FURTHER FURTHER READING
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If Janet Yellen and the FOMC are breathing a sigh of relief after today’s jobs report, it’s probably just a very shallow sigh.
In the household survey, the unemployment rate inched back up to 6.7 per cent because of both new entrants to the labour force and weak employment growth. The Fed will certainly discuss at length how to change forward guidance at their meeting later this month, though they won’t have to discuss it with the rate having already crossed the 6.5 per cent threshold. Read more
Women hold about 60 per cent of the total jobs in the thirty occupations projected by the US Bureau of Labor Statistics to have the most net job growth in the decade through 2022.
That figure was calculated* recently by the National Women’s Law Center, which adds that eighteen of those thirty occupations are “female dominated, with workforces that are 60 per cent or more female”. Read more
Anyone who has tried to work out the extent of US labour market slack has risked getting lost in a thicket of detailed research.
The most obvious question, and easily the most debated, is whether discouraged workers who have dropped out of the labour force will return in an accelerating recovery — keeping a lid on wage growth and core inflation. James Bullard included a useful summary of the literature on this debate in his speech last week. Read more
A hat tip to rock-star Alphaville alum Tracy Alloway for passing along this chart from The Socionomics Institute, now updated to include last week’s release of the 2008 transcripts (click to enlarge):
There’s been a ton of blogospheric analysis about the deal between Netflix and Comcast, and even after reading all of it you might well emerge as we did — completely unsure what to think.
Is the deal good or bad for consumers? Does it violate net neutrality, or have the pipes stayed neutral (and Netflix is simply a volume issue)? Is it any different from other deals already in place between content providers and internet service providers? Does it reflect the growing clout of the ISPs, or was it just smart business of Netflix to start bypassing the middlemen/backbone-providers? Read more
From the introduction to a new IIF paper:
The already acute financial pressures appear to have intensified further in recent weeks, with bank deposits falling sharply, the government out of funding and foreign exchange reserves likely to have tanked to as low as $12 billion by late February. The political change in Kiev has increased odds that Ukraine would receive the urgent financial assistance needed soon enough to avert default. With the Russian bailout likely to be put on hold, this assistance should amount to at least $20 billion this year alone. However, this would require the prompt formation of a new government able to undertake the reforms needed to alleviate the acute macroeconomic imbalances and put the economy on sound footing.
From a passage at the beginning of the December 2008 meeting transcript, where Ben Bernanke explains the difference between Japanese quantitative easing and the Fed’s combination of funding facilities, backstops and QE1 (which included agency debt and agency MBS):
In some respects our policies are similar to the quantitative easing of the Japanese, but I would argue that, when you look at it more carefully, what we’re doing is fundamentally different from the Japanese approach. Let me talk about that a bit. Read more
Given the release of the 2008 FOMC transcripts, the St Louis Fed has shrewdly tweeted a speech from last year by its president, James Bullard, arguing that the real-time economic data in 2008 was badly trailing events.
Janet Yellen was less worried than some of her FOMC colleagues in September 2008 that high inflation would remain a problem, and she was also more bearish on the economic outlook:
My contacts also report that their businesses are still raising prices in response to past increases in commodity and import prices that boosted their costs. I expect as a consequence that core inflation will remain uncomfortably high for a while longer, but the marked decline in commodity prices since June reinforces my conviction that there is light at the end of this inflation tunnel. … Read more
The January FOMC meeting, Bernanke’s last, had an uneventful outcome: the taper would continue at the same pace, while the statement itself had only mild changes to the economic outlook.
If the minutes to that meeting were slightly more interesting, this passage is the reason (paragraph broken up for easier reading): Read more
It’s a big day for Fed-watchers, with the FOMC minutes to the January meeting just out and Fed speeches by three district presidents (Dennis Lockhart, James Bullard, John Williams).
Here’s the opening paragraph from Arthur Okun’s 1973 paper, Upward Mobility in a High-Pressure Economy:
The choice of an aggregate target of resource utilization remains one of the key issues facing policy makers and macroeconomists. Obviously, fuller utilization of labor and capital brings benefits in the form of extra incomes, output, and jobs; at the same time, it clearly imposes costs by increasing inflationary tendencies. Various economists see these benefits and costs very differently. Henry Wallich once suggested that macroeconomists could be classified into advocates of “high pressure” and “low pressure” operation of the economy. At the present time, the controversial range for the target unemployment rate extends from 4 to 5 percent. Generally, high-pressure advocates concede that, with existing labor market institutions, unemployment rates below 4 percent would be associated with unacceptable inflation; while most low-pressure advocates agree that unemployment rates above 5 percent are intolerable.
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Eventually I’m going to do exactly what the other side wants me to do seems like an odd starting point for a negotiation.
But the debt ceiling negotiation that matters right now isn’t between Republicans and Democrats, but between the Republican leadership and the Republican won’t-be-leds. In that context, John Boehner’s comments last week — “We do not want to default on our debt, and we’re not going to default on our debt” — established his position ahead of meetings with the Republican tea-party flank and other potentially rebellious members. (By happy coincidence, it is also the sensible position.) Read more
What jittery times we live in. It was only a month ago that a bright-eyed and bushy-bearded blogger was (cautiously) citing numerous reasons for optimism about the US economy in 2014.
That was just before the thud of the December employment situation report, which was then followed by an unrelenting succession of disappointing economic indicators, not to mention the emerging-market selloff. Read more
Here’s an observation from Capital Economics in response to this week’s news about Japanese wages that hasn’t been much discussed:
The threat to the economic recovery from falling real wages may not be as big as many fear, given the trade-off between higher pay or more job creation. Nonetheless, consumers are understandably far from happy about the return of price inflation.