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February 5, 2015

Latest Posts from Economist's View

Latest Posts from Economist's View

'Where Are the Jobs?'

Posted: 05 Feb 2015 12:15 AM PST

A new report from Mike Cassidy of the Century Foundation:

Where Are the Jobs?: Overview If all the job openings in the United States were to be filled today, an additional 5 million Americans would be employed. That total is higher than the population of twenty-eight states, as well as every American city other than New York. It is the most job openings at any one time in the United States since 2001—enough to provide work for nearly three-in-five of the 8.7 million Americans who are now categorized as unemployed.

Of course, the notion of instantaneously and simultaneously filling all of America's vacancies is a nice thought exercise, but not particularly realistic. A healthy economy will always have openings as it grows and changes, as businesses open and close, and as workers leave jobs and begin new ones.

But the sheer magnitude of current job availabilities raises important questions. Why are employers apparently having more difficulty filling openings than in the past? Is it because applicants lack the skills required? Or are businesses feeling uncertain about the durability of the recovery? What industries have rebounded most strongly after the Great Recession, and which have lagged behind?

This report, the third in The Century Foundation's Working Paper Series, will explore these issues complicating the demand side of the U.S. labor market. But our guiding question will be a simple one: Where are the jobs? ...

Links for 02-05-15

Posted: 05 Feb 2015 12:06 AM PST

'Social Mobility Barely Exists but Let’s Not Give up on Equality'

Posted: 04 Feb 2015 09:34 AM PST

Gregory Clark:

Social mobility barely exists but let's not give up on equality: We live surrounded by inequality. Some have wealth, health, education, satisfying occupations. Others get poverty, ill-health and drudgery. The Conservative reaction, personified by David Cameron, is to promote social mobility and meritocracy.
History shows this will fail to increase mobility rates. Given that social mobility rates are immutable, it is better to reduce the gains people make from having high status, and the penalties from low status. The Swedish model of compressed inequality is a realistic option, the American dream of rapid mobility an illusion. ...
How then can we reduce the inequalities associated with status? There is the obvious mechanism of redistribution through the tax system. Provide minimum levels of consumption to all, funded by transfers from the prosperous.
But also you can create labour market institutions that compress wages and salaries, as in the Nordic societies. ... You can also structure educational systems to narrow the social rewards to those at the top of the ability distribution, or to amplify these rewards. ...
The message here is that while mobility seems governed by a social physics that defies easy intervention, the magnitude of social inequalities varies considerably across societies, and can be strongly influenced by social institutions. We cannot change the winners in the social lottery, but we can change the value of their prizes.

Fed Optimism Could Cost the Economy Dearly

Posted: 04 Feb 2015 08:57 AM PST

Me, at MoneyWatch:

Fed optimism could cost the economy dearly: Is the Fed overoptimistic about where the economy is headed? If so, that could cause the central bank to raise interest rates too soon, a policy error that could leave the economy stuck in a "deflationary trap" and remain at subpar growth levels for an extended time period.
The answer to that question is yes. The Fed's tendency to be overly optimistic about the economy is documented in a recent Economic Letter from the San Francisco Fed. In the Economic Letter, Kevin Lansing and Benjamin Pyle note that the Fed's economic forecasts "(1) did not anticipate the Great Recession that started in December 2007, (2) underestimated the severity of the downturn once it began, and (3) consistently overpredicted the speed of the recovery..."
The following two charts presented along with the researchers' findings show how far off the Fed's projections for the economy have been...
This had consequences. Although the central bank's monetary policy was much better than Washington's fiscal policy, the "green shoots" the Fed saw around every corner often caused policymakers to be too slow to put new policy in place (e.g. to turn from interest rate policy to quantitative easing, and then to new rounds of quantitative easing), and to be less aggressive than needed. ...
The risk now is that the Fed will repeat these mistakes. ...

Household Formation within the 'Boomerang Generation'

Posted: 04 Feb 2015 08:13 AM PST

This is from the New York Fed's Liberty Street Economics blog:

Household Formation within the "Boomerang Generation", by Zachary Bleemer, Meta Brown, Donghoon Lee, and Wilbert van der Klaauw: Young Americans' living arrangements have changed strikingly over the past fifteen years, with recent cohorts entering the housing market at much lower rates and lingering much longer in their parents' households. The New York Times Magazine reported this past summer on the surge in college-educated young people who "boomerang" back to living with their parents after graduation. Joining that trend are the many other members of this cohort who have never left home, whether or not they attend college. Why might young people increasingly reside with their parents? They may be unable to find employment, they may be saving their income to pay down increasing levels of student debt, or they may be unable to afford the rent for an apartment in the face of lower income or higher housing prices.
In a new Federal Reserve Bank of New York staff report, we discuss our analysis of these trends using the New York Fed Consumer Credit Panel (CCP). The CCP is a unique data set that includes information on the ages and locations of a large, representative sample of U.S. individuals and households. This data set's size allows us to analyze residence patterns for very narrow age groups, here twenty-five- and thirty-year-olds, at very fine geographic levels. Such fine age and geographic detail helps us distinguish among the various local economic forces that may be driving young people home.

After a long explanation, they conclude:

Our findings, then, confirm the view, widely reported in the American media, that today's young people are more likely to live in parental households long into their twenties than were young people one or two decades ago. This trend is widespread across the United States. Finally, while local economic growth, reflected in rising youth employment and escalating house prices, has mixed consequences for youth independence, the increasing magnitude of student debt among college graduates appears to be driving young people home and keeping them there. We will examine this relationship—between education, finance, and socioeconomic outcomes in the short and long term—further in our future research.

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