Month: August 2015

Must-Read: Why American finance today is in substantial part a value-subtracting activity:

Harold Pollack: Fidelity Investments: Guess What Is Missing: “You might read the below gobbly-gook I found from Fidelity…

…All the bolding is in the original document:

When we act as a broker for you, we also offer you investment education, research, planning assistance, and guidance designed to assist you in making decisions on the various products that you may wish to hold. No separate fees are charged for the investment education, research, planning assistance, and guidance that Fidelity offers you because they are part of, and considered to be incidental to, the brokerage services that we provide. Unless we specifically state otherwise, Fidelity is acting as a broker-dealer with respect to your account and as a broker-dealer and insurance agent with respect to any insurance product.

[…]

When we act in a brokerage or insurance agency capacity, we do not have a fiduciary or advisory relationship with you and our disclosure obligations are more limited than if we did. In general, unless we specifically inform you otherwise, the services offered by our representatives are services offered by FBS.

Get that? FBS is not in an ‘advisory relationship’ with you, even though it is offering ‘investment education, research, planning assistance, and guidance.’ This is so complicated that the lesson is simple. Don’t deal with anyone under these terms. Fidelity should add this to their index card.

Well, Paul doesn’t do anything. But he writes a good post, and I find myself procrastinating on other things…

Paul Krugman: Trash Talk and the Macroeconomic Divide: “Paul Romer… maintain[s]… Chicago’s inward turn…

…was a defensive reaction to the sarcasm of Robert Solow…. [But] what was actually going on at MIT was nothing like the implacable opposition of Chicago fantasies. I was at MIT from 1974 to 1977… [when] Rudi Dornbusch and Stan Fischer were the preeminent teachers of macroeconomics… ‘Expectations and Exchange Rate Dynamics’… ‘Long-term Contracts, Rational Expectations, and the Optimal Money Supply rule’ that combined rational expectations with realistic limitations on wage and price flexibility…. an attempt to build bridges, not a war on Chicago….

But Chicago responded with trash talk. Lucas and Sargent (1978) talked a lot about the ‘wreckage’ of Keynesian economics, and…

For policy, the central fact is that Keynesian policy recommendations have no sounder basis, in a scientific sense, than recommendations of non-Keynesian economists or, for that matter, noneconomists.

And two years later, as Mankiw points out, this had descended into pure neener-neener, with Lucas asserting that:

At research seminars, people don’t take Keynesian theorizing seriously anymore; the audience starts to whisper and giggle to one another….

Lucas and Sargent… how did they respond in the face of strong evidence that their own approach didn’t work? Such evidence wasn’t long in coming. In the early 1980s the Federal Reserve sharply tightened monetary policy… openly… much public discussion… anyone who opened a newspaper… [was] aware…. [In all] Lucas-type models… such a… monetary change should have had no real effect [on employment]…. In fact… there was a very severe recession–and a dramatic recovery once the Fed, again quite openly, shifted toward monetary expansion. These events definitely showed that Lucas-type models were wrong…. But there was no reconsideration on the part of the freshwater economists; my guess is that they were in part trapped by their earlier trash-talking…

And Charles Steindel agrees with Paul K.:

Charles Steindel: “It seems I must have finished at MIT a few weeks before Romer arrived, so my recollections predate his period…

…I agree with [Paul R.] on the [very high] intellectual influence of Stan and Rudi, and with Brad on Rudi’s intellectual style. What I find a bit baffling is the supposed major influence of Bob Solow’s comments on creating a more permanent rift. Bob wasn’t that heavily into money/macro in my day (for instance, he was still dealing with the last embers of Cambridge-Cambridge); of course, I’m aware of his later work and remarks, but I find it baffling to think that his comments would have such an impact (as to particulars about Bob and more technical work, one should observe that he was Mike Woodford’s advisor!). Interestingly, at one point (in 1975, 1976, or 1977–I can’t recall it more precisely) Lucas gave a seminar at MIT and went outside and lunched with the grad students on the ‘lawn’ (the wide median strip on Memorial Drive). Seemed like a nice enough gesture, and unique in my day.

The “Robert Solow and Frank Hahn looked at Bob Lucas funny” line is, without a doubt, one that is deeply embedded in the folk psychology of those whose thought Paul Romer is currently trying to understand. But that does not make it true. And I do not think it is.

What I do find interesting is Robert Lucas’s expressed rationale for his own abandonment of his own research program. One day he was a shrill and unreasoning advocate of his own information-imperfections are the only reason that monetary policy has real effects. The next day he was saying that even though the credible disinflations of Thatcher and Volcker were followed by big recessions much larger than any credibility-information-imperfections theory could account for, that nevertheless the temporal coincidence of the Thatcher and Volcker disinflations with the recessions of the early 1980s in Britain and the U.S. was simply coincidental–that something bad had simply happened to economy-wide total factor productivity at the same time.

In his Nobel Lecture:

Robert Lucas (1995): Monetary Neutrality: The importance of this distinction between anticipated and unanticipated monetary changes…

…is an implication of every one of the many different models, all using rational expectations, that were developed during the 1970s…. But… none of the specific models that captured this distinction in the 1970s can now be viewed as a satisfactory theory of business cycles…. Much recent research has followed the lead of Kydland and Prescott (1982) and emphasized the effects of purely real forces on employment and production…. General-equilibrium reasoning can add discipline to the study of an economy’s distributed lag response to shocks, as well as to the study of the nature of the shocks them- selves. More recently, many have tried to re-introduce monetary features into these models, and I expect much future work in this direction. But who can say how the macroeconomic theory of the future will develop? All one can be sure of is that progress will result from… formulat[ing] explicit theories that fit the facts, and that the best and most practical macroeconomics will make use of developments in basic economic theory.

And in his Professional Memoir:

Robert Lucas (2001): Professional Memoir: “In October, 1978—leaf season—the Federal Reserve Bank of Boston…

…sponsored a conference at the Bald Peak Colony Club in New Hampshire…. Though I did not see it at the time, the Bald Peak conference… marked the beginning of the end for my attempts to account for the business cycle in terms of monetary shocks…. Prescott presented a model… growth subject to stochastic technology shocks and my model of monetary shocks…. Later on… through numerical simulations… Kydland and Prescott found that the monetary shocks were just not pulling their weight: By removing all monetary aspects of the theory, they obtained a far simpler and more comprehensible structure that fit postwar U.S. time series data just as well as the original version…

The years 1978-1986 saw the first out-of-sample test by reality of both Lucas’s original theory that it was all information misperceptions driven by unanticipated monetary shocks and Lucas’s later allegiance to Prescott’s theory that it was all shocks to total factor productivity–recessions = “great forgettings”. Both Lucas’s monetary-misperceptions and Prescott’s real business cycle theory failed those tests catastrophically. Yet that–the world knocking on Lucas’s brain and saying: “BOB!! YOU ARE WRONG!!!!”–made no impression whatsoever, neither on what he thought he should write about in his Nobel Lecture nor what he should write about in his Professional Memoir.

What is going on?

One clue: Lucas does tell one story on himself in his Professional Memoir, of himself as an undergraduate taking a biology course:

The only science course I took in college was Natural Sciences II…. We read a modern anatomy text… selections from Darwin, Mendel, and others… an incomprehensible paper on embryology by Spemann and Mangold, and one by another German author called “The continuity of the germ plasm” that had mysterious overtones. But there was nothing spooky about Mendel’s genetic theories. They were clear, they made some kind of sense… you could work out predictions that would surprise you, and these predictions matched interesting facts. We did a classroom experiment with fruit flies… pooled the results. Our assignment was to write up the results… and compare them to predictions from a Mendelian model…. It was the first time I can recall ever working out the predictions of a scientific theory from its basic principles and testing these predictions against experimental evidence….

My friend Mike Schilder returned to the dorm from a weekend that had clearly not been occupied with fruit flies. The report was due Monday, and he asked to copy mine. I agreed, in part just to get some reaction to a report that I was very pleased with. Mike came back in half an hour, and told me: “This is a good report, but you forgot about crossing-over.” “Crossing over” was a term introduced to us to describe a discrepancy between Mendelian theory and certain observations. No doubt there is some underlying biology behind it, but for us it was presented as just a fudge-factor…. I was entranced with Mendel’s clean logic, and did not want to see it cluttered up with seemingly arbitrary fudge-factors. “Crossing over is b—s—,” I told Mike.

In fact, though, there was a big discrepancy between the Mendelian prediction without crossing over and the proportions we observed…. My report included a long section on experimental error… arguing that errors could have been large enough to reconcile theory and fact…. Mike… replaced my experimental error section with a discussion of crossing over. His report came back with an A. Mine got a C-, with the instructor’s comment: “This is a good report, but you forgot about crossing-over.”

I don’t think there is anyone who knows me or my work as a mature scientist who would not recognize me in this story. The construction of theoretical models is our way to bring order to the way we think about the world, but the process necessarily involves ignoring some evidence or alternative theories…. Sometimes my unconscious mind carries out the abstraction for me: I simply fail to see some of the data or some alternative theory. This failing can be costly and embarrassing to me, but I don’t think it has any effect on the advance of knowledge. Others will see the blind spot… keep what is good and correct what is not.

The kicker, of course, is that, as everyone who remembers their first-year biology at all knows, “crossing over” is an absolutely key part of the microfoundations of genetic inheritance–of the process of meiosis–and its discovery was a major part of the reason Thomas Hunt Morgan won the Nobel Prize in Biology in 1933.

Yet Lucas, to this very day, tells this story on himself and appears to have never bothered to dig any deeper to learn about the real microfoundations of inheritance. In 2001 he knew no more about chromosomal crossover than that “no doubt there is some underlying biology…” “seemingly arbitrary fudge-factors…” “entranced with Mendel’s clean logic… [I] did not want to see it cluttered up…” “crossing-over is b—s—…”

Must-Read: A couple of decades ago Paul Krugman wrote a very nice little book about why one reason that exchange rates swung so much and yet industrial locations were so persistent was because of the huge costs to any really existing multinational of actually moving production from one continent to another. Now Thomas Palley points out that this is not nearly as true as it used to be for production (although not for design, marketing, etc.). So what are the implications for equitable growth?

Thomas Palley: The New Economics of Trade: “Jack Welch… talked of ideally having ‘every plant you own on a barge”… [to] float between countries to take advantage of lowest costs…

…be they due to under-valued exchange rates, low taxes, subsidies, or a surfeit of cheap labor. Globalization has made Welch’s barge a reality… made capital mobility rather than country comparative advantage the engine of trade…. The U.S. and European response to Welch’s barge has been competitiveness policy that advocates measures such as increased education spending to improve skills; lower corporate tax rates; and investment and R&D incentives. The thinking is increased competitiveness can make Europe and the US more attractive to businesses. Unfortunately, competitiveness policy is not up to the task of anchoring the barge, and it can even be counter-productive….

The emergence of barge-like corporations has reduced the scope for effective competitiveness policy… and created a wedge between corporate and national interests…. Addressing globalization’s challenges poses enormous analytical difficulties. Unfair competition must be prevented and companies re-anchored. But this must be done without losing the benefits of real trade based on comparative advantage or ending investment that fosters development. These economic challenges are compounded by political difficulties… elite policy thinking… funded and lobbied for by corporations…. Fifty years ago what was good for GM may really have been good for the US. With Jack Welch’s barge, that may no longer hold.

**Must-Remember:** Richard Thaler: “The belief that asset prices are always rational…

…I give that a gentleman’s C- in a world where nobody gets less than a B…

Paul Romer has a long post that seems to me to get some elements of the story right, some elements of the story wrong, and to miss some elements of the story completely:

Paul Romer: What Went Wrong in Macro–Historical Details: “During my time at MIT, Robert Solow was harshly critical…

…of the new classical macro models pioneered by Robert Lucas, dismissive in a way that seemed to me to skirt uncomfortably close contempt. I recall hearing the same type of criticism from Frank Hahn…. If it sounded like contempt to me, others may have heard it the same way.

At this point, Romer should say what Solow’s and Hahn’s criticisms were ca. my freshman college year 1978-1979. The argument, as I remember it, went like this:

1. Lucas dismisses models that said that ,for institutional, behavioral, psychological, and historical reasons outside the model, prices are slow to adjust as ad hoc: he says that the patterns of and reasons for price adjustment durations need to be built in the model.

2. Lucas proposes models that say that, for no reason at all, prices are slow to adjust because people cannot open the newspaper to read the inflation report.

3. Lucas’s models do not fit the data. The most that can be said of them is that if you stringently restrict the set of allowable tests you might be able to fail to reject them at the 0.05 level if you give them the initial high ground of the null hypothesis.

And, at this point, Romer ought to say that Solow’s and Hahn’s criticisms were (a) no more biting in their rhetoric than the criticisms that Stigler, Friedman, and company had been inflicting on their victims at Chicago for a generation, and (b) correct and accurate. He ought to say that Lucas, too, eventually said that his proposed mechanism–that “surprises” in the prices they were offered on the market led them to misperceive their real terms-of-trade–simply did not work theoretically. And Romer ought to say that the evidence that Lucas’s mechanism simply did not work had emerged even while Romer was still in graduate school:

Robert Lucas: Monetary Neutrality: “In the models in Lucas (1972) and (1973), trade takes place in competitive markets…

…though these markets are incomplete, so any real effects of monetary policy need to work through movements in prices. The tests de-scribed in the last paragraph do not use data on prices and so do not test this prediction. Other econometric work that did require money shocks to be transmitted through price movements was much less favorable. Estimates in Sargent (1976) and in Leiderman (1979) indicated that only small fractions of output variability can be accounted for by unexpected price movements. Though the evidence seems to show that monetary surprises have real effects, they do not seem to be transmitted through price surprises, as in Lucas (1972).

And it would be nice if Paul Romer also acknowledged that, in his Nobel lecture, Lucas finally admitted that the bad ad hoc sticky-price assumption was no less microfounded than Lucas’s good ad hoc people-cannot-open-the-newspaper-to-read-the-price-level assumption:

One such… described in Lucas (1972)… was based on suppliers’ imperfect information…. Some of… assum[ed] that some nominal prices are set in advance, as in Fischer (1977), Phelps and Taylor (1977), Taylor (1979), or Svensson (1986)…. All… offer rationalizations of a short-run monetary non-neutrality…. None of these models deduces the function f from assumptions on technology and preferences alone… [but also from] the specific assumptions one makes about the strategies available to the players, the timing of moves, how information is revealed, and so on. Moreover, these specifics are all, for the sake of tractability, highly unrealistic and stylized: We cannot choose among them on the basis of descriptive realism…

In short, Romer ought, at this point, to say, simply: Solow and Hahn were right. He does not. Instead, he says:

Solow also seemed to be motivated to attack harshly because he was concerned that the type of model Lucas was developing might undermine political support for active countercyclical policy. To his credit, there was a legitimate basis for this concern…. But… in retrospect, if the goal was to maintain support for active macro policy, the better course would have been to take seriously what the rebel group that was forming around Lucas was saying. This might have kept the rebels from cutting off contact with all outsiders…

As Matthew Shapiro has frequently pointed-out, the cutting-off of contact went only one way. Saltwater economists kept on reading, assigning their students, borrowing from, and reacting to New Classical models. Freshwater economists, however, by and large did not assign what became known as New Keynesian work to their students, in large part did not borrow from and react to it, and so we get situations like Robert Lucas in 2009 having absolutely no understanding of what Obstfeld and Rogoff (1996) had taught everyone who had kept up with the literature about fiscal policy.

Romer continues:

Once they cut off contact with the outside, these rebels developed a sub-culture that was more like what you’d expect to find among members of a platoon on the battlefield than among scientists parsing logic and weighing evidence. Loyalty and group cohesion took priority, so models that were illogical or inconsistent with the evidence went unchallenged. These values might have developed in any department, but they found support and encouragement at the University of Chicago, which was already committed to Stigler conviction instead of Feynman integrity. As a result, real business cycle models, which were introduced by Prescott and Kydland in 1979, attracted support among the rebels, even though these models did an even worse job of matching the empirical evidence than the model that Lucas first proposed…. assumed away the possibility that monetary policy and inflation could have any interaction with output and employment… decided that econometrics was getting in the way. Word came down from the top that they were abandoning the cutting-edge econometric work that Sargent had specialized in and using calibration in its place….

The alternative to derision would have been for skeptics to embrace and extend. This was what Stan Fischer and Rudi Dornbusch, who were supervising almost all of the Ph.D. students at MIT doing anything related to macro, were quietly doing at this time…. Fischer and Dornbusch trained a cohort of Ph.D. students at MIT who put the tools of modern macro to work and, as Krugman has observed, turned out to be unusually influential…

Perhaps Stan was doing so quietly. Rudi never did anything quietly. Rudi was constitutionally incapable of ever doing anything “quietly”. He was the kind of person who would dismiss a paper of Allan Meltzer’s in public as “Tobin, plus original errors”. In Rudi’s view, rational expectations was a superb modeling tool for many problems, a very useful tool that allowed for enormous amounts of simplification while not forcing your conclusions into an unwanted and unwarranted coneptual Prokrustean box for many other problems, and a bonkers stupid assumption in some others. And he made that very clear. In Rudi’s view, Lucas’s people-cannot-open-the-newspaper assumption was silly, but as long as it was innocuous you should use it because it would help you communicate with more people–yet whenever it turned out not to be innocuous, but to instead be making you say something stupid, you should, of course, drop it immediately.

Romer continues:

If Dornbusch and Fischer had set the tone for the response to Lucas and his followers things might have turned out differently…

But they did set the tone! As Romer writes immediately, in the next paragraph:

The rebels… won the battle for mindshare among the next generation of macroeconomists… could have taken credit for killing off the large multi-equation models…. Lucas could have been embraced as a leading contributor to the larger intellectual program launched by Paul Samuelson, the founder of the department [at MIT]… could… have healed the divide that had separated MIT and Chicago… [with] its roots in Stigler’s political agenda…

I think not. I think that the reason for cutting off of communication on the part of Lucas and company was that the MIT contingent refused to accept the policy implications that Lucas and Sargent had derived from their models with the particular ad hocness that they liked. Romer again:

In 1978, when I was hearing the harsh critique from Solow, it is hard to find evidence of a closed-minded intransigence among the people he was criticizing. That mindset did develop soon thereafter and it seems to me that the frustration that would encourage it was already evident. Lucas and Sargent also wrote [in “After Keynesian Macroeconomics”, published in 1979, written presumably in 1978]:

Criticism of equilibrium models is simply a reaction to these implications for policy. So wide is (or was) the consensus that the task of macroeconomics is the discovery of the particular monetary and fiscal policies which can eliminate fluctuations by reacting to private sector instability that the assertion that this task either should not, or cannot be performed is regarded as frivolous independently of whatever reasoning and evidence may support it…. To confuse… faith in the existence of efficacious, reactive monetary and fiscal policies with scientific evidence that such policies are known is clearly dangerous, and to use such faith as a criterion for judging the extent to which particular theories “fit the facts” is worse still…

Lucas and Sargent, writing back in 1978 and 1979, are already saying that the government “either should not or cannot” pursue policies that attempt to “eliminate fluctuations by reacting to private sector instability”. And ever since then it seems to me that for Lucas, at least, the most important factor in his judgment of whether a model is worth discussing is whether it leads to that “either should not or cannot” policy conclusion.

I came through this process some seven years behind Paul Romer. I have learned huge amounts from Robert Barro and Thomas Sargent, but I have never interacted with Robert Lucas. But I don’t think my different reading of this history is due to my relative youth here.

And what I do want to earn is why Milton Friedman and company weren’t able to bring the Chicago Boys back into some contact with reality…

Must-Read: Paul Romer sets out his theory of George Stigler. I think Paul is under-generous. Romer drifts toward the position that Stigler chose to do ideology rather than science–that it was important to reject rather than test Chamberlin’s theories because if they were true they would support policies Stigler disliked. I see Stigler as believing that he was doing science: that since we knew that the arc of the universe bends toward freedom, doctrines that if true would support policies that limited freedom could not be correct, and admitting such doctrines for testing would increase the likelihood of error:

Paul Romer: On George Stigler: “The Great Depression was a traumatic experience for both Solow and Stigler…

…They reacted very differently. For Solow, the human cost of mass unemployment was so high that to him, it seemed obvious that the government had to do something to bring unemployment down quickly in the wake of a recession. Stigler saw the many harmful and ineffective things that the government tried during the 1930s (including price floors and official support for cartels) and resolved that the guide to government policy must be ‘do no harm.’ Stigler wanted halt to progress in economic theory because he feared that it would lead to more theories like those of Keynes and Chamberlin (who provided the foundation for Dixit and Stiglitz). For him, there was apparently too much risk that such theories might lend political support for government policies that should not be tried.

Under his division of labor with Milton Friedman, Friedman took on Keynes and Stigler took on Chamberlin. Marshall, they agreed, was safe. They turned Chicago in the last bastion of opposition to the Samuelson [mathematical general-equilibrium] program and thereby prolonged for decades the confusion that Marshall had spawned. For Stigler, the logical implication of ‘do no harm’ was ‘do nothing at all,’ so what good could come from the Samuelson program anyway? Samuelson, like Lucas, must have found it infuriating to have his life’s work dismissed by someone who already knew all the policy answers…

http://paulromer.net/what-went-wrong-in-macro-historical-details/

I would also say that Friedman “took on” Keynes in only a small and limited way. The way I put it to my students, Friedman’s argument was:

• Keynes has identified a real problem, but,
• as long as the central bank can keep the economy away from the zero lower bound,
• the problem can be solved by the central bank keeping the money stock stable,
• because the money stock is a sufficient statistic for forecasting future aggregate demand.
• Hence all of Keynes’s worries about and proposals for fiscal policy and a somewhat comprehensive socialization of investment are unnecessary and in fact harmful,
• and Keynes’s belief that they were necessary was the result of his failure to recognize how contractionary monetary policy had been in the Great Depression.

However, at the zero lower bound on interest rates Friedman became a Keynesian:

Even more pertinent is a talk Viner delivered in Minneapolis of February 20, 1933, on “Balanced Deflation, Inflation, or More Depression”….

[I]t would have been sound policy on the part of the federal government deliberately to permit a deficit to accumulate during depression years, to be liquidated in prosperity years…. The outstanding though unintentional achievement of the Hoover Administration in counteracting the depression has in fact been its deficits of the last two years….

[…]

I will use the term ‘inflation’ to mean an inrease in the total amount of spendable funds…. It is often said that the federal government and the Federal Reserve system have practiced inflation during this depression and that no beneficial effects resulted from it. What in fact happened was that they made mild motions in the direction of inflation…. At no time… since the beginning of the depression has there been for so long as four months a net increase in the total volume of bank credit…. Assuming for the moment that a deliberate policy of inflation should be adopted, the simplest and least objectionable procedure would be for the federal government to increase its expenditures or decrease its taxes, and to finance the resultant excess of expenditures over tax revenues either by the issue of legal tender greenbacks or by borrowing from the banks…

Friedman was always at least as interested in fighting the Hayeks and the Schumpeters (and the Lucases) who argued that nothing should be done to fight depressions as he was in fighting Keynes…

Must-Read: Paul Romer: On George Stigler: “The Great Depression was a traumatic experience for both Solow and Stigler…

…They reacted very differently. For Solow, the human cost of mass unemployment was so high that to him, it seemed obvious that the government had to do something to bring unemployment down quickly in the wake of a recession. Stigler saw the many harmful and ineffective things that the government tried during the 1930s (including price floors and official support for cartels) and resolved that the guide to government policy must be ‘do no harm.’ Stigler wanted halt to progress in economic theory because he feared that it would lead to more theories like those of Keynes and Chamberlin (who provided the foundation for Dixit and Stiglitz). For him, there was apparently too much risk that such theories might lend political support for government policies that should not be tried.

Under his division of labor with Milton Friedman, Friedman took on Keynes and Stigler took on Chamberlin. Marshall, they agreed, was safe. They turned Chicago in the last bastion of opposition to the Samuelson [mathematical general-equilibrium] program and thereby prolonged for decades the confusion that Marshall had spawned. For Stigler, the logical implication of ‘do no harm’ was ‘do nothing at all,’ so what good could come from the Samuelson program anyway? Samuelson, like Lucas, must have found it infuriating to have his life’s work dismissed by someone who already knew all the policy answers…

Must- and Should-Reads:

• Amanda Taub: This 1-minute debate perfectly captures the shameful racism of anti-immigration arguments
• Paul Gertler: Good Science Gone Wrong?
• Paul Spinrad: The Surprisingly Tumultuous History of Socks](https://timeline.com/stories/socks-manufacture-retail-weaving-hosiery-stockings)
• Must-Read: Dean Baker: Job Growth Remains Strong in July

Might Like to Be Aware of:

• Matthew Yglesias: Correcting and Updating Vox Card Stacks

Must-Read: It is interesting that these days even Dean Baker is calling 215,000 net jobs a strong-growth month. I would still require more than 300,000 a month for “strong”. 200,000-300,000 a month is “moderate”. 100,000-200,000 a month is “adequate” (if the economy were already near full employment. And less than 100,000 a month is “weak”…

Dean Baker: Job Growth Remains Strong in July: “The economy added 215,000 jobs in July, while the overall unemployment rate was unchanged at 5.3 percent…

…The unemployment rate for African Americans fell from 9.5 percent to 9.1 percent, the lowest level since February of 2008. The employment-to-population ratio (EPOP) remained unchanged at 59.3 percent for the population as a whole and 55.8 percent for African Americans. While the unemployment rate has been falling sharply in the last four years, the EPOP has moved much less, having risen by just 1.1 percentage points from its low point in 2011…. The EPOP for prime-age men (ages 25-54) is still down by almost three percentage points from its pre-recession level. This is almost certainly an indication of ongoing weakness in the labor market.