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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December 18, 2014, 11:33 am, 1391531

Russian consumers flocked to the stores Wednesday, frantically buying a range of big-ticket items to pre-empt the price rises kicked off by the staggering fall in the value of the ruble in recent days.

As the Russian authorities announced a series of measures to ease the pressure on the ...


December 18, 2014, 11:03 am, 1391470
Fed Chairwoman Janet Yellen, asked Wednesday what “patient” meant, said the Fed would not begin hiking rates for “a couple” of meetings. Pressed further, she confirmed “a couple” means two.


December 18, 2014, 11:03 am, 1391469

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.

Oil prices plummeted 43% during the course of 2014 – good news for oil-importing ...


December 18, 2014, 11:03 am, 1391468
From the Philly Fed:December Manufacturing Survey

The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased 16 points, from a reading of 40.8 in November to 24.5 this month ... The new orders [to 19.7] and current shipments indexes also weakened significantly.
... ...


December 18, 2014, 10:44 am, 1391467
Wage stagnation is a growing topic in the national political discussion, but the problem is not spread evenly – as we noted recently. And when one looks closely at a map of changes in pay over the past decade, there are some noteworthy trends in the county data beyond big ...


December 18, 2014, 10:44 am, 1391465
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December 18, 2014, 10:44 am, 1391463
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December 18, 2014, 10:04 am, 1391459

In an interview with Financial Times this week, Iraqi foreign minister Ibrahim Jafari revealed China has offered to provide support for Iraqi airstrikes against ISIS. It’s unclear whether Beijing plans to follow through on this proposition, but potential Chinese-Iraqi cooperation could include weapons ...


December 18, 2014, 10:04 am, 1391458

Following a visit to Jordan last month, Rep. Rob Wittman (R-VA) argued the campaign against the Islamic State (ISIS) “needs an Arab face.” Saudi Foreign Minister Saud Al-Faisal agreed, declaring success “requires the presence of combat ...


December 18, 2014, 10:04 am, 1391457

The “Cromnibus” that was enacted last week has received its share of brickbats, mostly over the Citigroup-written and Rep. Kevin Yoder-instigated provision giving banks taxpayer protection for derivatives trading. Also for the campaign-finance provision blowing up most of what was left of campaign contribution limits, pushed by Mitch McConnell but ...


December 18, 2014, 9:33 am, 1391454

As Colbert transitions the NC Sea Level Rise panel continues its work:

The N.C. Coastal Resources Commission’s science panel made a few final adjustments Monday to the draft five-year update to its sea level rise report before agreeing it was ready for peer review.

The draft ...


December 18, 2014, 9:03 am, 1391393
In both the U.K and U.S., policy makers expect tightening labor markets to result in a pickup in wages that will translate into higher consumer prices.


December 18, 2014, 9:03 am, 1391391

The Wall Street Journal’s Daily Report on Global Central Banks for Thursday, December 18, 2014:

Sign up for the newsletter: http://on.wsj.com/grandcentralsignup


Highlights

Hilsenrath’s Take: Yellen Playbook Puts Slack Over Oil Price Declines Fed Sets Stage for Rate ...


December 18, 2014, 9:03 am, 1391392
AFP

What are they?

Central banks typically set multiple interest rates, including on the loans they extend to banks and the rate they pay on excess reserves parked at the central bank. When they install a negative deposit rate, ...


December 18, 2014, 9:03 am, 1391390
From the DOL reported:

In the week ending December 13, the advance figure for seasonally adjusted initial claims was 289,000, a decrease of 6,000 from the previous week's revised level. The previous week's level was revised up by 1,000 from 294,000 to 295,000. The 4-week moving average was 298,750, ...


December 18, 2014, 8:44 am, 1391389
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December 18, 2014, 8:44 am, 1391388

IT MUST seem churlish of me to maintain my grim pessimism about the Fed's current course of action, given the steady flow of encouraging data from the American economy. But try as I might, I cannot muster the same Panglossian enthusiasm as my colleague about the way policy is ...


December 18, 2014, 8:34 am, 1391387
Yesterday’s update of the Federal Reserve’s quarterly economic forecast is a minor triumph for optimism. The central bank still expects that US GDP in 2015 will increase in the range of 2.6% to 3.0%, unchanged from its previous estimate in September. That’s a mild expansion, but it’s a step up ...


December 18, 2014, 8:34 am, 1391386
Teaser:

Civil ...


December 18, 2014, 8:05 am, 1391383

This post isn’t about smuggling Cuban cigars it’s an incredible story about smuggling Cuban baseball players.

The average wage in Cuba is about $20 per month so a typical Cuban might earn 50 times more in the United States but a star Cuban baseball player (who also earns about $20 per month ...


December 18, 2014, 8:05 am, 1391384

Switzerland is introducing a negative interest rate on the deposits it holds for lenders, its central bank said on Thursday, moving to hold down the value of the Swiss franc amid the turmoil in global currency markets.

The Swiss National Bank said in ...


December 18, 2014, 8:04 am, 1391382
(Don Boudreaux)

Here’s a video of a talk that my colleague Dan Klein delivered in October at Guatemala City’s indispensable Universidad Francisco Marroquin.  Dan here speaks about “The Hayekian Narrative.”  (This video is not the same as the one I posted a few days ago.)


December 18, 2014, 8:04 am, 1391381
(Don Boudreaux)

… is from the abstract of Solomon Polachek’s and Carlos Seiglie’s important 2006 paper, “Trade, Peace and Democracy: An Analysis of Dyadic Dispute“:

At least since 1750 when Baron de Montesquieu declared peace is the natural effect of trade, a number of economists and political scientists espoused the ...


December 18, 2014, 7:23 am, 1391378

Private label brands (or own brand labels) are products sold by a retailer with its own packing, but manufactured by a third party. For example, Tesco sell ordinary branded items, such as Heinz baked beans, but also sell their own ‘Tesco ...


December 18, 2014, 7:03 am, 1391329
Much of America’s wealth gains are due to the stock market, which has jumped nearly 200% since its lowest point in 2009.  Bloomberg News

The typical affluent ...


December 18, 2014, 7:03 am, 1391331
Getty Images Sen. David Vitter (R., La.) proposed a Fed requirement that one of the seven members of the Fed’s board of governors to be a person ...


December 18, 2014, 7:03 am, 1391330

European Central Bank executive board member Benoît Coeuré sat down with The Wall Street Journal’s Brian Blackstone and Todd Buell to discuss the prospects for quantitative easing, the inflation outlook and reasons for optimism in Europe. Here are edited excerpts:

WSJ: What are the prospects for quantitative easing after the results ...


December 18, 2014, 7:03 am, 1391333

The Wall Street Journal’s Daily Report on Global Central Banks for Wednesday, December 17, 2014:
Sign up for the newsletter: http://on.wsj.com/grandcentralsignup.

Highlights


Hilsenrath’s Take: How Yellen’s Methodical Style Informs the “Considerable Time” Debate WSJ’s Hilsenrath ...


December 18, 2014, 7:03 am, 1391328

November saw the steepest drop in consumer prices in almost six years, and that decline may have further to go as the collapse of oil continues to pull down prices.

The Consumer Price Index, released this morning, fell a seasonally adjusted 0.3% between October and November. But at the end ...


December 18, 2014, 7:03 am, 1391335
Bloomberg News

About 8.7 million homeowners still owed more on their mortgages than their homes were worth at the end of September, according to a report released Wednesday by Zillow. ...


December 18, 2014, 7:03 am, 1391334
Laborers work at a construction site in Shanghai, December 16, 2014. Reuters

Growth in minimum-wage levels across China appeared to have slowed this year, amid low inflation ...


December 18, 2014, 7:03 am, 1391332

Low oil prices may offer a hidden gift to consumers beyond the gas pump: They could also indirectly support lower mortgage rates.

Already, the average 30-year fixed-rate mortgage fell to 4.06% last week, ...


December 18, 2014, 7:03 am, 1391325

The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see ...


December 18, 2014, 7:03 am, 1391327
Federal Reserve Board Chairwoman Janet Yellen speaks during a news conference on Wednesday Getty Images

The Federal Reserve wrapped up its final policy meeting of the year Wednesday ...


December 18, 2014, 7:03 am, 1391320

The Federal Reserve’s decision Wednesday to tiptoe slowly toward interest-rate increases generated a significant and rare level of insurrection among its membership.

Dallas Fed President Richard Fisher was ...


December 18, 2014, 7:03 am, 1391322

Federal Reserve Chairwoman Janet Yellen said she has “great confidence” in Federal Reserve Bank of New York President William Dudley, responding to questions about scrutiny the regional Fed bank is facing for its ties to large financial institutions and its performance in supervising them.

Mr. Dudley has “done a fine job ...


December 18, 2014, 7:03 am, 1391321

Federal Reserve officials said Wednesday they would be “patient” as they considered when to start raising interest rates next year. But the central bank’s policy statement retained some of its earlier language, mitigating the effect of the shift in wording. Here’s how economists reacted to the ...


December 18, 2014, 7:03 am, 1391323
U.S. Federal Reserve Chairwoman Janet Yellen Reuters

Federal Reserve Chairwoman Janet Yellen said Wednesday the U.S. central bank is unlikely to raise short-term interest rates until at least the spring.

“The ...


December 18, 2014, 7:03 am, 1391326

Here is the full text of the Federal Reserve’s policy statement, released Wednesday:

Information received since the Federal Open Market Committee met in October suggests that economic activity is expanding at a moderate pace. Labor market conditions improved further, with solid job gains and a lower unemployment rate. On ...


December 18, 2014, 7:03 am, 1391324
Reuters

Federal Reserve officials continue to see a start to rates rises next year but a slightly slower pace of increases, in an outlook that predicts weaker ...


December 18, 2014, 7:03 am, 1391319
Lower gas prices are “certainly good for families, for households,” Fed Chairwoman Janet Yellen said. Bloomberg News

Federal Reserve Chairwoman Janet Yellen isn’t too worried about plunging ...


December 18, 2014, 7:03 am, 1391318
As the White House charts a new course for relations with Cuba, here are five things to know about Cuba’s economy.


December 18, 2014, 7:03 am, 1391316
AFP

What are they?

Central banks typically set multiple interest rates, including on the loans they extend to banks and the rate they pay on excess reserves parked at the central bank. When they install a negative deposit rate, ...


December 18, 2014, 7:03 am, 1391317
In both the U.K and U.S., policy makers expect tightening labor markets to result in a pickup in wages that will translate into higher consumer prices.


December 18, 2014, 6:44 am, 1391315
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December 18, 2014, 6:34 am, 1391314
● US, Cuba restore ties after 50 years | Reuters ● Experts on N. Korea see regime’s fingerprints on Sony attack | LA Times ● Putin’s Economic System Frays Further | Bloomberg ● North Sea oil industry ‘close to collapse’ | BBC ● Global life expectancy has ‘increased by 6 ...


December 18, 2014, 6:34 am, 1391313

In my previous post, I pointed out that, given the inflation target, a less tight fiscal policy implies higher official interest rates. This means that the choice between the two main parties isn't just about fiscal policy, but about the fiscal-monetary mix: Labour offers looser fiscal and tighter* ...


December 18, 2014, 5:03 am, 1391271

December 18, 2014, 4:44 am, 1391270

Sub-Saharan Africa has been growing steadily over the past decade. The main question that policymakers should face is how to sustain the region’s progress. This column argues that the positive growth is due both to good policies and higher prices of certain commodities (such as oil, gas, and minerals). To ...


December 18, 2014, 4:05 am, 1391269

This cracks me up:

The illustrations on the banknotes show generic examples of architectural styles such as renaissance and baroque rather than real bridges from a particular member state, which could have aroused envy among other countries. “The European Bank didn’t want to use real bridges so I thought it would ...


December 18, 2014, 2:44 am, 1391217
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December 18, 2014, 2:04 am, 1391216
A new report by Good Jobs First shows how the very wealthy in America have benefited from government subsidies as one element in building their fortunes. According to the study, the 11 richest Americans, and 23 of the 25 richest, all have significant ownership in companies that have received at ...


December 18, 2014, 12:44 am, 1391161
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December 17, 2014, 9:33 pm, 1391140
Not only is torture against international law, it also produces no useful intelligence. Common sense is enough to prove that statement.

If someone threatened to rape your sister, kill your mom, or shackled you until you were half-dead while feeding you up your anus, you would say nearly anything ...


December 17, 2014, 9:03 pm, 1391111

It has often been remarked that falling oil prices are unambiguously good for Americans. But as we'll show you today, who they might be good for depends greatly upon where you live and the kind of government policies that are enforced there.

Let's ...


December 17, 2014, 9:03 pm, 1391110

Tim Duy:

Quick FOMC Recap, by Tim Duy: Running short on time today....

Today's FOMC statement was a reminder that in normal times the Federal Reserve moves slowly and methodically. Policymakers were apparently concerned that removal of "considerable time" by itself would prove to be disruptive. Instead, they opted to ...


December 17, 2014, 9:03 pm, 1391109
A few key takeaways:
• There has been no change in FOMC policy. Replacing "considerable time" with "patient" was because we are moving further in time from the end of QE3 . The first rate hike will be a "considerable time" from October.

• "Patient" means it is ...


December 17, 2014, 8:34 pm, 1391108

This morning, I noted that the hacking attacks on Sony Pictures that had to date resulted in the release of personal and proprietary business information belonging to the company as well as communications between top executives that ...


December 17, 2014, 8:04 pm, 1391105
(December 17, 2014 07:31 PM, by Alberto Mingardi) Mixed signals from France. The Financial Times, among others, has stressed the potential of the liberalisation plan pursued by the new Economy Minister Emmanuel Macron. The bill aims at lowering barriers to entry in liberal professions--notaries, pharmacists, et cetera. The... (0 COMMENTS)


December 17, 2014, 8:04 pm, 1391104
This video was published on Youtube a week ago and has only had 27 views. The video is of a talk Adair Turner gave in November at the Bristol Festival of Economics. It reflects his current insights. He gives explanations for 4 big patterns developing in the global economy. Increased ...


December 17, 2014, 7:03 pm, 1391057
As the White House charts a new course for relations with Cuba, here are five things to know about Cuba’s economy.


December 17, 2014, 6:44 pm, 1391056
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December 17, 2014, 6:44 pm, 1391055

WHAT could be better than an economy converging rapidly on full employment? A central bank in no mood to get in the way. That is the happy combination America now enjoys, and it explains the stock market's euphoric reaction to today's meeting of the Federal Reserve.

In the statement releaed after ...


December 17, 2014, 6:04 pm, 1391052
(December 17, 2014 06:57 PM, by David Henderson) As is probably known to virtually all readers of this blog, President Obama announced today his steps to normalize relations with Cuba. It is long overdue and finally we have a President willing to do something about it. I have... (1 COMMENTS)


December 17, 2014, 6:04 pm, 1391051

Yesterday, Jeb Bush announced that he was maybe kinda sorta thinking of running for president. Politicos and wonks wasted little time before handicapping his assorted strengths and weaknesses vis-a-vis the rest of the field, with many arguing that his positions on immigration and the Common Core would be non-starters among ...


December 17, 2014, 5:33 pm, 1391047
Sanctions and embargoes don't work. And in the case of Cuba, it took the US 52 years to partially realize that.

In 1962, President John F. Kennedy singed into law a Cuban trade embargo. I have long known how foolish Kennedy's decision was (and the decision of every president ...


December 17, 2014, 5:33 pm, 1391048
Today the Fed made its much awaited FOMC Announcement.

Pundits poring over the statement have generally concluded as does the Financial Times, that Fed Signals Tightening by Mid-2015.

Why?

Because the Fed dropped its forecast that it will keep low interest rates for a "considerable ...


December 17, 2014, 5:03 pm, 1390986

While the media has been feasting on Lux Leaks and other stories of “multinational tax dodging”, academic accountants have determined that U.S. multinational corporations (MNCs) have no particular tax advantage over U.S. domestic firms. In fact, a new study finds the average effective tax rate for ...


December 17, 2014, 5:03 pm, 1390985

There has been considerable discussion about the corporate tax system in the U.S. and the IRS’s global reach in the media over the past year. The rash of corporate inversions was the catalyst for the public discussion of the outdated worldwide corporate tax system, which only six other countries ...


December 17, 2014, 5:03 pm, 1390982

Federal Reserve officials said Wednesday they would be “patient” as they considered when to start raising interest rates next year. But the central bank’s policy statement retained some of its earlier language, mitigating the effect of the shift in wording. Here’s how economists reacted to the ...


December 17, 2014, 5:03 pm, 1390984
U.S. Federal Reserve Chairwoman Janet Yellen Reuters

Federal Reserve Chairwoman Janet Yellen said Wednesday the U.S. central bank is unlikely to raise short-term interest rates until at least the spring.

“The ...


December 17, 2014, 5:03 pm, 1390983

Federal Reserve Chairwoman Janet Yellen said she has “great confidence” in Federal Reserve Bank of New York President William Dudley, responding to questions about scrutiny the regional Fed bank is facing for its ties to large financial institutions.


December 17, 2014, 5:03 pm, 1390981

The Federal Reserve’s decision Wednesday to tiptoe slowly toward interest-rate increases generated a significant and rare level of insurrection among its membership.

The outcome of the Federal Open Market Committee meeting saw dissenting votes from three of the 10 officials who currently are allowed to weigh in directly on ...


December 17, 2014, 5:03 pm, 1390980
Lower gas prices are “certainly good for families, for households,” Fed Chairwoman Janet Yellen said. Bloomberg News

Federal Reserve Chairwoman Janet Yellen isn’t too worried about plunging ...


December 17, 2014, 5:03 pm, 1390979

Surprise! Or not (more concerned with this than whether the Fed changed a few words in its Press Release following the FOMC meeting):

Wall Street Salivating Over Further Destruction of Financial Reform, by Kevin Drum: Conventional pundit wisdom suggests that Wall Street may have overreached last week. ...


December 17, 2014, 5:03 pm, 1390978

Some of you might find this interesting:

“Minimal Model Explanations,” R.W. Batterman & C.C. Rice(2014), A Fine Theorem: I unfortunately was overseas and wasn’t able to attend the recent Stanford conference on Causality in the Social Sciences; a friend organized the event and was able to put together a ...


December 17, 2014, 5:03 pm, 1390977
From Zillow: Negative Equity Down By Almost Half Since 2012 Peak, But There’s Still a Ways to Go

The national negative equity rate continued to decline in the third quarter, falling to 16.9 percent, according to the third quarter Zillow Negative Equity Report, down almost half from its 31.4 ...


December 17, 2014, 4:44 pm, 1390976
How many Americans have the wherewithal -- and the desire -- to give even more money to the Republican and Democratic Parties? The Wall Street Journal looks at the numbers.


December 17, 2014, 4:44 pm, 1390973
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December 17, 2014, 4:44 pm, 1390975
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December 17, 2014, 4:44 pm, 1390974
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December 17, 2014, 4:05 pm, 1390972

Felix Salmon writes:

Facebook’s algorithm is already working overtime on trying to slim down a virtually infinite range of possible News Feed posts to a much smaller number. A significant chunk of the NewsFeed is already ads, so in order to make it into the News Feed if you’re ...


December 17, 2014, 4:04 pm, 1390971
AEI Fellow Marc Thiessen discusses the CIA report and the morality of the interrogation tactics described on Fox News' 'Kelly File.'


December 17, 2014, 4:04 pm, 1390970

Can Pakistan learn from tragedy? As horrific details continue to emerge of Tuesday’s massacre in a Peshawar army-run school—at least 148 persons killed, 132 of them children—this is the central question facing the troubled country.

If Pakistan’s powerful generals use this moment to rethink their long-standing support for Islamist militancy, then ...


December 17, 2014, 4:04 pm, 1390969

The Cuban regime’s decision to release American hostage Alan Gross to celebrate Hanukkah with his family is long overdue, welcome news. Gross is free today; 11 million Cubans are not. President Obama’s decision to move toward normalizing diplomatic relations with the Castro regime resuscitates a gasping dictatorship without even asking ...


December 17, 2014, 4:04 pm, 1390968

In The New York Times, reporter Neil Irwin wonder what lessons America can learn from Scandinavia in creating a pro-work safety net:

In short, more people may work when countries offer public services that directly make working easier, such as ...


December 17, 2014, 3:33 pm, 1390962

Torsten Slok at Deutsche Bank sends the graph, along with some musings on the eternal question: When (if?) interest rates rise, will it look like 1994, or like 2004? Will rates rise quickly, ...


December 17, 2014, 3:33 pm, 1390961
The US Energy Information Administration (EIA) forecasts U.S. Household Gasoline Expenditures in 2015 On Track to be the Lowest in 11 Years.

The average U.S. household is expected to spend about $550 less on gasoline in 2015 compared with 2014, as annual motor fuel expenditures are on ...


December 17, 2014, 3:24 pm, 1390960

Photo Credit: International Monetary Fund

October 2014December 2014CommentsInformation received since the Federal Open Market Committee met in September suggests that economic activity is expanding at a moderate pace.Information received since the Federal Open Market Committee met in October ...


December 17, 2014, 3:23 pm, 1390959
An excellent video made for the Economics classroom applying the theory of market structures to the world of transport in Singapore. This is superb as it goes through each transport mode analysing the market structure befitting before digging into the conduct within that market. Terminology used will be familiar to ...


December 17, 2014, 3:23 pm, 1390958
Just a quick heads-up about this Twitter chat.


December 17, 2014, 3:03 pm, 1390896

Here is the full text of the Federal Reserve’s policy statement, released Wednesday:

Information received since the Federal Open Market Committee met in October suggests that economic activity is expanding at a moderate pace. Labor market conditions improved further, with solid job gains and a lower unemployment rate. On ...


December 17, 2014, 3:03 pm, 1390895

The Federal Reserve releases a statement at the conclusion of each of its policy-setting meetings, outlining the central bank’s economic outlook and the actions it plans to take. Much of the statement remains the same from meeting to meeting. Fed watchers closely parse changes between statements to see ...


December 17, 2014, 3:03 pm, 1390894
Reuters

Federal Reserve officials continue to see a start to rates rises next year but a slightly slower pace of increases, in an outlook that predicts weaker ...


December 17, 2014, 3:03 pm, 1390893

A follow up to this:

Higher capital requirements: The jury is in, by Stephen Cecchetti, Vox EU: Summary Regulators forced up capital requirements after the Global Crisis – triggering fears in the banking industry of dire effects. This column – by former BIS Chief Economist Steve Cecchetti ...


December 17, 2014, 3:03 pm, 1390892

Neil Irwin:

A Big Safety Net and Strong Job Market Can Co-Exist. Just Ask Scandinavia: It is a simple idea supported by both economic theory and most people’s intuition: If welfare benefits are generous and taxes high, fewer people will work. ... Here’s the rub, though: The idea may ...


December 17, 2014, 3:03 pm, 1390890
Statement here "Considerable time" replaced with "patient" - viewed as consistent with previous statement.

As far as the "Appropriate timing of policy firming", participant views were mostly unchanged (15 participants expect the first rate hike in 2015, and 2 in 2016).

The FOMC projections for inflation are ...


December 17, 2014, 3:03 pm, 1390891
FOMC Statement:

Information received since the Federal Open Market Committee met in October suggests that economic activity is expanding at a moderate pace. Labor market conditions improved further, with solid job gains and a lower unemployment rate. On balance, a range of labor market indicators suggests that underutilization ...


December 17, 2014, 2:44 pm, 1390889
How many Americans have the wherewithal -- and the desire -- to give even more money to the Republican and Democratic Parties? The Wall Street Journal looks at the numbers.


December 17, 2014, 2:44 pm, 1390888

In this week's EconTalk episode, EconTalk host Russ Roberts talks with NYU's Gary Marcus on how artificial intelligence may influence human flourishing and when such effects might become a real concern.

As always, we want to hear what you think.


December 17, 2014, 2:34 pm, 1390887

By Simon Johnson

Antonio Weiss has been nominated to become Undersecretary for Domestic Finance at the Treasury Department. A growing number of people and organizations have expressed reservations about this potential appointment, which requires Senate confirmation – including Senator Dick Durbin (D., IL), Senator Jeanne Shaheen (D.,NH), Senator ...


December 17, 2014, 2:05 pm, 1390884

December 17, 2014, 2:05 pm, 1390883

Here is a Cuban joke which we hope will become obsolete:

One Cuban young woman complains to another. “He lied to me! He told me that he was a luggage handler! It turns out, he’s nothing but a neurosurgeon!”

Here are many other Cuba posts from MR, interesting ...


December 17, 2014, 2:04 pm, 1390882
The markets wait for the Fed’s statement in 30 minutes. Some thoughts beyond low inflation and an active labor market… Fed must give forward guidance to normalizing the Fed rate. Yet, any sense of disciplining the markets will be met with lower stock values. The markets need discipline which is ...


December 17, 2014, 2:04 pm, 1390881
Visiting Fellow Roger Noriega discusses the significant shift in US policy toward normalizing relations with Cuba.


December 17, 2014, 2:04 pm, 1390880

In a letter to the editor of The Wall Street Journal, Hank Kim of the National Conference on Public Employee Retirement Systems responds to my recent Journal article arguing that state and local government pensions ...


December 17, 2014, 1:33 pm, 1390877

You can tell that I'm ramping up to teach principles of micro--I'm using env-econ to store examples, even if they have nothing to do with the environment. So here's a nice graph of ground beef prices over time. Now i just need to figure out what is going on so ...


December 17, 2014, 1:33 pm, 1390876

Is the great bourbon shortage really real?

After writing about it last week, we got some rather irate emails from readers, alleging that we were being fed a marketing scam. (There's some skepticism out there on the internet, as well.) After all, there's still plenty of bourbon ...


December 17, 2014, 1:03 pm, 1390815
Much of America’s wealth gains are due to the stock market, which has jumped nearly 200% since its lowest point in 2009.  Bloomberg News

The typical affluent ...


December 17, 2014, 1:03 pm, 1390814

November saw the steepest drop in consumer prices in almost six years, and that decline may have further to go as the collapse of oil continues to pull down prices.

The Consumer Price Index, released this morning, fell a seasonally adjusted 0.3% between October and November. But at the end ...


December 17, 2014, 1:03 pm, 1390813
Janet Yellen, chairwoman of the U.S. Federal Reserve, speaks in September. Bloomberg News

The Federal Reserve wraps up its final policy meeting of the year Wednesday with a ...


December 17, 2014, 1:03 pm, 1390812
The Cleveland Fed released the median CPI and the trimmed-mean CPI this morning:

According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.1% (1.8% annualized rate) in November. The 16% trimmed-mean Consumer Price Index rose 0.1% (1.0% annualized rate) during the month. The median ...


December 17, 2014, 12:44 pm, 1390811
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December 17, 2014, 12:44 pm, 1390810
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December 17, 2014, 12:44 pm, 1390809
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December 17, 2014, 12:04 pm, 1390806
(December 17, 2014 11:24 AM, by Scott Sumner) The title of this post sounds like a truism, and yet it's actually highly controversial. In my previous post I pointed out that the ECB was not hitting its 1.9% inflation target, and apparently has no plan for doing so... (0 COMMENTS)


December 17, 2014, 12:04 pm, 1390804

You may be tired of reading commentary on the US-China climate deal struck last month. We thankfully didn’t hear as much about a minor international agreement reached in Peru ...


December 17, 2014, 12:04 pm, 1390805

We’re joined this week by AEI Scholar Claude Barfield to the discuss the idea of “right to be forgotten.” Claude explain what the idea behind it is and then gives us some insight into why the misbegotten regulation is a bad idea for tech companies. We also spend some time ...


December 17, 2014, 11:33 am, 1390802

Central banks issue currency. (They issue reserves too, but "reserves" are just the name we give to central bank currency held by commercial banks in electronic form rather than in paper form, and it makes no difference whether money is printed on paper, on plastic, or on computer disks.) Commercial ...


December 17, 2014, 11:33 am, 1390801

|Peter Boettke|

A free society is a "giving" society, not a "taking" one. In fact, all "taking" is limited to cases where there is a corresponding "giving". But in a truly free society, the "giving" will far exceed the "taking". The core principle of social cooperation in a society ...


December 17, 2014, 11:33 am, 1390799

Climate negotiators forged a new climate agreement this past weekend. It’s been named the Lima Accord, and it relies on countries to individually decide if and by how much they want to reduce their emissions of greenhouse gases. In other words, the Lima Accord sets out to solve ...


December 17, 2014, 11:33 am, 1390800

The Uber price gouging in Sydney problem was brought to my attention by Daniel Brent (thanks!). Jodi Beggs has covered it better than I could:

I’m beginning to think that the overlap in the Venn diagram of “Economic Theory” and “Good PR” is an area that my cat ...


December 17, 2014, 11:33 am, 1390798

On Monday I read this:

Negotiatorseked out a globalagreementto fight climate change during an environmental summit in the Peruvian capital, Lima, early Sunday. The approach taken by this agreementis quite different from that of the more familiarKyotoProtocol. There are no formal commitments to reduce carbon emissions by a ...


December 17, 2014, 11:33 am, 1390797

Although that strategy didn’t work out so well for Jerry Seinfeld….

It’s that time of year for my annual post on the “deadweight loss of Christmas gift giving.”

1. Economist Steven Landsburg writing in his book the “Armchair Economist: Economics and Everyday Experience“:

 I am not ...


December 17, 2014, 11:23 am, 1390796

In the UK, smoking rates have fallen significantly in the past 40 years. A combination of factors have led to declining smoking rates.

Higher tax Health campaigns warning about the dangers of smoking. Regulations to ban smoking in many public areas, making smoking less ...


December 17, 2014, 11:03 am, 1390733
Getty Images Sen. David Vitter (R., La.) proposed a Fed requirement that one of the seven members of the Fed’s board of governors to be a person ...


December 17, 2014, 11:03 am, 1390732

European Central Bank executive board member Benoît Coeuré sat down with The Wall Street Journal’s Brian Blackstone and Todd Buell to discuss the prospects for quantitative easing, the inflation outlook and reasons for optimism in Europe. Here are edited excerpts:

WSJ: What are the prospects for quantitative easing after the results ...


December 17, 2014, 11:03 am, 1390731
Note: This index is a leading indicator primarily for new Commercial Real Estate (CRE) investment.

From AIA: Demand Softens, but Outlook for Architecture Billings Index Remains Positive

Buoyed by sustained demand for apartments and condominiums, coupled with state and local governments moving ahead with delayed public projects, ...


December 17, 2014, 10:44 am, 1390730
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December 17, 2014, 10:34 am, 1390729

Congress has adjourned. The Daily Deduction will post on Mondays until the 114th Congress convenes.   

Expired tax breaks: Renewed for 2014. Last night the Senate passed a $42 billion package of expired tax breaks by a vote of 76-16. In two weeks’ time, the tax breaks will expire. Again. Senate ...


December 17, 2014, 10:04 am, 1390724
(Don Boudreaux)

Here’s the audio of the Deirdre McCloskey portion of a great panel discussion (of Thomas Piketty’s Capital in the Twenty-First Century) featuring Deirdre, Chris Giles, John McTernan, and Evan Davis.


December 17, 2014, 10:04 am, 1390723

Although that strategy didn’t work out so well for Jerry Seinfeld….

It’s that time of year for my annual post on the “deadweight loss of Christmas gift giving.”

1. Economist Steven Landsburg writing in his book the “


December 17, 2014, 9:03 am, 1390661
Laborers work at a construction site in Shanghai, December 16, 2014. Reuters

Growth in minimum-wage levels across China appeared to have slowed this year, amid low inflation ...


December 17, 2014, 9:03 am, 1390660

The Wall Street Journal’s Daily Report on Global Central Banks for Wednesday, December 17, 2014:
Sign up for the newsletter: http://on.wsj.com/grandcentralsignup.

Highlights


Hilsenrath’s Take: How Yellen’s Methodical Style Informs the “Considerable Time” Debate WSJ’s Hilsenrath ...


December 17, 2014, 9:03 am, 1390659

Low oil prices may offer a hidden gift to consumers beyond the gas pump: They could also indirectly support lower mortgage rates.

Already, the average 30-year fixed-rate mortgage fell to 4.06% last week, ...


December 17, 2014, 9:03 am, 1390658
From the BLS:

The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.3 percent in November on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.3 percent before seasonal adjustment.
...


December 17, 2014, 8:44 am, 1390657
With Russia's economy on the brink of collapse, the White House, Treasury Department, and Federal Reserve have a number of senior officials with deep experience to draw from.


December 17, 2014, 8:34 am, 1390656
The global economy is under pressure these days, suffering from a troubling mix of heightened geopolitical risk and wobbly macro reports. Despite the challenging environment, the US economy still looks resilient, based on the current numbers through November. Tracking a diversified set of indicators shows that macro momentum was solidly ...


December 17, 2014, 8:34 am, 1390652

In the spending bill, inversion curbs could be curbed. The bill to fund the government through September 2015, scheduled for a House vote today and a Senate vote after that, waters down Democratic-supported curbs on corporate inversions. The Ds would have barred companies that move their tax addresses ...


December 17, 2014, 8:34 am, 1390653

U.S.-based multinationals hold $2.1 trillion in foreign cash and insist that the only way they can feasibly bring that money back home is if Congress grants them a tax holiday—an idea that even President Obama now appears to support. But the argument they (and the President) are making for a ...


December 17, 2014, 8:34 am, 1390651

Rep. Sandy Levin (D-MI), the senior Democrat  on the House Ways & Means Committee, stood up on the House floor yesterday and urged Congress to refuse to make permanent three special tax breaks for charitable giving unless their $11 billion cost was paid for. Why were his remarks notable? ...


December 17, 2014, 8:34 am, 1390655

Can somebody explain to me why the House agreed last week to restore 50+ tax subsidies without paying for them (and thus adding $42 billion to the deficit) and 10 minutes later approved a new tax subsidy that it insisted on paying for?

It can’t be the merits of the recipients. ...


December 17, 2014, 8:34 am, 1390654

Congress blows yet another budget deadline. After missing its chance to approve a spending bill to keep the government running after Thursday, Congress is now planning to vote this week on a very short-term continuing resolution—one good for just a few days. The measure  is designed to keep ...


December 17, 2014, 8:34 am, 1390645

Congress has adjourned. The Daily Deduction will post on Mondays until the 114th Congress convenes.   

Expired tax breaks: Renewed for 2014. Last night the Senate passed a $42 billion package of expired tax breaks by a vote of 76-16. In two weeks’ time, the tax breaks will expire. Again. Senate ...


December 17, 2014, 8:34 am, 1390650

No shutdown, so far. Democrats hated it because of riders weakening Dodd-Frank financial protections and allowing fat-cats to triple their donations to political parties. Republicans hated it because it didn’t stop President Obama from liberalizing immigration laws. But, in the end, the House agreed to fund ...


December 17, 2014, 8:34 am, 1390647

Still on deck in the Senate: It is expected this week to renew dozens of expired tax breaks, including tax cuts for business research, wind power, and foreign profits. It’s worth remembering that if a $42 billion package like this gets passed every year, the


December 17, 2014, 8:34 am, 1390646

The massive 2015 spending bill that President Obama is likely to sign this week continues an ongoing effort to trash the Internal Revenue Service.  It is a cynical recipe for a self-fulfilling disaster: Give the agency more and more work. Cut its budget. Blame it for failing to do its ...


December 17, 2014, 8:34 am, 1390649

In the end-of-the-year congressional scramble, lawmakers scuttled an effort to permanently extend a number of tax breaks—largely because many feared it would open the door to widespread use of refundable tax credits by undocumented immigrants covered by President Obama’s recent executive order.  But is their concern justified?

Three sets of ...


December 17, 2014, 8:34 am, 1390648

Oh, what a night…” but no shut down. Ted Cruz and a handful of allies succeeded in delaying the Senate vote on the 2015 budget, but they couldn’t stop it. The $1.1 trillion spending bill was approved late Saturday night by a vote of 56-40. And ...


December 17, 2014, 8:05 am, 1390642

David Cay Johnston takes a trip to Disneyland some 60 years after his first visit. It looks better than ever, even as America has declined.

Every night Disneyland gets freshened up. When the park closes at midnight, the ...


December 17, 2014, 8:04 am, 1390641

At a meeting on refugee rights the other night, one of the other activists asked me if I am a Marxist. “No,” I replied, “though I used to be.” I think the last time it was a vaguely accurate description of me was probably sometime in the late 1980s or ...


December 17, 2014, 8:04 am, 1390640
(Don Boudreaux)

… is from pages 114-115 of Ronald Coase‘s 1994 collection, Essays on Economics and Economists; specifically, it’s from Coase’s 1976 superb essay “Adam Smith’s View of Man”:

Adam Smith’s argument for the use of the market for the organisation of economic activity is much stronger than it is usually ...


December 17, 2014, 7:23 am, 1390637
An opportunity to teach Business and Economics at a thriving department here - with our good friends at Charters School in Sunningdale, Berkshire.


December 17, 2014, 7:03 am, 1390588
From the MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey

Mortgage applications decreased 3.3 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending December 12, 2014. ...

The Refinance Index remained unchanged from the ...


December 17, 2014, 6:44 am, 1390587
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December 17, 2014, 6:34 am, 1390586
● Bond Investors Are Skittish Over Emerging Markets | NY Times ● Three most important things to watch during Fed meeting | MarketWatch ● Memories of 1998 May Persuade Yellen’s Fed to Keep Rates Low | BusinessWeek ● Weakened Kremlin, plunging ruble create unpredictable Putin | Globe & Mail ● ...


December 17, 2014, 5:23 am, 1390582

With economic sanctions and a plummeting price of oil, the Russian economy is seeing a real economic crisis. The value of the rouble is falling – causing inflation and a decline in living standards. Government tax revenues are falling as oil ...