Longtime reader Ricardo (aka Dick/DickF/RicardoZ) writes:
…Our government is doing a serious disservice by falsifying the employment condition in our country. Policy changes that could actually help are being delayed with false information.
Author Archives: Menzie Chinn
October Employment Release: Market Improvement, but Not Yet Tight
The October employment release was much in line with expectations. I will focus my observations on a few observations:
(1) Alternative indicators indicate better improvement than headline (estimated) nonfarm payroll employment; (2) estimated nonfarm payroll employment has been revised upward over the past couple months; (3) estimated employment compensation growth remains muted, especially after taking into account catch-up and estimated productivity gains.
Rouble Floats, and Sinks
From Reuters yesterday:
The rouble tumbled on Wednesday after Russia’s central bank effectively abandoned the trading corridor for the currency, halting the multi-billion dollar daily interventions that had propped it up through sanctions and plunging oil revenues.
Known Unknowns in Macro
Reader Tom argues that economic discourse should not include discussion of variables that are unobservable, to wit (or at least indicate that it’s an estimate):
You announce somebody’s estimations of a theoretical, unobservable phenomenon as “the output gap” or “the actual output gap” as if you and they actually know them to be the output gap.
If we used this criterion, what variables would be ruled out from polite conversation? A lot…let’s just take the real interest rate.
Arkansas ahead of Wisconsin
On progress in implementing the minimum wage.
Mind the (Output) Gap
Yesterday’s advance GDP release for 2014Q3, covered by Jim, was welcome news, and was something Jeff Frieden and I predicted at the beginning of the year [1]. However, while growth seems to be firming, it is far too soon to take away stimulus. Figure 1 shows that the degree of economic slack remains large. [edits 11/6 to accommodate reader Tom’s critique]
Philadelphia Fed: Wisconsin and Kansas Growth Gaps Forecasted to Increase
And California and Minnesota surge ahead of the US. I know this sounds like a broken record, but the numbers are the numbers. And reader Patrick R. Sullivan suggests I move to Kansas, based on a Tax Foundation analysis (the same Patrick R. Sullivan who refuses to admit that his assertion that the depth of the downturn in Canada was less than that in the US during the Great Depression is wrong.) Here’s at least one reason why I don’t plan to. From today’s release of leading indices by the Philadelphia Fed, combined with last week’s release of coincident indices.
Ed Lazear Comments on Government Forecasts
Or, the self-rehabilitation effort continues. In a WSJ op-ed entitled “Government Forecasters Might as Well Use a Ouija Board”, he writes:
My analysis of 1999-2013 reveals that the CBO’s real GDP growth forecasts for the next year were off, on average, by 1.7 percentage points, either too high or low. Administration forecasts were similarly off by a slightly larger 1.8 percentage points on average, also to high or too low. Given that the average growth rate during this period was only 2.1%, errors of this magnitude are substantial.
Guest Contribution: Is the US Current Account Deficit Problem Over?
Today we are fortunate to have a guest contribution written by Jeffrey Frankel, Harpel Professor of Capital Formation and Growth at Harvard University, and former Member of the Council of Economic Advisers, 1997-99.
Philadelphia Fed Coincident Indices: Kansas and Wisconsin Continue to Lag Nation
Low ranked by ALEC-Laffer, California and Minnesota continue to power along, as shown in data released today by the Philadelphia Fed.