Economics Roundtable

May 2014 Payroll Employment

After 76 months, we finally got back to the prerecession level of payroll employment.

Click on the image to get a bigger version.


The best summary of the state of our economy is the graph (below) of employment as a fraction of population for people over 16 years old. The decrease is large, but the most troubling feature of the graph is the flat trend .

Click on the image to get a bigger version.

Graph-of-the-Year Candidates

Donald Marron likes European interest rates. Click on the image to get a bigger version. Can you find three distinct subperiods?

Brad DeLong favors the U.S. gdp gap.

Remember M1?

Money Supply M1 growth is now over 20% per year over a 12 month lag. M1 growth has touched 20% before, but not with excess reserves of $1.6 trillion. Where is M1 headed?

Click on the chart for a larger version.


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August 31, 2015, 3:33 pm, 1536863
The Chicago PMI reading came in just shy of the Bloomberg Econoday Estimate of 54.9.

The headline for August looks solid, at 54.4 for the Chicago PMI, but the details look weak. New orders and production both slowed and order backlogs fell into deeper contraction. Employment contracted ...

August 31, 2015, 3:23 pm, 1536862

A Nonbehavioral Theory of Saving
Michalis Nikiforos

“We present a model where the saving rate of the household sector, especially households at the bottom of the income distribution, becomes the endogenous variable that adjusts in order for full employment to be maintained over time. An increase in income inequality and ...

August 31, 2015, 3:23 pm, 1536861

Movements in the stock market can have a profound economic impact on the economy and everyday people. A collapse in share prices has the potential to cause widespread economic disruption. Most famously, the stock market crash of 1929 was a key factor in causing the great depression of ...

August 31, 2015, 3:23 pm, 1536860

In recent months, the Chinese stock market has been very volatile, with sharp drops in prices since last July. On August 24th, share prices fell 9% – one of the biggest single day falls. People fear this is the bursting of the Chinese stock market bubble which could have serious ...

August 31, 2015, 3:03 pm, 1536799
Olivier Blanchard, who is soon to leave his post as the IMF’s chief economist. ERIC PIERMONT/AFP/GETTY IMAGES

Olivier Blanchard began his tenure as the International Monetary Fund’s ...

August 31, 2015, 3:03 pm, 1536798
Here is a minor indicator I follow from the National Restaurant Association: Stronger sales, traffic in July boost RPI

Driven by stronger same-store sales and customer traffic levels, the National Restaurant Association’s Restaurant Performance Index (RPI) posted a solid gain in July.

The RPI stood at 102.7 ...

August 31, 2015, 2:44 pm, 1536797

August 31, 2015, 2:04 pm, 1536795

August 31, 2015, 2:04 pm, 1536794

This is quite long, so it goes under the fold…class starts tomorrow night!

Books: Jacob Viner, Studies in the Theory of International Trade (on-line, optional).

All videos can be found on, if not in the international trade section than in the development economics class or a few on Mexico in the ...

August 31, 2015, 2:04 pm, 1536793
(Don Boudreaux)

Robert Doar is right: family structure matters.  Here’s his conclusion:

But until all participants in the debate recognize the overwhelming importance of ...

August 31, 2015, 2:04 pm, 1536792

1. Chart of the Day I (above). As a result of revolutionary drilling technologies that have dramatically increased domestic production of shale oil and shale gas, America produced 89% of the domestic energy consumed this year (through May), which is the highest level ...

August 31, 2015, 1:33 pm, 1536790
Repeat after me "housing and cars and part time jobs, oh my". There's little else worth cheering about, not even the stock market lately. And housing is not all that strong either.

Today, the Dallas Fed reported that activity in its region plunged to a reading of reading of ...

August 31, 2015, 1:33 pm, 1536789

1. Chart of the Day I (above). As a result of revolutionary drilling technologies that have dramatically increased domestic production of shale oil and shale gas, America produced 89% of the domestic energy consumed this year (through May), which is the highest level ...

August 31, 2015, 1:03 pm, 1536728

When the Connecticut legislature passed a budget increasing the burden of the state’s already high corporate taxes earlier this year, major employers like General Electric initiated a very public search for a new home. Taxes are but one of many factors companies weigh while making location decisions—a state like ...

August 31, 2015, 1:03 pm, 1536727

Tim Duy:

Does 25bp Make A Difference?, by Tim Duy: I am often asked if 25bp really makes any difference? If not, why does it matter when the Fed makes its first move? The Fed would like you to believe that 25bp really isn't all that important. Indeed, they ...

August 31, 2015, 1:03 pm, 1536726

"Those predicting Mr. Trump’s imminent political demise are ignoring the lessons of recent history":

A Heckuva Job, by Paul Krugman, Commentary, NY Times: ...Katrina was special in political terms because it revealed such a huge gap between image and reality. Ever since 9/11, former President George W. Bush had ...

August 31, 2015, 12:44 pm, 1536725
After a week of market upheaval and speculation about whether the Federal Reserve will raise rates, WSJ chief economics correspondent Jon Hilsenrath discusses three takeaways from the Fed’s annual meeting in Jackson Hole, Wyoming. ...

August 31, 2015, 12:44 pm, 1536724

Clinton. Bush. Kennedy. Political family dynasties have survived the establishment of democracies in the developed and developing world and, in some cases, are strengthening. This column argues that political dynasties are still with us, and that it’s fairly easy to see why. Whoever said that elections are the only time ...

August 31, 2015, 12:44 pm, 1536723

August 31, 2015, 12:44 pm, 1536722

August 31, 2015, 12:44 pm, 1536721

August 31, 2015, 12:44 pm, 1536720

August 31, 2015, 12:34 pm, 1536719

It ...

August 31, 2015, 12:04 pm, 1536718
Fellow Marc Thiessen discusses Hillary Clinton and Donald Trump's immigration proposals on Fox News' 'The Kelly File'

August 31, 2015, 12:04 pm, 1536717
AEI's Visiting Fellow of Society and Culture, Ramesh Ponnuru, offers insight into Donald Trump's conservative principals -- or lack thereof -- and what the candidate's flip-flopping could mean going forward.

August 31, 2015, 12:04 pm, 1536716
Fellow Marc Thiessen discusses the Clinton email controversy and Donald Trump's recent attacks on Clinton aide on Fox News' 'America's Newsroom.'

August 31, 2015, 12:04 pm, 1536715

In their quest for quick returns, activists make the mistake of forgetting that it takes time and patience to position any company for success.

A sea change is under way in the governance of America’s public companies. Today, we are witnessing a dramatic increase in attacks by activist investors demanding immediate ...

August 31, 2015, 11:33 am, 1536714

…. is from Frederic Jesup Stimson‘s 1910 book “Popular Law-Making: A Study of the Origin, History, and Present Tendencies of Law-Making By Statute” (emphasis added):

And now we find the first statutory origin of that utterly fallacious principle — although alive today — that the state, in ...

August 31, 2015, 11:03 am, 1536675
Chicago PMI: August Chicago Business Barometer Down 0.3 Point to 54.4

The Chicago Business Barometer held on to most of July’s gain, falling just a fraction to 54.4 in Augustfrom 54.7 in July. While below the highs seen towards the end of last year, it’s still consistent with ...

August 31, 2015, 11:03 am, 1536674
From the Dallas Fed: Texas Manufacturing Activity Holds Steady, but Outlooks Deteriorate

Texas factory activity was essentially flat in August, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, climbed to near zero (-0.8), suggesting output ...

August 31, 2015, 10:44 am, 1536673

August 31, 2015, 10:44 am, 1536672

August 31, 2015, 10:44 am, 1536670

August 31, 2015, 10:44 am, 1536671

August 31, 2015, 10:34 am, 1536669
The ISM Manufacturing Index is expected to tick higher to 53.0 in tomorrow’s update for August vs. the previous month, based on The Capital Spectator’s average point forecast for several econometric estimates. The prediction is moderately above the neutral 50.0 mark and so the current outlook still translates into a ...

August 31, 2015, 10:34 am, 1536668

August 31, 2015, 10:04 am, 1536664
(Don Boudreaux)

As Bryan Caplan notes over at EconLog, today is the first day of the 2015-2016 academic year at George ...

August 31, 2015, 10:04 am, 1536663
Brad DeLong Friday morning: I cannot help but note strong divergence between the near-consensus views of Fed Chair Janet [Yellen]‘s and Fed Vice-Chair Stan [Fischer]‘s still-academic colleagues and students that tightening now is grossly premature, financial markets’ agreement with the hippies as evidenced by the ten-year breakeven, commercial-banker and wingnut ...

August 31, 2015, 10:04 am, 1536662

Donald Trump is not high on my list of people who ought to be the president of the United States. I would prefer a candidate who has a track record of conservatism. Who supports free trade. Who has served in elective office. Who can keep his petty resentments below the ...

August 31, 2015, 9:33 am, 1536659

August 31, 2015, 9:03 am, 1536606
Danny Vinik in Politico's Agenda today:

Pork hasn't been "the other white meat" for years—after a 24-year run as the centerpiece of billboards and the butt of jokes, the slogan was retired in 2011 and replaced with "Pork: Be Inspired," a logo you might have seen on the ...

August 31, 2015, 8:34 am, 1536605
Fed Vice Chairman Stanley Fischer over the weekend laid out the rationale for raising US interest rates in the near future, perhaps as early as next month. His reasoning boils down to two main arguments. One, “the economy has continued to recover and the labor market is approaching our maximum ...

August 31, 2015, 8:04 am, 1536604

Gross domestic product in Macau, China’s semi-autonomous gambling haven, fell by more than a quarter in the three months to June as the junket-fuelled growth model comes under attack from Beijing.

The economy contracted by a whopping 26.4 per cent in the second quarter, following declines of 24.5 per cent in ...

August 31, 2015, 8:04 am, 1536603

In just 4 years, over half of Syria’s population of 22m has been killed, displaced or fled the country.

Tweet here, by Paul Kirby.

August 31, 2015, 8:04 am, 1536602

Here’s one bit from an excellent interview of Paul Romer on urban development:

Q. How are economics and planning and development of cities related each other?

Urban Expansion is an exception to the usual rule that an economy does not need a plan. Creating new built urban area requires a plan for the ...

August 31, 2015, 8:04 am, 1536601
(Don Boudreaux)

… is from pages 144-145 of the late Shirley Robin Letwin’s 1976 Hillsdale College address, “The Morality of the Free ...

August 31, 2015, 7:33 am, 1536599
MathJax.Hub.Config({ TeX: { equationNumbers: { autoNumber: "AMS" } } }); (Note: This post uses mathjax to display equations and has several graphs. I've noticed that the blog gets picked up here and there and mangled along the way. If you can't read it or see the ...

August 31, 2015, 7:33 am, 1536597

Arnold Kling, with yet another terrific post. This one is on "the analytical gap between the theory of market failure and actual policy". His example is housing policy:

From the standpoint of the theory of market failure, the subsidize-demand, restrict-supply pattern almost never makes sense. If there ...

August 31, 2015, 7:33 am, 1536598

Words to remember:

As theNation‘s article notes, “Most ordinary people behave remarkably well when their city is ripped apart by disaster. They did in San Francisco after the 1906 earthquake; in New Orleans during Hurricane Betsy in 1965; in Mexico City after the 1985 earthquake; in New ...

August 31, 2015, 7:33 am, 1536596

"What recent research says about fraud, errors, and other dismaying academic problems."

Related: "Science Isn’t Broken: It’s just a hell of a lot harder than we give it credit for". Includes a very clever simulation exercise, "Hack Your Way to Scientific Glory".

Also related: "Many Psychology Findings ...

August 31, 2015, 7:33 am, 1536594

Milo Yiannopoulos, doing his thing:

So perhaps there is, in this case, some justification for a bit of middle-class discomfort, particularly when you consider howbizarre and inconsistent and dysfunctional the city of San Francisco is: it’s a placethat turns a blind eye to illegal immigrants, ...

August 31, 2015, 7:33 am, 1536595

Kyle Smith, reviewing Ronald Bailey's new book,The End of Doom: Environmental Renewal in the Twenty-first Century:

Environmentalist groups are, of course, in the same business as the folks who brought you the “Saw” movies. Their fundraising depends on it, and the media rarely go ...

August 31, 2015, 7:33 am, 1536593
Tobias Adrian, Richard Crump, Peter Diamond, and Rui Yu

Expectations about the path of interest rates matter for many economic decisions. Three sources for obtaining information about such expectations are ...

August 31, 2015, 6:44 am, 1536531

August 31, 2015, 6:44 am, 1536530

Are human beings naturally cooperative or selfish? Can people thrive without government law? Paul Robinson of the University of Pennsylvania and author of Pirates, Prisoners and Lepers talks with EconTalk host Russ Roberts the ideas in his book. Robinson ...

August 31, 2015, 6:34 am, 1536529
● US personal income & spending rise in July ● US consumer sentiment slips to 3-month low in August ● A Fed rate hike in September? Maybe, says Fed Vice Chairman Fischer ● Eurozone flash estimate of annual inflation in Aug: stable but close to flat at 0.2% ● German ...

August 31, 2015, 5:33 am, 1536526

It sure looks that way. Advice on salt, dietary cholesterol, and, now, saturated fat appear to have been seriously wrong.

August 31, 2015, 5:33 am, 1536525

Glenn Reynolds offers a compact and very discouraging review.

As late as 2010, things were going so well in Iraq thatObama and Biden were bragging.Now, after Obama’s politically-motivated pullout and disengagement, the whole thing’s fallen apart. This is near-criminal neglect and incompetence, and an awful lot ...

August 31, 2015, 5:03 am, 1536494

From time to time, we'll conclude our more remarkable posts with the phrase "Welcome back to the cutting edge!" We're going to do that again today.

The reason we'll do that today is because of a new paper that was published just 20 ...

August 31, 2015, 4:04 am, 1536493
(August 31, 2015 02:18 AM, by David Henderson) I spent part of Sunday catching up on Wall Street Journals that had piled up when I was at my cottage in Canada. Some highlights, in chronological order. 1. "ObamaCare Undercover," August 1-2, 2015 (July 31 on-line). Highlight: Last year... (0 COMMENTS)

August 31, 2015, 3:03 am, 1536470

This is a summary of new research from two of our former graduate students here at the University of Oregon, Harold Cuffe and Chris Gibbs (link to full paper):

The effect of payday lending restrictions on liquor sales – Synopsis, by Harold Cuffe and Chris Gibbs: The practice of short-term ...

August 31, 2015, 2:04 am, 1536468

Remember back in 2009, and a bit thereafter (pdf), when so many people were praising China’s very activist, multi-trillion fiscal stimulus?

Yet some of us at the time insisted this would only push off and deepen China’s adjustment problems.  There was already excess capacity and ...

August 31, 2015, 1:33 am, 1536467
In China, a massive witch hunt is underway.

Beijing regulators now seek individuals who have destabilized the markets and spread rumors.

Official want someone to blame after their Large-Scale Share Purchases failed to halt a huge stock market slide.

China’s government has decided to abandon attempts ...

August 31, 2015, 1:03 am, 1536446

August 31, 2015, 12:44 am, 1536445

The Eurozone crisis continues to take centre stage. This column discusses how deep the EZ crisis is, how long it will last, and what should be the policy priorities. A number of findings emerge. First, the difference in labour market performance between the US and the Eurozone is one of ...

August 31, 2015, 12:04 am, 1536443
(August 31, 2015 12:00 AM, by Bryan Caplan) Today's the first day of GMU's fall semester, and for some reason I'm thinking about a class I haven't taught in years: Industrial Organization. I wrote the notes when I was much younger and more enamored of theory. Much of... (0 COMMENTS)

August 31, 2015, 12:04 am, 1536442

Earlier this month, the New York Times created a firestorm with a description of what it’s like to work at Amazon, one of America’s most successful companies. The reporters described a brutal workplace culture where employees work long into the night, are pushed to their limits and beyond, and sabotage ...

August 30, 2015, 11:33 pm, 1536441
Questionable Gamble

In the wake of reneging on major election promises, Greek prime minister Alexis Tsipras resigned and called for snap elections. He did so out of fear of losing a vote of confidence that would have forced the same result down the road.

In addition, Tsipras ...

August 30, 2015, 10:34 pm, 1536435

Dr. ...

August 30, 2015, 10:04 pm, 1536427
(August 30, 2015 09:07 PM, by Scott Sumner) It seems that Asia has overtaken Latin America as the largest source of immigration to the US. Here's a recent example of that trend: Mexicans still dominate the overall composition of immigrants in the U.S., accounting for more than a... (0 COMMENTS)

August 30, 2015, 9:03 pm, 1536413
A September rate hike is still on the table, from Jon Hilsenrath and Ben Leubsdorf at the WSJ: Fed Appears to Hold Line on Rate Plan

Federal Reserve officials emerged from a week of head-spinning financial turbulence largely sticking to their plan to raise U.S. interest rates before the ...

August 30, 2015, 7:33 pm, 1536412

Wisconsin Governor and potential presidential candidate Scott Walker apparently thinks it is not an unreasonable idea to consider building a wall between Canada and the United States in order to secure his country’s borders from security threats. Now, to be fair, he did not say that a wall ...

August 30, 2015, 6:04 pm, 1536409

August 30, 2015, 5:33 pm, 1536408

August 30, 2015, 4:34 pm, 1536403

The prophet Elijah’s most famous forecast (I Kings 18:44) – the sudden storm, deduced from inconspicuous change, that ended a three-year drought – became a cliché in business journalism in the 1970s, as one industry after another was overtaken by rapid change that it hadn’t anticipated. There were no ...

August 30, 2015, 4:04 pm, 1536400
(August 30, 2015 04:50 PM, by David Henderson) In a response to, I think, me, although he doesn't make it clear whether he's responding to me, Robert P. Murphy writes: I realized from Levi's comment that people are genuinely misunderstanding what I was trying to say in that... (0 COMMENTS)

August 30, 2015, 3:33 pm, 1536396
In spite of the recent plunge on the Shanghai index, as recently as August 24, CALL options on the index were more expensive than PUT options.

This Bloomberg headline "If the Options Market Is Right, China's Stock Rescue Is Doomed" reads like something one would find in ...

August 30, 2015, 3:33 pm, 1536395
Paul Romer has posted an important blog post on the urbanization process. In the case of the nation of Colombia, he seeks to help the leaders of this urbanizing nation to create the necessary conditions to have productive and "livable" future cities. Rather than embracing a "Soviet Style" deterministic ...

August 30, 2015, 3:03 pm, 1536390

U.S. oil production has begun to drop in response to low oil prices, but not as dramatically as many had anticipated.

Oil companies have cut back spending significantly in response to the fall in the price of oil. The number of rigs that are active in the main U.S. ...

August 30, 2015, 2:04 pm, 1536389

A mistake by representatives of the Business Loop 70 Community Improvement District means a sales tax increase the district needs to thrive will require approval by a single University of Missouri student.

On Feb. 28, Jen Henderson, 23, became the sole registered voter living within the community improvement district, or CID, ...

August 30, 2015, 1:03 pm, 1536371

'Is China's Devaluation a Game Changer'

If you can't get enough on China, here's more from Cecchetti & Schoenholtz:

Is China's devaluation a game changer?: Since 1978, China has engaged in an unprecedented and wildly successful experiment, moving gradually from a command economy to one based on markets; in small ...

August 30, 2015, 1:03 pm, 1536370
The automakers will report August vehicle sales on Tuesday, Sept 1. Sales in July were at 17.5 million on a seasonally adjusted annual rate basis (SAAR), and it appears sales in August will be over 17 million SAAR again.

Note: There were 26 selling days in August, down from ...

August 30, 2015, 12:04 pm, 1536368

One of my web searches turned up a study from Trinity College’s American Religious Identification Survey (ARIS) on the demographics of Mormons. According to the ARIS study, there are now 150 Mormon women for every 100 Mormon men in the state of Utah—a 50 percent oversupply of women.

The ...

August 30, 2015, 11:33 am, 1536366

Since 1978, China has engaged in an unprecedented and wildly successful experiment, moving gradually from a command economy to one based on markets; in small steps transforming a system where administrators controlled the goods that were produced to one where prices allocate resources. There were surely miscalculations along the way. ...

August 30, 2015, 8:04 am, 1536336
(August 30, 2015 07:18 AM, by Alberto Mingardi) Tim Sablik has an interesting literature review on secession on the Richmond Fed's "EconFocus." Sablik presents research relevant to the issue, including Alesina and Spolaore and Buchanan and Faith. He also deals with contemporary secessionist communities - like Catalonia and... (0 COMMENTS)

August 30, 2015, 8:04 am, 1536335
(Don Boudreaux)

… is from page 144 of William Marina’s 1972 essay “Egalitarianism and Empire,” which is reprinted as Essay Four in ...

August 30, 2015, 7:33 am, 1536333

I can't vouch for all of it, but taken at face value, there's a bunch of stuff here I certainly didn't know.

August 30, 2015, 6:44 am, 1536301

Economists have been exploring the relationship between prosperity and trust since the 1950s. This column explores the possible relationships, arguing that enhanced economic prosperity acts as a signal that fellow citizens are trustworthy. The more optimistic assessment then breeds trust among individual citizens. This theory suggests the possibility of a ...

August 30, 2015, 5:33 am, 1536300

August 30, 2015, 5:03 am, 1536281

August 30, 2015, 5:03 am, 1536280

Daniel Little:

The case for realism in the social realm, Understanding Society: The case for scientific realism in the case of physics, microbiology, and chemistry is a strong one. The theories of physics, biology, and chemistry postulate unobservable entities, forces, and properties. These hypotheses are specified in a fair ...

August 30, 2015, 4:04 am, 1536279
My regular column is available to subscribers on This is an excerpt. It has been a nasty scare, and it is not yet over. Though I think they are overstated, the doubts about China will persist. Though the...

August 30, 2015, 3:23 am, 1536277

Photo Credit: Luz Bratcher

Imagine that you are in the position of a high cost crude oil producer that has a lot of debt to service.  The price that you can sell your oil for is high ...

August 30, 2015, 2:44 am, 1536254

Early school leaving and criminal behaviour are important social problems. This column argues that delinquency and arrests both lead to early school leaving. The findings show that the overall reduction in education due to delinquency is at least as large as the reduction due to arrest. Crime prevention efforts thus ...

August 30, 2015, 2:04 am, 1536252

1. I do not know what the Fed should do, and I do not know what the Fed will do.  I don’t even like that phrase “should the Fed tighten?,” but the superior “what kind of multi-dimensional expectational monetary path should the Fed indicate?” is awkward.

2. Starting in 2008, I ...

August 30, 2015, 1:33 am, 1536251
Simon Wren-Lewis has a nice post discussing Paul Romer’s critique of macro.

In Simon's words:

"It is hard to get academic macroeconomists ...