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 29, 2015, 12:44 pm, 1412439
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January 29, 2015, 12:34 pm, 1412432
Teaser:

Some ...


January 29, 2015, 12:05 pm, 1412428

I hope Robert Mundell is proud:

The idyllic Swiss village of Grächen, flanked by better-known competitors Zermatt and Saas-Fee, has declared itself a financial microclimate, with constant exchange rate of 1.35 francs to the euro. The rate has been in place during winter months since 2011, and squarely ignores the official ...


January 29, 2015, 12:04 pm, 1412426
(January 29, 2015 11:07 AM, by Alberto Mingardi) The world is pondering the odds of Mr Tsipras and Syriza succeeding. To win an election on a rather populist platform might be easy, but governing and entering into highly complex negotiations with European authorities is a different matter. I... (0 COMMENTS)


January 29, 2015, 12:04 pm, 1412427
(January 29, 2015 10:55 AM, by David Henderson) Regular Econlog commenter Ray Lopez writes, in response to Scott Sumner: My first objection: aside from the "Open Letter" by the liberal leaning economists, that indeed predicted a 'double-dip recession' if sequestration happened, who else predicted a recession? Not the... (0 COMMENTS)


January 29, 2015, 11:23 am, 1412425
What does this mean? Stated simply, it means that ratings agencies – who try to judge how reliable a debtor is – have issued a warning about the Russian government. If traders in the bond market doubt Russia’s ability to pay back debts, it will make it much ...


January 29, 2015, 11:03 am, 1412364

By many measures, U.S. wages have been stagnant since the recession ended. It’s a sign the economy isn’t yet at full strength and another reason for the Federal Reserve to move cautiously ...


January 29, 2015, 11:03 am, 1412362
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 29, 2015, 11:03 am, 1412363

The overall U.S. housing market still is struggling to hit its stride, but the remodeling market meanwhile has fully regained its mojo, according to a report released Thursday by the Harvard University ...


January 29, 2015, 11:03 am, 1412361
From the NAR: Pending Home Sales Stall in December

The Pending Home Sales Index, a forward-looking indicator based on contract signings, decreased 3.7 percent to 100.7 in December from a slightly downwardly revised 104.6 in November but is 6.1 percent above December 2013 (94.9). Despite last month’s decline (the ...


January 29, 2015, 11:03 am, 1412360
The Census Bureau released the Residential Vacancies and Homeownership report for Q4 2014.

This report is frequently mentioned by analysts and the media to track the homeownership rate, and the homeowner and rental vacancy rates. However, there are serious questions about the accuracy of this survey.


January 29, 2015, 10:44 am, 1412359
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January 29, 2015, 10:35 am, 1412358
After reading today’s weekly update on jobless claims the Fed’s comment yesterday that “economic activity has been expanding at a solid pace” carries more weight. Indeed, new filings for unemployment benefits dropped by a staggering 43,000 last week to a seasonally adjusted 265,000—the lowest in nearly 15 years. The shortened ...


January 29, 2015, 10:34 am, 1412357

In the Times, David Aaronovitch accuses the left of being "completely without ideas" and of sinking into the politics of "symbology" because they have "nothing else." I'm in two minds about this.

One the one hand, it seems wrong. A few decent ideas get us a longish ...


January 29, 2015, 10:04 am, 1412351

On December 24, the Islamic State (ISIS) captured Jordanian pilot Muath al Kasasbeh when his F-16 fighter jet crashed near Raqqa, Syria. After failed efforts by the United States and Turkey to secure Kasasbeh’s release, Jordan proposed a ...


January 29, 2015, 9:33 am, 1412347
This seems like a great opportunity for econ grad students.


January 29, 2015, 9:33 am, 1412346

Gov. Scott Walker said Wednesday that University of Wisconsin System faculty and staff could increase their workload to reduce the impact of his proposed $300 million budget cut.

Walker announced this week that the proposed cuts, along with a two-year tuition freeze, would be part of his two-year budget ...


January 29, 2015, 9:03 am, 1412284

The Wall Street Journal’s Daily Report on Global Central Banks for Thursday, January 29, 2015:

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


Highlights

Hilsenrath’s Take: Amidst Many Distractions, Labor Market at Center of Fed Thinking Fed Stays Patient ...


January 29, 2015, 9:03 am, 1412283
The government will offers its broadest snapshot of the 2014 economy Friday with the first estimate of how much the economy grew in the final quarter.


January 29, 2015, 9:03 am, 1412282
The DOL reported:

In the week ending January 24, the advance figure for seasonally adjusted initial claims was 265,000, a decrease of 43,000 from the previous week's revised level. This is the lowest level for initial claims since April 15, 2000 when it was 259,000. The previous week's level ...


January 29, 2015, 8:44 am, 1412278
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January 29, 2015, 8:44 am, 1412273

Anyone who has ever litigated a valuation issue knows that valuation is more art than science. Experts often arrive at widely ...


January 29, 2015, 8:35 am, 1412272
The Federal Reserve continues to signal that it will start raising interest rates later this year, according to yesterday’s FOMC statement. But the Treasury market begs to differ. The benchmark 10-year yield fell to 1.73% yesterday, the lowest since last May. Notably, the 2-year yield, considered to be the most ...


January 29, 2015, 8:34 am, 1412271

TPC shows how President Obama would redistribute income from the rich to the poor. The President will release his budget next week, and with it, a tax plan analyzed by the Tax Policy Center. TPC’s Howard Gleckman explains that under the plan, after- tax income would ...


January 29, 2015, 8:34 am, 1412270
Teaser:

One ...


January 29, 2015, 8:34 am, 1412269
Teaser:

Before ...


January 29, 2015, 8:04 am, 1412267
(Don Boudreaux)

… is from page 98 of Robert Higgs’s 2004 volume, Against Leviathan (footnote excluded):

And make no mistake: the politicians know a good deal when they stumble into one.  Large majorities of voters continue to support the attack on drug users and dealers, notwithstanding the soaring costs of ...


January 29, 2015, 7:33 am, 1412263

For anybody who studied a foreign language in American schools, I recommend Tom Parks's bit. It describes my experience exactly.


January 29, 2015, 7:33 am, 1412261

Good question.

Studies have shown that straight women overestimate the importance of thinness in heterosexual men’s perception of female beauty. That is to say, women think men prefer ladies much thinner . . . than they actually do.

Related: "Why Do So Many Women Wear So ...


January 29, 2015, 7:33 am, 1412262

For my money, a fine list.


January 29, 2015, 7:03 am, 1412214
Peter Praet, the ECB’s chief economist, said he sees things improving for the eurozone economy. Associated Press

LUXEMBOURG—European Central Bank Executive Board member Peter ...


January 29, 2015, 6:44 am, 1412213
Mitt Romney plans to say in a speech Wednesday that the economy is "looking up," and the wealthy are improving but the middle class and poor are not.


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January 29, 2015, 6:35 am, 1412208
● Fed upbeat on U.S. economy, cites strong job gains | Reuters ● German Unemployment Drops as Growth Strengthens | Bloomberg ● Eurozone M3 Growth Accelerates; Loan To Private Sector Falls | RTT ● Japan Dec Retail Sales Up for 6th Month To Highest Since Mar | MNI ● 401(k) ...


January 29, 2015, 6:05 am, 1412207

January 29, 2015, 5:33 am, 1412204

"Variations in the sun’s output may explain some of the natural changes in Europe’s climate during the past 1,000 years, including the deadly, cold winters of the 16th and 18th centuries. Earth scientists recently discovered that as solar output dipped, so did temperatures in the North Atlantic, which ...


January 29, 2015, 5:33 am, 1412203
When inflation alarmists want to convince everyone the dollar is about to become worthless, they post this chart of the CPI.

CPI - Urban Consumers - All Items - Index



Inflationists claim that is a trend to oblivion. And actually ...


January 29, 2015, 5:23 am, 1412202

Deflation means a fall in prices (a negative inflation rate). Policy makers should generally be concerned if there is an inflation rate of less than the target of 2%.

For example, in the Eurozone  Jan 2015, the headline inflation rate is ...


January 29, 2015, 5:03 am, 1412141

January 29, 2015, 3:23 am, 1412139

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

msantoli:

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 these ...


January 29, 2015, 3:23 am, 1412138

Photo Credit: DonkeyHotey

December 2014January 2015CommentsInformation received since the Federal Open Market Committee met in October suggests that economic activity is expanding at a moderate pace.Information received since the Federal Open Market Committee met in December ...


January 29, 2015, 3:23 am, 1412137

I was on RT Boom/Bust yesterday.  The segment that I taped here was mostly on corporate earnings.  There’s only seven minutes of me here — so enjoy it if you will.


January 29, 2015, 3:03 am, 1412076

From Foxnews:

Wisconsin Gov. Scott Walker is calling for steep cuts to the University of Wisconsin System, while offering the network more freedom in exchange, … [H]is university plan … would cut funding by $300 million over two years…

This measure would amount to a 13% cut in state funding ...


January 29, 2015, 2:05 am, 1412075

In addition to my earlier pick of Chile, I now must nominate Sweden and Norway for this honor.  Both are wonderful countries, and in absolute terms very likely to remain strong performers.  But I think a good deal of that old Nordic magic is slipping away, and this ...


January 29, 2015, 1:03 am, 1412030
Pedestrians walk past the Reserve Bank of Australia in Sydney, Australia. Bloomberg News

Despite an uptick in inflation for the last quarter of 2014, Australia’s central bank ...


January 29, 2015, 1:03 am, 1412029

 

What does deflation look like? As Europe and other regions flirt with deflation, Japan’s experience over the past couple of decades offers a window: it hasn’t been the Great Depression, but it has been painful–and hard to escape.


January 29, 2015, 12:34 am, 1412028
Teaser:

Before ...


January 28, 2015, 11:03 pm, 1411989
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 28, 2015, 11:03 pm, 1411988

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 28, 2015, 11:03 pm, 1411991
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 28, 2015, 11:03 pm, 1411992
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 28, 2015, 11:03 pm, 1411990
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 28, 2015, 11:03 pm, 1411987
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 28, 2015, 11:03 pm, 1411984
Boris Sofman, co-founder and CEO of Anki,which raised $55 million in venture capital in 2014. Getty Images (2013)

Venture capitalists are betting big on a robot invasion.

They ...


January 28, 2015, 11:03 pm, 1411985

Inequality in America is about more than the rich and the poor. Significant income gaps are present by age, by race, by occupation, by family type, by homeownership and more.

Since 1989, the Federal Reserve has compiled detailed data on the wealth of Americans, presented in 10 different charts ...


January 28, 2015, 11:03 pm, 1411986

The Wall Street Journal’s Daily Report on Global Central Banks for Wednesday, January 28, 2015:

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


Highlights

Hilsenrath’s Take: China’s Local Government Debt Could Be Source of Trouble Hard Choices on Easy ...


January 28, 2015, 11:03 pm, 1411980

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 ...


January 28, 2015, 11:03 pm, 1411981

Here is the full statement text from the Federal Reserve’s policy-making committee.

Information received since the Federal Open Market Committee met in December suggests that economic activity has been expanding at a solid pace.  Labor market conditions have improved further, with strong job gains and a lower unemployment rate.  ...


January 28, 2015, 11:03 pm, 1411983
The number of children on food stamps remains higher than at the start of the 2007-09 recession. Getty Images

The use of food-stamps has generally ...


January 28, 2015, 11:03 pm, 1411979
The Federal Reserve building in Washington, D.C. Reuters

What caught our eye in the Federal Reserve’s January policy statement released Wednesday.

No Rate Hikes Until at ...


January 28, 2015, 11:03 pm, 1411982

Much has been made of the stagnant wage growth so far in this expansion even as net hiring has accelerated. The Federal Reserve thinks it’s one sign that the labor market still ...


January 28, 2015, 11:03 pm, 1411976

The Federal Reserve chooses its words carefully, though it doesn’t always say exactly what officials mean.

The central bank said in its policy statement Wednesday the economy “has been expanding at a solid pace,” and characterized recent job gains as “strong.” Both were tweaks from the December statement, ...


January 28, 2015, 11:03 pm, 1411973
The Marriner S. Eccles Federal Reserve building in Washington, D.C. Bloomberg News

No one expected major changes in Federal Reserve policy at this week’s meeting—and sure enough, ...


January 28, 2015, 11:03 pm, 1411974

For the first time since December 2009, Richmond Fed President Jeffrey Lacker was not the odd man out.

Mr. Lacker did not dissent over the Federal Reserve policy statement Wednesday, joining his colleagues to say the central bank would be “patient” in deciding when to start raising ...


January 28, 2015, 11:03 pm, 1411975

If you want to understand the complexity of monetary policy, you could read and interpret the Federal Reserve‘s policy statement or you could just do a word count. The results of the ...


January 28, 2015, 11:03 pm, 1411978
In a statement from the New York Fed, the bank said a series of so-called “term” reverse repurchase agreements will take place over February and March.


January 28, 2015, 11:03 pm, 1411977

The Federal Reserve said Wednesday it would keep short-term interest rates near zero until at least the middle of the year. The central bank’s policy committee also signaled caution about low inflation and nodded to overseas uncertainty by including new language that it would monitor international developments. Here’s how ...


January 28, 2015, 10:34 pm, 1411972
Teaser:

Before ...


January 28, 2015, 10:04 pm, 1411969
(January 29, 2015 12:04 AM, by Bryan Caplan) In the face of Jeff Sachs' challenge, Bob Lawson proposes a bet on economic freedom:"Dear Tyler, I read with obvious interest your post (and the paper itself) about the endogeneity of institutions. Leaving aside my issues with the IV literature,... (0 COMMENTS)


January 28, 2015, 10:04 pm, 1411968


January 28, 2015, 9:23 pm, 1411967
FT Video has a short animation by Martin Wolf explaining why Global Trade Imbalances matter. This could be useful for A2 students, but needs to be used with caution - they will need to be quite clear first on the difference between a trade surplus or deficit and a government ...


January 28, 2015, 9:03 pm, 1411912

Much has been made of the stagnant wage growth so far in this expansion even as net hiring has accelerated. The Federal Reserve thinks it’s one sign that the labor market still ...


January 28, 2015, 9:03 pm, 1411913
The number of children on food stamps remains higher than at the start of the 2007-09 recession. Getty Images

The use of food-stamps has generally ...


January 28, 2015, 9:03 pm, 1411911

Here is the full statement text from the Federal Reserve’s policy-making committee.

Information received since the Federal Open Market Committee met in December suggests that economic activity has been expanding at a solid pace.  Labor market conditions have improved further, with strong job gains and a lower unemployment rate.  ...


January 28, 2015, 9:03 pm, 1411910

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 ...


January 28, 2015, 9:03 pm, 1411907

The Federal Reserve said Wednesday it would keep short-term interest rates near zero until at least the middle of the year. The central bank’s policy committee also signaled caution about low inflation and nodded to overseas uncertainty by including new language that it would monitor international developments. Here’s how ...


January 28, 2015, 9:03 pm, 1411909
The Federal Reserve building in Washington, D.C. Reuters

What caught our eye in the Federal Reserve’s January policy statement released Wednesday.

No Rate Hikes Until at ...


January 28, 2015, 9:03 pm, 1411906

The Federal Reserve chooses its words carefully, though it doesn’t always say exactly what officials mean.

The central bank said in its policy statement Wednesday the economy “has been expanding at a solid pace,” and characterized recent job gains as “strong.” Both were tweaks from the December statement, ...


January 28, 2015, 9:03 pm, 1411908
In a statement from the New York Fed, the bank said a series of so-called “term” reverse repurchase agreements will take place over February and March.


January 28, 2015, 9:03 pm, 1411905

If you want to understand the complexity of monetary policy, you could read and interpret the Federal Reserve‘s policy statement or you could just do a word count. The results of the ...


January 28, 2015, 9:03 pm, 1411903
The Marriner S. Eccles Federal Reserve building in Washington, D.C. Bloomberg News

No one expected major changes in Federal Reserve policy at this week’s meeting—and sure enough, ...


January 28, 2015, 9:03 pm, 1411904

For the first time since December 2009, Richmond Fed President Jeffrey Lacker was not the odd man out.

Mr. Lacker did not dissent over the Federal Reserve policy statement Wednesday, joining his colleagues to say the central bank would be “patient” in deciding when to start raising ...


January 28, 2015, 9:03 pm, 1411902
On mortgage rates from Matthew Graham at Mortgage News Daily: Mortgage Rates Back to Long Term Lows After Fed

Mortgage rates fell again today, and while the move wasn't big, it was enough to bring most lenders back in line with the best rates from two weeks ago. ...


January 28, 2015, 8:44 pm, 1411901
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January 28, 2015, 8:44 pm, 1411900
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January 28, 2015, 8:04 pm, 1411898

This week, President Barack Obama became the first U.S. president to preside as the chief guest at India’s annual Republic Day celebrations. What does this mean for U.S.-India relations? Coming on the heels of Indian Prime Minister Narendra Modi’s successful visit to the U.S. last September, Obama’s latest trip to ...


January 28, 2015, 7:23 pm, 1411897
This website, and the many links to videos and articles included within it, looks like a treasure trove of resources for teaching inequality.


January 28, 2015, 7:23 pm, 1411896
Read on to find out about my article in UKED Magazine on 'Real World Economics'.


January 28, 2015, 7:23 pm, 1411895
"Smoking during pregnancy remains a major health problem, resulting in the deaths of an estimated 5,000 foetuses and babies each year in the UK. It is responsible for tens of millions of pounds in extra healthcare spending."This extract from a report published today in the British Medical Journal offers clear ...


January 28, 2015, 7:03 pm, 1411832
The Federal Reserve building in Washington, D.C. Reuters

What caught our eye in the Federal Reserve’s January policy statement released Wednesday.

No Rate Hikes Until at ...


January 28, 2015, 7:03 pm, 1411830

The Federal Reserve said Wednesday it would keep short-term interest rates near zero until at least the middle of the year. The central bank’s policy committee also signaled caution about low inflation and nodded to overseas uncertainty by including new language that it would monitor international developments. Here’s how ...


January 28, 2015, 7:03 pm, 1411831
In a statement from the New York Fed, the bank said a series of so-called “term” reverse repurchase agreements will take place over February and March.


January 28, 2015, 7:03 pm, 1411828

If you want to understand the complexity of monetary policy, you could read and interpret the Federal Reserve‘s policy statement or you could just do a word count. The results of the ...


January 28, 2015, 7:03 pm, 1411829

The Federal Reserve chooses its words carefully, though it doesn’t always say exactly what officials mean.

The central bank said in its policy statement Wednesday the economy “has been expanding at a solid pace,” and characterized recent job gains as “strong.” Both were tweaks from the December statement, ...


January 28, 2015, 7:03 pm, 1411826
The Marriner S. Eccles Federal Reserve building in Washington, D.C. Bloomberg News

No one expected major changes in Federal Reserve policy at this week’s meeting—and sure enough, ...


January 28, 2015, 7:03 pm, 1411827

For the first time since December 2009, Richmond Fed President Jeffrey Lacker was not the odd man out.

Mr. Lacker did not dissent over the Federal Reserve policy statement Wednesday, joining his colleagues to say the central bank would be “patient” in deciding when to start raising ...


January 28, 2015, 7:03 pm, 1411825

Going into Wednesday, 28 January 2015, investors had believed that the Fed was likely to indicate that the U.S. economy was performing solidly enough that it would begin to implement its plan to hike short term interest rates before the end of 2015-Q2 in June 2015. ...


January 28, 2015, 7:03 pm, 1411824

Tim Duy:

FOMC Decision, by Tim Duy: If you were looking for fireworks from today's FOMC statement, you were disappointed. Indeed, you need to work pretty hard to pull a story out of this statement. It provided little reason to believe that the Fed has shifted ...


January 28, 2015, 6:44 pm, 1411823
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January 28, 2015, 6:44 pm, 1411822
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January 28, 2015, 6:44 pm, 1411821
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January 28, 2015, 6:35 pm, 1411820
The site’s servers are having a bit of a hissy fit this afternoon and so the computer seems to have eaten today’s posts. I’ll repost shortly, but there’ll probably be some broken links. Apologies…


January 28, 2015, 6:34 pm, 1411819

Territorial tax systems abroad may not be good models for corporate reform here. A new TPC paper warns against drawing quick and easy conclusions from the territorial tax systems in other developed countries. While Senate Finance Committee Chairman Orrin Hatch and House Ways and Means Committee Chairman Paul Ryan find ...


January 28, 2015, 6:34 pm, 1411818

The GOP says it wants a revolution, but who’s going to change the world? Long touted as a way to prove that tax cuts can pay for themselves by the economic growth they generate, “dynamic scoring” of federal legislation is no simple task. Today’s TPC-Hutchins Center on Fiscal and Monetary ...


January 28, 2015, 6:34 pm, 1411817

President Obama will feature higher education prominently in next week’s budget—a choice that makes sense, given that educational attainment is the most straightforward pathway for economic advancement. Many of his ideas, which he highlighted in his State of the Union address, are controversial. And some don’t go far enough. But ...


January 28, 2015, 6:34 pm, 1411816

The House has instructed the Joint Committee on Taxation and the Congressional Budget Office to factor in the macroeconomic effects of tax law changes when calculating the official budget score of revenue bills. But are existing models up to the task of what’s commonly called dynamic scoring?

A group of experts ...


January 28, 2015, 6:34 pm, 1411814

CBO’s  new budget projections are an opportunity to take stock of the country’s fiscal situation. At the risk of oversimplifying, the report contains one piece of good news, and two of bad news.  The bottom line: The sky is not falling but policymakers have fallen short of solving the ...


January 28, 2015, 6:34 pm, 1411813

The Washington Nationals' signing of Max Scherzer—one of the best starting pitchers in baseball—ignited a few sports-talk debates: Do the Nationals have the best rotation in the history of the game? Can DC win its first World Series title since 1924? Did the District's tax laws help ...


January 28, 2015, 6:34 pm, 1411815

Is dynamic scoring ready for prime time? At a TPC-Hutchins Center program yesterday, backers and critics debated whether congressional scorekeepers should include  macroeconomic effects of tax changes when doing a budget score. They disagreed, of course, but did agree that if the tool is used, it ought to ...


January 28, 2015, 6:34 pm, 1411812

“There’s no tax-driven move in baseball!” At least not for ace starting pitcher Max Scherzer. He recently signed to play for the Washington Nationals for $210 million and there’s been speculation that DC’s tax laws helped seal the deal. TPC’s Richard Auxier reminds us that taxes are a little like ...


January 28, 2015, 6:34 pm, 1411811

President Obama’s latest tax package, which he’ll unveil in detail next week along with his new budget, would lower taxes for low-income households and significantly raise taxes for the highest income 1 percent—those making $663,000 or more, according to new Tax Policy Center estimates.  Middle-income households would see relatively ...


January 28, 2015, 6:34 pm, 1411810

In his upcoming budget, President Obama will propose to strip away the “loopholes” that permit wealthy individuals to accumulate large amounts in tax-favored retirement plans. He would prohibit a taxpayer from contributing any more to IRAs or other qualified retirement plans once his or her accounts reach a combined value ...


January 28, 2015, 6:04 pm, 1411808
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January 28, 2015, 6:04 pm, 1411807

Apple just reported the most profitable quarter in the history of capitalism, netting $18 billion over the last three months.

Now Washington is going to want to take a bite.

The Beltway machine — the politicians, the lobbyists and even the industry press — have been trying to teach Apple a lesson ...


January 28, 2015, 6:04 pm, 1411806

Conservatives in Washington are increasingly confident that the Supreme Court will rule this summer that the White House has gone beyond its legal authority in implementing the Affordable Care Act. Any such decision would enrage liberals. They would accuse the Republican-appointed justices of ...


January 28, 2015, 6:04 pm, 1411804

In light of President Obama’s free community college proposal, Slate’s Jordan Weissmann recently rekindled an idea he’s mentioned before: instead of just providing two years of free community college, the federal government could “zero out tuition at all of our public colleges” without ...


January 28, 2015, 6:04 pm, 1411805

This blog series analyzes the most important Iran news events of the past week and provides an outlook of the regime’s strategic calculus.

Outlook:

Iran and Lebanese Hezbollah’s desire for additional retaliation against Israel for the airstrike that killed IRGC Quds Force Brigadier General Mohammad Ali Allah Dadi and several Lebanese ...


January 28, 2015, 5:33 pm, 1411799
Investors who plowed into Greek assets ahead of Mario Draghi's QE €60 billion a month bond-buying spree figuring the ECB could paper over this mess have been hammered nonstop recently.

Today alone, bank shares plunged 22-29% and yield on the 3-year treasury hit 16.97%.

Worst Day in History ...


January 28, 2015, 5:03 pm, 1411736
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 28, 2015, 5:03 pm, 1411735
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 28, 2015, 5:03 pm, 1411737
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 28, 2015, 5:03 pm, 1411734
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 28, 2015, 5:03 pm, 1411738
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 28, 2015, 5:03 pm, 1411733

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 28, 2015, 5:03 pm, 1411732
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 28, 2015, 5:03 pm, 1411730

Inequality in America is about more than the rich and the poor. Significant income gaps are present by age, by race, by occupation, by family type, by homeownership and more.

Since 1989, the Federal Reserve has compiled detailed data on the wealth of Americans, presented in 10 different charts ...


January 28, 2015, 5:03 pm, 1411729
Boris Sofman, co-founder and CEO of Anki,which raised $55 million in venture capital in 2014. Getty Images (2013)

Venture capitalists are betting big on a robot invasion.

They ...


January 28, 2015, 5:03 pm, 1411731

The Wall Street Journal’s Daily Report on Global Central Banks for Wednesday, January 28, 2015:

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


Highlights

Hilsenrath’s Take: China’s Local Government Debt Could Be Source of Trouble Hard Choices on Easy ...


January 28, 2015, 5:03 pm, 1411725

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 ...


January 28, 2015, 5:03 pm, 1411726

Here is the full statement text from the Federal Reserve’s policy-making committee.

Information received since the Federal Open Market Committee met in December suggests that economic activity has been expanding at a solid pace.  Labor market conditions have improved further, with strong job gains and a lower unemployment rate.  ...


January 28, 2015, 5:03 pm, 1411724
The Federal Reserve building in Washington, D.C. Reuters

What caught our eye in the Federal Reserve’s January policy statement released Wednesday.

No Rate Hikes Until at ...


January 28, 2015, 5:03 pm, 1411728
The number of children on food stamps remains higher than at the start of the 2007-09 recession. Getty Images

The use of food-stamps has generally ...


January 28, 2015, 5:03 pm, 1411727

Much has been made of the stagnant wage growth so far in this expansion even as net hiring has accelerated. The Federal Reserve thinks it’s one sign that the labor market still ...


January 28, 2015, 5:03 pm, 1411719

For the first time since December 2009, Richmond Fed President Jeffrey Lacker was not the odd man out.

Mr. Lacker did not dissent over the Federal Reserve policy statement Wednesday, joining his colleagues to say the central bank would be “patient” in deciding when to start raising ...


January 28, 2015, 5:03 pm, 1411720

If you want to understand the complexity of monetary policy, you could read and interpret the Federal Reserve‘s policy statement or you could just do a word count. The results of the ...


January 28, 2015, 5:03 pm, 1411721

The Federal Reserve chooses its words carefully, though it doesn’t always say exactly what officials mean.

The central bank said in its policy statement Wednesday the economy “has been expanding at a solid pace,” and characterized recent job gains as “strong.” Both were tweaks from the December statement, ...


January 28, 2015, 5:03 pm, 1411723
In a statement from the New York Fed, the bank said a series of so-called “term” reverse repurchase agreements will take place over February and March.


January 28, 2015, 5:03 pm, 1411722

The Federal Reserve said Wednesday it would keep short-term interest rates near zero until at least the middle of the year. The central bank’s policy committee also signaled caution about low inflation and nodded to overseas uncertainty by including new language that it would monitor international developments. Here’s how ...


January 28, 2015, 5:03 pm, 1411718
Every week the EIA releases a petroleum status report. I wanted to post an excerpt this week for two reasons: 1) Oil inventories are at a record level for this time of year (see blue line on graph), and 2) the US is a very large oil importer ...


January 28, 2015, 4:44 pm, 1411717
Mitt Romney plans to say in a speech Wednesday that the economy is "looking up," and the wealthy are improving but the middle class and poor are not.


January 28, 2015, 4:44 pm, 1411716
A


January 28, 2015, 4:34 pm, 1411715

President Obama proposed three important changes to the way the federal government helps families with child care costs – increase direct subsidies for low-income families, increase tax credits for middle- and higher income families, and simplify the tax code (and offset some of the cost of the other changes) by ...


January 28, 2015, 4:34 pm, 1411714

Territorial tax systems abroad may not be good models for corporate reform here. A new TPC paper warns against drawing quick and easy conclusions from the territorial tax systems in other developed countries. While Senate Finance Committee Chairman Orrin Hatch and House Ways and Means Committee Chairman Paul Ryan find ...


January 28, 2015, 4:34 pm, 1411710

Is dynamic scoring ready for prime time? At a TPC-Hutchins Center program yesterday, backers and critics debated whether congressional scorekeepers should include  macroeconomic effects of tax changes when doing a budget score. They disagreed, of course, but did agree that if the tool is used, it ought to ...


January 28, 2015, 4:34 pm, 1411711

The House has instructed the Joint Committee on Taxation and the Congressional Budget Office to factor in the macroeconomic effects of tax law changes when calculating the official budget score of revenue bills. But are existing models up to the task of what’s commonly called dynamic scoring?

A group of experts ...


January 28, 2015, 4:34 pm, 1411709

CBO’s  new budget projections are an opportunity to take stock of the country’s fiscal situation. At the risk of oversimplifying, the report contains one piece of good news, and two of bad news.  The bottom line: The sky is not falling but policymakers have fallen short of solving the ...


January 28, 2015, 4:34 pm, 1411712

President Obama will feature higher education prominently in next week’s budget—a choice that makes sense, given that educational attainment is the most straightforward pathway for economic advancement. Many of his ideas, which he highlighted in his State of the Union address, are controversial. And some don’t go far enough. But ...


January 28, 2015, 4:34 pm, 1411713

The GOP says it wants a revolution, but who’s going to change the world? Long touted as a way to prove that tax cuts can pay for themselves by the economic growth they generate, “dynamic scoring” of federal legislation is no simple task. Today’s TPC-Hutchins Center on Fiscal and Monetary ...


January 28, 2015, 4:34 pm, 1411705

In his upcoming budget, President Obama will propose to strip away the “loopholes” that permit wealthy individuals to accumulate large amounts in tax-favored retirement plans. He would prohibit a taxpayer from contributing any more to IRAs or other qualified retirement plans once his or her accounts reach a combined value ...


January 28, 2015, 4:34 pm, 1411708

The Washington Nationals' signing of Max Scherzer—one of the best starting pitchers in baseball—ignited a few sports-talk debates: Do the Nationals have the best rotation in the history of the game? Can DC win its first World Series title since 1924? Did the District's tax laws help ...


January 28, 2015, 4:34 pm, 1411706

President Obama’s latest tax package, which he’ll unveil in detail next week along with his new budget, would lower taxes for low-income households and significantly raise taxes for the highest income 1 percent—those making $663,000 or more, according to new Tax Policy Center estimates.  Middle-income households would see relatively ...


January 28, 2015, 4:34 pm, 1411707

“There’s no tax-driven move in baseball!” At least not for ace starting pitcher Max Scherzer. He recently signed to play for the Washington Nationals for $210 million and there’s been speculation that DC’s tax laws helped seal the deal. TPC’s Richard Auxier reminds us that taxes are a little like ...


January 28, 2015, 4:05 pm, 1411703

The author is Ian Bostridge and the subtitle is Anatomy of an Obsession., and of course it focuses on Die Winterreise.  This is the first book published this year to make it into my 2015 “best of the year list.”  Here is one good ...


January 28, 2015, 4:04 pm, 1411702
(Don Boudreaux)

In an admirable comment on this post, regular Cafe patron Sam Grove (one of my favorites, I add to alert you to my partiality) writes in response to another commenter:

We [those of us of a free-market bent] do care about income inequality when it is a product ...


January 28, 2015, 4:04 pm, 1411701

The origins of President Obama’s “middle-class economics ” is a bit of political salesmanship called “middle-out economics” concocted by some left-wing, progressive thinkers. See, these folks faced a big problem. They had lots of ideas to reduce income inequality. Well, actually they had one big idea: Tax the 1% and ...


January 28, 2015, 4:04 pm, 1411700

Read the PDF.

AEI’s Center for Internet, Communications, and Technology Policy is doing truly excellent work to advance the public dialogue on communications and technology issues. My staff tells me that the Center’s TechPolicyDaily blog is essential reading. The job you and AEI have done ...


January 28, 2015, 4:04 pm, 1411699

I may not be an economics Ph.D., but I think I have spotted something (from a blogpost by Arnold Kling) that those more learned in that disciple have missed. In commenting on the Oxfam report on global wealth distribution, based on Credit Suisse data, which argues that the top 1 ...


January 28, 2015, 3:33 pm, 1411692
The Outside the Box MarketWatch Opinion of Damian Maldonado is Millennials Can Finally Afford Homes with New Mortgage Rules.

Let's start with a look the new rules.

New Rules

The administration earlier this month cut the premium that borrowers with a Federal Housing Administration ...


January 28, 2015, 3:23 pm, 1411691

If one were asked to describe the formal economic and political processes that have shaped the condition of the eurozone since the eruption of the euro crisis in late 2009 in a terse and peremptory way, he or she might boldly and truly say this: “German Chancellor Angela Merkel’s policies ...


January 28, 2015, 3:03 pm, 1411629

Here is the full statement text from the Federal Reserve’s policy-making committee.

Information received since the Federal Open Market Committee met in December suggests that economic activity has been expanding at a solid pace.  Labor market conditions have improved further, with strong job gains and a lower unemployment rate.  ...


January 28, 2015, 3:03 pm, 1411630

Much has been made of the stagnant wage growth so far in this expansion even as net hiring has accelerated. The Federal Reserve thinks it’s one sign that the labor market still ...


January 28, 2015, 3:03 pm, 1411628

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 ...


January 28, 2015, 3:03 pm, 1411627

Brad DeLong:

Somebody Is Inside an Echo Chamber. But Who?: Paul Krugman fears that somebody is trapped inside an echo chamber, hearing only things that confirm what they already believe...

But how can we tell which side has lost contact with the reality out there? ...

I do not think we ...


January 28, 2015, 3:03 pm, 1411626
As expected ... solid growth, patient on policy.

FOMC Statement:

Information received since the Federal Open Market Committee met in December suggests that economic activity has been expanding at a solid pace. Labor market conditions have improved further, with strong job gains and a lower unemployment ...


January 28, 2015, 2:44 pm, 1411625

On 19th December, CEPR and the Bank of England hosted a joint workshop to discuss Thomas Piketty’s seminal work ‘Capital in the 21st Century’. Chaired by the Bank’s Chief Economist Andy Haldane, the panel comprised Orazio Attanasio, Tim Besley, Peter Lindert, Thomas Piketty and Jaume Ventura.


January 28, 2015, 2:44 pm, 1411624
A


January 28, 2015, 2:34 pm, 1411623
Teaser:

Berkeley ...


January 28, 2015, 2:05 pm, 1411620

January 28, 2015, 2:04 pm, 1411619
(January 28, 2015 01:37 PM, by Scott Sumner) I'm seeing lots of comments to the effect that the 2013 austerity was not a big deal, and or the dreaded "fiscal cliff" never happened. OK, let's see some numbers. After all, if my critics just know that I am... (0 COMMENTS)


January 28, 2015, 2:04 pm, 1411618
We had about 33 inches of snow with the blizzard Juno. Luckily it was a light and fluffy snow, so there was little damage for electric lines and such. (The storm was a reminder to check ocean temperatures and effects on weather.)


January 28, 2015, 1:23 pm, 1411615

With Syriza in the driver’s seat, Greece now has some hope for the end to austerity imposed by Germany and the troika.

Here’s a good short piece in the New York Times by C. J. Polychroniou, a research associate and policy fellow at the Levy Economics Institute. As he ...


January 28, 2015, 1:03 pm, 1411550

The Obama Administration yesterday backed down from its plan to tax the earnings on 529 savings accounts, a kind of saving account for higher education under section 529 of the tax code. At Bloomberg, Richard Rubin and Mike Dorning report: "A White House official, speaking on condition of anonymity, ...


January 28, 2015, 1:03 pm, 1411549

The Wall Street Journal’s Daily Report on Global Central Banks for Wednesday, January 28, 2015:

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


Highlights

Hilsenrath’s Take: China’s Local Government Debt Could Be Source of Trouble Hard Choices on Easy ...


January 28, 2015, 1:03 pm, 1411548

Inequality in America is about more than the rich and the poor. Significant income gaps are present by age, by race, by occupation, by family type, by homeownership and more.

Since 1989, the Federal Reserve has compiled detailed data on the wealth of Americans, presented in 10 different charts ...


January 28, 2015, 1:03 pm, 1411547
Boris Sofman, co-founder and CEO of Anki,which raised $55 million in venture capital in 2014. Getty Images (2013)

Venture capitalists are betting big on a robot invasion.

They ...


January 28, 2015, 1:03 pm, 1411546
The number of children on food stamps remains higher than at the start of the 2007-09 recession. Getty Images

The use of food-stamps has generally ...


January 28, 2015, 1:03 pm, 1411545
From Tim Duy: While We Wait For Yet Another FOMC Statement... Excerpt:

The Fed recognizes that hiking rates prematurely to "give them room" in the next recession is of course self-defeating. They are not going to invite a recession simply to prove they have the tools to deal with ...


January 28, 2015, 12:44 pm, 1411544
A


January 28, 2015, 12:44 pm, 1411543
A


January 28, 2015, 12:44 pm, 1411541
A


January 28, 2015, 12:44 pm, 1411542
A


January 28, 2015, 12:44 pm, 1411540

LOW OIL prices are not good for the Nigerian economy. In itslatest forecasts,the IMF's predictions for the Nigerian economy in 2015 have been cut—from over 7% growth to about 5%. The naira, Nigeria's currency, is doing badly. But what are ...


January 28, 2015, 12:44 pm, 1411539

Susan Wachter and I have a new (short!) paper up on SSRN. It's called Second-Liens and the Leverage Option, and is about the curious absence of negative pledge clauses in US home mortgages, which enabled enormous amounts of second-lien leverage (much more than anyone realized) during the ...


January 28, 2015, 12:04 pm, 1411536

The art of successful monetary policy is in the timing. Measures that might have worked a year or two ago might not be very effective today. Sadly, this would seem to be the case with the European Central Bank’s (ECB’s) latest monetary policy action. Bold as that action might appear ...


January 28, 2015, 12:04 pm, 1411535

Today is Fed message day and the real message is already out for all to see in the front page headline of The Wall Street Journal – it says, “Strong Dollar Squeezes US Firms.”

Turn to page 2 and experienced ...


January 28, 2015, 12:04 pm, 1411537
Fellow Marc Thiessen discusses the Obama administration's response to the upcoming visit of Israel Prime Minister Benjamin Netanyahu to the United States on Fox News' 'The Kelly File.'


January 28, 2015, 12:04 pm, 1411532

The Obama White House’s decision to abandon its controversial plan to, as the New York Times puts it, “effectively end the popular college savings accounts known as 529s” is what the left likes to call a “teachable moment.” For middle-income America, ...


January 28, 2015, 12:04 pm, 1411531

Prior to Sunday’s Greek parliamentary election, there was the hope that once elected, Alexis Tsipras, Greece’s new prime minister, would soften his stance on economic policy with a view to reaching a compromise with Greece’s official creditors. Sadly, everything that he has done since the elections suggests that this will ...


January 28, 2015, 12:04 pm, 1411533

“It casts a spell. There’s such a sense of seclusion. And, I suppose, it’s the Scriptural line, ‘I look to the hills, whence cometh my strength.”

That’s how Ronald Reagan described his beloved ranch in the mountains above Santa Barbara — Ranch of the Skies — to his close friend, British ...


January 28, 2015, 12:04 pm, 1411534

Coming from a university, Dartmouth, that ranks horribly across the board in access to parking, I can understand the appeal of an app that helps ease parking struggles. In a recent Wall Street Journal article, Christopher Mims comments on the promise of startup ...


January 28, 2015, 11:03 am, 1411468

Inequality in America is about more than the rich and the poor. Significant income gaps are present by age, by race, by occupation, by family type, by homeownership and more.

Since 1989, the Federal Reserve has compiled detailed data on the wealth of Americans, presented in 10 different charts ...


January 28, 2015, 11:03 am, 1411467
Boris Sofman, co-founder and CEO of Anki,which raised $55 million in venture capital in 2014. Getty Images (2013)

Venture capitalists are betting big on a robot invasion.

They ...


January 28, 2015, 10:34 am, 1411466

How do you convert ability into income? This is a question promoted by Ann Bauer's claim that novelists often need subsidies from their family. Her point broadens. Many artists struggle to get by: I suspect Jolie Holland speaks for many when she says she ...


January 28, 2015, 10:34 am, 1411465
A


January 28, 2015, 10:04 am, 1411461
(Don Boudreaux)

In my latest Pittsburgh Tribune-Review column I ponder some of the reasons for the concern over income differences.  Here are the first few paragraphs:

I’ve never worried about income inequality. It’s not that I’ve not worried much about it; I’ve not worried about it at all.

Income inequality – like the color of ...


January 28, 2015, 10:04 am, 1411460

Right after the Obama administration announced a plan to block drilling in Alaska’s arctic wildlife refuge, it then rolled out a plan to open up parts of the southern Atlantic coast for oil and gas exploration. So a trade-off. What the White House took with one hand, it gave with the ...


January 28, 2015, 9:33 am, 1411457

Last week the Bank of Canada cut the overnight rate of interest from 1.00% to 0.75%. The exchange rate dropped 2 cents (about 2.5%) on the news.

Consider a very simple economy with only two goods: apples and bananas. It's a non-monetary economy; apple producers and banana producers swap apples and ...


January 28, 2015, 9:33 am, 1411456
"The Impact of Unemployment Benefit Extensions on Employment: The 2014 Employment Miracle" by Marcus Hagedorn, Iourii Manovskii and Kurt Mitman is making waves. NBER working paper here. Kurt Mitman's webpagehas an ungated version of the paper, and a summary of some of the controversy. It's part ...


January 28, 2015, 9:33 am, 1411455
Piketty and Saez have updated their famous one-percent graph to 2013. It is above. (Click on graphic to enlarge.)

One thing that commentators sometimes fail to notice is that the big increase in ...


January 28, 2015, 9:33 am, 1411454

Agnar Sandmo (Rev Environ Econ Policy 2015 9: 43-63):

Abstract

This article traces the history of economists’ treatment of environmental problems prior to the establishment of environmental economics as a separate field in the 1960s. I examine the economics literature from the late eighteenth century onward, searching for an ...


January 28, 2015, 9:33 am, 1411453

Why else would the government try to stop mining in Alaska?

The Obama administration moved Tuesday to open up a vast stretch of East Coast waters to oil and gas drilling, a decision that could have a profound impact on the economic and environmental future of states from Virginia to Georgia. ...