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.


The Economics Roundtable is sponsored by EconModel.

The Classic Economic Models cover micro, macro, and financial markets.

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December 21, 2014, 5:33 pm, 1392889

If I make one very trivial change to Paul Krugman's model of a temporary liquidity trap, I can change the results, so that the central bank can use current monetary policy to return the economy to full employment, even if it cannot make credible commitments about future monetary policy.

I am ...

December 21, 2014, 5:33 pm, 1392888

December 21, 2014, 5:33 pm, 1392887
OPEC is pointing the finger at speculators as well as Non-OPEC countries, but especially US shale producers for the crude price crash.

Let's explore that idea in a series of charts. But first let's take a look at the allegation.

The Wall Street Journal reports Gulf ...

December 21, 2014, 4:44 pm, 1392866

December 21, 2014, 4:05 pm, 1392865

From Paul Mason, here is the summary bit:

So a worst-case scenario under a Syriza victory is: short-term repayment crisis, botched negotiations with the EU, social upheaval, capital flight and default.

A best-case scenario – for Syriza – would see its EU allies force a long-term debt deal, but it would ...

December 21, 2014, 4:04 pm, 1392864
(Don Boudreaux)

The Institute for Justice – a special and genuine force for significant good in the U.S. – just published its superb Entrepreneur’s Survival Guide.

I thank the many of you who sent to me Michael Moynihan’s excellent essay “Castro’s Hipster Apologists Want to Keep Cuba ‘Authentically’ Poor.”  A ...

December 21, 2014, 3:03 pm, 1392842

Bill McBride at Calculated Risk:

Katie Couric and the Net Petroleum Exporter Myth: To understand what the general public is hearing about oil, I watched a Yahoo video yesterday with Katie Couric explaining the decline in oil prices.

In general the piece was very ...

December 21, 2014, 2:05 pm, 1392841

1. Should you publish a book with too many hyphens?

2. Japan Senior Cheer Association (mostly video), and more here.

3. Kangaroos against drones.

4. It’s odd that such a category even exists (“Top 10 feminist fiascoes of 2014″).  This is a good ...

December 21, 2014, 2:04 pm, 1392840
(December 21, 2014 02:46 PM, by David Henderson) UW-Madison has been moving toward egalitarian grading since 2008 when the university began reporting to departments and instructors the rates of D, F, and drop grades by gender, first-generation college status, and targeted minority status. That sent a message to... (0 COMMENTS)

December 21, 2014, 1:33 pm, 1392838

December 21, 2014, 12:34 pm, 1392819
Existing home sales in the US are expected to decline slightly to an annual pace of 5.25 million units in tomorrow’s update for November, according to The Capital Spectator’s median point forecast for several econometric estimates. The projection represents a marginal decrease from October’s 5.26 million units (seasonally adjusted annual ...

December 21, 2014, 11:03 am, 1392790

The spectacular drop in oil prices means that inflation is going to fall even further below the Fed’s 2% target. Does that raise any new risks for the economy? I say no, and here’s why.

December 21, 2014, 11:03 am, 1392789
To understand what the general public is hearing about oil, I watched a Yahoo video yesterday with Katie Couric explaining the decline in oil prices.

In general the piece was very good. Couric started by explaining that the decline in oil prices could be explained in two ...

December 21, 2014, 10:34 am, 1392788

The Moscow Times has a headline you don’t see every day: “Falling Ruble Hits Russians Where it Hurts Most as Condom Prices Soar.” (The story’s a ...

December 21, 2014, 10:04 am, 1392787
(Don Boudreaux)

… is from page 302 of the late Thomas McCraw’s excellent 1984 volume, Prophets of Regulation:

On balance, however, it seems clear that the concern about legal process has controlled the outcome of regulation more often than has the concern about the substance of economic efficiency.  In economists’ ...

December 21, 2014, 8:05 am, 1392755

There is a good interview with Paul Fischer, who has studied this and related topics, here is one bit:

The way Americans are shown is equally counterfactual. There’s a long-running film franchise in North Korea that Kim Jong-il started called — depending on how you translate — Unknown Heroes ...

December 21, 2014, 6:04 am, 1392741
My regular column is available to subscribers on This is an excerpt. A few days ago something happened which I have not experienced for a very long time, if ever. Inflation fell to just 1% and will surely...

December 21, 2014, 5:33 am, 1392739
If you don't have the money, spend it anyway, says the Ukrainian government.

Of course, that's no different than the philosophy of any other country, including the US.

In this case, however, Ukraine's borders on default.

Please consider Ukraine Can’t Scrimp on Military Spending as ...

December 21, 2014, 5:03 am, 1392738

December 21, 2014, 3:24 am, 1392736

1. Recently I appeared on RT Boom/Bust again.  The interview lasts 6+ minutes.  Erin Ade and I discussed:

Who benefits from lower energy prices.The No-Lose Line for owning bonds,Whether you are compensated for inflation risks in long bondsHow much an average ...

December 21, 2014, 2:44 am, 1392735

Migration is heavily influenced by social networks. Nonetheless, little is known about the underlying mechanisms. This column uses a new dataset from China to disentangle the effects of strong and weak ties on the migration decision. The findings indicate that strong and weak ties act as complements. Having many weak ...

December 21, 2014, 2:05 am, 1392734

Here is a new research paper by Voskobvoynikov and Solanko, but dating before the collapse in oil prices:

Based on newly available data, we argue that multifactor productivity increases over the period 1995-2008 generated only about a half of Russia’s GDP growth, a smaller increase than most previous estimates. Further, growth ...

December 20, 2014, 5:33 pm, 1392694
What will become of YouTube?

It started from nowhere about 10 years ago as an idea with no revenue and no content, then pretty quickly lots of content coupled with a plethora of copyright infringement lawsuits.

Today, YouTube gets 300 million hours of watching every day. Top content ...

December 20, 2014, 5:33 pm, 1392693
My friend Allen Sanderson points out these headlines intoday's Wall Street Journal:

Safety Gear Helps Reduce U.S. Traffic Deaths


Cities Target Elevated Levels of Pedestrian Deaths

As Sam Peltzman pointed out years ago, when cars get safer, driversare less careful, increasing externalities ...

December 20, 2014, 5:03 pm, 1392674
The NAR will report November Existing Home Sales on Monday, December 22nd. The consensus is the NAR will report sales at 5.20 million seasonally adjusted annual rate (SAAR), however economist Tom Lawler estimates the NAR will report sales of 4.90 million on a SAAR basis.

Housing economist ...

December 20, 2014, 4:44 pm, 1392673

December 20, 2014, 4:05 pm, 1392672

December 20, 2014, 4:04 pm, 1392671
(December 20, 2014 04:09 PM, by David Henderson) Both Obama and the WSJ are wrong: The WSJ is more wrong. Here's an excerpt from the Wall Street Journal's Review and Outlook (unsigned) editorial, "Obama on Oil Markets: Supply and demand seem to be elusive concepts," on President Obama's... (1 COMMENTS)

December 20, 2014, 3:33 pm, 1392669
Commenter Zack sent the following Paul Krugman links and quotes, which deserve promotion from the comments section.

"But deflation is a huge risk — and getting out of a deflationary trap is very, very hard. We truly are flirting with disaster."

"So we're ...

December 20, 2014, 2:44 pm, 1392652

OVER the past few weeks, debates over British fiscal policy have been conducted under the shadow of George Orwell's "The Road to Wigan Pier",a powerful description of the povertyfound in the north of England in the 1930s.On December 3rd, George Osborne, the ...

December 20, 2014, 2:05 pm, 1392651

Here are the last few paragraphs from Global Times:

The US society stands on the upper stream of global competition of culture. It needs to show some good manners instead of being too aggressive. The American elites should not just speak like gentlemen, but behave like them.

The biggest motive for Sony ...

December 20, 2014, 1:03 pm, 1392626
The key reports this week are November Existing Home Sales on Monday, November Personal Income and Outlays on Tuesday, November New Home Sales on Tuesday, and the third estimate of Q3 GDP also on Tuesday.

Merry Christmas and Happy Holidays to All!

----- Monday, December 22nd -----
8:30 ...

December 20, 2014, 12:44 pm, 1392625

December 20, 2014, 12:04 pm, 1392624
(December 20, 2014 10:25 AM, by Scott Sumner) Paul Krugman has a new post that explains why he is pessimistic about monetary stimulus at the zero bound. He briefly describes his 1998 paper on the zero bound problem. This paper shows that if base money and bonds are... (0 COMMENTS)

December 20, 2014, 12:04 pm, 1392623
(Don Boudreaux)

Here’s a letter to the Chronicle of Higher Education; (thanks to Lyle Albaugh and George Leef for alerting me to this Beckert essay) :

Sven Beckert struggles to portray slavery as essential to the origins of capitalism (“Slavery and Capitalism,” Dec. 12).  His core argument, it seems, boils down to ...

December 20, 2014, 10:05 am, 1392589

Lucy Kellaway of the FT reports that “food, activities and even spa treatments are chocolate-themed,” here is one description from another source:

A dessert island fantasy, Boucan by Hotel Chocolat in St Lucia seems made for chocolate lovers. The jungle-surrounded hilltop lodges – with views of the Caribbean Sea ...

December 20, 2014, 9:33 am, 1392587

Paul Krugman is frustrated because people aren't taking his model of the liquidity trap seriously. OK, let me take it seriously.

Suppose Paul's model is 100% true. And suppose that Paul's model economy is humming along nicely, at full employment, and everyone in the model expects it to continue ...

December 20, 2014, 9:03 am, 1392566

December 20, 2014, 9:03 am, 1392565
This is an unofficial list of Problem Banks compiled only from public sources.

Here is the unofficial problem bank list for Dec 19, 2014.

Changes and comments from surferdude808:

The OCC released an update on its latest enforcement action activity that contributed to many changes ...

December 20, 2014, 8:34 am, 1392564
Last week I recapped some of the more interesting titles that appeared in The Capital Spectator’s Book Bits column that runs on Saturday mornings. Here’s Part II of the year-end review of economic and finance books from 2014 that deserve a second look… ● Risk Savvy: How to Make Good ...

December 20, 2014, 8:04 am, 1392560
(Don Boudreaux)

… is from page 120 of the third edition (2015) of my colleague Tyler Cowen’s and Alex Tabarrok’s microeconomics textbook, Modern Principles: Microeconomics:

How is order produced from freedom of choice?  That is a scientific mystery, and prices are the biggest clue to the solution.  Prices do much more ...

December 20, 2014, 7:03 am, 1392535
Economist Thomas Piketty in Berlin in November. Agence France-Presse/Getty Images

Thomas Piketty’s “Capital in the 21st Century” was a 2014 must-read for anyone interested in economics. But ...

December 20, 2014, 7:03 am, 1392536
G-8 leaders at Camp David in May 2012 European Pressphoto Agency

For a meeting of the Group of Eight nations in 2012, President Barack Obama ...

December 20, 2014, 7:03 am, 1392537

December 20, 2014, 7:03 am, 1392534
Federal Reserve Bank of Minneapolis President Narayana Kocherlakota. Reuters

One of the Federal Reserve officials who cast a dissenting vote at this week’s policy meeting said Friday ...

December 20, 2014, 7:03 am, 1392538
German Chancellor and chairwoman of the Christian Democrats, CDU, Angela Merkel, thanks delegates after her speech at the party convention in Cologne, Germany, on Dec. 9. (AP Photo/Martin Meissner)

December 20, 2014, 7:03 am, 1392531
Personal incomes in North Dakota slowed in the third quarter, with declines in farming offsetting gains in the category that includes gas and oil drilling. Agence ...

December 20, 2014, 7:03 am, 1392529
U.S. homes will be worth $27.5 trillion at the end of 2014, an increase of 6.1%, or $1.7 trillion, according to the real estate website Zillow.

December 20, 2014, 7:03 am, 1392533

Regulators and lenders say that agreements struck this year should make it easier for more Americans to get mortgages in 2015. But one major problem that could hold ...

December 20, 2014, 7:03 am, 1392530
Federal Reserve Bank of San Francisco President John Williams in October. Reuters

Federal Reserve Bank of San Francisco President John Williams said in a radio interview Friday ...

December 20, 2014, 7:03 am, 1392532
Washington, D.C., saw its jobless rate drop to 7.4% in November from 7.8% last year, though it still has one of the nation’s highest rates. Getty ...

December 20, 2014, 7:03 am, 1392528

Federal Reserve Bank of Richmond President Jeffrey Lacker said Friday he isn’t ready to say when the U.S. central bank should raise rates.

Mr. Lacker was speaking in Charlotte, N.C., as part of a panel discussion followed by questions from reporters. The official will gain a vote on the monetary-policy setting ...

December 20, 2014, 7:03 am, 1392527
The reports are front-loaded in the coming week to allow for financial markets and the U.S. government to close for Christmas. Before Santa comes down the chimney, reports on home sales, sentiment and other data will be released. Will they bring holiday cheer to economy-watchers?

December 20, 2014, 7:03 am, 1392526

Federal Reserve Bank of Philadelphia leader Charles Plosser said in a statement Friday the U.S. central bank is failing to make its monetary policy stance truly dependent on how the economy performs.

Mr. Plosser’s comments came from a statement that explained why he cast a dissenting vote against the Fed monetary ...

December 20, 2014, 3:03 am, 1392500

December 20, 2014, 2:05 am, 1392497

1. Jim Al-Khalili and Johnjoe McFadden, Life on the Edge: The Coming of Age of Quantum Biology.  How quantum effects can matter for biological phenomena.  No, it doesn’t mean Roger Penrose was right (and this book usefully tells you why not), but still this is a stimulating book ...

December 20, 2014, 12:44 am, 1392478
On the Capital Journal Roundtable, Washington Bureau Chief Jerry Seib discusses the politics of the U.S. shift on Cuba, Jeb Bush's near-candidacy for 2016 and signs of an improving economy with the WSJ's Colleen McCain Nelson, Beth Reinhard and Sudeep Reddy.

December 20, 2014, 12:44 am, 1392476

Argentina is the only country in the world that was 'developed’ in 1900 and ‘developing’ in 2000. Various explanations highlight the roles of trade openness, political institutions, financial integration, financial development, and macroeconomic instability. No study has so far attempted a quantitative assessment of the relative importance of each of ...

December 20, 2014, 12:44 am, 1392477

The recent dramatic fall in oil prices has renewed the interest in the importance of shocks in the oil price volatility. This column presents results from new research on the role of shocks and speculation on oil prices. The authors find that when speculation is short in duration, it has ...