Good Job Washington D.C.

I found this article amusing. It explains how the Federal deficit is cut down by 8% for the first half of 2010, compared to a year ago. Only one word comes to mind when I read this, DUH! The officials contributed this by higher tax revenue and lower spending. So they are saying that if you save money, instead of spending it, you’ll reduce debt? Good work D.C.! The funny thing about this is they are serious and just barely figuring this out. The average child knows that if they want to buy a candy bar, they have to save money from their allowance to be able to buy it. It doesn’t take a Harvard degree and a six-digit salary to understand this. What is going on in this nation!?


David said...

Yeah, I found 'funny' the fact about the USA debt...

I'm running a blog about Economy Lessons, so people who don't know too much about Economy, I'm gonna link you, you've an interesting blog about news.


Dr. Tufte said...

The link was general rather than specific, so I can't see the article you're referring to.

I'm guessing that this is just one more case of the media focusing on a secondary statistic - the deficit. It's pretty standard for deficits to come down as a country comes out of a recession. But to reporters this is new. I'm not sure why.

Dr. Tufte said...

I wouldn't read too much into the way this forecast tails off. This is probably just mean reversion - the tendency of a growth rate to return towards its mean after deviating from it. A model like this just isn't going to be able to predict deviations above or below the mean more than a few months in advance.

What does bother me, is that it looks like it is returning to a mean of around 2%. Why so low? I don't have a good answer right now.