In Search of the Confidence Fairy
Paul Krugman
NYT
In the debate over the budget, Republicans seem to be leaning on the claim that austerity will actually increase employment, because it will raise business confidence; at least that’s what John Taylor seems to be saying.
But how’s that going in Britain, where the Cameron austerity program was supposed to lead the way?
Most of the discussion of Britain I’ve seen focuses on GDP numbers, with the debate then centering on how much of the decline in the 4th quarter was weather-related. But a lot of things affect GDP. Why not look directly at confidence? The BDO has a convenient survey of business optimism (pdf); numbers for December and January here. Here’s what it looks like:
(Original here.)
NYT
In the debate over the budget, Republicans seem to be leaning on the claim that austerity will actually increase employment, because it will raise business confidence; at least that’s what John Taylor seems to be saying.
But how’s that going in Britain, where the Cameron austerity program was supposed to lead the way?
Most of the discussion of Britain I’ve seen focuses on GDP numbers, with the debate then centering on how much of the decline in the 4th quarter was weather-related. But a lot of things affect GDP. Why not look directly at confidence? The BDO has a convenient survey of business optimism (pdf); numbers for December and January here. Here’s what it looks like:
(Original here.)
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1 Comments:
Hmmm... Krugman suggests that spending less does not result in improved consumer confidence. Is this to say that continuing to spend beyond our limits will build confidence? We cannot have it both ways.
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