Macroeconomics

What is the Council of Economic Advisers and Does it Really Matter?

When President Donald Trump formally announced his Cabinet, one of the surprises was that the list of 24 Cabinet-level officials did not include the chair of the Council of Economic Advisers (CEA).  There is no formal requirement that an economic adviser be part of the Cabinet. However, Barack Obama started a new trend by appointing the last four council chairs as part of his Cabinet. Being part of the Cabinet is important because it ensures economic as well as political considerations are part of presidential decisions.

Not only has the position now been eliminated from Cabinet meetings, but the council’s website has also been turned off. Only archival versions from past administrations remain.  This apparent sign of disrespect for the role of the CEA, along with the fact that President Trump has yet to actually nominate a council chair, has caused some to worry that he won’t be getting much economic advice from actual economists. A website that takes bets on who will fill various posts in Trump’s Cabinet suggests he may not even fill the position.
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Is Japan Really in a Recession?

Yesterday and today the business news highlighted a story that Japan was now in a recession.  The media defines a recession as any time a country has two consecutive quarters of falling GDP.    The graph from the Wall Street Journal, seen at the bottom of this post, confirms that Japan’s GDP has shrunk over the last six months.  Based on the extensive negative press coverage Japan’s Prime Minister Shinzo Abe has called for early elections.  An important question needs to be asked.  Is Japan really in a recession?  There are three reasons why Japan’s economy is much healthier that the media portrays.   These three reasons strongly suggest to me that Japan is not in recession right now. Continue reading Is Japan Really in a Recession? →