September 16, 2003
Notes: What Could Malpass Be Talking About?

Department of "Huh?": David Malpass on Inventories & Manufacturing Jobs on NRO Financial: ...Though it is popular to blame China for U.S. job losses, the data shows clearly that the ongoing U.S. inventory reduction -- a vestige of deflation and a sign of risk aversion -- drove the weakness in manufacturing, capacity utilization, and manufacturing jobs.... The drawdown in inventories has been part of the drag on manufacturing production. With demand growing strongly, inventories will rebuild, causing manufacturing production to grow. And this increase in manufacturing production will soon contribute to employment gains. The loss of manufacturing jobs since the February 2001 employment peak accounted for almost all the total job losses, making manufacturing jobs a key variable in near-term job growth. The concerns currently expressed in the financial markets -- and also at the Fed -- over a jobless recovery and excess capacity seem misplaced and could evaporate quickly as inventory rebuilding kicks in. What is he talking about? Yes, the U.S. economy cut its stock of inventories by $60 billion in 2001 (and by an additional $7 billion in the first quarter of 2002). But that was more than a year and a half ago. Since then there...

Posted by DeLong at 10:04 PM

July 01, 1986
J. Bradford DeLong and Lawrence H. Summers (1986), "The Changing Cyclical Variability of Economic Activity in the United States," in Robert J. Gordon, ed., The American Business Cycle: Continuity and Change (Chicago, IL: University of Chicago Press for the National Bureau of Economic Research), pp. 679-719.

J. Bradford DeLong and Lawrence H. Summers (1986), "The Changing Cyclical Variability of Economic Activity in the United States," in Robert J. Gordon, ed., The American Business Cycle: Continuity and Change (Chicago, IL: University of Chicago Press for the National Bureau of Economic Research), pp. 679-719....

Posted by DeLong at 08:11 AM