Most of the discussion has focused on the domestic repercussions of going off the fiscal cliff (or as my former colleague Chad Stone calls it, the “fiscal slope”). I think it important to remember that, as the single largest economy, policy in the US has profound implications for economic developments overseas. This is particularly true with the eurozone still in a fragile state, and China growing (relatively) slowly.
Finding compromise
President Obama won a second term in office yesterday, receiving 50.3% of the popular vote But the Republicans held control of the House of Representatives and Americans remain deeply divided. Historically, the party in control of the White House loses some congressional seats in the midterm elections. That means that any legislation passed into law over the next two years, and likely the next four years, is going to have to be agreed to by both a Democratic President and a Republican House.
The Choice: Math vs. Anti-Math in Fiscal Policy
Over a hundred and fifty years ago, the “Know Nothing Movement” rose to prominence in American politics. The “Know Nothings” were thusly known not because they were ignorant, but because they denied being adherents of a xenophobic, nativist party. But I think this time around, it is appropriate to characterize one group as being a true “Know Nothing” party in the sense that they reject the gifts of the Enlightenment.
Going over the fiscal cliff
The “fiscal cliff” refers to a broad set of tax increases and spending cuts that under current U.S. law will take effect in January. A recent assessment by Bank of America Merrill Lynch estimates the tax increases in 2012 could come to $470 B and spending cuts another $250 B, for a combined fiscal shock of $720 B, or 4.6% of GDP.
The October Employment Situation: Continued Improvement
Figures 1 and 2 illustrate the improvement in nonfarm payroll and private nonfarm payroll employment, respectively. Figure 3 highlights the fact that total civilian employment and labor force both increased in October. Interestingly, civilian employment growth in October continues that reported for September, the veracity of which some observers had questioned.
Bringing the Bubble to the Senate
Or, “Who will rid me of this troublesome study?”
The Employment and GDP Relationship
The latest GDP release gives me the opportunity to re-evaluate whether job creation is less than what would be expected, given the growth in real GDP. At first glance, it seems obvious that growth in employment is less than expected. A simple OLS regression of log private employment on log real GDP over the 1987Q1-2012Q3, which might be implied by a particular form of Okun’s Law.
Economic Effects of Hurricane Sandy
As the eastern U.S. tries to dig out from under the devastation, I thought it might be useful to comment on the economic consequences that a storm like this could have.
Romney/Ryan on FEMA and NOAA
With an update (10/31) “Obama cuts FEMA funding by 3 percent. Romney-Ryan cuts it by 40 percent. Or more. Or less.”.
From National Journal, Governor Romney on FEMA:
Yet another discouraging GDP report
That’s the same title I used to summarize the U.S. 2012:Q2 GDP report released back in July. Doesn’t look like there’s much need to use any different headline for the 2012:Q3 numbers released on Friday.