Economics Roundtable

Technical Problems 1/21/15

The website was down for a day and a half, but is back up now.

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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February 1, 2015, 11:03 am, 1414075

The U.S. national debt recently topped $18 trillion, and deficits may start to climb again by 2018. What does it mean for the U.S. economy?

President Barack Obama is set to release his new budget Monday. Economics reporters Nick Timiraos and Josh Zumbrun answered your questions about the deficit and debt outlook in a ...

February 1, 2015, 10:44 am, 1414074

February 1, 2015, 10:34 am, 1414073
US personal consumption spending for December is projected to rise 0.3% vs. the previous month in tomorrow’s update (Feb. 2), based on The Capital Spectator’s median point forecast for several econometric estimates. The prediction reflects a substantial slowdown in growth relative to November’s 0.6% advance. Note, however, that the previously ...

February 1, 2015, 10:04 am, 1414071
(Don Boudreaux)

… is from page 160 of the 1997 Johns Hopkins University Press edition of H.L. Mencken’s 1956 collection, Minority Report:

Whenever one comes to close grips with so-called idealism, as in war time, one is shocked by its rascality.

February 1, 2015, 10:04 am, 1414070
(Don Boudreaux)

Inspired in part by Pierre Lemieux’s recent Regulation article “A Slow-Motion Collapse,” Bob Higgs finds genuine reason to be concerned about ordinary Americans’ economic future.  (Note that this post by Bob – like Pierre’s essay – is emphatically not the standard middle-class stagnation myth repeated endlessly by ...

February 1, 2015, 9:33 am, 1414069

From a profile of "the Risky Business Project, an unusual collection of business and policy leaders determined to prepare American companies for climate change":

In May 2014, the committee members gathered at the Bloomberg Philanthropies offices in Manhattan to hear two of the authors commissioned by the Rhodium Group — Robert ...

February 1, 2015, 9:23 am, 1414068
The weekend newsletter from the Institute of Economic Affairs has this 2-minute video about the regressive impact if indirect taxation on those with the lowest incomes. The message comes very much from the free-market perspective of the IEA, which may or may not be to your taste, but serves as ...

February 1, 2015, 9:03 am, 1414037
For amusement, I checked out the WSJ opinion page comments on the Q4 GDP report. As usual, the WSJ opinion is pure politics - but it does bring up an excellent point (that the WSJ conveniently ignores).

First, from the WSJopinion page:

The fourth quarter report means ...

February 1, 2015, 8:05 am, 1414035

Symposium co-sponsored by the Mercatus Center:

Economists on the Welfare State and the Regulatory State: Why Don’t Any Argue in Favor of One and Against the Other?

The symposium Prologue suggests that among economists in the United States, on matters of the welfare state and the regulatory state, virtually ...

February 1, 2015, 7:33 am, 1414033

February 1, 2015, 6:04 am, 1413996
In a significant reversal of its longstanding recommendation to raise rates, the Shadow MPC has voted to keep rates on hold. It should be emphasized that the driver of this shift was not a change in the personnel voting. Instead,...

February 1, 2015, 6:04 am, 1413995
My regular column is available to subscribers on This is an excerpt. A month into the year and questions about the recovery are already being asked. Growth slowed at the end of last year, with the smallest quarterly...

February 1, 2015, 5:33 am, 1413994

My wife's a fan.

Every company and industry dreams of bagging the kind of growth rates that could make such pie-in-the-sky talk possible. The basic principles of math make it easy at first. If you sell 10 widgets in your first week of existence and 50 in ...

February 1, 2015, 5:23 am, 1413993

Photo Credit: Thibaut Chéron Photographies

I wish I could tell you that it was easy for me to stop making macroeconomic forecasts, once I set out to become a value investor.  It’s difficult to get rid of ...

February 1, 2015, 5:03 am, 1413966

February 1, 2015, 4:05 am, 1413965

“Highly specific pools of reputation information will become more useful in aggregate,” said Mr. Fertik, co-author with David C. Thompson of “The Reputation Economy,” a guide to optimizing digital footprints. “If you’re a really good Uber passenger, that may be useful information for Amtrak or American Airlines. But if you ...

February 1, 2015, 2:44 am, 1413933

Corruption and favouritism have motivated people to protest against the ruling regimes. In Egypt, in particular, the protests brought down Hosni Mubarak's government. To what extent this reduced the corruption and favouritism is less clear. This column sheds light on this problem. It present evidence that daily protest numbers were ...

February 1, 2015, 2:05 am, 1413932

I wrote a short piece on this for Vox, here is one excerpt:

Who is the most influential public intellectual of the last 20 years?

This designation should go to someone who actually has helped change the world, rather than just changing lots of minds. It also should go to ...

February 1, 2015, 1:33 am, 1413931

The price of bitcoin is a capricious thing. Imagine that you've saved enough bitcoin to take your significant other out to a fancy restaurant. When the bill comes you discover to ...

February 1, 2015, 12:34 am, 1413899

February 1, 2015, 12:34 am, 1413900

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February 1, 2015, 12:34 am, 1413896

January 31, 2015, 11:33 pm, 1413888

January 31, 2015, 9:33 pm, 1413881
Yellen Yap

On Thursday, Fed Chair Janet Yellen met with Senate Democrats at a private luncheon. She told the Democrats that the U.S. Economy is Strong.

My first thought was "what the heck is Yellen doing holding a private lunch with Democrats only?" Had she ...

January 31, 2015, 9:33 pm, 1413880
United Airlines is earning some extra revenue selling economy plus tickets on airplanes. Such seats cost roughly 20% more but offer more legroom and early boarding on the airplane. Could public universities offer a similar experience? Imagine if students could pay a tuition premium for the right to ...

January 31, 2015, 6:05 pm, 1413861

Doug Hendrie, Amalganations: How Globalisation is Good.

Arnold Thackray, David Brock, and Rachel Jones, Moore’s Law: The Life of Gordon Moore, Silicon Valley’s Quiet Revolutionary.

Jeffrey A. Frieden, Currency Politics: The Political Economy of Exchange Rate Policy, somehow this is oddly relevant these days.

Andrew Levy,

January 31, 2015, 3:33 pm, 1413848
On January 21 when the Canadian Central Bank unexpected slashed interest rates, I wrote Canadian Recession Coming Up.

Following the rate cut, the yield curve in Canada inverted out to three years. Inversion means near-term interest rates are higher than long-term rates.

I saw no ...

January 31, 2015, 3:23 pm, 1413847

What do we ‘know’ about investing — but can’t prove with stats?


The statistical revolutions that have overtaken sports, business and markets have bred suspicion of any observation or assertion not backed up by hard numbers.

This is a good thing in most respects. Yet experts who study ...

January 31, 2015, 3:03 pm, 1413824

The Bureau of Economic Analysis announced yesterday that U.S. real GDP grew at a 2.6% annual rate in the third quarter. Even factoring in the dismal start to the year, that leaves full-year GDP growth during 2014 at 2.4% (the best annual performance since 2010) and growth at an ...

January 31, 2015, 3:03 pm, 1413823
The key report this week is the January employment report on Friday.

Other key reports includethe January ISM manufacturing index on Monday,January vehicle sales on Tuesday, the ISM non-manufacturing index on Wednesday, and the December Trade Deficit on Thursday.

----- Monday, February 2nd -----
8:30 AM ET: Personal ...

January 31, 2015, 2:05 pm, 1413822

January 31, 2015, 1:23 pm, 1413820
Habitual Radio 4 listeners will already have heard the trailers for a programme coming up on Tuesday morning at 9am called The Price of Inequality. In two 30-minute programmes, Robert Preston will be investigating the cause of the growing gap between the rich and the rest of us in the ...

January 31, 2015, 1:23 pm, 1413819
When the government still has to borrow an extra £90bn per year, in spite of all their efforts to cut spending, then the rate of interest they need to pay in order to get access to that borrowing has got to be very important. George Osborne certainly thinks so; ...

January 31, 2015, 1:03 pm, 1413802


Bad Tayloring: Since they aren’t currently able to demand a return to the gold standard — and maybe a ban on paper money? — Republicans are pushing to mandate that the Fed follow the so-called Taylor rule, which relates short-term interest rates to unemployment (and/or the output gap) and ...

January 31, 2015, 12:44 pm, 1413801

January 31, 2015, 12:34 pm, 1413800

This ...

January 31, 2015, 10:44 am, 1413760

January 31, 2015, 10:44 am, 1413758

January 31, 2015, 10:44 am, 1413759

January 31, 2015, 10:04 am, 1413751
(Don Boudreaux)

In the current issue of Barron’s I review Jeff Madrick’s latest book, Seven Bad Ideas.  (My review is the last of the three reviews at this link.)  A slice (links added):

Unlike Madrick, however, Austrians also understand that this imperfect competitive market process still outperforms all other methods ...

January 31, 2015, 10:04 am, 1413750
Tbe Italian parliament has elected Sergio Mattarella president of the republic. For US readers, the Italian President is like the constitutional monarch of the parliamentary republic. Actual controversial decisions are made by the prime minister (now Matteo Renzi). The president has great power in theory on the understanding that it ...

January 31, 2015, 9:33 am, 1413747

25% support higher electricity taxes and 36% support higher gas taxes "to try to reduce future global warming." Here are the questions and results from the poll:

January 31, 2015, 9:03 am, 1413726

January 31, 2015, 9:03 am, 1413725
This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Jan 30, 2015.

Changes and comments from surferdude808:

As expected, the FDIC released an update on its enforcement action activities through December 2014 that ...

January 31, 2015, 8:44 am, 1413724

January 31, 2015, 8:34 am, 1413723

In the day job, I endorse Paul Samuelson's dictum that stock markets are "micro efficient" but "macro inefficient". This isn't to say that they are wholly efficient at the micro level: there are some anomalies and I prefer to think ...

January 31, 2015, 8:04 am, 1413721
(Don Boudreaux)

… is from page 128 of Thomas Sowell’s 2009 book, The Housing Boom and Bust:

Few things blind human beings to the actual consequences of what they are doing like a heady feeling of self-righteousness during a crusade to smite the wicked and rescue the downtrodden.

January 31, 2015, 7:33 am, 1413720

Like Greek bonds. Dumb question of the day.

"Because risky assets are risky!" is not the answer.

Other things equal, I would prefer to hold a safe asset than a risky asset, because I don't like risk. But other things are not equal, precisely because other people don't like holding risky assets ...

January 31, 2015, 7:33 am, 1413719

Piece argues that it's all about the hormones.

January 31, 2015, 6:34 am, 1413714
● The Age of Cryptocurrency: How Bitcoin and Digital Money Are Challenging the Global Economic Order By Paul Vigna and Michael J. Casey Review via The Washington Post To their ample credit, Paul Vigna and Michael J. Casey, veteran Wall Street Journal reporters, resist the common temptation to hype their ...

January 31, 2015, 5:33 am, 1413712

I can't decide whether this is good news or bad news. Good news: we have a country where a 13-year-old with a terrific idea can be honored and rewarded for it (and attract investment from one of the world's largest companies).

Bad news: where were all the adults? Why ...

January 31, 2015, 4:05 am, 1413693

Nonetheless it is considering tolerating them, as we are told by Air Genius Gary Leff.  Here is one short bit:

The tourism minister says that even though the Greek Prime Minister is attacking all-inclusive resorts as it identifies problems with the country’s economy, it has no plans to make ...

January 31, 2015, 2:05 am, 1413671

…blogging, for better or worse, is proving resistant to scale. And I think there are two reasons why.

The first is that, at this moment in the media, scale means social traffic. Links from other bloggers — the original currency of the blogosphere, and the one that drove its collaborative, conversational ...

January 31, 2015, 1:03 am, 1413647
Executive Board member of the European Central Bank Benoit Coeure on Saturday at the World Economic Forum annual meeting in Davos, Switzerland. Agence France-Presse/Getty Images

The European ...

January 31, 2015, 1:03 am, 1413648

The European Central Bank‘s battle to persuade households and consumers that inflation will pick up over coming months and years just got a little tougher.

The ECB last week ushered in a new ...

January 31, 2015, 1:03 am, 1413646

The U.S. homeownership fell to its lowest level in 20 years at the end of 2014—levels last seen when national leaders embarked on a broad push to expand homeownership in the mid-1990s.

The ...

January 31, 2015, 1:03 am, 1413650
For years, the wealth gains of typical Americans were tied to housing; housing still looms largest on the balance sheet of the middle class.  Getty Images

American ...

January 31, 2015, 1:03 am, 1413649

The Labor Department reported that 265,000 people filed initial claims for jobless benefits last week. To find a week when fewer people filed jobless claims, you have to go back to April 2000, the tail end of the 1990s economic boom.

Recall how different that was from today: It ...

January 31, 2015, 1:03 am, 1413645
People cross a street in Tokyo on Friday. Associated Press

Some economists are betting Japan will slip back into deflation, at least for a time, in coming ...

January 31, 2015, 1:03 am, 1413642
Bloomberg News

How clear and present is the eurozone’s deflation threat?

Increasingly clear and present. Consumer prices fell in January at the joint fastest rate since records began in 1997, down 0.6% from their year-earlier levels. Worryingly, the ...

January 31, 2015, 1:03 am, 1413641
U.S. gross domestic product advanced 2.6% at an annual rate in the fourth quarter, the Commerce Department said Friday.

January 31, 2015, 1:03 am, 1413643

The Wall Street Journal’s Daily Report on Global Central Banks for Friday, January 30, 2015:

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Hilsenrath’s Take: On an Important Data Day for the Fed, Look Out for Wages

January 31, 2015, 1:03 am, 1413644
Eric Rosengren Jessica Rinaldi/The Boston Globe/Getty Images

The Federal Reserve has an important role to play in ensuring the nation’s financial system is resilient against cyberattacks, ...

January 31, 2015, 1:03 am, 1413637

U.S. labor costs increased moderately in the final three months of the year, a sign that the improving job market is only slowly boosting wages for most American workers. The employment-cost index, which measures wage and benefit expenditures, rose a seasonally adjusted 0.6% in the fourth quarter of ...

January 31, 2015, 1:03 am, 1413638

Federal Reserve Bank of St. Louis President James Bullard said on Friday that the U.S. economy remains on a solid path that argues for raising interest rates relatively soon.

Keeping interest rates near zero “is not the right interest rate for this economy. We are much closer to our goals than ...

January 31, 2015, 1:03 am, 1413639

U.S. employers aren’t yet getting squeezed by workers demanding higher wages.

The employment-cost index, a broad gauge of wage and benefit expenditures, rose a seasonally adjusted 0.6% in the fourth quarter ...

January 31, 2015, 1:03 am, 1413636
Imports rose briskly in the fourth quarter while exports rose only modestly, weighing on overall GDP. Getty Images

The U.S. economy expanded a disappointing 2.6% ...

January 31, 2015, 1:03 am, 1413640

U.S. economic growth slowed in the final months of 2014, highlighting challenges facing the U.S. expansion amid rising global uncertainty. Gross domestic product—the broadest measure of goods and services produced across the economy—expanded at a 2.6% annual rate in the fourth quarter, the Commerce Department said Friday, following ...

January 31, 2015, 1:03 am, 1413634
Federal Reserve Chairwoman Janet Yellen testifies in July before the House Financial Services Committee on monetary policy and the state of the economy. Agence France-Presse/Getty Images

If ...

January 31, 2015, 1:03 am, 1413631
Football fans may have Super Bowl Sunday, but economy-watchers look forward to Friday—the monthly employment report. How did hiring and wage growth kick off 2015? A strong report will support expectations of a solid expansion in 2015. Other economic reports are also worth a look. Here are five things to ...

January 31, 2015, 1:03 am, 1413635
Getty Images

Consumers are breaking into a happy dance and breaking out their wallets.

Ever since oil prices began falling, consumers have been feeling better and been more willing to ...

January 31, 2015, 1:03 am, 1413632

How can the Federal Reserve even think about raising rates when price pressures are falling so short of the central bank’s official 2% target?

That’s been a question on the minds of many central bank watchers, some Fed officials and financial market participants for some time.

Inflation has fallen short of the ...

January 31, 2015, 1:03 am, 1413633

Federal Reserve Bank of San Francisco President John Williams said Friday the U.S. economy remains on a solid path that will open the door to interest-rate increases in the summer.

In an interview with CNBC, Mr. Williams said, “I see a lot of strength in the domestic economy,” adding there’s “a ...

January 31, 2015, 1:03 am, 1413630

January 31, 2015, 12:44 am, 1413629

Spatial inequalities in territorial-based greenhouse emissions matter in terms of regulation, both at the international and subnational levels. This column decomposes these inequalities worldwide for the two major greenhouse gases over the period 1970–2008. Within-country inequalities are larger, and rising, while between-country inequalities are smaller and falling. Moreover, social tensions arising from the ...