The Closer

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- The week in four charts, via Fast FT. And what’s coming next week.  Read more

Yellen’s speech

Janet Yellen’s speech on Wednesday repeated some of her earlier points about labour market slack — she thinks there is plenty left and hasn’t followed the shifting centre of gravity within the FOMC — and also included remarks on her inflation outlook and the Fed’s new, qualitative forward guidance.

On inflation: Read more

Construction vs manufacturing re(-re)visited, and the US labour market

The graph above from CreditSights, which shows cumulative net job changes by industry since the start of the recession, can be used to tell a general story about the US economy and a more specific story about the current labour market recovery. Read more

The Closer

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- How much trading should there be? Read more

The remarkable productivity stagnation of the US construction sector

For the nearly half-century through 2012, annual labour productivity growth in the US construction sector averaged close to zero, and it has been negative for the past two decades.

Here’s a graph constructed last year by Paul Teicholz, a civil engineer who has been working on construction technology issues for a long time and who produced the best concise analysis of the sector’s productivity that I’ve come across: Read more

Further further reading

- The output gap is a flawed and potentially dangerous concept.

- Who bears “Federal Reserve risk“? Read more

Takeaways from the minutes to the March 18-19 FOMC meeting

Our brief thoughts on the FOMC minutes:

1) When Janet Yellen said at the FOMC presser that the public, in thinking about the future path of short rates, should mind the FOMC statement rather than the dots in the Summary of Economic Projections, she was simply reaffirming what had already been discussed during the meeting. What the minutes don’t explain very well is just why “the increase in the median projection overstated the shift in the projections”. In any case, the point remains that Yellen would rather the dots be considered a secondary communications tool. Read more

The Closer

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- Why those guys won the economics NobelsRead more

The Closer

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-”When is it ethical to hand our decisions over to machines? And when is external automation a step too far?” Read more

Readings from the book of Sam

After a half-century with the FT, Sir Samuel Brittan retired last week, signing off with a valedictory essay and video chat.

I was new to journalism when a friend bought for me Against the Flow, a collection of Brittan’s essays published in 2005. My friend thought I might enjoy the book based on an enthusiastic review in The Economist, which proclaimed it “so good that rivals in the field will, like this reviewer, put it down not knowing whether to feel inspiration or despair”. Read more

The Closer

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- The highest-ranking American airport (Cincinnati) is 27th in the world. Read more

Yellen: four pieces of evidence of slack in the US labour market

From her speech in Chicago:

One form of evidence for slack is found in other labor market data, beyond the unemployment rate or payrolls, some of which I have touched on already. For example, the seven million people who are working part time but would like a full-time job. This number is much larger than we would expect at 6.7 percent unemployment, based on past experience, and the existence of such a large pool of “partly unemployed” workers is a sign that labor conditions are worse than indicated by the unemployment rate. Statistics on job turnover also point to considerable slack in the labor market. Although firms are now laying off fewer workers, they have been reluctant to increase the pace of hiring. Likewise, the number of people who voluntarily quit their jobs is noticeably below levels before the recession; that is an indicator that people are reluctant to risk leaving their jobs because they worry that it will be hard to find another. It is also a sign that firms may not be recruiting very aggressively to hire workers away from their competitors. Read more

The capex call

Like other parts of the US economic recovery — housing, the labour market — capital expenditures by companies have been a letdown recently, even accounting for the weather.

The latest example came in Wednesday’s durable goods report, in which the “nondefense capital goods orders excluding aircraft” component fell. (That figure is a proxy and obviously doesn’t capture everything that normally counts as capex, which also includes investment in property and structures, imported capital goods, and certain intangible assets. Capex is often poorly or loosely defined in discussions about it.) Read more

The Closer

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- Wired on the fierce battle for the soul of BitcoinRead more

The endless(ly sluggish) US expansion

Jared Bernstein posts the chart above and notes that the US expansion is “getting on in years relative to all the others since the mid-40s”, though he’s also careful to note the large amount of variability around this figure.

This reminded us of two notes from earlier this year on the length and durability of the US recovery, written by two different sets of economists at Goldman Sachs. Read more

The Closer

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- The loneliness of a Kiev bond traderRead more

The Closer

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- Economics and the foundations of artificial intelligenceRead more

Yellen’s words vs what you heard

The thresholds had a one-time gig, doing their job so well that they made themselves obsolete. How very New Economy of them.

Well, sort of. According to Janet Yellen’s reasoning for having ditched the thresholds as a part of the Fed’s forward guidance, they served their purpose at a time when it still seemed possible that inflation would climb above the Fed’s target even while the unemployment rate was still well above its natural level. Their presence was meant to reassure markets that the Fed wouldn’t rush to tighten in such a scenario, and in the meantime they also communicated to markets that policy was data contingent rather than calendar-based. Read more

The Closer

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- The battle of China’s two tech titans. Make that three.  Read more

US Markets Live, Yellen first presser

Live markets commentary from FT.com 

FOMC statement, 18 March 2014

A reminder that we’ll be covering Janet Yellen’s presser in real time on Markets Live starting at 2:25pm EST (6:25pm in London).

A few quick points, which we’ll add to as we make our way through it: Read more

US Markets Live today, special Janet Yellen first presser edition

Tune in at 2:25pm EST (6:25pm in London) today for a special edition of US Markets Live and join the rabble to watch Janet Yellen be grilled post-meeting by our colleagues in the media.

As usual we recommend the preview by our man in DC, Robin “Hip Specs” Harding. Read more

In search of agreement on slack and the Fed

Just here for a bit of gap-bridging. Peacemaking. Common ground finding.

Evan Soltas and Robin Harding last week offered strong challenges to the try risking an overshoot argument made by Ryan Avent and meRead more

The Closer

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- James Suroweicki: “The real irony of our forecasting boom is that as fortune-tellers proliferate, fortunes become harder to read.” Read more

The Closer

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- Your job taught to machinesRead more

The Closer

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- Five things to know about income inequalityRead more

The Closer

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- “Worried about immigration? Wait till I tell you about young people…” Read more

Known unknowns about labour market slack

Here are questions to which the answers remain disputed:

1) To what extent will discouraged workers return to the labour force if the economic recovery accelerates? Read more

Quits lacking => slacking?

Remember the Yellen labour market dashboard?

Two of the five indicators she watched carefully before she became Fed chair are in the Jolts report, one of which is the quits rate (the hiring rate is the other). Read more

The Closer

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- The US now has the fewest government workers since 2001. Read more