How Budget Deficits Reduce Investment

A identity is a equation that is true because of the way the terms are defined. Thus, when an economist says that “gross national product is equal to the sum of consumption plus investment plus government spending on goods and services plus exports minus imports,”

U.S. Household Finances Rebound

One signal for whether the U.S. economy is ready for a more robust recovery is the extent to which the financial position of households has rebounded. Here are some illustrative figures, taken from the January 2014 issue of Economic Trends from the Cleveland Fed.

Barack Obama, Adam Smith, and the Minimum Wage

by Timothy Taylor, Conversable Economist Posted originally at Conversable Economist, o6 December 2013. In a speech recently on economic mobility, President Barack Obama quoted Adam Smith in support of a higher minimum wage. Given that minimum wage laws were not a hot topic in 1776 when The Wealth of Nations was published, I went looking …

Why U.S. Economic Growth is Getting Harder

The formula for economic growth is clear enough: more workers, improved human capital as measured in education and experience, high levels of capital investment, and ongoing adoption of new technologies, all mixed together in a market-oriented economic environment that provides incentives for work and innovation.