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.


The Economics Roundtable is sponsored by EconModel.

The Classic Economic Models cover micro, macro, and financial markets.

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October 13, 2015, 9:03 am, 1557277
A Ryland Group home under construction near Dallas. KRIS HUDSON/THE WALL STREET JOURNAL

Home builders are facing delays and rising costs as they struggle to find ...

October 13, 2015, 8:44 am, 1557276

October 13, 2015, 8:34 am, 1557275
Mr. Market’s cautious outlook of late is less acute at the moment relative to recent history, but it’s not obvious that all’s well. True, the US Stock Market Crash Risk Index is less threatening and a markets-based estimate of US business cycle risk has pulled back after briefly spiking higher ...

October 13, 2015, 8:34 am, 1557274

John McDonnell's decision to oppose Osborne's fiscal charter reminds me of what Winston Churchill said of the Americans: they will always do the right thing after they've exhausted all the alternatives.

The charter commits the government to ...

October 13, 2015, 8:34 am, 1557273

Some sixty-two years after it began and set off a revolution that is still reverberating, Playboy is getting rid of the thing that made it most famous:

Last month, Cory Jones, a top editor at Playboy, went to ...

October 13, 2015, 8:04 am, 1557270

In The Atlantic I present the case for open borders. Here is one bit:

No standard moral framework, be it utilitarian, libertarian, egalitarian, Rawlsian, Christian, or any other well-developed perspective, regards people from foreign lands as less entitled to exercise their rights—or as inherently possessing less moral worth—than people ...

October 13, 2015, 8:04 am, 1557269
(Don Boudreaux)

… is from pages 243-244 of newly minted economics laureate Angus Deaton’s 2013 book, The Great Escape (original emphasis; ...

October 13, 2015, 7:33 am, 1557262

Greatly improved results happen, that's what.

Link via Economics Job Market Rumors.

October 13, 2015, 7:33 am, 1557265

Dan Shaughnessy puts aGodfather reference near the beginning--"The Patriots are settling all family business in this Deflategate vendetta"-- and ends with an even better one. (Which NFL team is Fredo?)

October 13, 2015, 7:33 am, 1557264

October 13, 2015, 7:33 am, 1557263

Jonah Goldberg:

That’s because violence is a tool. It’s not a good tool—in the moral sense—nor is it a bad tool. Surgery to save a life is laudable. Surgery to inflict pain is torture. A hammer can smash in someone’s skull, or it can build a house. ...

October 13, 2015, 6:34 am, 1557201
● China’s imports and exports slump in September| Bloomberg ● Germany’s ZEW survey: investor confidence falls to 1yr low in Oct | Bloomberg ● India’s industrial output in Aug rose at fastest pace in nearly 3yrs | WSJ ● German inflation slips back to zero in September | RTE ● ...

October 13, 2015, 6:04 am, 1557200

Many are bemoaning the “chaos” and “toxic crackup” in the GOP after House Majority Leader Kevin McCarthy withdrew his candidacy for speaker. Here is what would have been worse: keeping the same leadership team in place. Electing McCarthy — John Boehner’s second-in-command — speaker would have been politically tone-deaf.

Have Republicans ...

October 13, 2015, 5:33 am, 1557197

I hadn't followed the debate over the TPP, so Kevin Williamson's piece seems useful.

October 13, 2015, 5:03 am, 1557162

We're seeing more signs of a reversal in China's recent economic fortunes. First, taking advantage of what may be the most unique alternative economic indicator we've developed to date, we observe that the trailing twelve month average of the year-over-year change in Earth's atmospheric carbon ...

October 13, 2015, 4:44 am, 1557161

October 13, 2015, 3:03 am, 1557137

October 13, 2015, 3:03 am, 1557136

Tim Duy:

Brainard Drops A Policy Bomb, by Tim Duy: What if a Federal Reserve Governor drops a policy bomb in the woods and no one is there to hear it? Did it really make a noise?

That's what happened today. While the bond market was closed and whatever financial ...

October 13, 2015, 2:04 am, 1557135

Ben Casselman has a good piece on this question, here is one excerpt:

During the strong labor market of the mid-1990s, only 1 in 5 minimum-wage workers was still earning minimum wage a year later. Today, that ...

October 13, 2015, 2:04 am, 1557134
(October 13, 2015 12:01 AM, by Bryan Caplan) Pieces I failed to link to while visiting the University of Illinois:1. Me on open borders in TIME.2. Alex Tabarrok on open borders in The Atlantic.3. Scott Alexander on me on mental illness.... (0 COMMENTS)

October 13, 2015, 1:33 am, 1557133
Banks have become convinced the Fed simply isn't going to hike. So instead of waiting any longer, large banks like Wells Fargo are plowing billions of dollars into longer dated treasuries and agencies.

Simply put, Big US Banks Lose Patience With the Fed

In the years since ...

October 13, 2015, 1:03 am, 1557113

People with concealed weapon licenses would be allowed to carry guns inside the buildings and classrooms of Wisconsin’s public universities and colleges under a bill introduced Monday by two state legislators.

According to the Wisconsin State Journal article, the bills sponsors argue that if only students were armed to ...

October 12, 2015, 10:44 pm, 1557097

The importance of the general public’s inflation expectations is increasingly being emphasised, but surveys of firms’ expectations are notably absent. This column explores the extent to which inflation expectations of firms in New Zealand are anchored. The findings indicate that managers show little anchoring of inflation expectations, despite 25 years ...

October 12, 2015, 10:34 pm, 1557096

Our ...

October 12, 2015, 10:34 pm, 1557094

Angus Deaton, 69, a Princeton University econometrician, has been awarded the 2015 Nobel Prize in economic sciences for forty years of work on consumer behavior, concentrating in later years on well-being among the poor in the developing world.

His 1980 treatise, Economics and Consumer Behavior (Oxford), with John ...

October 12, 2015, 10:34 pm, 1557095

People ...

October 12, 2015, 9:33 pm, 1557093

What do the companies in these three groups have in common?

Group A: American Motors, Brown Shoe, Studebaker, Collins Radio, Detroit Steel, Zenith Electronics, and National Sugar Refining.

Group B: Boeing, Campbell Soup, General Motors, Kellogg, Procter and Gamble, Deere, IBM and Whirlpool.

Group C: Facebook, ...

October 12, 2015, 9:23 pm, 1557092
I am seeing more and more people get excited about "People's QE", the brainchild of UK labor party leader Jeremy Corbyn. For example, Roger Farmersees it as similar in spirit to his own preferred approach, Ambrose Evans-Pritchard says "it is exactly what the world may soon ...

October 12, 2015, 9:03 pm, 1557074
A couple of excellent articles ...

From Binyamin Appelbaum at the NY Times: Nobel in Economics Given to Angus Deaton for Studies of Consumption

The economist Angus Deaton has devoted his career to improving the data that shape public policy, including measures of wealth and poverty, savings and ...

October 12, 2015, 8:04 pm, 1557072

October 12, 2015, 8:04 pm, 1557071
(October 12, 2015 08:02 PM, by David Henderson) Bad government is itself a product of phishing and phoolishness, for "we are prone to vote for the person who makes us the most comfortable," even when that person's decisions are effectively bought by special interests. This is a quote... (3 COMMENTS)

October 12, 2015, 8:04 pm, 1557070

What do the companies in these three groups have in common?

Group A: American Motors, Brown Shoe, Studebaker, Collins Radio, Detroit Steel, Zenith Electronics, and National Sugar Refining.

Group B: Boeing, Campbell Soup, General Motors, Kellogg, Procter and Gamble, Deere, IBM and Whirlpool.

Group C: Facebook, ...

October 12, 2015, 5:03 pm, 1556944

This Economic Letter from Vasco Cúrdia of the SF Fed finds that even though interest rates are very low, so is the natural rate of interest, and that implies that monetary policy is "relatively tight." "The model projections for the natural rate are consistent with the federal funds rate only ...

October 12, 2015, 5:03 pm, 1556943
Note: Fiscal 2015 ended on September 30, 2015.

From CBO: Monthly Budget Review for September 2015

The federal government ran a budget deficit of $435 billion fiscal year 2015, the Congressional Budget Office estimates—$48 billion less than the shortfall recorded in fiscal year 2014, and the smallest deficit ...

October 12, 2015, 4:44 pm, 1556942

October 12, 2015, 4:44 pm, 1556941

October 12, 2015, 4:04 pm, 1556939

October 12, 2015, 3:03 pm, 1556883
William Shatner and Leonard Nimoy in ‘Star Trek II: The Wrath of Khan.’ Everett Collection

Talk about the final frontier: In the future world of “Star Trek,” ...

October 12, 2015, 3:03 pm, 1556882
Should economics papers be like ice crystals? DANIEL ROLAND/AFP/GETTY IMAGES

Some things don’t lend themselves to replication: the pattern of a snowflake, fingerprints, Wilt Chamberlain’s 100-point performance ...

October 12, 2015, 3:03 pm, 1556881

Busy this morning. Here's the press release on the award of the Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel for 2015 to Angus Deaton:

Consumption, great and small: To design economic policy that promotes welfare and reduces poverty, we must first understand individual consumption choices. ...

October 12, 2015, 3:03 pm, 1556880
Here is an article today from economist Josh Lehner: Is 2015 Peak Renter?

There have been at least three primary drivers of the massive shift toward renting in the past decade: finances, demographics, and taste and preferences. Much of the discussion surrounding this overall shift has focuses on the ...

October 12, 2015, 2:44 pm, 1556879

October 12, 2015, 2:44 pm, 1556878

October 12, 2015, 2:04 pm, 1556870
(October 12, 2015 12:22 PM, by Scott Sumner) One of the earliest ideas to come out of market monetarism was the proposal for negative interest rates on reserves (negative IOR). I mentioned this idea in a couple papers published in early 2009, and the New York Fed discussed... (0 COMMENTS)

October 12, 2015, 1:33 pm, 1556867
To some, TPP stands for Trans Pacific Partnership (an alleged free trade agreement). To me it's synonymous with toilet paper, with a dangling P at the end that stands for politics.

I will get around to "dead rats" in a bit. First let's discuss how Hillary Clinton fits into ...

October 12, 2015, 1:33 pm, 1556866

October 12, 2015, 1:33 pm, 1556865

The Department of Agricultural, Environmental, and Development Economics (my department) in the College of Food, Agricultural and Environmental Sciences (my college) at The Ohio State University (my university) is hiring for four new faculty positions--and I am not ashamed of taking advantage of this blog to promote the positions. If ...

October 12, 2015, 1:03 pm, 1556815
A picture of British economist Angus Deaton, winner of the 2015 economics Nobel Prize, is seen on a screen as members of the Royal Swedish Academy of Sciences address ...

October 12, 2015, 1:03 pm, 1556814

The selection of Angus Deaton as the winner of the Nobel Memorial Prize in Economic Sciences won high marks from his colleagues in the economics world on Monday.

The Royal Swedish Academy of Sciences recognized Mr. Deaton of Princeton University for his research on consumption, incomes and poverty.

October 12, 2015, 1:03 pm, 1556813
Here is another graph on framing lumber prices. Early in 2013 lumber prices came close to the housing bubble highs.

The price increases in early 2013 were due to a surge in demand (more housing starts) and supply constraints (framing lumber suppliers were working to bring more capacity ...

October 12, 2015, 12:44 pm, 1556812

October 12, 2015, 12:44 pm, 1556811

October 12, 2015, 12:44 pm, 1556810

October 12, 2015, 11:03 am, 1556746
San Francisco’s among the U.S. cities with the highest income inequality, just one factor in America’s complex wealth gaps. JUSTIN SULLIVAN/GETTY IMAGES

When economists talk about ...

October 12, 2015, 11:03 am, 1556745

Today we are fortunate to have a guest contribution written by Jeffrey Frankel, Harpel Professor of Capital Formation and Growth at Harvard University, and former Member of the Council of Economic Advisers, 1997-99. A shorter version appeared at Project Syndicate.

The text of the TPP (Trans ...

October 12, 2015, 11:03 am, 1556744
Columbus Day 2008 was a crazy time ... A few headlines on my blog from Monday, October 13, 2008:

Paulson to Meet with Bank CEOs Today

The 3 p.m. meeting is being called while most of the banking chiefs are in Washington for meetings of the World ...

October 12, 2015, 10:44 am, 1556743

October 12, 2015, 10:44 am, 1556742

October 12, 2015, 10:04 am, 1556740
An extract from my book, Something Will Turn Up The 1979 budget was big and bold. Rarely has a government set out its stall, and its philosophy, so clearly. The argument was that if these big changes had been...

October 12, 2015, 10:04 am, 1556739
(Don Boudreaux)

Here’s a letter to the New York Times:

In your report on generous cultural philanthropists you describe Leonard Lauder as “Old Money” (“

October 12, 2015, 9:33 am, 1556735

October 12, 2015, 9:33 am, 1556732

I had this book once:

The idea of duality has proved to be a powerful device in modern work on the economics of consumer behaviour. The authors have used duality to provide an integrated and accessible treatment of this subject. The book focuses on applications of ...

October 12, 2015, 9:33 am, 1556734

Retraction Watch:

The authors of apaper that examined the best way to inspire creativity in the workplace have issued an erratum after they “failed to cite some very relevant recent papers in experimental economics.”

The paper, “Incentives for creativity,” was published by Experimental Economicsonly a few months ago ...

October 12, 2015, 9:33 am, 1556733

I'm resisting the urge to try to conjure a useful comment on this one in order to (1) veil my ignorance and (2) further convince myself that I think I know everything:

Only a few months ago, it seemed that the renewable energy sector could do ...

October 12, 2015, 9:33 am, 1556731

The home page for the Google Self-Driving Car Project contains the following:

Imagine if everyone could get around easily and safely, regardless of their ability to drive. […] Aging or visually impaired loved ones wouldn't have to give up their independence. Time spent commuting could be time spent doing ...

October 12, 2015, 9:23 am, 1556730

Secular stagnation is a term coined to describe a prolonged period of lower economic growth. Economists, such as Larry Summers have written on secular stagnation arguing the world has entered a period of substantially lower economic growth. He points to factors, such as ineffective monetary policy and weak demand for ...

October 12, 2015, 8:44 am, 1556696

Most households lack the skills to make financial decisions and therefore rely on the advice of experts. But do experts provide unbiased recommendations or do they distort their advice to serve their own needs? This column provides that they do distort their advice, using the mortgage market in Italy. If ...

October 12, 2015, 8:44 am, 1556695

October 12, 2015, 8:44 am, 1556694

October 12, 2015, 8:04 am, 1556692

A brilliant selection.  Deaton works closely with numbers, and his preferred topics are consumption, poverty, and welfare.  “Understanding what economic progress really means” I would describe as his core contribution, and analyzing development from the starting point of consumption rather than income is part of his vision.  That includes looking ...

October 12, 2015, 8:04 am, 1556691

Angus Deaton of Princeton University wins the Nobel prize. Working with the World Bank, Deaton has played a huge role in expanding data in developing countries. When you read that world poverty has fallen below 10% for the first time ever and you want to know how we know— the answer ...

October 12, 2015, 8:04 am, 1556690
(Don Boudreaux)

… is from pages 293 of David Neumark’s and William L. Wascher’s 2008 book, Minimum Wages; note that this conclusion is ...

October 12, 2015, 7:33 am, 1556686

Funny and so very true.

When did looking for a college turn into a modern version of the 18th-century Grand Tour?

October 12, 2015, 7:33 am, 1556685

One on a good reform: "Why Liberals Should to Learn to Love Charter Schools".

One on a not-so-good reform: "Questioning the Common Core". (By Frederick Hess, calm and balanced.)

October 12, 2015, 7:33 am, 1556682

Send these to your favorite "reasonable gun control" advocates:

"Would-be killers target gun-free zones".

Still, Kelly said, “There’s no indication from other — from another study that any shooter intentionally went to a gun-free zone.”

Kelly might be surprised to learn that killers have frequently talked about ...

October 12, 2015, 7:33 am, 1556684

This is a beautiful column, saying something that needs to be said. Good on you, Ms. Yabroff.

Glimpsing these moments, I wonder what other, secret joys these parents are hiding, what furtive raptures they harbor. I wonder if they, too, sometimes wish there were more words to ...

October 12, 2015, 7:33 am, 1556683

Rule of thumb: before complaining about seemingly outlandish behavior in markets, check to see if Big Government is involved.

See also the Volkswagen scandal: "Volkwagen's unethical emissions scam is partly the government's fault" and"Climate Politics and the Volkswagen Scandal".

October 12, 2015, 6:44 am, 1556629

Pete Boettke of George Mason University talks with EconTalk host Russ Roberts about the political and economic lessons he has learned as program director of research in the aftermath of Hurricane Katrina. In this wide-ranging conversation, Boettke discusses the role of civil society, the barriers ...

October 12, 2015, 6:35 am, 1556628
● US import prices fell less than expected in September | RTT ● US wholesale invetories up slightly in August | Reuters ● Money outflows from emerging markets threaten global economy | NY Times ● US NABE Outlook Survey: 2.5% to 2.8% Growth through 2016 | MNI ● Gold at ...

October 12, 2015, 6:35 am, 1556627
Stocks in emerging markets posted their best weekly gain in nearly four years last week. Analysts are divided over whether this is a dead-cat bounce or the start of an enduring mean-reversion trade in the wake of nearly non-stop declines since last-April. From the perspective of the week just passed, ...

October 12, 2015, 5:33 am, 1556624

Trust your doctor, but check the statistics.

October 12, 2015, 5:03 am, 1556589

According the S&P's Monthly Dividend Report (Excel spreadsheet), the U.S. economy is once again experiencing contractionary economic forces.

October 12, 2015, 5:03 am, 1556588

Why is Paul Ryan under so much pressure to become speaker, and why would he be wise to resist?:

The Crazies and the Con Man, by Paul Krugman, Commentary, NY Times: How will the chaos that the crazies, I mean the Freedom Caucus, have wrought in the House get ...

October 12, 2015, 4:44 am, 1556587

October 12, 2015, 2:04 am, 1556562

His very good point does not receive enough attention:

“I thought that the zero interest rate, the decrease in the price of oil, the depreciation of the euro, the pause in fiscal consolidation, would help more than they have”, he said.

Perhaps we should consider the possibility that many of the European ...

October 12, 2015, 1:33 am, 1556561
IMF head Christine Lagarde says "IMF credibility is at stake". She blames the US for that development, and calls on US to give more voting power to China to solve the problem.

Link if video does not play: "IMF Credibility ...

October 12, 2015, 1:03 am, 1556540

October 12, 2015, 1:03 am, 1556539

Tim Duy:

Fed Struggles With The High Water Mark, by Tim Duy: Gavyn Davies reviews the evidence on the apparent slowing of US economic activity and concludes:

So is the US slowdown for real? Yes, but it is not yet very severe — and some of it is ...

October 12, 2015, 12:44 am, 1556538

Discussions on the connection between the level of interest rates, incentives to search for yield, and financial stability have been prominent over the last ten years or so. More recently, Larry Summers argued in his 2014 secular stagnation address that the decline in the real interest rates would be expected ...

October 12, 2015, 12:44 am, 1556537

October 12, 2015, 12:04 am, 1556536

In 1942, economist Joseph Schumpeter described “creative destruction” as a “process of industrial mutation that incessantly revolutionizes the economic structure from within, incessantly destroying the old one, incessantly creating a new one.” There probably hasn’t been a better recent example of Schumpeterian creative ...