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 .
June Payroll Employment
The slowndown in employment growth over the past few months is starting to become more apparent in the graph below.
Click on the image to get a bigger version.
Focus on the Problem
U.S. payroll employment peaked at 132.5 million jobs in February 2001. For April 2012, U.S. payroll employment had reached 133.0 million jobs, marking the third month in a row above the February 2001 level.
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.
Looking Up At 2001
In February 2001, U.S. payroll employment peaked at 132.5 million. The November 2011 figure of 131.7 million still falls 800,000 jobs short of the earlier peak.
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?
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"Helping to Simplify Economics”
The great recession refers to the period of economic downturn between 2008 and 2013. The recession began after the 2007/08 global credit crunch and has led to a prolonged period of low growth and rising unemployment. In particular, the great recession highlighted problems within the Eurozone and, unlike the US, ...
Back in February 2007, I wrote an essay – Evaluate the effectiveness of the MPC in controlling inflation.
The last line was:
MPC have done a good job so far. However the real test may come when there is a rise in structural inflation or global instability.
Given the knowledge ...
Readers Question: Evaluate the case for raising the legal drinking age to 21. Will it be more effective than other methods for reducing the harmful effects of alcohol?
There are several reasons to be concerned about the over-consumption of alcohol, especially amongst young people. In the UK, abuse of alcohol has ...
The 1930s economy was marked by the effects of the great depression. After experiencing a decade of economic stagnation in the 1920, the UK economy was further hit by the sharp global economic downturn in 1930-31. This lead to higher unemployment and widespread poverty. However, although the great depression caused ...
Interesting article here about the UK economy of the 1930s escaping from Liquidity trap and great depression of the 1930s. This involved:Higher inflation target Low interest rates and negative real interest rates. Devaluation
The article is also interesting for another reason, a short insight into the housing market of the 1930s. Like ...
Readers Question: I am also interested in Marxist economics and they seem to say the 2007-2008 crisis was a result of over-financialisation of the the economy, and that investors/owners could not squeeze surplus out of other sectors in the economy as they once could.
Financialisation of an economy refers to the ...
Readers Question: How does a current account surplus change demand in an economy?
A current account surplus means that the value of exports is greater than the value of imports (of goods and services).
Net exports is a component of Aggregate demand. (AD) = C+I+G+(X-M).
Therefore a current account surplus means that ...
Credit policy / financial policy is the use of the financial system to influence aggregate demand (AD). Monetary policy affects AD through the Central bank controlling interest rates and the money supply. Fiscal policy affects AD through the use of government spending and taxation.
Credit policy looks at factors ...
The Bank of England set the base rate. This is the rate at which they charge commercial banks to borrow from the Bank of England. In normal economic circumstances, this base rate will influence all the interest rates set by other banks and financial institutions.If the Bank of England cut ...
Readers Question: how to revise for a possible exam question like: discuss the likely effectiveness of ‘expansionary fiscal and monetary policies as means of closing the output gap’
Firstly write down the question on a blank piece of paper. Then try and revise in three parts.Part One – Knowledge define terms