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.


Jobs

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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September 1, 2014, 8:04 pm, 1327566

I think this is too good to excerpt just read
“Want better, smaller government? Hire another million federal bureaucrats.”

by John DiIulio. He argues that the obsession with keeping the number of Federal civilian employees low has reduced efficiency and created powerful concentrated interests represented by powerful lobbies. The ...


September 1, 2014, 7:33 pm, 1327565

Dallas Morning News editorial writer William Ruggles (pictured above) “thought every American had a right to work. He used those words in an editorial on September 1, 1941 (Labor Day) asking for a 22nd amendment to the ...


September 1, 2014, 5:33 pm, 1327550
If I'm reading this correctly, the British Prime Minister will require that British citizens who have spent considerable time in Iraq and Afghanistan will have to attend "deprogramming" classes if they return to England. The enormous economics literature on "treatment effects" has some insights to offer.

I have ...


September 1, 2014, 4:04 pm, 1327549
(September 1, 2014 04:00 PM, by Scott Sumner) MaynardGKeynes recently left this comment: Simple fact is that Shiller correctly predicted 3 of the last 3 bubbles (2000, housing, 2007). That's a widely held view, but is it correct? This is from Eugene Fama's Nobel Prize lecture (in the... (0 ...


September 1, 2014, 3:33 pm, 1327547

The hardest part of doing research is escaping from prejudices.


September 1, 2014, 2:44 pm, 1327518
A


September 1, 2014, 2:44 pm, 1327517

THIS week: Central bank meetings and the performance of real wages


September 1, 2014, 2:35 pm, 1327516

by Roger Koppl

Oliver Blanchard tells us “Where Danger Lurks”  in the macro-finance world.

The big theme is nonlinearity, which is a profoundly conservative move: DSGE modeling is just fine and we don’t need to rethink it at all. We just need to add in some nonlinearities. Blanchard does not tell ...


September 1, 2014, 2:05 pm, 1327513

Chinese authorities in the restive western region of Xinjiang have begun offering large cash incentives for interracial marriages in the latest attempt to quell growing unrest among the mainly Muslim Uighur ethnic group that inhabit the region.

The policy, celebrated by local Communist party officials as advancing the “great cause ...


September 1, 2014, 2:04 pm, 1327512
(September 1, 2014 01:51 PM, by David Henderson) Every Labor Day in the last few years, we hear about the decline of unions and how that has been a bad thing. What I find striking is how economically uninformed most of this commentary is. Start with the fact... (2 ...


September 1, 2014, 1:03 pm, 1327489

The White House and union leaders are using Labor Day reinvigorate efforts to raise the minimum wage.

Legislation to increase the federal pay floor from $7.25 an hour stalled in Congress this spring, but Democrats hope the issue will resonate with voters in November, especially in states with closely contested Senate ...


September 1, 2014, 1:03 pm, 1327488

Justin Fox:

What Unions No Longer Do, by Justin Fox: Forty years ago, about quarter of American workers belonged to unions, and those unions were a major economic and political force. Now union membership is down to 11.2% of the U.S. workforce, and it’s increasingly concentrated in the public sector ...


September 1, 2014, 12:05 pm, 1327487

1. What people cured of blindness see.

2. Shoes that show you the way.

3. Which states are in the Midwest?  I say no to all the marginal cases, including Kentucky.  And how can it be that not everyone thinks Iowa is in the Midwest?

4.


September 1, 2014, 12:04 pm, 1327486

September 1, 2014, 11:33 am, 1327484
The Markit Eurozone Manufacturing final data shows Eurozone Manufacturing PMI at 13-month low in August.

The rate of expansion in eurozone manufacturing production eased to its lowest during the current 14-month growth sequence in August, as companies faced slower increases in both total new orders and new ...


September 1, 2014, 11:23 am, 1327483
Is the U.S. economy in the midst of another bond market "conundrum"? The last time we had one was in 2005 when former Fed chairman Alan Greenspan became perplexed over long-term interest rates failing to rise with the tightening of monetary policy. Some observers see something similar ...


September 1, 2014, 11:03 am, 1327445
Two and half years ago I argued that "most of the drag from state and local governments would be over by mid-year 2012. Just eliminating the drag from state and local governments would help GDP and employment growth". This has been an important change.

Here is a graph ...


September 1, 2014, 10:35 am, 1327444

At the gym yesterday morning, I caught site of a TV show discussing "is fracking the future?" Who might usefully discuss this question: geologists? energy economists? Nope. There was the ubiquitous vested interest; Vivienne Westwood, a frock designer; and James Delingpole, whose field of expertise has ...


September 1, 2014, 8:36 am, 1327400
The ISM Manufacturing Index is expected to decline slightly to 56.8 in tomorrow’s update for August vs. the previous month, based on The Capital Spectator’s median econometric point forecast. The estimate is still well above the neutral 50.0 mark and … Continue reading →


September 1, 2014, 8:05 am, 1327397

From ChinaRealTime:

China’s 1% average annual growth in total factor productivity between 1978 and 2012 – a period when average per capita annual incomes rose from $2,000 to $8,000 — compares with 4% annual gains for Japan during its comparable 1950-1970 high-growth period, 3% for Taiwan from 1966-1990 and ...


September 1, 2014, 7:03 am, 1327357
An employee works at a production line inside a Geely factory in Ningbo, Zhejiang province. Reuters

China’s productivity is slipping away, the miracle days are largely over ...


September 1, 2014, 7:03 am, 1327358
A sales promotion advertisement at a housing sales office in Hangzhou, Zhejiang province.  Newscom

After a modest uptick in the middle of the year, the Chinese economy ...


September 1, 2014, 7:03 am, 1327356

 

Indonesian motorists queue up for gasoline amid a shortage of subsidized fuel. Agence France-Presse/Getty Images

Indonesia squeezed out a narrow trade surplus in July but the Southeast ...


September 1, 2014, 6:44 am, 1327355

Switzerland has had consistently low tax rates and a remarkably stable income distribution, although in the last 20 years the share of top incomes has risen. This column documents that the top 0.01%’s share doubled, meaning Switzerland is similar to European countries in terms of the top 1%’s income share, ...


September 1, 2014, 6:44 am, 1327354

Central banks’ exchange rate interventions are typically attributed to precautionary, prudential, or mercantilist motives. This column documents the prevalence of an alternative motive – that of stabilising the exchange rate – in emerging markets, where, despite heavy intervention, the Global Crisis saw important deviations of the real exchange rate from ...


September 1, 2014, 6:44 am, 1327353

European migration exhibits a bias towards low-skilled workers, whereas the US attracts the majority of the world’s skilled migrants. At the same time, the welfare system in Europe is more generous than the one in the US. This column describes an analytical framework that can explain the existence of these ...


September 1, 2014, 6:44 am, 1327352

Nathan Blecharczyk, co-founder and chief technology officer of Airbnb, talks with EconTalk host Russ Roberts about Airbnb, one of the earliest companies to use technology to allow individuals to share underused resources, and in the case of Airbnb, housing. Blecharczyk and Roberts discuss how a ...


September 1, 2014, 5:33 am, 1327351

If you want to be on the Net on this holiday, this list should give you some things to look at.


September 1, 2014, 5:33 am, 1327350



(p. C6) The outcome was perhaps foreshadowed, as Mr. Marciano points out, when President Ford, using a customary unit, noted that American industries were "miles ahead" when it came to adopting the metric system.

Mr. Marciano tells his story more or less without editorializing, until the end. Surveying ...


September 1, 2014, 5:23 am, 1327349

Thanks for the questions, which have been building up in Readers Questions

During the summer holiday, I find it difficult to get into writing economics, but now the new term has started I will get back into the flow. Feel free ...


September 1, 2014, 5:23 am, 1327348

“Readers Question – A microeconomics question. In you labour market section you discuss a monopsonist.You say that “in order to employ one extra worker the firm has to increase the wages of all workers”- why? You give a coal mine as ...


September 1, 2014, 5:03 am, 1327329

 

Indonesian motorists queue up for gasoline amid a shortage of subsidized fuel. Agence France-Presse/Getty Images

Indonesia squeezed out a narrow trade surplus in July but the Southeast ...


September 1, 2014, 5:03 am, 1327328

September 1, 2014, 5:03 am, 1327327

Good news on health care costs:

The Medicare Miracle, By Paul Krugman, Commentary, NY Times: So, what do you think about those Medicare numbers? What, you haven’t heard about them? Well, they haven’t been front-page news. But something remarkable has been happening on the health-spending front, and it should ...


September 1, 2014, 4:04 am, 1327325
(Don Boudreaux)

… is from page 10 of Roger Koppl’s hot-off-the-press monograph, From Crisis to Confidence: Macroeconomics after the Crash (original emphasis):

[T]he central banks inappropriately and needlessly expanded the volume of credit in the years before the boom, thus ensuring a subsequent bust [in 2008].  It was not bankers gone ...


September 1, 2014, 3:03 am, 1327304
A sales promotion advertisement at a housing sales office in Hangzhou, Zhejiang province.  Newscom

After a modest uptick in the middle of the year, the Chinese economy ...


September 1, 2014, 3:03 am, 1327303
An employee works at a production line inside a Geely factory in Ningbo, Zhejiang province. Reuters

China’s productivity is slipping away, the miracle days are largely over ...


September 1, 2014, 2:05 am, 1327302

1. Bolivia became a semi-stable democracy in the early 1980s and it has stayed that way.

2. For all the rhetoric to the contrary, the current regime is a mix of 1990s-era market-oriented reforms and Evo Morales.  Probably you like one of these, though perhaps not both.

3. Many more Bolivian children ...


September 1, 2014, 1:03 am, 1327292
A sales promotion advertisement at a housing sales office in Hangzhou, Zhejiang province.  Newscom

After a modest uptick in the middle of the year, the Chinese economy ...


September 1, 2014, 12:44 am, 1327291
The White House and union leaders are using Labor Day reinvigorate efforts to raise the minimum wage.


September 1, 2014, 12:34 am, 1327290

It’s difficult to envisage a downward-sloping yield curve in an unhampered market economy since this would imply that investors are assigning a higher risk to short-term maturities than long-term maturities. But in today’s economy, an upward- or a downward-sloping yield curve reflects the ...


August 31, 2014, 11:03 pm, 1327281
I've seen some recent discussion suggesting that mortgage refinance activity might pickup significantly if mortgage rates fall just a little more. I think this is incorrect.

First, from Freddie Mac last week: Mortgage Rates Remain Low Heading Into Holiday Weekend

Freddie Mac ... released the results of ...


August 31, 2014, 10:04 pm, 1327277

Lifted from open thread Aug. 31, 2014 by Sandwichman.

My latest on the lump of labor fallacy takes the story back to the 17th century and John Graunt’s Observations on the Bills of Mortality. Graunt speculated about a certain PROPORTION of work to be done. The fallacy claim alleges the assumption ...


August 31, 2014, 9:33 pm, 1327276


August 31, 2014, 9:33 pm, 1327275
I spent a lot of time in Singapore in the Summer of 2012 and 2013. I was amazed at the amount of land that Singapore (a small city/state) devotes to its port. Such land could be used for other purposes that might yield more long term economic growth? Few wanted ...


August 31, 2014, 8:44 pm, 1327272
The White House and union leaders are using Labor Day reinvigorate efforts to raise the minimum wage.


August 31, 2014, 8:44 pm, 1327271

Last December the FDIC put out for comment a proposal for a Single-Point-of-Entry (SPOE) Strategy to implement its Orderly Liquidation Authority (OLA) under Title II of Dodd-Frank. Single-Point-of-Entry has gotten a lot of policy traction. The Treasury Secretary supports it and there’s huge buy-in from Wall ...


August 31, 2014, 8:05 pm, 1327266

Most Keynesian economists do not want to admit that we are in another depression.  They find the word painful.

They find it painful because it contradicts the idea that Keynesian economic ideas have ended depressions forever. It also contradicts the idea that the massive and continuing Keynesian stimulus applied by world ...


August 31, 2014, 7:33 pm, 1327265
Putin threw fat into the Ukrainian fire today by calling for Talks on Eastern Ukraine Statehood.

The question at hand is" What precisely does Putin mean by "statehood" ?

Russian President Vladimir Putin called on Sunday for immediate talks on the "statehood" of southern and eastern Ukraine, ...


August 31, 2014, 6:44 pm, 1327264
A


August 31, 2014, 6:34 pm, 1327263

Labor Day in the United States, and EP has taken the day off.  Herewith a re-issue of EP’s edition of July 18, 2004.

Frank Levy, of the Massachusetts Institute of Technology,  and Richard Murnane, of Harvard University,  had just published The New Division of Labor: How Computers Are Creating the Next Job Market ...


August 31, 2014, 5:03 pm, 1327262

As the U.S. economy returns to healthier growth, many of us expected long-term interest rates to return to more normal historical levels. But the general trend has been down since the end of the Great Recession. The 10-year rate did jump back up in the spring of ...


August 31, 2014, 4:44 pm, 1327261
A


August 31, 2014, 4:05 pm, 1327258

It is potent:

If people married each other more randomly, poverty levels would be considerably lower than they are now.  If we abandoned all current family arrangements and randomly grouped all Bolivians into new families of 5 persons, poverty levels would fall by about 15 percentage points (from the current level ...


August 31, 2014, 3:23 pm, 1327257
Here are a couple of current UK problems. Firstly, although the economy is recovering strongly, tax receipts aren’t. Secondly, flaws in the way the welfare system operates may be creating disincentives in the labour market. Could a radical proposal: streamlining the whole welfare system by paying everyone ...


August 31, 2014, 3:03 pm, 1327239
Getty Images

Proposed requirements for an obscure, but widely used, corner of the mortgage market would protect Fannie Mae and Freddie Mac


August 31, 2014, 3:03 pm, 1327237
A customer browses for shoes in New York. Bloomberg News

The latest reading on consumer confidence, released Tuesday by the Conference Board, shows households are as ...


August 31, 2014, 3:03 pm, 1327240

The Federal Reserve has helped put the federal budget on a more sustainable path by holding interest rates very low and making big payments to the U.S. Treasury, according to a new report from the Congressional Budget Office.

The CBO said Wednesday the federal budget deficit over the next decade ...


August 31, 2014, 3:03 pm, 1327238

Diversity is turning out to be a key ingredient of a healthy and durable regional economy.

Unemployment has fallen sharply across the U.S. over the past year, sitting at 6.5% in ...


August 31, 2014, 3:03 pm, 1327244
Bummed out by the low quality of official economic data. Agence France-Presse/Getty Images

India is scheduled to release its latest quarterly data on economic growth on ...


August 31, 2014, 3:03 pm, 1327236
Toyota Motor Corp. vehicles. Bloomberg News

If you are wondering why Japan’s exports are languishing despite the yen’s weakness, take a quick look at monthly production data ...


August 31, 2014, 3:03 pm, 1327243
Stacks of containers at the Port of Bangkok in Thailand. Bloomberg News

Thailand’s central bank governor Wednesday said he is reassessing what to do ...


August 31, 2014, 3:03 pm, 1327242

The Wall Street Journal’s Daily Report on Global Central Banks for Wednesday, August 27, 2014
Sign up for the newsletter: http://on.wsj.com/grandcentralsignup.

“September
and October of 2008 was the worst financial crisis in global history, including the Great Depression.” –Ben Bernanke


August 31, 2014, 3:03 pm, 1327241

By now, anyone following the debate over income inequality in the U.S. has likely seen the rise of income inequality charted over the years or over decades. But how about income inequality hour by hour?


August 31, 2014, 3:03 pm, 1327232
Protestors and police officers are seen in smoke during a demonstration outside the Russian Consulate in the southeastern Ukrainian city of Kharkiv on August 28, 2014.


August 31, 2014, 3:03 pm, 1327228

Small cities are among the biggest beneficiaries of a wave of foreign students studying at U.S. universities, according to a Brookings Institution study.

Ithaca, N.Y.; Corvallis, Ore.; and Jonesboro, Ark., have among the ...


August 31, 2014, 3:03 pm, 1327227
Next week it is the jobs data’s world, we just live in it. At the Jackson Hole conference, Federal Reserve chairman Janet Yellen highlighted central bank research on labor-market conditions that depends on up to 24 different labor-related series. Many of them will be updated in various releases due next ...


August 31, 2014, 3:03 pm, 1327226

BRUSSELS—European Union leaders aim to meet in Italy in October and hold other discussions on the economy in the coming months amid concerns about the faltering recovery.

“In recent weeks, economic data have confirmed that the recovery, particularly in the euro area, is weak, inflation exceptionally low and unemployment unacceptably high,” ...


August 31, 2014, 3:03 pm, 1327235

August 31, 2014, 3:03 pm, 1327229

Consumer prices rose modestly in July, a sign inflation remains in check as the Federal Reserve winds down its bond-buying program.

The price index for personal consumption expenditures–the Fed’s preferred inflation measure–increased 1.6% in July from a year earlier, the Commerce Department said Friday. Excluding volatile food and energy prices, so-called ...


August 31, 2014, 3:03 pm, 1327230

August 31, 2014, 3:03 pm, 1327233

Former Secretary of State Hillary Clinton, or any other potential Democratic candidate in the next presidential race, may need to have a plan to close the revolving door of Democratic economic advisers if she hopes to gain stronger support from America’s labor movement.


August 31, 2014, 3:03 pm, 1327234

The Federal Reserve Bank of Kansas City launched Thursday a new gauge to track labor market conditions, which signaled in its first outing a hopeful outlook for hiring in the U.S. economy.

The bank said that its Kansas City Fed Labor Market Conditions Indicators activity measure moved to -0.6 in July, ...


August 31, 2014, 3:03 pm, 1327231

 

An employee operates a crane to move a roll of sheet aluminum on the production line at the Akao Aluminum Co. plant in Tokyo. Bloomberg News


August 31, 2014, 2:45 pm, 1327225
The White House and union leaders are using Labor Day reinvigorate efforts to raise the minimum wage.


August 31, 2014, 2:05 pm, 1327224

August 31, 2014, 2:04 pm, 1327223
(August 31, 2014 12:20 PM, by David Henderson) Robert Litan gives a nice 15-minute speech in which he highlights some of the main contributions that microeconomists have made that have generated, over 30+ years, hundreds of billions (and possibly trillions) of dollars in consumer and producer surplus. (These... (1 COMMENTS)


August 31, 2014, 1:33 pm, 1327220
The currency and fiscal battleground front lines in Europe remains the same. France wants QE, fiscal stimulus, and more leeway on meeting fiscal deficit targets. Germany doesn't. And the fighting has strengthened.

The idea that ECB can produce nirvana by devaluing the euro is ridiculous. Yet, that's the ...


August 31, 2014, 1:33 pm, 1327219

At his Calafia Beach Pundit blog, Scott Grannis recently posted a pretty devastating critique of Keynesian economic theory and the abject failure of Keynesian fiscal stimulus in the period following the Great Recession (“the most expensive such failure in the history of the world”), here’s an excerpt below and I ...


August 31, 2014, 1:03 pm, 1327206

BRUSSELS—European Union leaders aim to meet in Italy in October and hold other discussions on the economy in the coming months amid concerns about the faltering recovery.

“In recent weeks, economic data have confirmed that the recovery, particularly in the euro area, is weak, inflation exceptionally low and unemployment unacceptably high,” ...


August 31, 2014, 1:03 pm, 1327204

Joe Stiglitz in a review of Martin Wolf's new book "The Shifts and the Shocks":

... If I have a point of difference with Wolf’s analysis, it is that he ... is insufficiently critical of the “savings glut” hypothesis advanced by former Federal Reserve chairman Ben Bernanke, among others, ...


August 31, 2014, 1:03 pm, 1327205

Olivier Blanchard (a much shortened version of his arguments, the entire piece is worth reading):

Where Danger Lurks: Until the 2008 global financial crisis, mainstream U.S. macroeconomics had taken an increasingly benign view of economic fluctuations in output and employment. The crisis has made it clear that this view ...


August 31, 2014, 1:03 pm, 1327203
From the National Restaurant Association: Restaurant Performance Index Dipped in July

Due in part to a dampened outlook among restaurant operators, the National Restaurant Association’s Restaurant Performance Index (RPI) registered a modest decline in July. The RPI – a monthly composite index that tracks the health of and ...


August 31, 2014, 12:04 pm, 1327202
(August 31, 2014 10:23 AM, by Bryan Caplan) The Weather Channel's daily and hourly forecasts often seem logically incompatible. Consider Oakton, VA's forecast for today. The current daily prediction says "60% chance of rain." But several evening hours individually have the same probability of 60%. Unless I'm missing... (2 COMMENTS)


August 31, 2014, 12:04 pm, 1327200

Peter Dorman at Econospeak describes a common example of thought experiments on markets and externalities, and concludes with “More complex considerations that take into account dynamics, interaction effects and the like never intrude.  What you end up with is an ideological truncation of economics, and, as the Great ...


August 31, 2014, 12:04 pm, 1327201

In my own state of Michigan, there was a battle in the Republican controlled state legislature to expand Medicaid for the 600,000 uninsured citizens. It did pass with some legislators such as Michigan State Senator Joseph Hune complaining loudly about how its passage made him “sick to his stomach.” Even ...


August 31, 2014, 11:33 am, 1327198

August 31, 2014, 11:23 am, 1327196
According to The Economist there is a long history of efforts to distinguish products that have been made more ethically than others. In the late 18th century, anti-slavery campaigners urged British consumers to boycott sugar from the West Indies in favour of supplies from India. Today’s fair-trade movement took off ...


August 31, 2014, 11:23 am, 1327197
Here is a new twelve question quiz drawing on economic indicators from the Economists's Pocket World in Figures (2015 edition) which has just been published. Good luck!


August 31, 2014, 10:44 am, 1327173
A


August 31, 2014, 7:33 am, 1327144

Sample:

Contrary to what you might think, the Museum of Contemporary Art in Rio de Janeiro is not, in fact, a spaceship.


August 31, 2014, 6:44 am, 1327099

In the wake of the crisis, forward guidance has become a prominent tool of monetary policy. This column argues that central banks should go a step further, communicating to the public the internal policy debate that goes into monetary policy formation – especially regarding uncertainty. Since policy is determined contingent ...


August 31, 2014, 6:44 am, 1327098
A


August 31, 2014, 6:05 am, 1327097

Hannes Schwandt of Princeton has a new paper (pdf) on this topic:

Do wealth shocks affect the health of the elderly in developed countries? The economic literature is sceptical about such effects which have so far only been found for poor retirees in poor countries. In this paper I ...


August 31, 2014, 5:33 am, 1327095

Good list. I'd add two more: soccer is much better to exercise to and Leo.


August 31, 2014, 5:03 am, 1327088

August 31, 2014, 4:05 am, 1327087

Here is a new paper by Cosmin L. Ilut and Martin Schneider on how ambiguity aversion can give rise to a kind of real business cycle, augmented by nominal rigidities:

This paper studies a New Keynesian business cycle model with agents who are averse to ambiguity (Knightian uncertainty). Shocks to confidence ...


August 31, 2014, 3:23 am, 1327085

Photo Credit: Martin Kenny

One of the challenges of fundamental investing is trying to find decent ideas that are off the radar. There are a number of ways to try to do that by looking at:

smaller foreign ...


August 31, 2014, 2:04 am, 1327080
(Don Boudreaux)

… is from page xxvii of Michael Huemer’s 2013 book, The Problem of Political Authority:

This book addresses the foundational problem of political philosophy: the problem of accounting for the authority of government.  This authority has always struck me as puzzling and problematic.  Why should 535 people in Washington ...


August 31, 2014, 1:33 am, 1327079
As the tide in the Ukraine civil war turns, the EU threatens Russia with more mindless sanctions.

Bloomberg reports EU Vows More Russia Sanctions If War in Ukraine Worsens.

European Union leaders agreed to impose tougher sanctions on Russia, possibly targeting energy and finance, if the ...