Economy

Apologies for the light posting this week--I was working on a big piece that will be out soon. I'm going to take a longer look at the new job numbers before deciding if I stand by my ten-percent unemployment prediction. But, in the meantime, here are two nuggets that caught my eye: 1.) Commercial real estate continues to worry me a bit, and the jobs report flicks at the reason why: In August, construction employment declined by 65,000, in line with the trend since May. Monthly losses had averaged 117,000 over the 6 months ending in April.

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Worth Reading

WSJ's Wessel: Taxing the rich more wouldn't hamper economy. The ratio of oil to natural gas prices is 4X the historical average. Krugman's essay on the failure of economics. Reactions from DeLong and Kling. Gillian Tett: Why did more bankers go to prison during S&L crisis than now? Why demand for healthcare shouldn't be suppressed. How can we prevent students from taking on too much debt?

Biden Gets Real

There was a lot of standard defense of Team Obama stimulus policy in Vice President Biden’s speech on the recovery act here at Brookings today.

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Back in May, I wrote about recent research unearthing the fact that a substantial portion of the unemployment rate is driven not by job losses, but by slowdowns in hiring--a most counterintuitive result. The magnitude of this effect is the subject of some disagreement, but it would be fair to say that, on average, about 50-75% of the changes in the unemployment rate are caused by changes in the willingness of businesses to create new jobs. I, and others, have used this to suggest that during downturns the government should do more to get businesses hiring again.

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Worth Reading

A very good explanation of why deficits aren't necessarily inflationary. Fed considered extending MBS purchases at last meeting. Willem Buiter is against, and Dean Baker is for, taxing trades. 10% of House and Senate have family members who also served in Congress. How credit derivatives are different from insurance.

The Wall Street Journal reports this morning, based on new figures from the Bureau of Labor Statistics, that unemployment rates continued to climb in July in metropolitan America. It’s probably true, based on BLS estimates that the nation overall shed another 247,000 jobs in July.  But BLS’ metropolitan data don’t exactly show us what’s going on from month to month. That’s because they don’t take account of the natural fluctuations in employment levels that occur everywhere due to seasonal labor market changes. Or, in data-wonk terms, they’re not “seasonally adjusted.”  Why does this matter f

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New employment data for August will be released this Friday, fueling a fresh round of analysis and punditry about whether the economy is on the upswing. To get ahead of that news, Vice President Biden will give what’s billed as a “major address” tomorrow  at Brookings to reinforce the administration’s assessment that the economy is improving and the federal stimulus package is working. No doubt, he will come armed with a new set of corroborative economic statistics and federal spending data. These national statistics are encouraging, but there’s just one problem. There is no uniform national

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A proposed tax on sugary drinks has gotten some good press of late, but here's a new paper that casts doubt on its obesity fighting abilities for children and adolescents. Jason Fletcher of Yale, David Frisvold of Emory, and Nathan Tefft of Bates collected data on the effects of soft drink taxes in about 20 states that had implemented them at some point between 1988 - 2006. While the taxes -- which averaged about 2% over the period -- did reduce soft drink consumption by the young, they were not helpful in reducing obesity rates. The reason?

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Worth Reading

Bailouts of Fannie and Freddie could also turn a profit. Sheila Bair: Super-regulator would "benefit the largest banks and punish community ones." Vanity Fair profiles Hank Paulson. Flash orders come to an end at Nasdaq. The number of "decent jobs" will stay flat over the next decade. Study: Multi-taskers are slowed down by irrelevant information.

Infrastructure—roads and rails, ports and pipes, bits and bytes—determines how efficiently and rapidly people, goods, and information move within and across our major metropolitan markets, driving their success and prosperity. It's only slightly hyperbolic to contend that the past 12 months marked a new era in U.S. infrastructure.

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