Month: February 2014

The household-survey seasonally-adjusted employment-to-population ratio jumped a surprisingly large amount in January: from 58.6% to 58.8%. The household-survey not-seasonally-adjusted employment-to-population ratio fell a surprisingly small amount in January: from 58.5% to 58.1%. The seasonal-adjustment factor did its standard recent thing for January: jumped from -0.1%-point to -0.7%-point:

We had this surprising dip in raw employment-to-population in October, when businesses are usually staffing-up for the Christmas rush. Is that connected? That is what I want to know this morning. And I cannot find anybody with both (a) the time and (b) the knowledge to tell me this morning…

Household employment seasonal adjustment factors since 1980 (January 2014 missing–it’s -0.7%-points):

Continue reading “The Employment Report: Friday Focus: February 7, 2014” →

David Weigel: CBOghazi: Journalists have no idea “what will matter” in an election.: “Chris Cillizza… defending [is] post he wrote about the political damage the CBO’s report might inflict on Democrats….

Here’s the problem: Journalists, in real time, are not the best arbiters of what people will come to believe months later. The fact that one party is spinning an incorrect story does not mean voters will buy that story…. From some previous instances of [Cilizza’s] the Fix pronouncing that some misinterpreted news item was going to badly wound the Democrats. On June 10, 2012, Cillizza confidently predicted that a gaffe you’ve probably forgotten about—President Obama saying that “the private sector’s doing fine” compared with the state of social programs—would “be fodder in the general election.”… In July of that year, Cillizza’s fellow Fix writer Aaron Blake explained why Obama’s exhortation that “if you’ve got a small business, you didn’t build that”… would be a problem…. Did it matter? No. Mitt Romney did not win the election….

Continue reading “Morning Must Read: David Weigel: The CBOghazi of Chris Cilizza (and Others): Journalists have no idea “what will matter” in an election.” →

Must-Reads:

1. Mark Peters and David Wessel: More Men in Prime Working Ages Don’t Have Jobs: “Mark Riley was 53 years old when he lost a job as a grant writer for an Arkansas community college. ‘I was stunned’, he said. ‘It happened on my daughter’s 11th birthday’. His boss blamed state budget cuts. That was almost three years ago and he still hasn’t found steady work…. More than one in six men ages 25 to 54, prime working years, don’t have jobs—a total of 10.4 million. Some are looking for jobs; many aren’t…. Having so many men out of work is partly a symptom of a U.S. economy slow to recover from the worst recession in 75 years. It is also a chronic condition that shows how technology and globalization are transforming jobs faster than many workers can adapt, economists say.”

2. Robert M. Solow: The One Percent: “Mankiw’s… paper… without making an explicit claim, carries on tacitly as if the One Percent consists mainly of entrepreneurs whose innovations generate a lot of consumer surplus for the world. There would be less alarm if that were so. But… the financial services industry… trading profits… the payoff to asymmetric information, and generates precious little in the way of aggregate consumer surplus…. From 1970 to about 1995, the median realized compensation for chief executive officers in Standard and Poor’s 500 broker-dealer firms was essentially indistinguishable from that of Standard and Poor’s 500 banks and industrials. Rather suddenly, between 1996 and 2006, the median broker-dealer chief executive officer started to collect anywhere between 7 and 10 times the median compensation of the other two groups. This does not smell like the Goldin and Katz (2008) story. I’ll swallow “innovation,” but socially productive innovation, no thanks. Extreme inequality is not primarily about useful entrepreneurs. On financial profits and inequality, Mankiw waffles uncomfortably.”

3. Jonathan Chait: The Lonely Death of the Republican Health Plan: “Last week, Republican Senators Tom Coburn, Richard Burr, and Orrin Hatch unveiled a health-care proposal – or, at least, a close approximation of one. Conservatives hailed it as a seminal event, the moment when the Republican Party would finally dispel the accusation of mindless obstructionism and assert its full equal status as a vessel for serious health-care policymaking. Ross Douthat rejoiced, ‘mirabile dictu, an actual health care reform proposal!’ The new plan ‘explode[s] the myth’, exulted a National Review editorial, that ‘Obamacare or something like it is the only game in town’…”

4. Tim Duy: Markets Tumble. How Will the Fed React?: “The Fed’s decision to taper despite the obvious challenge to their inflation target looks increasingly questionable…. Across the Curve points us to the Wall Street Journal’s anecdotal account of intense pricing pressures (and still weak demand) facing firms…. Despite the Fed’s claim that tapering is not tightening, that it is the stock of assets held, not the flow, that matters, that they could change the policy mix without changing the level of accommodation, market participants are acting as if tapering is indeed tightening…. Bond market participants, who had been starting to get optimistic that improving economic conditions would prompt the Fed to tighten sooner than later are now rethinking that scenario…. If this keeps up, it looks like Yellen will face an early test in her first few weeks as Chair. And I would say there is a good chance this does keep up until the Fed changes direction and decides that the US economy may not have reached escape velocity as believed…. The hawks fought long and hard for the taper; they will not be easily dissuaded from by a few sloppy days on Wall Street….”

Continue reading “Things to Read at Dinnertime on February 6, 2014” →

Mark Peters and David Wessel: More Men in Prime Working Ages Don’t Have Jobs: Mark Riley was 53 years old when he lost a job as a grant writer for an Arkansas community college.

“I was stunned,” he said. “It happened on my daughter’s 11th birthday.” His boss blamed state budget cuts. That was almost three years ago and he still hasn’t found steady work. Mr. Riley, whose unemployment benefits ran out 14 months ago, says his long and fruitless search is proof employers won’t hire men out of work too long. “We’re poor, but we’re not broke,” Mr. Riley said. “We still have property. We have cars. We have some assets, we just can’t liquidate them.”… More than one in six men ages 25 to 54, prime working years, don’t have jobs—a total of 10.4 million. Some are looking for jobs; many aren’t…. Having so many men out of work is partly a symptom of a U.S. economy slow to recover from the worst recession in 75 years. It is also a chronic condition that shows how technology and globalization are transforming jobs faster than many workers can adapt, economists say.

Continue reading “Mark Peters and David Wessel: More Men in Prime Working Ages Don’t Have Jobs” →

Robert M. Solow: The One Percent:

The cheerful blandness of N. Gregory Mankiw’s “Defending the One Percent” (Summer 2013, pp. 21–34) may divert attention from its occasional unstated premises, dubious assumptions, and omitted facts. I have room to point only to a few such weaknesses; but the One Percent are pretty good at defending themselves, so that any assistance they get from the sidelines deserves scrutiny.

First, the paper starts off by invoking an iconic Steve Jobs and, without making an explicit claim, carries on tacitly as if the One Percent consists mainly of entrepreneurs whose innovations generate a lot of consumer surplus for the world. There would be less alarm if that were so. But a large and–before the crisis–increasing part of the income of the One Percent arises in the financial services industry, and a large and increasing part of that has come from trading profits. Much of the income in question must therefore be the payoff to asymmetric information, and generates precious little in the way of aggregate consumer surplus. Consider this history (for details see Murphy 2012, especially pp. 307–8): from 1970 to about 1995, the median realized compensation for chief executive officers in Standard and Poor’s 500 broker-dealer firms was essentially indistinguishable from that of Standard and Poor’s 500 banks and industrials. Rather suddenly, between 1996 and 2006, the median broker-dealer chief executive officer started to collect anywhere between 7 and 10 times the median compensation of the other two groups. This does not smell like the Goldin and Katz (2008) story. I’ll swallow “innovation,” but socially productive innovation, no thanks. Extreme inequality is not primarily about useful entrepreneurs. On financial profits and inequality, Mankiw waffles uncomfortably.

Continue reading “Evening Must-Read: Robert M. Solow: Greg Mankiw and the One Percent” →

As somebody-or-other I was talking to earlier this week said: “I used to read the NYT and the WSJ to figure out what had happened yesterday, the Economist to learn what had happened in the past two months on topics I wasn’t keeping always up to speed on, and the NYRB to get reasonably up-to-date in what had happened in the past year or five in A pretty random set of areas that I did not follow daily or monthly.”

“Then that strategy somehow broke down…”

Now comes the EzraPosse, the Juicebox-Mafia-that-was: now come Ezra Klein and Melissa Bell and Dylan Matthews and Matthew Yglesias to partner with Vox Media and launch us up to the next level of that great Algonquian Round Table in the Cloud that our public sphere has been ever since Tim Berners-Lee worked his magic at the start of the 1990s.

Continue reading “What Are Ezra Klein, His Posse, and Vox Media About to Try to Do?: Thursday Focus: February 6, 2014” →

The financial crisis, output collapse, failure to support the economy enough to create a strong high-pressure recovery, and subsequent new normal appear to have robbed America of 10% of it economic productivity from now until the end of time.

What forces, shocks, and processes are in train to get us back to the “old normal” trend? And is there any reason to believe that any such will show up in the future?

I don’t see any…

Must-Reads:

1. Paul Krugman: Changing Circumstances: “You can pretty clearly see three things: 1. Until 2008, the Fed leaned against the wind…. 2. After 2008, the Fed would have liked to cut rates but couldn’t. 3. Also after 2008, as a result of the zero constraint, monetary policy no longer leaned against the wind. Point 3 strongly suggests that you would expect different results from… policies…. Some people will argue that the Fed coulda and shoulda and maybe even did make up for its inability to lower short-term rates with other policies. My view would be that making monetary policy truly effective at zero rates, if it was possible at all, would have required more radical action than the Fed was willing or politically able to take.”

2. Josh Barro: CBO Report Obamacare Discouraging Work: “The law will reduce work hours through several mechanisms, some of which are desirable and some of which aren’t…. The decline in work will be almost entirely because people choose to work less, not because employers choose to hire less. Republicans tend to talk about Obamacare as ‘forcing people into part-time work’. But CBO expects the law to have ‘small or negligible’ effects on labor demand…. While a decline in labor demand will tend to reduce wages, a withdrawal of labor supply may actually help push them up…”

3. Dylan Scott: The GOP Has It Wrong: Obamacare Won’t ‘Cost’ 2 Million Jobs: “The CBO… undermines that [Republican] claim. Those lost hours will ‘almost entirely’ be the result of people choosing to work fewer hours…. The report explicitly says that Obamacare isn’t going to force businesses to cut jobs on any grand scale. What it is going to do is change how much Americans work. ‘I think it’s important to distinguish between people choosing to work less and jobs being lost’, Larry Levitt, vice president at the non-partisan Kaiser Famiy Foundation, told TPM. ‘That is something important to keep an eye on, since you don’t want to discourage work. But, it’s not in all cases a bad thing’.”

4. Jonathan Chait: Obamacare, Jobs, and ‘What Matters Politically’: “Imagine that the United States had a national health-care system in place for long enough that it was no longer the subject of frenetic controversy…. Now imagine a new president just proposed to eliminate that system…. Then suppose the Congressional Budget Office analyzed the effect…. Would the firestorm… about Obamacare killing jobs that dominated the actual news yesterday be, in this imagined world, a heavenly chorus of hallelujahs?… There would be more people working, more economic output, and more national wealth. Hooray!”

5. Paul Krugman: CBO: ACA OK – NYTimes.com: “What with the fuss over the CBO estimates of employment effects of health reform–Appendix C–everyone seems to have overlooked Appendix B…. How has the disastrous initial rollout affected CBO’s projections about reform’s near future?…. The number of uninsured will fall 13 million, not 14 million!… CBO thinks that reform has been only mildly set back by the healthcare.gov mess… [and] these are predictions we’ll be able to test in real time, unlike the labor force estimates, which will get lost in statistical noise.”

Continue reading “Things to Read on the Morning of February 6, 2014” →

Paul Krugman: Austerity Memories: “Cooper in passing reminds me of something I wrote during the depths of oh-my-God-90-percent-debt enthusiasm.

As Cooper suggests, way back then I made all the key anti-debt-panic arguments that would be vindicated in 2013 — which is not so much a comment on my own perspicacity as it is a comment on how easy it was to see the flaws in the debt-panic argument right from the beginning, never mind the spreadsheet. And following the link from my post to the article that inspired it, I see a reminder of what was really going on before the debt scolds tried to rewrite history. These days, they always insist that they weren’t arguing for short-run fiscal austerity. Oh yes they were: in the linked article, Ken Rogoff explicitly attacks those who wanted to maintain fiscal stimulus, and ridicules those suggesting that pursuing fiscal consolidation “risks throwing already weak economies into double-dip recessions, or even a sustained depression.”

Um, Europe?

Continue reading “Morning Must-Read: Paul Krugman: Yes, the Deficit Hawks of 2000 Need to Mark Their Beliefs to Market Right Now” →

It’s starting to look like real GDP in the first quarter of 2014 will–seasonally adjusted–be 2.0%/4 above real GDP in the fourth quarter of 2013. -0.5%-point per year of that will be weather-related, but even without the weather factor the economy looks to be starting the year still growing at or below potential.

No “gap closing”.

No “escape velocity”.