Economics Roundtable

May 2014 Payroll Employment

After 76 months, we finally got back to the prerecession level of payroll employment.

Click on the image to get a bigger version.


The best summary of the state of our economy is the graph (below) of employment as a fraction of population for people over 16 years old. The decrease is large, but the most troubling feature of the graph is the flat trend .

Click on the image to get a bigger version.

Graph-of-the-Year Candidates

Donald Marron likes European interest rates. Click on the image to get a bigger version. Can you find three distinct subperiods?

Brad DeLong favors the U.S. gdp gap.

Remember M1?

Money Supply M1 growth is now over 20% per year over a 12 month lag. M1 growth has touched 20% before, but not with excess reserves of $1.6 trillion. Where is M1 headed?

Click on the chart for a larger version.


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"Economic analysis of current issues, every Friday.” Francisco M. Torralba.

July 23, 2015, 1:23 pm, 1514414
I put together a chart of the 12-month percent change of measures of core inflation for a selection of countries. The definition of core inflation varies across countries.

Green (red) means lower (higher) inflation. The color scale is meaningful within rows only. So, for example, the deep-green that the ...

July 21, 2015, 1:23 pm, 1512915
Here's an article from on market analysts who kept predicting (incorrectly) that the stock market would crash.

(Hat tip to an old colleague and accomplished investment manager P. M. - I'm not sure I can say his name, since I got his pointer through LinkedIn.)

July 5, 2015, 1:23 am, 1503148
Over two years ago Jim Hamilton posted that the relationship between the retail price of U.S. gasoline and the price of Brent, empirically, is given by

$$g_t = 0.839 + 0.02499 b_t + e_t, $$

an equation that comes from an OLS regression of weekly prices ...

July 5, 2015, 1:23 am, 1503149
The long-term unemployed matter. That might be the conclusion from a trio of blog posts by New York Fed researchers, over at Liberty Street Economics. (The authors areáRob Dent, Samuel Kapon, Fatih Karahan, Benjamin W. Pugsley, and Ay┼čeg├╝l Sahin.)

In the

July 5, 2015, 1:23 am, 1503147
One way for central banks to gauge long-term inflation expectations is to look at the \(n\)-year-forward, \(m\)-year-ahead expected inflation rate. For instance, the two-year-forward, three-year-ahead expected inflation is the expected change of prices two years from now, over the following three years. As of December 2014, that would be the ...

July 5, 2015, 1:23 am, 1503145
In the chart below I have displayed the GDP and inflation surprises of 2014, by country.

I define a "surprise" as the difference between the 2014 forecast in December (which should be close to the actual outcome) and the 2014 forecast in January (the one-year ahead forecast). (The data ...

July 5, 2015, 1:23 am, 1503143
It's that time of the year when seemingly every economist in the private sector puts together an economic outlook for the year ahead. I'm not foolhardy enough to make predictions, or even to pretend my crystal ball is less cloudy than others'. I'm writing this post because I am bothered ...

July 5, 2015, 1:23 am, 1503144
Things that Conventional Wisdomágot right about 2014:
1. The Fed tapered asset purchases and ended the quantitative easing program by October.
2. China staged a soft landing, holding growth above 7%.
3. The eurozone's recovery from the recession was slow and uneven. (Here I must say, however, that the majority ...

July 5, 2015, 1:23 am, 1503146
Tim Duy wonders whether predicting the Fed's change of language over the next six months will be as easy as looking at the statements from 2004. On Jan. 28, 2004 the FOMC statement introduced the word "patient", replacing the "considerable period" phrase. The Fed kept "patient" in the ...

July 5, 2015, 1:23 am, 1503131
Last week I started writing up a quick (?) methodology to forecast equity returns. Specifically, the question was

Forecast the real total return of U.S. equities over the next ten years. Show your work.áTime: two hours.

I wrote down a decomposition of the total return into three components: