Retail sales jump as people spend their tax rebates. However, the rise is less impressive if you exclude gasoline.
Copyright © 2009 by The Atlantic Monthly Group. All rights reserved.
Copyright © 2009 by The Atlantic Monthly Group. All rights reserved.
"However, the rise is less impressive if you exclude gasoline."
The fact that there is a rise, if you exclude gasoline, is impressive enough!
It's not so impressive if people think that their incomes are going to rise more in the near future than they originally expected.
To the extent that this is redistributory, surely it doesn't refute the PEH?
Obviously, to that extent, it's also likely to have Aggregate Supply effects as well as Agg D ones, too...
If you look at the percent change in category after category it is still impressive even if you exclude energy,
Never let the facts come between a believer and their faith in whatever idea of Friedman they elect to believe.
Say what you will, skeptical knaves, but if you exclude Lutefisk, these sales increases are astounding!
I've bought a LOT of Lutefisk this month.
If you exclude gasoline, retail sales were still up 0.8% last month, which is still much higher than expectations. How is that not impressive??
shawneriksmith et al., Ms. McArdle is kind of wedded to the hypothesis that the economy is in recession. So she generally trumpets any bad economic news, and downplays any good economic news. In contrast, Glenn Reynolds usually trumpets good economic news, and ignores bad economic news.
As for me, I don't know and don't pretend to know.
Shocking lack of economic literacy among your readers?
Freidman never advocated the PEH - Modigliani wans't (not the painter) Spencer should bone up.
Also, greg Mankiw's blog said something like "So much for Ricardian Equivalence" which is a better analog to what we have here. Government spending making people feel richer? The PIH would be tested if people got a windfall from dear Aunt Sally. Would they change their lifetime consumption pattern (incorrectly)?
Money from uncle Sam is in a different category (if you believe Robert Barro) but then again, the tax system now is so ridiculous that the people who actually pay Federal income taxes - in the main - don't qualify for the rebate, while people who pay a pittance in federal income tax get a generous check, so it is not a very good test of either hypothesis.
Japan got into the demographic squeeze we are about to enter about ten years ago. Their reaction was to pander to older voters by crushing inflation so thoroughly they entered a classic liquidity trap which caused a decade long recession. The current oil induced cost push inflation will definitely stress our fixed income elderly voters. The coming election will not pit D against R so much as seniors against juniors. Japan tried to keep young voters happy through make-work public sector construction. I see the track being laid for much the same here-water infrastructure projects, global warming boondoggles, stupid wars, etc. This is the calm before the storm.
The PIH distinguishes between a transitory shock and a permanent shock to income. The readers are not. I thought there was a specific percentage people usually spent, something like 2/3, of a temporary boost to income. What percentage of the tax rebates corresponds to the rise in retail sales?
Agreed that Mankiw's analog was better. But then again, does anyone actually believe in Ricardian equivalence anymore?