qualifications - "I could be wrong") and then blast the administration about it.

Now head over to "Truth Squad", who point out that Krugman today is sharply at odds with his 1996 incarnation.

I'd be interested in your comments (more on the "real story" than Krugman, even the hard-core Dems at my company have resigned themselves to the fact that he's playing a monotonous tune in his Times Op-Ed columns). In the meantime, I'm off traveling for a week, and I'll post when I can.