Wonkblog had an interesting piece noting the fact that the number of people collecting unemployment benefits is falling faster than the number of new unemployment insurance claims. It attributed this fact to the growing number of unemployed workers who have exhausted their benefits. The reduction in the duration of benefits has also increased this number.
There is a third reason that the percentage of unemployed workers collecting benefits may decline. Many workers who lose their jobs now will have had little work experience in the last two years, which means that they may not qualify for benefits. In other words, if a worker had been laid off in 2008 or 2009, when the economy was losing 700,000 jobs a month, and since then has only been able to find intermittent and part-time work, they likely will not meet even the work requirements to collect benefits. Relatively few laid off workers would have been in this situation at the start of the recession, but it is likely that many workers are now.
(Note: Typos corrected.)
Wonkblog had an interesting piece noting the fact that the number of people collecting unemployment benefits is falling faster than the number of new unemployment insurance claims. It attributed this fact to the growing number of unemployed workers who have exhausted their benefits. The reduction in the duration of benefits has also increased this number.
There is a third reason that the percentage of unemployed workers collecting benefits may decline. Many workers who lose their jobs now will have had little work experience in the last two years, which means that they may not qualify for benefits. In other words, if a worker had been laid off in 2008 or 2009, when the economy was losing 700,000 jobs a month, and since then has only been able to find intermittent and part-time work, they likely will not meet even the work requirements to collect benefits. Relatively few laid off workers would have been in this situation at the start of the recession, but it is likely that many workers are now.
(Note: Typos corrected.)
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I just thought I’d ask since the paper apparently decided to tell readers that the government’s health and retirement programs are expensive. This information is given in the context of an article on a plan by House Speaker John Boehner to offer a short-term continuing resolution that will maintain funding for the government into the new fiscal year that begins on October 1.
The article told readers:
“Obama and other Democrats are eager to turn off the sequester and have offered a plan to replace the savings with a mix of tax increases and reforms to expensive health and retirement programs.”
The piece did not tell readers how it determined that these programs are expensive. They clearly take up a large share of the budget, but that true statement is not well-conveyed by the adjective “expensive.”
I just thought I’d ask since the paper apparently decided to tell readers that the government’s health and retirement programs are expensive. This information is given in the context of an article on a plan by House Speaker John Boehner to offer a short-term continuing resolution that will maintain funding for the government into the new fiscal year that begins on October 1.
The article told readers:
“Obama and other Democrats are eager to turn off the sequester and have offered a plan to replace the savings with a mix of tax increases and reforms to expensive health and retirement programs.”
The piece did not tell readers how it determined that these programs are expensive. They clearly take up a large share of the budget, but that true statement is not well-conveyed by the adjective “expensive.”
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Laura Tyson has a NYT Economix blog post that highlights the success of Japan’s policy of running large budget deficits. While Japan has a gross debt of almost 250 percent of GDP (more than twice the ratio in the U.S.), the government has embarked on an ambitious stimulus plan to boost its economy. In the two quarters this plan has been in place Japan’s economy has grown at 3.0 percent annual rate (3.1 percent per capita). By comparison, in the United States, where deficit reduction has been the guiding policy, the economy has grown at just a 1.4 percent annual rate (0.7 percent per capita).
Tyson notes that one of the main goals of the current policy is to bring more Japanese women into the labor force. It tells readers that the gap in employment rates in Japan between men and women is 25 percentage points.
Actually, this comment refers to data that does not reflect the current situation in Japan. The employment rate among women has increased substantially in recent years. According to the OECD, the employment rate for prime age women (ages 25-54) in Japan was 69.2 percent last year. This implies a gap in employment rates between women and men of 22.3 percentage points in Japan compared to just 13.3 percentage points in the United States. However, this difference is explained entirely by a lower employment rate for men in the United States, as the employment rate for prime age women in the United States is also 69.2 percent.
In fact, since the employment rate for women aged 16-64 in Japan has risen by 1.3 percentage points in the first half of 2013 from its year-round average in 2012, the employment rate for prime age women in Japan is now almost certainly higher than in the United States.
Laura Tyson has a NYT Economix blog post that highlights the success of Japan’s policy of running large budget deficits. While Japan has a gross debt of almost 250 percent of GDP (more than twice the ratio in the U.S.), the government has embarked on an ambitious stimulus plan to boost its economy. In the two quarters this plan has been in place Japan’s economy has grown at 3.0 percent annual rate (3.1 percent per capita). By comparison, in the United States, where deficit reduction has been the guiding policy, the economy has grown at just a 1.4 percent annual rate (0.7 percent per capita).
Tyson notes that one of the main goals of the current policy is to bring more Japanese women into the labor force. It tells readers that the gap in employment rates in Japan between men and women is 25 percentage points.
Actually, this comment refers to data that does not reflect the current situation in Japan. The employment rate among women has increased substantially in recent years. According to the OECD, the employment rate for prime age women (ages 25-54) in Japan was 69.2 percent last year. This implies a gap in employment rates between women and men of 22.3 percentage points in Japan compared to just 13.3 percentage points in the United States. However, this difference is explained entirely by a lower employment rate for men in the United States, as the employment rate for prime age women in the United States is also 69.2 percent.
In fact, since the employment rate for women aged 16-64 in Japan has risen by 1.3 percentage points in the first half of 2013 from its year-round average in 2012, the employment rate for prime age women in Japan is now almost certainly higher than in the United States.
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The Census Bureau reported a 13.4 percent drop in new home sales in July. This could be a really big deal.
House prices had been rising rapidly in many parts of the country and there was a real basis for concern about bubbles in many markets. While these bubbles were not driving the national economy, as they had been in the years 2002-2007, there was a real risk that many homebuyers would again buy into seriously over-valued markets and face large losses on their homes.
It appears that the interest rate hikes in May-June curbed the enthusiasm of investors for real estate, thereby taking the air out of the bubble. The reason why the July new home sales data is important information on this point is that it is giving us data on contracts signed in July. Most other data sources are about sales which reflect contracts that were typically signed 6-8 weeks earlier. The July sales data strongly reinforce realtor accounts of a weakening market in the last two months.
The Census Bureau reported a 13.4 percent drop in new home sales in July. This could be a really big deal.
House prices had been rising rapidly in many parts of the country and there was a real basis for concern about bubbles in many markets. While these bubbles were not driving the national economy, as they had been in the years 2002-2007, there was a real risk that many homebuyers would again buy into seriously over-valued markets and face large losses on their homes.
It appears that the interest rate hikes in May-June curbed the enthusiasm of investors for real estate, thereby taking the air out of the bubble. The reason why the July new home sales data is important information on this point is that it is giving us data on contracts signed in July. Most other data sources are about sales which reflect contracts that were typically signed 6-8 weeks earlier. The July sales data strongly reinforce realtor accounts of a weakening market in the last two months.
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It’s good to see the NYT taking a serious interest in the wages and income of typical families. Unfortunately, they have picked a bad measure to highlight in relying on the reports of Sentier Research.
The Sentier measure is moved to a large extent by erratic patterns in income reported by respondents to the Current Population Survey fielded by the Census Bureau. Because the sample size in this survey is relatively small (the overall survey has 60,000 households, with only one quarter answering the income question each month), there will frequently be large movements which almost certainly reflect sampling error rather than actual changes in the economy.
For example, the Sentier index showed a sharp drop in before tax income in the early months of this year which has since been reversed. It showed an even sharper drop at the start of 2012, which was reversed over the course of the year. There were no obvious economic developments that could explain the drops in either year or their subsequent reversal. These movements were simply random fluctuations in the data, which is common in this series. That is why economists generally do not pay much attention to its short-term movements.
A much better analysis of trends in income can be found at the Economic Policy Institute’s (EPI) website. It has been providing solid analysis of wage and income trends for more than two decades. Unlike Sentier Research, EPI does not charge for its research findings.
It’s good to see the NYT taking a serious interest in the wages and income of typical families. Unfortunately, they have picked a bad measure to highlight in relying on the reports of Sentier Research.
The Sentier measure is moved to a large extent by erratic patterns in income reported by respondents to the Current Population Survey fielded by the Census Bureau. Because the sample size in this survey is relatively small (the overall survey has 60,000 households, with only one quarter answering the income question each month), there will frequently be large movements which almost certainly reflect sampling error rather than actual changes in the economy.
For example, the Sentier index showed a sharp drop in before tax income in the early months of this year which has since been reversed. It showed an even sharper drop at the start of 2012, which was reversed over the course of the year. There were no obvious economic developments that could explain the drops in either year or their subsequent reversal. These movements were simply random fluctuations in the data, which is common in this series. That is why economists generally do not pay much attention to its short-term movements.
A much better analysis of trends in income can be found at the Economic Policy Institute’s (EPI) website. It has been providing solid analysis of wage and income trends for more than two decades. Unlike Sentier Research, EPI does not charge for its research findings.
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Morning Edition had a segment on the housing recovery which substantially overstated its likely contribution to the recovery. The expert analyst the piece relied upon suggested that housing construction could add 1.0 percentage point to GDP growth over the next three years. This would imply a near doubling of its contribution over the last year.
According to data from the Bureau of Economic Analysis, housing has added an average of just less than 0.4 percentage points to growth over the last four quarters. Its peak contribution in this period was just 0.5 percentage points. Even assuming a multiplier of 1.5, the average contribution over this period would be just 0.6 percentage points, considerably less than the 1.0 percentage point suggested by NPR’s expert.
It is also remarkable that the piece never referred to the vacancy rate which is still near record highs. This is a key factor holding housing starts down.
Morning Edition had a segment on the housing recovery which substantially overstated its likely contribution to the recovery. The expert analyst the piece relied upon suggested that housing construction could add 1.0 percentage point to GDP growth over the next three years. This would imply a near doubling of its contribution over the last year.
According to data from the Bureau of Economic Analysis, housing has added an average of just less than 0.4 percentage points to growth over the last four quarters. Its peak contribution in this period was just 0.5 percentage points. Even assuming a multiplier of 1.5, the average contribution over this period would be just 0.6 percentage points, considerably less than the 1.0 percentage point suggested by NPR’s expert.
It is also remarkable that the piece never referred to the vacancy rate which is still near record highs. This is a key factor holding housing starts down.
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A Washington Post article on the battle over replacing Bernanke as Fed chair forget to mention these qualifications of Larry Summers.
A Washington Post article on the battle over replacing Bernanke as Fed chair forget to mention these qualifications of Larry Summers.
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The Washington Post may not be the best place to get breaking news, but that doesn’t mean they never get the news. Today it ran a piece discussing a proposal by the Center for American Progress (CAP) to create state-run savings systems that workers could contribute to on an opt-out basis. In other words, they would be contributing to the system unless they explicitly asked not to contribute. The plan is intended to supplement Social Security, recognizing that the vast majority of workers have been able to accumulate little or nothing in 401(k) type plans. It would also provide a guaranteed benefit based on the contribution, similar to a cash balance pension plan.
While it’s good to see the Post take note of the CAP proposal, these types of plans are not exactly new. The Economic Opportunity Institute in Washington State has been working on a similar plan for almost 15 years. They got a bill through the legislature for a study of such a system just before the economic downturn in 2007. The budget crisis from the downturn made the state reluctant to spend even the seed money that would be needed to get a plan in place.
There were also efforts undertaken in Maryland, Connecticut, and California (in 2007), that came close to being approved by legislatures and put into law. (CEPR assisted several of these efforts.) Anyhow, it would be helpful to include some of this background.
The Washington Post may not be the best place to get breaking news, but that doesn’t mean they never get the news. Today it ran a piece discussing a proposal by the Center for American Progress (CAP) to create state-run savings systems that workers could contribute to on an opt-out basis. In other words, they would be contributing to the system unless they explicitly asked not to contribute. The plan is intended to supplement Social Security, recognizing that the vast majority of workers have been able to accumulate little or nothing in 401(k) type plans. It would also provide a guaranteed benefit based on the contribution, similar to a cash balance pension plan.
While it’s good to see the Post take note of the CAP proposal, these types of plans are not exactly new. The Economic Opportunity Institute in Washington State has been working on a similar plan for almost 15 years. They got a bill through the legislature for a study of such a system just before the economic downturn in 2007. The budget crisis from the downturn made the state reluctant to spend even the seed money that would be needed to get a plan in place.
There were also efforts undertaken in Maryland, Connecticut, and California (in 2007), that came close to being approved by legislatures and put into law. (CEPR assisted several of these efforts.) Anyhow, it would be helpful to include some of this background.
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