Weekly Roundup

Weekly Roundup

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On June 16, the Department of Housing and Urban Affairs released its 2009 annual report on homelessness. According to the report, overall homelessness declined slightly in 2009 despite the recession. However, the decline was entirely among single persons; homelessness among families increased.

In a June 15 blog post, economist Paul Krugman challenged the growing conservative view that fiscal austerity is stimulative. One example often cited is Canada in the 1990s. But Krugman points to an analysis by economist Marshall Auerback, which shows that special factors offset the fiscal tightening—rapid money supply growth, rising indebtedness at the household level, and strong exports to the U.S., which was then in the midst of the tech boom.

On June 14, PricewaterhouseCoopers released a report forecasting a 9% increase in employer health costs in 2011. It predicts that employers will continue to raise deductibles to restrain costs.

A June 9 report from the Department of Agriculture estimates the cost of raising a child until age 18 at $286,050 in 2009 dollars. This estimate is based on costs for a middle class family for food, shelter and other necessities. Annual costs per child range from $11,650 to $13,530 in 2009 depending on age.

The June issue of Finance & Development contains an article by IMF economists Harald Finger and Azim Sadikov on episodes of large reductions in the debt/GDP ratio. Among advanced economies the primary means of doing so involved running primary surpluses.

Somewhat surprisingly, PIMCO’s Bill Gross, an expert on the bond market, warned in a June commentary that fiscal tightening may be counterproductive in a debt crisis because of its negative impact on growth and, ironically, that creating more debt may be preferable.

In a June Brookings paper, William Galston examined policies to increase growth and innovation. He recommends reforms that would reduce budget deficits, increase savings, end gerrymandering and increase voting by citizens.

In the June issue of the Survey of Current Business, Michael Christian of the Wisconsin Center for Education Research presents new estimates of the stock of human capital in the U.S. Human capital measures the ability of people to produce income based on things such as education and training. Christian estimates the stock of human capital at $738 trillion—yes, trillion—in 2006, up from $417 trillion in 1994. In 2005, Americans invested $6.4 trillion in their human capital.

In a May 24 paper, Indiana University economist Huxinin Bi looked at factors influencing governments’ ability to service their sovereign debt and those that may forecast a downgrade in debt ratings. A key conclusion is that the risk premium on debt can rise very rapidly, very quickly as nations approach the fiscal limits of their capacity to bear debt.

Bruce Bartlett is an American historian and columnist who focuses on the intersection between politics and economics. He has written for Forbes Magazine and Creators Syndicate, and his work is informed by many years in government, including as a senior policy analyst in the Reagan White House. He is the author of seven books including the New York Times best-seller, Impostor: How George W. Bush Bankrupted America and Betrayed the Reagan Legacy (Doubleday, 2006)

Previous posts:

June 16: Focus on Housing

June 15: Focus on National Security

June 14: State and Local Budgets

June 11: Economic Commentary Roundup

Bruce Bartlett’s columns focus on the intersection of politics and economics. The author of seven books, he worked in government for many years and was senior policy analyst in the Reagan White House.