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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May 1, 2016, 4:04 pm, 1631875

I will be doing a Conversation with Tyler with him, June 15, late afternoon, Washington D.C., location to be announced.

So what should I ask?  I already know which is his favorite novel…and plan to ask about that…and of course we will cover his ...

May 1, 2016, 2:04 pm, 1631853

Two papers suggest numeracy improves financial outcomes and can be taught.

Numeracy and Wealth: We examined the relationship between numeracy and wealth using a cross-sectional and a longitudinal study. For a sample of approximately 1000 Dutch adults, we found a statistically significant correlation between numeracy and wealth, even after ...

May 1, 2016, 2:04 pm, 1631852

May 1, 2016, 1:34 pm, 1631850

May 1, 2016, 1:33 pm, 1631849

May 1, 2016, 1:33 pm, 1631848
Here is quote from a book review(of a new book by Thomas Frank) published in today's NY Times. In Econ 101 classes, young people learn that economists are skeptical that policies such as high minimum wages and rent control will achieve their intended goals. Students hear a full ...

May 1, 2016, 1:03 pm, 1631836

Dietrich Vollrath:

Technology versus the Distribution of Workers in Aggregate Productivity: There was a recent post by an engineer rebutting Robert Gordon’s (and others) thesis that technological change was slowing down. The evidence cited is a series of plots and figures showing how specific technologies (battery storage, energy ...

May 1, 2016, 12:04 pm, 1631822

Now that we’re at the beginning of college graduation season, I thought it would be a good time to show the updated chart above of the huge ...

May 1, 2016, 11:33 am, 1631821
The NY Times has published another piece celebrating the extension of the Los Angeles Expo Line (which will take place on May 20th). I am really excited about this because the extension of the train will now pass through Westwood and this will mean that I no longer ...

May 1, 2016, 11:33 am, 1631820

Now that we’re at the beginning of college graduation season, I thought it would be a good time to show the updated chart above of the huge ...

May 1, 2016, 11:03 am, 1631794
Note: Last month I noted that energy expenditures as a percentage of PCE had hit an all time low. Here is an update through the March 2016 PCE report.

Below is a graph of expenditures on energy goods and services as a percent of total personal consumption expenditures ...

May 1, 2016, 10:04 am, 1631793
(May 1, 2016 11:03 AM, by David Henderson) In my post on the late Lester Thurow on April 15, I promised to post more from his book The Zero-Sum Society. Here are some further excerpts. Thurow as Ludwig von Mises Proposition VII: Regulation Leads to Regulation Since individual... (0 ...

May 1, 2016, 8:34 am, 1631772

Just 12 months ago, Labour had a Jewish leader. Today, we’re told, it has a problem with antisemitism. How can this be?

It might be useful to distinguish between two forms of racism: verbal, and structural. Although the two often go together, they need not. For example, ...

May 1, 2016, 8:04 am, 1631771
(Don Boudreaux)

… is from page 19 of the 1991 Liberty Fund edition of Bruno Leoni’s indispensable 1961 volume, Freedom and ...

May 1, 2016, 7:34 am, 1631770

I don't believe it, but, hey, you're not supposed to argue with science!

May 1, 2016, 5:34 am, 1631759

Maybe. We'll see.

May 1, 2016, 4:04 am, 1631729

True or false? A new nuclear power station in the south-west of the UK will be the most expensive object on Earth. That’s the claim about the proposed plant at Hinkley Point in Somerset – but has anything else ever cost so much to build?

“Hinkley is set to ...

May 1, 2016, 4:04 am, 1631728
My regular column is available to subscribers on This is an excerpt. There are two things that even the most casual observer of the EU referendum debate will have heard. One is that we “send” £350m a week...

May 1, 2016, 3:23 am, 1631726

May 1, 2016, 2:04 am, 1631707

The United States Air Force never really wanted GPS.  The 621B program, the precursor to GPS, was underfunded.  After it evolved into the GPS program in the early 1970s, the Air Force largely neglected it, to the point of disowning it and defunding it.  A few times, it tried ...

May 1, 2016, 2:04 am, 1631706
(Don Boudreaux)

… is from an e-mail sent to me (and some other people) by Texas A&M emeritus professor of economics ...

May 1, 2016, 12:04 am, 1631690
Thing of beauty. Not everything worked but I haven’t seen anything so devastating since Colbert in 2006 Stephen Colbert Roasts Bush at 2006 White House Correspondents Dinner Open thread for all things 2016 related.

April 30, 2016, 10:04 pm, 1631678
Yves Smith at Naked Capitalism has just pointed to The unfairness of housing purchases through time.     New Deal democrat and Barkley Rosser (at Econospeak) have pointed to problems with rental prices.  NDd continues with this post, also pointing to Bill McBride at Calculated Risk… by New Deal democrat Rents are ...

April 30, 2016, 7:33 pm, 1631656
I ride public transit to USC. I like it and it helps me to beat the uncertainty of the traffic along the 10 highway to USC. This article highlights the benefits of the train and it implies that another benefit of using the train is that traffic congestion in ...

April 30, 2016, 7:03 pm, 1631643

Paul Krugman:

When Europe Stumbled: Doing some homework on the European economy...

... What was happening in 2011-2012? Europe was doing a lot of austerity. But so, actually, was the U.S., between the expiration of stimulus and cutbacks ...

April 30, 2016, 5:03 pm, 1631632

A reader comments:

Your final jab in this post regresses the state output gap on the fiscal gap. You then conclude that there is a positive relation between the two and that this somehow implies that a reduction in gov’t spending is a drag on the economy. I’ll just point ...

April 30, 2016, 4:04 pm, 1631631

I very much like this book, it is one of my favorites of the year so far.  It resists being excerpted, as it is an old-style think piece in the style of Montaigne, or for that matter Robert Burton.  Every page is idea-rich and should ...

April 30, 2016, 4:04 pm, 1631630
(April 30, 2016 03:22 PM, by David Henderson) But isn't SoFi cherry-picking loans? Absolutely. Why can't banks do this? Because if you use depositor money for loans, as all banks do, you fall under the jurisdiction of the Federal Deposit Insurance Corp. and the Community Reinvestment Act, which... (2 COMMENTS)

April 30, 2016, 2:04 pm, 1631617

1. The most exclusive dating app?

2. The Hong Kong triangle congruence song.

3. What does a Chinese hard landing consist of?  What were people saying in 2013, and how does it compare to what actually has happened?

4. Is Latin music going mainstream?

5. ...

April 30, 2016, 2:04 pm, 1631616
(April 30, 2016 01:05 PM, by Emily Skarbek) I have just come across a nice two part documentary on Adam Smith available at Free to Choose TV. The videos give those unfamiliar with Smith's thought a good introduction to his life and work in both the Theory of... (0 COMMENTS)

April 30, 2016, 2:04 pm, 1631615

We have not ended up where we began, with democracy. Our institutions of government, business of lawmaking, and notions about successful popular rule do not resemble all that closely the storied originals from Athens. The broad outlines of democracy are certainly still here—elections occur; liberty and rights are invoked—but democracy’s ...

April 30, 2016, 1:03 pm, 1631600
Here is a small example of Washington at its worst.

The Capital Press reports this week that several agriculture commodity organizations have successfully lobbied members of Congress to include a provision in the House agricultural appropriations bill that would protect the federal government's "checkoff" commodity promotion boards from ...

April 30, 2016, 1:03 pm, 1631599
The key report this week is the April employment report on Friday.

Other key indicators include April vehicle sales, the April ISM manufacturing and non-manufacturing indexes, and the March trade deficit.

----- Monday, May 2nd -----

April 30, 2016, 12:04 pm, 1631595
(April 30, 2016 11:11 AM, by Scott Sumner) In my book entitled The Midas Paradox, I argued that FDR's NIRA wage program set back economic recovery by almost 2 years. Prior to the wage increase, industrial production had surged by 57% in 4 months, mostly due to the... (0 COMMENTS)

April 30, 2016, 11:34 am, 1631593
My dream of equity-financed banking may be coming true under our noses. In "the Uberization of banking" Andy Kessler at the WSJ reports on SoFi, a "fintech" company. The article is mostly about the human-interest story of its co-founder Mike Cagney. But the interspersed economics are interesting.

SoFi ...

April 30, 2016, 10:04 am, 1631573
(Don Boudreaux)

… is from page 173 of the 1991 Liberty Fund edition of Bruno Leoni’s pioneering 1961 volume, Freedom and ...

April 30, 2016, 9:23 am, 1631570
Definition of Household savings ratio: The percentage of disposable income that is saved. (1) Total savings = Disposable income – Household consumption

UK Saving Ratio

Latest UK household savings ratio: Q4 2015 = 3.8% (31 March, 2016)

April 30, 2016, 9:23 am, 1631569

Mercantilism is an economic theory and practise where the government seeks to regulate the economy and trade in order to promote domestic industry – often at the expense of other countries. Mercantilism is associated with policies which restrict imports and foster domestic industries.

Mercantilism stands in contrast to the theory ...

April 30, 2016, 9:23 am, 1631566

UK unemployment rates since 1881.

UK unemployment 1881-2015. Source: ONS historical unemployment + ONS

This shows ...

April 30, 2016, 9:23 am, 1631568

The balance of payments is the record of a country’s transactions / trade with the rest of the world.

The balance of payments consists of:

Current Account (trade in goods, services + investment incomes + transfers) Capital Account / Financial Account (capital and financial flows, net investment, portfolio investment) Errors and omissions. It is ...

April 30, 2016, 9:23 am, 1631567

At different times there have been campaigns to ‘Buy British’ – patriotic efforts to support the economy. The campaigns seem quite popular, but usually fade ...

April 30, 2016, 9:23 am, 1631565

A look at the main UK housing market data.

House prices Affordability of housing Interest rates Supply of housing House price inflation

Nationwide data

Annual house price inflation running at 5.3% in ...

April 30, 2016, 9:23 am, 1631564

Readers question: Will a sustained recovery in the UK lead to inflation?

A sustained economic recovery could lead to inflation. If economic growth is above the long run trend rate for a prolonged period, if demand grows faster than productivity, then in that scenario we are likely to see rising inflation ...

April 30, 2016, 9:23 am, 1631561

In 1967, the UK government of Harold Wilson devalued the Pound from $2.80 to $2.40 (a devaluation of 14%). It was a major political event because the government had tried hard to avoid a devaluation, but felt forced into the decision because of a trade deficit, a weak domestic economy ...

April 30, 2016, 9:23 am, 1631563

In recent years, the UK has seen a more flexible labour market. One phenomena is the growth in self-employed contractors. This category of workers have different rights to employees. Self-employment can be attractive to workers seeking greater flexibility. But, there is also concern firms are using the categorisation of  self-employment ...

April 30, 2016, 9:23 am, 1631562

A look at different aspects of UK economic history, concentrating on the different decades of the Twenty and Twenty-First Century. Includes histories of particular sectors, such as housing and the coal industry.

The economy of the 1920s – a legacy of war debt, deflation and life under the gold standard

April 30, 2016, 9:03 am, 1631549

April 30, 2016, 9:03 am, 1631548
This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for April 2016.

Changes and comments from surferdude808:

Update on the Unofficial Problem Bank List for April 2016. During the month, the list fell ...

April 30, 2016, 8:35 am, 1631547
● The Power of a Single Number: A Political History of GDP By Philipp Lepenies Summary via publisher (Columbia University Press) Widely used since the mid-twentieth century, GDP (gross domestic product) has become the world’s most powerful statistical indicator of national development and progress. Practically all governments adhere to the ...

April 30, 2016, 7:34 am, 1631544

Funny, unless you were the one being yelled at.

April 30, 2016, 5:34 am, 1631539

The Cubs will win the World Series this year? Really?? I'm not sure I'm ready for the world to end.

April 30, 2016, 5:03 am, 1631529

April 30, 2016, 4:04 am, 1631528

Trading volumes of the most-traded steel rebar contract in Shanghai hit a record 1.3bn tonnes today, or enough to build the Sydney Harbour Bridge 24,621 times.

If skyscrapers are the preferred metric, fret not: trades today were also equivalent to approximately 41,401 Burj Khalifas.

…One could construct around 178,082 Eiffel ...

April 30, 2016, 2:04 am, 1631514

In response to my post on transgender issues, I was sent this in an email, by a very good economist, it is lengthy so I am putting most of it under the fold, but do please read the whole thing.

First of all, I would like to thank you for ...

April 30, 2016, 12:04 am, 1631503

Here is