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.


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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January 28, 2015, 12:04 am, 1411175
(January 28, 2015 12:05 AM, by Bryan Caplan) Voltaire never actually said, "I disapprove of what you say, but I will defend to the death your right to say it." But Voltaire would probably embrace this line - just like legions of other smart, well-meaning people. Interpreted poetically,... (1 COMMENTS)


January 28, 2015, 12:04 am, 1411174
Noah Smith has replied to my recent post criticizing his use of median household income to measure middle class living standards. He raises some interesting questions, but some of them still leave me scratching my head. Smith writes: I don’t understand the idea that “households have had to” compensate for ...


January 28, 2015, 12:04 am, 1411173

It’s National School Choice Week and across the country more than 11,000 events are planned to celebrate school choice and advocate for more options for parents.

The school choice movement has much to celebrate.

This year, more students will attend charter schools than at ...


January 27, 2015, 11:33 pm, 1411171
Payback of Greek Debt

Greece has something like €315 billion of public debt.

Forget about that. Instead focus on liabilities as presented in Revised Greek Default Scenario: Liabilities Shifted to German and French Taxpayers; Bluff of the Day Revisited.

The above total is a "modest" ...


January 27, 2015, 11:03 pm, 1411132
Illinois and Rhode Island saw the biggest declines in December unemployment from last year. Getty Images

The jobless rate fell in all four regions of the country ...


January 27, 2015, 11:03 pm, 1411131

How transitory is the inflation impact of plunging oil prices?

The answer to that question could hold the key to whether the Federal Reserve raises interest rates in midyear, as many economists still expect, or waits until September or later, just to make sure inflation is rising toward the ...


January 27, 2015, 11:03 pm, 1411130
The Federal Reserve releases its policy statement at 2 p.m. ET on Wednesday. Getty Images

The Federal Reserve’s policy meeting Tuesday and Wednesday is likely to yield ...


January 27, 2015, 11:03 pm, 1411129

January 27, 2015, 10:44 pm, 1411128

Bank resolution is a key pillar of the European Banking Union. This column argues that the current structure of large EU banks is not conducive to an effective and unbiased resolution procedure. The authors would require systemically important banks to reorganise into a ‘holding company’ structure, where the parent company ...


January 27, 2015, 10:44 pm, 1411127

In the aftermath of the Global Crisis, international banking is undergoing structural adjustments. This column investigates the role of policy-related drivers of changes in cross-border bank lending since the Crisis. The findings indicate that changes in regulatory policies are important push and pull factors of foreign credit. The empirical evidence ...


January 27, 2015, 10:44 pm, 1411126
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January 27, 2015, 10:44 pm, 1411125

This week, we want to further the learning associated with Alex Tabarrok on Private Cities. We can learn a lot from one another.

So this week, choose from one of the prompts below the fold, and post your reply (250 words or less, please!) in the comments. We'll highlight some ...


January 27, 2015, 10:04 pm, 1411123

In advance of the final report by the congressionally established Military Compensation and Retirement Modernization Commission (MCRMC) on Thursday, the Center for a New American Security (CNAS) has released an important new report ...


January 27, 2015, 9:03 pm, 1411077
I don't expect much to change in the FOMC statement. I expect "patient" to remain:

"Based on its current assessment, the Committee judges that it can be patient in beginning to normalize the stance of monetary policy."

And this sentence will probably be dropped (it seemed like a one ...


January 27, 2015, 8:05 pm, 1411073

He is an economist, taught last year at UT Austin, and is now the new finance minister of Greece.  You can find him here on scholar.google.com.  And here is his 2011 proposal for overcoming the euro crisis, another version of that here (pdf).  Here ...


January 27, 2015, 8:04 pm, 1411072
(Don Boudreaux)

Here’s a video of a superb appearance by Milton Friedman on Icelandic television in 1984.


January 27, 2015, 7:03 pm, 1411009
From the BLS: Regional and State Employment and Unemployment Summary

Regional and state unemployment rates were generally lower in December. Forty-two states and the District of Columbia had unemployment rate decreases from November, four states had increases, and four states had no change, the U.S. Bureau of Labor Statistics ...


January 27, 2015, 6:44 pm, 1411008
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January 27, 2015, 6:44 pm, 1411007
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January 27, 2015, 6:44 pm, 1411006
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January 27, 2015, 6:44 pm, 1411005

Quantitative easing? Bah humbug!

TIRED of lightweights bickering over the financial crisis and its aftermath? Of economic upheaval becoming merely fodder for intellectually dishonest political campaigns? Wonder what biggest thinkers might have to say?

Our efforts to consult the giants of economist has ...


January 27, 2015, 6:34 pm, 1411004
Teaser:

During ...


January 27, 2015, 6:04 pm, 1411000


January 27, 2015, 6:04 pm, 1410999

Over at Business Insider,  James Rosenbush writes about the need for startups (a favorite topic of mine):

The private sector economy has a life blood, and it is startups. New businesses are started by inventive entrepreneurs out of economic necessity or because their ...


January 27, 2015, 6:04 pm, 1410998


January 27, 2015, 6:04 pm, 1410997

Editor’s Note: The following is Desmond Lachman’s response to the New York Times Room for Debate question: Can Greece’s new leftist government lift the country out of its economic wreckage or, by resisting its creditors, will it only make things worse?

In the depth of an economic depression, it is perfectly ...


January 27, 2015, 5:33 pm, 1410995
US Special Forces in Ukraine?

In response to US Special Forces in Mariupol? I received an interesting email from "Dan" a 23-year Army veteran with four years in special services.

Dan writes ...

I was a soldier in the US Army for 23 years including ...


January 27, 2015, 5:33 pm, 1410994
I have been in NYC since Sunday night. On Sunday night, I had the opportunity to sit snugly with some teenagers in the Economy Plus section of a United Flight. I worked for several hours and then watched Think Like a Man. Kevin Hart packs a punch. When ...


January 27, 2015, 5:03 pm, 1410931

For this week's tax map, we're continuing our series on pass-through businesses. For the first map of the series, check out our map from last week

Sole proprietorships, S corporations, limited liability companies (LLCs), and partnerships are also known as pass-through businesses. These entities are called pass-throughs, because the ...


January 27, 2015, 5:03 pm, 1410930

How transitory is the inflation impact of plunging oil prices?

The answer to that question could hold the key to whether the Federal Reserve raises interest rates in midyear, as many economists still expect, or waits until September or later, just to make sure inflation is rising toward the ...


January 27, 2015, 5:03 pm, 1410929
The Federal Reserve releases its policy statement at 2 p.m. ET on Wednesday. Getty Images

The Federal Reserve’s policy meeting Tuesday and Wednesday is likely to yield ...


January 27, 2015, 5:03 pm, 1410928
This morning, S&P reported that the National index increased 0.8% in October seasonally adjusted. However, it appears the seasonal adjustment has been distorted by the high level of distressed sales in recent years. Trulia's Jed Kolko wrote in August: "Let’s Improve, Not Ignore, Seasonal Adjustment of ...


January 27, 2015, 4:44 pm, 1410927

This column discusses and evaluates the new guidelines issued by the European Commission regarding the Stability and Growth Pact. These do not change the existing rules, but work to improve transparency, encourage fiscal discipline, and underline that fiscal adjustments should vary based on the circumstances a country finds itself to ...


January 27, 2015, 4:44 pm, 1410926
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January 27, 2015, 4:04 pm, 1410923

The most preposterous thing about a carbon tax, which California is in the process of implementing under the guise of a cap-and-trade program and which some other states are now considering, is the pretense that it will curb carbon emissions.

This notion — that states can save the planet from getting ...


January 27, 2015, 4:04 pm, 1410922

A new post by Brookings’s Melissa  Kearney, Brad Hershbein and David Boddy points out that almost 30% of workers in the US need a license to do their job. Occupational licensing has increased quite a ...


January 27, 2015, 2:44 pm, 1410855
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January 27, 2015, 2:34 pm, 1410854
Teaser:

A ...


January 27, 2015, 2:05 pm, 1410853

January 27, 2015, 2:05 pm, 1410852

American Sniper is one of the best anti-war movies I have seen, ever.  But it shows the sniper-assassin, and his killing, to be sexy, and to be regarded as sexy by women, while the rest of war is dull and stupid.  (Even the two enemy snipers are quite attractive and ...


January 27, 2015, 2:04 pm, 1410851
(January 27, 2015 03:32 PM, by David Henderson) Against Collectivism In the last year I have made our sister legal blog, Library of Law and Liberty, part of my newsfeed. I read most of their posts and learn from many of them. Today, blogger and George Mason University... (0 COMMENTS)


January 27, 2015, 1:33 pm, 1410848
The last two weeks have been full of monetary news with the Swiss Franc peg, and the ECB's announcement of Quantitative Easing (QE). A few thoughts.

As you have ...


January 27, 2015, 1:33 pm, 1410847
The casualties continue to pile up in the wake of the the Swiss National Bank dropping its peg to the euro.

(See Rabbit Hole Intervention Fails: Wild Moves in Swiss Franc as Switzerland Abandons Euro Peg; Morals of the Story).

The first moral of the ...


January 27, 2015, 1:33 pm, 1410846
Why did employment growby about 3 millionin 2014? Here is the answer from a new paper:

We measure the effect of unemployment benefit duration on employment. We exploit the variation induced by the decision of Congress in December 2013 not to reauthorize the ...


January 27, 2015, 1:03 pm, 1410785
Salt is unloaded at the Scio Township, Mich., maintenance yard in September. The rewards for surviving last year’s punishing winter were tight supplies of road salt and some drastic ...


January 27, 2015, 1:03 pm, 1410783
The national average price of gasoline is a half-cent higher today than it was yesterday, according to auto club AAA. That is the first rise in gas prices since ...


January 27, 2015, 1:03 pm, 1410784
Cleveland saw the smallest annual increase in home prices, 0.6% from November a year ago. Getty Images

Home prices in 20 major cities increased 4.3%  in year ended ...


January 27, 2015, 1:03 pm, 1410782
Illinois and Rhode Island saw the biggest declines in December unemployment from last year. Getty Images

The jobless rate fell in all four regions of the country ...


January 27, 2015, 1:03 pm, 1410781
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January 27, 2015, 1:03 pm, 1410780
Earlier: New Home Sales at 481,000 Annual Rate in December, Highest December since 2007

The new home sales for December were at 481 thousand on a seasonally adjusted annual rate basis (SAAR). This was the highest level of sales in over 6 years (best December since 2007).


January 27, 2015, 12:44 pm, 1410779
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January 27, 2015, 12:44 pm, 1410778
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January 27, 2015, 12:44 pm, 1410777
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January 27, 2015, 12:04 pm, 1410773
(January 27, 2015 10:44 AM, by Scott Sumner) Back in 2000, Robin Hanson wrote a paper entitled "Shall We Vote on Values, But Bet on Beliefs?", which offered a way forward for economics in the 21st century. Unfortunately his ideas were ignored (and even ridiculed) and today we... (1 COMMENTS)


January 27, 2015, 12:04 pm, 1410772
(Don Boudreaux)

One of the most frequently heard arguments in support of the so-called “war on drugs” is that a society whose government doesn’t actively discourage the use of many or most intoxicating and debilitating substances will inevitably become coarse (perhaps even downright uncivilized) and filled with all manner of ...


January 27, 2015, 12:04 pm, 1410770

The new CBO budget projection predicts annual deficits will continue to shrink the next few years before rising again in 2018, from 2.5%  of GDP in 2017 to 4.0% in 2025. Two reasons: Higher entitlement spending (from 13.0% of GDP in 2017 to 14.2% ...


January 27, 2015, 12:04 pm, 1410771

Net neutrality sounds good, but it means different things to different people, making it easy for special interests to manipulate it for narrow political ends.

One definition of net neutrality is a user’s freedom to connect to any Internet content, application or service. This is uncontroversial, and Internet providers already agree ...


January 27, 2015, 12:04 pm, 1410769

Barely a year ago, most foreign policy pundits would likely have agreed on one simple prediction: the election of Narendra Modi as Indian prime minister would set back relations with the United States, and by extension with the West more broadly.

Instead, the opposite has happened. Yesterday President Barack Obama shattered ...


January 27, 2015, 11:03 am, 1410701

The Congressional Budget Office predicts the government’s deficits will shrink in 2015 and again in 2016. As a share of the economy, it will fall to 2.5% and remain there through 2017 before beginning to rise again with the aging of the population.

These small deficits may seem surprising given ...


January 27, 2015, 11:03 am, 1410702
Crews work on D.R. Horton Inc. homes near Dallas on Monday. Kris Hudson/The Wall Street Journal

D.R. Horton Inc.’s latest quarterly results are the strongest signal yet ...


January 27, 2015, 11:03 am, 1410700
Allan Landon, Bank of Hawaii CEO, has been nominated for an open seat on the Federal Reserve’s Board Associated Press

Allan Landon, President Barack Obama‘s nominee ...


January 27, 2015, 11:03 am, 1410703
With a blizzard on the way, New York City is shrouded in a light snow on Monday. New York, and much of the Northeast, is bracing for a major ...


January 27, 2015, 11:03 am, 1410695
The national average price of gasoline is a half-cent higher today than it was yesterday, according to auto club AAA. That is the first rise in gas prices since ...


January 27, 2015, 11:03 am, 1410699

The Wall Street Journal’s Daily Report on Global Central Banks for Tuesday, January 27, 2015
Sign up for the newsletter: http://on.wsj.com/grandcentralsignup

Highlights


Hilsenrath’s Take: Bad Weather Could Complicate an Already Tough Fed Decision in March


January 27, 2015, 11:03 am, 1410696
Cleveland saw the smallest annual increase in home prices, 0.6% from November a year ago. Getty Images

Home prices in 20 major cities increased 4.3%  in year ended ...


January 27, 2015, 11:03 am, 1410697
Salt is unloaded at the Scio Township, Mich., maintenance yard in September. The rewards for surviving last year’s punishing winter were tight supplies of road salt and some drastic ...


January 27, 2015, 11:03 am, 1410698
Occupy Wall Street protestors in 2011 focused on New York City. State-level tax data shows the gap between the wealthiest 1% and everyone else was widening in all 50 ...


January 27, 2015, 11:03 am, 1410694

I have a new column:

Taxing the Wealthy Won't Hurt Economic Growth: I have no idea whether or not Mitt Romney will run for president, and if he does, if he will get the nomination. But many of the issues he ran on when he was a candidate in ...


January 27, 2015, 11:03 am, 1410693
S&P/Case-Shiller released the monthly Home Price Indices for November ("November" is a 3 month average of September, October and November prices).

This release includes prices for 20 individual cities, two composite indices (for 10 cities and 20 cities) and the monthly National index.

Note: Case-Shiller reports Not ...


January 27, 2015, 11:03 am, 1410692
The Census Bureau reports New Home Sales in December were at a seasonally adjusted annual rate (SAAR) of 481 thousand.

October sales were revised up from 445 thousand to462 thousand, and November sales were revised down from 438 thousand to 431 thousand.

"Sales of new single-family houses ...


January 27, 2015, 10:44 am, 1410691

With the large Syriza victory in Greece, thoughts turn to forthcoming debt restructuring talks. This column argues that Greece is unlikely to get a large restructuring. Using a Rubinstein bargain approach to generate a back-of-the-envelope estimate, Greece would get some breathing room but not much. Rather than running a structural ...


January 27, 2015, 10:44 am, 1410690
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January 27, 2015, 10:34 am, 1410689

I try not to watch politics programmes on TV. Andrew Neil's interview with Natalie Bennett about a basic income reminds me why.

I'm appalled by Natalie's inability to answer his first question: how to pay for it? The Citizens Income Trust has set out


January 27, 2015, 10:04 am, 1410681

The education policy world is buzzing. Universal pre-k for all 4 year olds. Free community college to anyone who wants to attend. Major changes to the No Child Left Behind Act. National School Choice Week.

Attention is warranted: education is a key to economic mobility in America. An additional year of ...


January 27, 2015, 9:33 am, 1410678

NYC Mayor:

“The furious hoarfrost bearing down upon us knows neither mercy nor reason, and all within the five boroughs will perish, cowering in their brittle dwellings ... This shall be a tempest the likes of which has never been glimpsed by man or beast. Clutch your babes close to your ...


January 27, 2015, 9:33 am, 1410677

Sad:

Barbie and other traditional toys are having a much tougher time supporting their elderly parent Mattel, a toymaker significantly weakened by stiff competition from small upstarts and by digital distractions aimed at children.

On Monday, the ...


January 27, 2015, 9:33 am, 1410676

January 27, 2015, 9:03 am, 1410614

The Wall Street Journal’s Daily Report on Global Central Banks for Tuesday, January 27, 2015
Sign up for the newsletter: http://on.wsj.com/grandcentralsignup

Highlights


Hilsenrath’s Take: Bad Weather Could Complicate an Already Tough Fed Decision in March


January 27, 2015, 9:03 am, 1410613
Occupy Wall Street protestors in 2011 focused on New York City. State-level tax data shows the gap between the wealthiest 1% and everyone else was widening in all 50 ...


January 27, 2015, 8:44 am, 1410612
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January 27, 2015, 8:44 am, 1410610
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January 27, 2015, 8:44 am, 1410611
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January 27, 2015, 8:44 am, 1410609

Can a company really melt? Putting aside a business with a perishable product or inventory, does management really wake up one ...


January 27, 2015, 8:35 am, 1410608
Estimates of US GDP growth for 2014’s fourth quarter have been rising in recent months, but the current outlook still anticipates a substantial slowdown from Q3’s strong advance. The economy is projected to increase 3.6% in Q4 (real seasonally adjusted rate), based on The Capital Spectator’s new median point forecast ...


January 27, 2015, 8:05 am, 1410605

In my EconTalk with Russ Roberts on proprietary cities I only mentioned company towns in passing. Even the great Milton Friedman got company towns wrong, however, so it’s worthwhile spending a little time to dispel some myths.

Take company stores. Why did mining companies often own the town store? The standard answer: to squeeze every ...


January 27, 2015, 8:04 am, 1410604
(Don Boudreaux)

… is from page 171 of David Henderson’s excellent 2002 book, The Joy of Freedom:

Markets teach or encourage at least three virtues: tolerance, honesty, and compassion.


January 27, 2015, 7:33 am, 1410602

Make your plans now:

It goes right through the middle of the country too . . . almost everyone in the lower 48 is within a day's drive of seeing it. Cities in the path of the totality include Salem, OR, Jackson, WY, Lincoln, NE, St. Louis, ...


January 27, 2015, 7:33 am, 1410600

Interesting look at recent work by prominent historians on the role of climate in history.

For the most part, these five senior historians use climate change to discuss economic and political history. Unexpected climate shifts, or brief climate shocks, brought crop failure, hunger, unrest—these arguments appear time ...


January 27, 2015, 7:33 am, 1410601

January 27, 2015, 7:33 am, 1410599

Seems like a useful set of recommendations.


January 27, 2015, 7:33 am, 1410598

The long run--fingers crossed--could be very, very good.


January 27, 2015, 6:44 am, 1410537
Stark partisan differences in the importance attached to making further deficit reductions, combined with the new deficit estimates, could spell more tension in the annual spending debate in Washington.


January 27, 2015, 6:34 am, 1410536
● Doubts grow about mid-year rate hike, but Fed won’t express any | MarketWatch ● U.K. GDP Growth Moderates In Q4 | RTT ● Greece debt repayment in full is ‘unrealistic’, says Syriza | BBC ● Market reaction muted after S&P drops Russia to ‘junk’ | Reuters ● China 2014 ...


January 27, 2015, 5:03 am, 1410492

From our perspective, the most important and useful part of the Efficient Markets Hypothesis (EMH) is its assumption that asset prices change quickly to reflect the impact of new information upon the future expectations of investors.

So what does the ability of investors to ...


January 27, 2015, 5:03 am, 1410491

January 27, 2015, 5:03 am, 1410490

Daniel Little:


Figure: Althusser's conception of the CMP (RP Resch, Althusser and the Renewal of Marxist Social Theory)

The mode of production as society's structure: Sociologists study social structureand the effects that structures ...


January 27, 2015, 4:44 am, 1410489
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January 27, 2015, 2:44 am, 1410446
David Wessel: CBO is growing steadily gloomier about the U.S. economy's capacity to grow. If CBO is right, that means it would be harder to bring down the historically high ratio of government debt to GDP and that living standards in the U.S. will improve more slowly.


January 27, 2015, 2:05 am, 1410445

Table 1 shows that adding estimates from the literature suggests that economists have already explained 177% of the rise in average BMI.

That is from this new NBER paper, by Courtemanche, Pinkston, Ruhm, and Wehby, which seems to be one of the most careful studies to date.  They do ...


January 27, 2015, 2:04 am, 1410444
Event Description

International trade and the US economy are top issues in the 114th Congress. We welcome you to join us at AEI as Senate Finance Committee Chairman Orrin Hatch (R-UT) outlines his vision for how America can succeed in today’s global economy. Sen. Hatch will speak to his longstanding efforts ...


January 27, 2015, 1:03 am, 1410397
Crews work on D.R. Horton Inc. homes near Dallas on Monday. Kris Hudson/The Wall Street Journal

D.R. Horton Inc.’s latest quarterly results are the strongest signal yet ...


January 27, 2015, 1:03 am, 1410395

Allan Landon, President Barack Obama‘s nominee for an open seat on the Federal Reserve’s Board, has personal assets worth between $9.7 million and $41 million, according to financial disclosure forms filed with the U.S. Office of Government Ethics.

Mr. Landon, a partner in Community BanCapital, a private investment ...


January 27, 2015, 1:03 am, 1410396

The Congressional Budget Office predicts the government’s deficits will shrink in 2015 and again in 2016. As a share of the economy, it will fall to 2.5% and remain there through 2017 before beginning to rise again with the aging of the population.

These small deficits may seem surprising given ...


January 27, 2015, 12:04 am, 1410392
(January 27, 2015 12:32 AM, by Bryan Caplan) When you're a normal member of your society, the appeal of collectivism is easy to understand. Most people believe what you believe and enjoy what you enjoy. So wouldn't it be great if society as a whole continuously celebrated your... (0 COMMENTS)