People are waking up and finding they now have little or no equity in their homes. Great, the American dream.

I actually think we live in a time of asymmetric inflation. Inflation is out there. We know that house prices go up (good?) and gas prices go up (bad?), but the picture is incomplete. It might even be possible that globalization masks part of this. A hypothetical microwave made in America might have gone up $X, but (luckily?) it is being made in China and has dropped $Y.

My answer is that the one good number is savings rate. If people are not being inflated out of their take home pay, they'll manage to put something in the bank. The fact that savings rate went negative recently, coinciding with higher energy prices etc., tells me that we have inflation are are not keeping up.

Think about it, savings rates go negative, average credit balances climb, home equity drops ... those are all signs of true rubber-meets-the-road inflation, even if it isn't reflected in an "index."

It's actually a very interesting question whether CPI, or any CPI-X, "historically overstated real inflation." Without addressing "real" I'll note that it is useful to define CPI in a conservative way, because CPI provides an obvious feedback loop. Higher CPI means higher gov expenditures, which might inflate, and cause a higher CPI, and so on.

So let's say we broke inflation by redefining CPI, good so far ... but where do we start thinking about "real" inflation? Real for whom?

If it is "real" for people living in (or on the edge of) poverty, "real" is going to include food and energy as a higher percentage of household expenses than those further up the curve.

The budget deficit is what it is, although they never seem to hurt the economy. We had a massive budget deficit in the 1990s and still had the huge Internet boom.

Rick: There's something to that, I'm sure. So what, though? Some of the growth of the 1980s came as a result of deficit spending, especially in the defense sector.

Odo: My understading, as that of the late Pat Moynihan, was that COLA adjustments have historically overstated real inflation. And there isn't a gas price run-up, just a very temporary spike; we're down to pre-Katrina levels again.

It looks like we calculate CPI multiple ways. Not sure which one is used as "core."

That is, we may just have raised the definitional threshhold of poverty more than incomes rose.

I suspect it is the opposite. Don't we exclude energy (and food) costs from core CPI these days, and then adjust numbers like "poverty income" by the core (without energy/food) CPI?

We know that these folks got the biggest whammy from the gas price run-up.

What we should be wondering is with all of the deficit spending (and let's be honest, that is what the tax cuts are), why is the economy only growing slightly more then the amount of the deficit spending?

What kind of jobs are being created?

All kinds. Of course, darned few union jobs are being created.

If your real concern is that the jobs becoming available are non-union, at least have the courage to say so, and have done, Bryan.

You see, I consider the union movement taking a pounding to be a good thing. THey've been choking America far too long.

Not monetarily bad news in the sense of percent up or down, but news of a negative shade for the overall picture, coupled with recent requirements raising minimum payments on credit card debt. These are the sort of "bad taste, good for you" medicine measures that make for a mixed picture.

Health care costs have been ballooning for as long as I can remember, too. But that doesn't mean they are not a negative part of the picture.

I note you didn't mention the other points. Look, I hope the economy is not going to tank. I'm out looking for a job right now. But Kudlow is telling only half of the picture to sell a column.

And I'm not sure how changes to the bankruptcy laws are bad economic news.

I just noticed this concluding sentence, and shuddered at the apples and oranges comparison. What kind of jobs are being created? Are they comparable in wage to the jobs that are being lost?

Kudlow also glosses over the recent restatements of earnings by several leading businesses. How are we to believe the claim that "business profits have increased ..." if the numbers are adjusted after the fact?

Oh, yeah. Like the relatively constant drumbeat of layoffs in the auto industry (among others), or the changes to the bankruptcy laws, or the rise in bankruptcy filings prior to the October change in the laws. Or the rising cost of healthcare (which should offset any raise in household income - it sure has in mine). Or the hole that is New Orleans. Or the enormous budget deficit.

In short, the economic news is not all good, despite Kudlow's "Don't worry, be happy" refrain.

I'd call that a mixed bag. You know, the conservative thing is that we want "a rising tide to raise all boats."

More on west coast states here:

http://cascadiascorecard.typepad.com/blog/2005/11/up_with_poverty.html