3.14.2019

Stephen Moore repeats the Menzie Chinn fallacy

In 2014, economics professor and Obama fanboy Menzie Chinn suggested that Obama's 3.1% GDP growth forecast was reasonable because the US had grown at that rate in the late 20th century. He gave absolutely no consideration to the enormous contribution of credit growth to 20th century GDP, and the unlikelihood (impossibility) of that explosion in credit to be repeated now.

Proving that both sides can have equally stupid partisan shills, here's Trump fanboy Stephen Moore in the WSJ:
Skeptics in and out of the Fed still think sustained 3% to 4% growth is out of reach. Nonsense. The combination of stable prices and sharp tax cuts in the 1980s produced an average of 4% growth for seven years. Imagine if we had a similar stretch of sustained growth, with low inflation and rising wages.
Just as Menzie did, Moore completely ignores the vastly different debt and demographic conditions between 1980 and now.

We're not going to get sustained 3% to 4% real GDP growth.




2 comments:

Anonymous said...

The demographics link is to a graph year to year deltas. Total population graph doesn’t look so bad.

https://fred.stlouisfed.org/series/LFWA64TTUSM647S?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=categories

WC Varones said...

It's population growth, not level, that feeds into GDP growth.

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