Economics Roundtable
Calculated Risk
Read the Bill McBride interview.
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.
June Payroll Employment
The slowndown in employment growth over the past few months is starting to become more apparent in the graph below.
Click on the image to get a bigger version.
Focus on the Problem
U.S. payroll employment peaked at 132.5 million jobs in February 2001. For April 2012, U.S. payroll employment had reached 133.0 million jobs, marking the third month in a row above the February 2001 level.
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.
Finally, it's hard to argue against the payroll employment graph below (straight from FRED) and the comparison across recessions (courtesy of Calculated Risk).
Looking Up At 2001
In February 2001, U.S. payroll employment peaked at 132.5 million. The November 2011 figure of 131.7 million still falls 800,000 jobs short of the earlier peak.
Click on the chart for a larger version.
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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The Refinance Index decreased 3 percent from the previous week. The seasonally adjusted Purchase Index decreased 3 percent from one week earlier.
...
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 ...
Andrew Sullivan is upset with President Obama over Syria. I’d like to consider the background question of whether individuals, upon assuming the presidency, subsequently come to look more kindly on foreign intervention (and perhaps also surveillance?) than before holding office. I can think of a few reasons why this ...
In my latest column in the Pittsburgh Tribune-Review, I continue to warn against the pretense of Science in policy-making. Here’s a slice:
Because no drug is completely risk-free, and because different people have different tolerances for risk, there’s absolutely no scientifically objective way for the FDA to determine if a new ...
When reading economic articles in the past few years, you may frequently come across reference to the ‘zero lower bound’ or ZLB.
What is the Zero Lower Bound rate?
In short - when interest rates can’t fall any further below 0%
Examples of ZLB
UK interest rates were cut to 0.5% in March 2009 ...Today, we're going to demonstrate how the demands of the International Monetary Fund (IMF), the European Commission (EC) and the European Central Bank (ECB) combined together into a troika to wreck the economy of Greece in 2010.
The great divergence of returns among the major asset classes rolls on in 2013. Indeed, the range of performance has widened since the previous edition of Asset Allocation & Rebalancing Review. US stocks are still at the top of the list while emerging market equities continue to toil ...
A good post by Simon Wren Lewis on future UK macroeconomic policy – learning from the experience of the past few years. – Bold macroeconomic policy for a new government.
Essentially, it involves committing to a more flexible fiscal policy which can take into account the different requirements of liquidity ...
China’s one-year interest-rate swap rose by the most in 22 months as the central bank refrained from adding funds to the financial system to ease a cash squeeze, causing demand to fall at a ...
I am biased on AIG. It was never as good as proponents of its past have said. But it was not as bad as current detractors allege.
AIG went through several eras, some of which are barely covered by this book. There was the ...
One statistic above all explains the excitement India kindles: just 18 people in every 1,000 own a car. In China the figure is 58, according to the World Bank, while in most European countries it is more than 500. “India’s level of car ownership per capita is even lower than ...
The National Association of Home Builders is reporting this week that:
Builder confidence in the market for newly-built single-family homes hit a significant milestone in June, surging eight points to a reading of 52 on the National Association of ...
The very idea that the FOMC would function as faithful monetary eunuchs, keeping their eyes on the M1 gauge and deftly adjusting the dial in either direction upon any deviation from the 3 percent target, was sheer fantasy. And not ...
Wednesday economic releases:
• At 7:00 AM ET, The Mortgage Bankers Association (MBA) will release the results for the mortgage ...
Mark Carney's arrival as the new head of the Bank of England on July 1 is an opportunity for the U.K. to rethink monetary policy. ...
Cathleen Leué, technically my ex-wife but we had gotten back together several years ago, unexpectedly passed away last night. I will miss her terribly.
Blogging ...
There’s been a lot of discussion of upward movements in long term interest rates. I thought it useful to consider the revisions in expectations, over time, and in context.
Look at thetwo columns in the tablefor Total "Distressed" Share. In almost every area that has reported distressed sales so far, the share of distressed ...
Let me clear this up so that Donn Zaretsky can have no doubt. When I say that the Michigan attorney general is “absolutely right” that the art collection of the Detroit Institute of Arts cannot be sold to satisfy the city’s financial obligations, I mean that he’s ...
Morgan Warstler points me to this article:
Mexican congressmen voted on Tuesday to change a law that makes it difficult for foreigners to own beach homes in Mexico.
The law prevents any foreigner from directly owning a home that is located within 50 kilometers of Mexico’s coasts. Foreigners in Mexico ...
Brazil’s real touched a four-year low, prompting the central bank to intervene for a second straight day as a report showed higher-than-forecast inflation.
“If there’s more currency devaluation, there will be more inflation,” Jankiel Santos, the chief ...
Some days ago, the giant Chinese telecoms firm, Huawei, once again was confronted with negative headlines — this time questioning the decision of the British government a decade ago to allow the firm substantial contractual access to the national telecommunications infrastructure. The new controversy and headlines stemmed from a damning ...
From the “Difficult Run” blog post “Health Insurance vs. Food Insurance” by Nathaniel Given:
Imagine if grocery shopping worked like health insurance. Let’s call it “food insurance.”
Now let’s imagine what actually shopping for groceries would look like. Theoretically, insurance is about risk management. That’s why you ...
Last July Mario Draghi, president of the European Central Bank, spoke of the ECB's intent to do "whatever it takes" to hold the euro area together. In the months after his comment, the ECB unveiled its Outright Monetary Transactions programme, in which it pledged to make unlimited purchases of troubled ...
Since the George W. Bush Administration, Social Security reform has been atop the federal government’s list of top policy challenges. But when people talk about Social Security, they usually have in mind the Old Age and Survivors piece of the program. There is another critical element, however–Social Security Disability Insurance. And ...
Mark Thornton is interviewed about the basics of Bitcoin
I took some time off and visited family in Kentucky last week. It was raining when we were packing up on Sunday so I moved the car into the garage to tie everything up on top. The angle isn't the best, but do you notice anything odd about this picture?
News from the AERE Summer Conference:
Larry Goulder John Loomis Robert PindyckCongratulations!
Here is theAERE Fellows webpage.
Last month I wrote about the idea of a tax cut financed by the Fed, perhaps combined with an NGDP target. As David Beckworth writes, this could be a way of combining fiscal and monetary policy responses ...
MIT Technology Review gives a solid overview of the “race against the machines,’ technological unemployment argument. It points out a) the productivity-jobs gap; b) the hollowing out of the workforce by skills; c) the emergence of a new generation of machine competitors such as Baxter, Kiva, and Watson. Lots ...
• Overall the housing starts report was a little disappointing with total starts at a 914 thousand rate on a seasonally adjusted annual rate basis (SAAR) in May. This was below the consensus forecast of 950 thousand SAAR.
•However starts are up significantly from ...
Last week, James Galbraith was supposed to be interviewed by ERT, the public broadcaster in Greece. Events intervened when the Greek government ordered that ERT be shut down, and so instead of sitting for the interview, Galbraith delivered this speech in Thessaloniki in front of a large gathering assembled in ...
GETTING a read on the American economy is proving a bit tricky at the moment. Manufacturing activity is moving sideways. But housing markets continue to strengthen, and the labour market is maintaining its plodding but stable rate of improvement. And then there are bond yields.
TODAY'S recommended economics writing:
• Krugman on forecasting, and AS/AD (Scott Sumner)
• Intended consequences and the yen (Alphaville)
• On September (Tim Duy)
• The ten suggestions (Ben Bernanke)
This week's Free exchange column discusses new research on the historical effectiveness of "macroprudential" policy: regulatory and supervisory action by the central bank used in place of monetary policy to guard against financial instability. We have invited Douglas Elliott, a fellow in economic studies at the Brookings Institution and ...
THE datasphere is bursting with inflation indexes (inflation inflation?). The Bureau of Labour Statistics provides consumer and producer prices while the Bureau of Economic Analysis gives us all manner of deflators. There are headline and core series (the latter stripping out especially volatile prices). One can look at price indexes ...
TODAY'S recommended economic writing:
• Chinese solar panels - economics or politics? (Bruegel)
• How I learned to stop worrying and love the bond (Pawel Morski)
• China's debt servicing cost (Alphaville)
• Is the other shoe about to drop? (San Francisco Fed)
THE American economy began the long trudge back to full employment in February of 2010, when the total number of people working in the economy finally hit bottom. Since that time private employers have added about 6.9m jobs. That works out to a rise of 178,000 new jobs each month ...
THE European Central Bank (ECB) left its monetary stance unchanged today. The decision came as little surprise just one month after it had lowered its main policy rate, from 0.75% to 0.5%. That made the press conference after the governing ...
JAMES BULLARD, president of the Federal Reserve Bank of St Louis, gave a talk today that discussed the will-they-or-won't-they-and-when guessing game everyone is now playing head of the Fed's June meeting. The Fed is running an ongoing, open-ended asset purchase plan, in which it buys $40 billion of mortgage-backed ...
IN THE last week the world has been treated to a steady stream of revelations about America's surveillance apparatus. Though much of the focus of reporting is on the previously unappreciated zealotry of the government's data gathering, one of the most dramatic themes of the story is technological. America ...
TODAY'S recommended economics writing:
• Is Japan already dead? (Worthwhile Canadian Initiative)
• PRISM rattles EU lawmakers (Reuters)
• The intelligence community and American tech companies (Matt Yglesias)
• The overstated inflation danger (Financial Times)
• Inflation is still the lesser evil (Project Syndicate)
...EUROPE has lots of economic problems, of the sort that will tend to make a place poorer over time. But it has one very big problem, of the sort that can condemn an economy to prolonged recession. Mario Dragio laid it bare last week in comments following the European ...
SINCE late last year commodity prices have been on a long, slow downward slide. Yet many in the markets, like Jeremy Grantham, a British money manager, reckon that the commodity-price spike of the past decade is but a taste of what's to come. This week's Free exchange column ...
MATT YGLESIAS links to a piece updating us on the migratory solution to euro-zone unemployment:
A study by Real Instituto Elcano in February showed 70% of Spaniards under 30 have considered moving abroad. Portugal has seen 2% of its population leave in the past two years. The numbers leaving ...
ROBERT FOGEL, a Nobel-winning economic historian and pioneer in the use of quantitative methods in economic history, has died at the age of 86. The University of Chicago has an obituary here, and theNew York Timeshere. Mr Fogel was perhaps ...
TREASURY yields are rising. So is the dollar. Inflation is falling. Stocks have been beaten back a bit by a global swoon but have fallen much less than other markets. The labour market is improving at a steady if modest pace. Industrial activity is flat, but other ...
ONE of the enduring economic mysteries in Canada is why labour productivity is so dismal compared with that in America, even though the two economies are closely intertwined and are each other’s largest trading partner. Since 1980, when they were more or less at par, productivity levels in the two ...
TODAY'S recommended economics writing:
• Is this (still) the age of the superstar? (Paul Krugman)
• Fiscalists vs market monetarists (Alphaville)
• Tech exists (Modeled Behavior)
• The "solution" to the jobs puzzle (Stephanie Flanders)
...THE policy that gave teeth to the “do whatever it takes” commitment that Mario Draghi, president of the European Central Bank (ECB) made last July still remains untested in action. So potent was the policy specified in September with its pledge to make unlimited purchases in secondary markets of government ...
LAST week Cardiff Garcia produced a lovely taxonomy of views on the proper composition of stimulus. The idea is that there is a large group of economists and economics writers who think most rich-world economies are suffering from a demand shortfall. But within that group there are big disagreements ...
YESTERDAY, theFinancial Times' Robin Harding dropped a stone on the toe of previously buoyant markets:
Ben Bernanke is likely to signal that the US Federal Reserve is close to tapering down its $85bn-a-month in asset purchases when he holds a press conference on Wednesday, but balance that by saying subsequent ...
Last July Mario Draghi, president of the European Central Bank, spoke of the ECB's intent to do "whatever it takes" to hold the euro area together. In the months after his comment, the ECB unveiled its Outright Monetary Transactions programme, in which it pledged to make unlimited purchases of troubled ...
1. Would you settle for a flying train?
2. Did killing lots of people in WWII postpone the great stagnation?, and more here.
3. Did the Romans make better concrete than we do?
The articles are all in regards to China. Change the ...
Paul Krugman provides a succinct argument for not doing anything on entitlement reform. Succinct, but mostly wrong.
Krugman says, “As I like to point out, the conventional wisdom on these things seems to be that to avert the danger of future benefit cuts, we must act now to cut future ...1. Another doctor dumps all health insurance plans, after five years of dealing with the red tape of health insurance companies and the high overhead for the staff he hired just to deal with paperwork. The Wichita family physician switched to a system of charging patients a ...
This morning, it appears that our e-mail was temporarily hijacked by a spammer, apparently working out of South Korea, between 11:15 AM EDT and 11:30 AM EDT. ...
According to the Federal Reserve Bank of Cleveland, the median Consumer Price Index rose 0.2% (2.0% annualized rate) in May. The 16% trimmed-mean Consumer Price Index increased 0.1% (1.6% annualized rate) during the month. The median ...
A few weeks ago, I posted about an apparent movement to challenge the bankruptcy-exempt status of IRAs based on boilerplate language commonly found in the account agreements of many of the nation's largest brokerages. The legal argument rested on hyper-technical interpretations of the Bankruptcy Code and ...
Charitable organizations form a vital part of America’s safety net. Ideally, foundations would be able to make greater payouts in hard economic times when needs are greatest. Unfortunately, the design of today’s excise tax on foundations undermines and in fact discourages such efficiency.
Under current law, private foundations are required to ...
It is an excellent overall review, here is one good excerpt of many:
“We may be dealing here with a general principle of action,” Hirschman wrote:
“Creativity always comes as a surprise to us; therefore we can never count on it and we dare not believe in it until it has ...
Because virtually everything in our lives is making its way onto a digital platform, it may seem premature to claim that digital cameras are becoming obsolete in the majority of people’s lives. However, if you are not a professional photographer, then it is ...
Providing disaster aid to the poorest people in the world who have been devastated by natural and man-made disasters has been a staple of farm bill legislation over the past sixty years, reflecting the commitment of ordinary American citizens to helping those who are genuinely in urgent need ...
Fannie Mae and Freddie Mac have been political Teflon for the last five years – untouched by regulatory reform that has pervaded the rest of the financial services industry. A not-so-secret source of their powers is the widespread belief that the GSEs promote home ownership. But what if they didn’t?
In ...
What should the Fed do next? Something to consider: Economist David Beckworth correctly notes that a) long rates started rising several weeks before Fed Chairman Ben Bernanke’s “tapering” comments. and b) long rates on safe sovereign assets around the world are going up and are doing so in a ...
High home ownership as a driver of high unemployment by Warwick University’s Andrew Oswald:
Famously, Switzerland has 3% unemployment and 30% home ownership, while Spain has 25% unemployment and 80% home ownership.
Simple correlations of this kind do not count as (remotely) persuasive causal evidence. They are open to the objection, in ...
These ratios show the percent of disposable personal income (DPI) dedicated ...
New residential construction in the US increased last month to a seasonally adjusted annual rate of 914,000, which is nearly 7% higher than April’s count. Meanwhile, newly issued building permits declined 3.1% in May to a seasonally adjusted 974,000 annual pace vs. the previous month. Nonetheless, the housing ...
Any day now, the Supreme Court will rule on whether same-sex married couples have the right to file joint federal tax returns. But Yale tax law professor Anne Alstott has me wondering whether the entire debate over the tax consequences of the Defense of Marriage Act is missing the point. In an ...
If Congress is going to reform the tax code, it will take an enormous amount of hard work and a lot of luck. The stars, as they say, will have to align. Unfortunately, those galactic bodies seem to be getting more and more disarranged.
Reform just can’t catch a break. The deficit ...
Charitable organizations form a vital part of America’s safety net. Ideally, foundations would be able to make greater payouts in hard economic times when needs are greatest. Unfortunately, the design of today’s excise tax on foundations undermines and in fact discourages such efficiency.
Under current law, private foundations are required to ...
The federal government has been borrowing rapidly to finance recent budget deficits. But that’s not the only reason it’s gone deeper into debt. Uncle Sam also borrows to issue loans, build up cash, and make other financial investments.
Those financial activities have accounted for an important part of government borrowing in ...
Do recessions have longlasting adverse effects upon output? One common answer is that they do, to the extent that young people who are out of work lose experience and training and so are less productive even many years later. However, in a recent
Here’s a letter to the Washington Post:
Michael Gerson argues that the G.O.P., to remain relevant, must “become more socially inclusive without becoming socially liberal” (“The GOP’s leadership reform challenge,” June 18). The details of his formula are sketchy, but we can infer from his many attacks on libertarianism that Mr. ...
|Peter Boettke|
David Beckworth proposes a policy position designed to please both monetarists and fiscialists.
What do you think?
A Senate panel will begin consideration of a carbon tax bill as part of a broader hearing on climate change in mid-July.
Senate Environment and Public Works Committee Chairwoman Barbara Boxer (D-Calif.) told reporters in the Capitol on Thursday that Sen. Bernie Sanders’s ...
The problem with policing steroids is that the crime pays too handsomely and the conviction amounts to a carrying charge.
Suspending a big-league ballplayer for 50 or even 100 games for using performance-enhancing drugs is like sticking a parking ticket on Al Capone’s getaway ...
As the Federal Reserve ponders its policy choices at the FOMC meeting today and tomorrow, Ben Bernanke is faced with the most difficult of policy dilemmas. Does the Fed start tapering off its program of buying US$85 billion a month in US Treasury bonds and in mortgage-backed securities and thereby ...
Housing Starts:
Privately-owned housing starts in May were at a seasonally adjusted annual rate of 914,000. This is 6.8 percent above the revised April estimate of 856,000 and is 28.6 percentabove the May 2012 rate of 711,000.
Single-family housing starts ...
As I was researching yesterday’s post on The Oocyte Cartel I came across an old MR post from 2003 on plans in Canada to restrict the import of American sperm:
The US is a world leader in sperm exports primarily because sperm banks in the U.S. are run on a ...
… is from pages 181-182 of Hayek’s 1967 collection, Studies in Philosophy, Politics, and Economics; specifically, it’s from his Spring 1949 University of Chicago Law Review article, “The Intellectuals and Socialism”:
Professor Schumpeter, who has devoted an illuminating chapter of his Capitalism, Socialism and Democracy to some aspects of our problem, has not unfairly stressed that ...
GW law professor Daniel J. Soklove replies to an argument commonly advanced these days: "Only if you're doing something wrong should you worry, and then you don't deserve to keep it private."
Another Soklove piece in the Washington Post. And another, a law review article, exploring the ...
Paul Gregory: "'Austerity' To Blame? But Where's The Austerity?"
Washinton, D.C. doesn't seem to be hurting.
The recent placement record of Princeton's economic department. Harvard's.
A short video advertisement for a graduate economics textbook. (Who knew Recursive Macroeconomics could sound so interesting?)
And this, worthy of a research project: "Can any older professors give perspective on all this grade whining?"
We were busy doing other things earlier this month, but here's the economic situation with respect to dividends in the U.S. stock market through May 2013:
Amen to this.
All throughout the country, unions are pounding tech companies with regulation: taxi unions oppose smart-phone ridesharing apps, hotel unions have threatened apartment owners who rent out their rooms, and college faculty unionsare fighting low-cost online courses.
At least unions are honest: the best (and perhaps only) ...
Economic defeatism is a situation where policy makers accept an economic situation which is well below potential. Another form of defeatism is to see some problems as intractable and concentrate on dealing with side issues.
Economic defeatism is contagious because it can set the tone for the whole economy, making it ...
We are, as they say, live:
7 Important Examples of How Markets Can Fail
Not sure what happened, but the second paragraph of the introduction to the column is missing . It should be:
7 Important Examples of How Markets Can Fail: Many people on the political right believe that free ...
At the Bharat Sanchar Nigam Limited (BSNL), India‘s state-owned telecom company, a message emerges from a dot matrix printer addressing a soldier’s Army unit in Delhi. ”GRANDMOTHER SERIOUS. 15 DAYS LEAVE EXTENSION,” it reads. It’s one of about 5,000 such missives still being sent every day by telegram – ...
From my op-ed in today’s Investor’s Business Daily:
Shale production is about to turn the country into a net exporter of natural gas, and oil is being produced at such a clip that crude imports have fallen this year to a 25-year low. Remarkably, this oil and natural ...
Hi Friends! This post particularly applies to those that read me via RSS, which may be half of my readership when you consider all of the republishers of my work. At present, Google has stopped working on Feedburner, and earning money from Feedburner, which currently handles most if not all ...