U.S. households are spending less. Is it because their incomes are down, because they have less net worth or because there is a fundamental change in what economists call ‘tastes and preferences’? The answer affects how the economy responds to…
Recent rally is good news, but not proof of a recovery
Happy days may not quite be here again, but they are on the way. At least that is how some interpret last week’s good economic news. One index showed consumer confidence increased in April. The stock market is up 20…
Colleges, defense contractors face high fixed costs
It may not be obvious, but educating college students and building military hardware are similar in some important ways, ones that become particularly vexing in an economic downturn. In both sectors, fixed costs are high compared to variable ones. Fixed…
Defining recessions, crises and bubbles
On a recent radio call-in show, an economist used the terms ‘recession’ and ‘financial crisis.’ A caller asked, ‘Well, just what is the difference?’ There is a difference, but confusion is understandable, especially when economists and others switch between terms…