Free Republic

Keynesian (and some Monetarist) versus Austrian views on the business cycle revolve around two basic empirical issues: the nature of capital and production and the nature of the national budget constraint. Concerning capital: Ironically, Keynesians appear to assume a kind of “equilibrium always” story in which productive (human and physical) resources can, at low cost, be simply shifted to and plugged in to the production of whatever product or service happens to be the object of demand stimulus; and, further, that if enough of this is done, income, employment and tax-payments will rise precipitously. In this way economic-policy can produce...

<p>Beyond fiscal stimulus and government bailouts, the economic recovery that appears under way may be based on little more than self-fulfilling prophecy.</p> <p>Consider this possibility: after all these months, people start to think it’s time for the recession to end. The very thought begins to renew confidence, and some people start spending again — in turn, generating visible signs of recovery. This may seem absurd, and is rarely mentioned as an explanation for mass behavior late in a recession, but economic theorists have long been fascinated by such a possibility.</p>

After last Friday's announcement of the third consecutive drop in US employment figures, following hot on the heels of Ben Bernanke's admission that the American economy is already in recession - or more precisely that “a recession is possible ... there's a chance that for the first half as a whole, there might be a slight contraction” - I am probably the only economist left in the world who still believes that a US recession is likely to be avoided. Obviously, I drew some encouragement for this view from the surprisingly decent ISM index, which triggered the huge rally in...

Housing Construction Falls to the Slowest Pace in 12 Years WASHINGTON (AP) -- Construction of new homes fell in August to the slowest pace in 12 years as troubles in the housing industry continued to intensify. The Commerce Department reported Wednesday that construction of new homes fell by 2.6 percent in August to a seasonally adjusted annual rate of 1.331 million units. The housing industry is experiencing its steepest downturn in 16 years with analysts forecasting weak prices and further declines in sales for months to come, given rising mortgage defaults which are dumping even more homes on an already...

Fed finds 'widespread' growth through early April WASHINGTON (Reuters) — The Federal Reserve on Wednesday gave the U.S. economy an upbeat assessment, saying economic growth and hiring had picked up in recent weeks. "Economic activity increased across the nation from mid-February through early April. The growth was widespread as retail sales moved up noticeably, and manufacturing, mining, energy, tourism, and services all grew," the Fed said in its "beige book" report, an anecdotal summary of conditions in the central bank's 12 regional districts across the nation. [Excerpted]

"[Sociologist Ernst] Troeltsch distinguished between church, sect, and mysticism as primary types of religious life. The church is more peremptorily inclusive and achieves greater accommodation to worldly institutions. The sect demands voluntary commitment from its members, is more perfectionistic in its aims, and often adopts a critical stance toward existing social arrangements..." -- Donald A. Nielsen I recently took the long form of the Are You an Austrian? quiz, which is about whether I agree with economists like Ludwig von Mises and Friedrich Hayek, not about whether I have the same country of origin as the new governor of California....

LOS ANGELES — With no obvious driver to power an economic recovery, economists with the UCLA Anderson Forecast predict that the national economy is looking at a “very sluggish period ahead,” with considerable risk of another recessionary dip. In his report titled “This is Our First Business Cycle,” Edward E. Leamer, director of the UCLA Anderson Forecast, and economics professor at The Anderson School at UCLA, notes that past recoveries have been fueled by consumer spending on goods and real estate - essentially “consumer cycles” driving the economy. But since these key sectors have remained steady throughout the recent recession...