My personal income is lower now than it was 20 years ago - in nominal as well as real terms. But I’m happier in my work and life now than I was then. Which poses the question: why do the main political parties regard the threat of stagnation with such fear?
David Beckworth submits: I am late getting to this, but Mark Thoma wants to hear the case for nominal GDP targeting. This approach to monetary policy requires the Fed to stabilize the growth path for total current dollar spending. As an advocate of nominal GDP level targeting, I am more than happy to respond to Mark's request.
The Bureau of Economic Analysis reported today that U.S. real GDP grew at a 2.2% annual rate during the first quarter, down from the 3.0% growth of 2011:Q4, and below the 2.4-2.9% range that the FOMC indicated yesterday it is anticipating for 2012 as a whole. I see some reasons to agree with the Fed that the rest of the year may be slightly better than the first quarter.