Good morning, all. Here are some of the stories and studies I'm reading to start my day:
Bernanke will have some explaining to do.
When the Federal Reserve releases its economic projections for 2016 on Wednesday, the forecasts are apt to show some inconsistencies, according to the Wall Street Journal's Jon Hilsenrath. For example, the projections could show the U.S. economy returning to full employment (5-6 percent) by 2016 and the fed funds rate still well below the perceived neutral rate of about 4 percent. It's an important question. I'll be listening closely to see how Fed chief Ben Bernanke finesses questions on the subject at Wednesday's press conference.
Yellen deserves better.
Forget Larry Summers. The selection process for the next Fed chairman damaged Janet Yellen as well. "She is an accomplished macroeconomic scholar and an experienced central banker," according to the Economist's Free Exchange blog. "By any reasonable standard she is exceptionally qualified. Yet Mr. Obama's team has managed to leave the impression that they consider her flawed." I doubt it will affect her standing within the Fed or have a lasting on the public if she is tapped by Obama. But the whole circus over the choice of Bernanke's successor serves as a lesson in how not to handle presidential appointments.
Diehards think that with a little work, Summers could yet be the comeback kid .
If he just learned a little humility, Summers could be back in the public arena in no time, according to the National Journal. He's one of the "best economic thinkers of his generation" (gosh, I hadn't heard that!), but he "made too many political enemies over the years and made too little effort to placate them" (no news there either). It's not too late to unload all that baggage, the National Journal says. Summers being Summers, he'd probably need a personality make-over first.
Robots are taking our jobs!
Since the beginning of time, technological innovation and increased productivity have been viewed by some as job-killers. The narrative tends to find new converts during periods of high unemployment. (Obama has said on several occasions that ATMs were stealing jobs.) There's only one flaw in the notion that innovation kills jobs, according to a report from the Information Technology and Innovation Foundation. "It is completely wrong and not supported by data, scholarly evidence or logic." (Aside from that, Mrs. Lincoln ... .) Yes, there are temporary dislocations when a machine takes over a job formerly performed by a human. But automation and productivity are "key enablers of human progress and absolutely no threat to overall employment."
And now for something completely different .
The fastest growing part of the federal budget is not Medicare or Social Security but interest on the public debt, reports the Center for a Responsible Federal Budget. Based on interest-rate projections similar to those of the Congressional Budget Office, interest expense is projected to rise from $255 billion this year to $505 billion in 2018 and $844 billion in 2023. "By 2025 interest payments will exceed the cost of all non-defense discretionary programs," the CRFB writes in a new report. The next time you hear a certain economist claim that the government needs to spend more today, remind him what it will cost tomorrow.
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