People who remember the 1990s stock bubble and the housing bubble of the last decade know that markets are not always right. But it is nonetheless worth following their response to events to see how ostensibly knowledgeable people see them.
In the case of Trump’s trade deal with China, where the big highlight was an announcement of new soybean purchases, the response was a big thumbs down. While soybean prices did go up by close to 1.0 percent yesterday, they are still around 3.0 percent below November levels and more than 10 percent below highs hit last year. This means that, for now, the markets do not expect Trump’s trade deal to substantially improve the prospects for soybean farmers.
People who remember the 1990s stock bubble and the housing bubble of the last decade know that markets are not always right. But it is nonetheless worth following their response to events to see how ostensibly knowledgeable people see them.
In the case of Trump’s trade deal with China, where the big highlight was an announcement of new soybean purchases, the response was a big thumbs down. While soybean prices did go up by close to 1.0 percent yesterday, they are still around 3.0 percent below November levels and more than 10 percent below highs hit last year. This means that, for now, the markets do not expect Trump’s trade deal to substantially improve the prospects for soybean farmers.
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Dawn Niederhauser, CEPR’s Development Department here. It’s the time of year when I highjack Dean’s blog to ask that you consider making a year-end donation to CEPR. As you may have heard, it’s CEPR’s 20th Anniversary this year. Yep, Dean has been calling out bad economic reporting for two decades now, and while he’s definitely made an impact over the years, there’s much more work to do.
So please, click here and donate in Dean’s honor today. Help us to help Dean keep those reporters on their toes!
Many thanks for your support. And as Dean always says, don’t believe everything you read in the papers…
Dawn Niederhauser, CEPR’s Development Department here. It’s the time of year when I highjack Dean’s blog to ask that you consider making a year-end donation to CEPR. As you may have heard, it’s CEPR’s 20th Anniversary this year. Yep, Dean has been calling out bad economic reporting for two decades now, and while he’s definitely made an impact over the years, there’s much more work to do.
So please, click here and donate in Dean’s honor today. Help us to help Dean keep those reporters on their toes!
Many thanks for your support. And as Dean always says, don’t believe everything you read in the papers…
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The NYT and Washington Post gave us more of their fraternity ritual budget reporting in talking about the new $738 billion military budget agreed to by Congress and Donald Trump. This is known as fraternity ritual reporting because everyone knows that the number $738 billion is completely meaningless to the overwhelming majority of NYT and Post readers. Nonetheless, reporters put it down knowing that it conveys no information, because that is the ritual.
If the papers were actually interested in providing information to their readers they could have told them the budget comes to just under 3.4 percent of GDP. Alternatively, they could have said that it accounts for a bit less than 17 percent of projected federal spending for the fiscal year. But no one expects these newspapers to be in the business of providing information.
The NYT and Washington Post gave us more of their fraternity ritual budget reporting in talking about the new $738 billion military budget agreed to by Congress and Donald Trump. This is known as fraternity ritual reporting because everyone knows that the number $738 billion is completely meaningless to the overwhelming majority of NYT and Post readers. Nonetheless, reporters put it down knowing that it conveys no information, because that is the ritual.
If the papers were actually interested in providing information to their readers they could have told them the budget comes to just under 3.4 percent of GDP. Alternatively, they could have said that it accounts for a bit less than 17 percent of projected federal spending for the fiscal year. But no one expects these newspapers to be in the business of providing information.
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A very large portion of U.S. workers will earn more than $2 million. That’s not in a year, but in a working lifetime. That makes a huge difference.
Apparently that point is too subtle for the people who write headlines for the Washington Post. The headline of an article on Senator Warren’s income from consulting fees told readers, “Sen. Elizabeth Warren earned nearly $2 million consulting for corporations and financial firms, records show.”
As people who read the article would learn, this amount was earned over roughly twenty years, meaning that the average payments were in the neighborhood of $50,000 a year. While that is still a considerable chunk of change, it is common for a lawyer of Ms. Warren’s stature to earn millions of dollars a year. (I’m not saying that’s justified, it just happens to be the reality.)
In any case, there is a huge difference between earning $2 million in a single year or a short period of time and earning it over a long portion of a person’s career. The people who write headlines for major newspapers should understand this point.
A very large portion of U.S. workers will earn more than $2 million. That’s not in a year, but in a working lifetime. That makes a huge difference.
Apparently that point is too subtle for the people who write headlines for the Washington Post. The headline of an article on Senator Warren’s income from consulting fees told readers, “Sen. Elizabeth Warren earned nearly $2 million consulting for corporations and financial firms, records show.”
As people who read the article would learn, this amount was earned over roughly twenty years, meaning that the average payments were in the neighborhood of $50,000 a year. While that is still a considerable chunk of change, it is common for a lawyer of Ms. Warren’s stature to earn millions of dollars a year. (I’m not saying that’s justified, it just happens to be the reality.)
In any case, there is a huge difference between earning $2 million in a single year or a short period of time and earning it over a long portion of a person’s career. The people who write headlines for major newspapers should understand this point.
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NPR had a piece on how the percentage of prime-age men (ages 25 to 54) in the workforce remains low, despite the relatively strong labor market. While the basic point is true, there are a couple of important qualifications. First, this is not a new story. The share of men who are employed has been dropping for a half-century. The second point is that, contrary to what is implied in the piece, the decline in employment rates has occurred for men at all education levels.
On the first point, if we look at business cycle peaks, we have a decline in prime-age employment to population (EPOP) ratios of 9.1 percentage points, taking business cycle peaks, from 95.6 in 1967 to 86.5 percent in the November data. (This assumes we are at a business cycle peak, which may prove not to be true.) I use employment rates since the decision to look for work, and therefore be counted as part of the workforce, is affected by the structure of unemployment benefits, which has been frequently changed over this period.
Most of this drop took place prior to 1990 when the prime age male EPOP peaked at 90.0 percent, 5.6 percentage points below its 1967 peak. The drop in the remaining 29 years has been just 3.5 percentage points, as shown below.
Prime Age (ages 25-54) Male Employment to Population Ratios
Source: Bureau of Labor Statistics.
The other point is that the drop in EPOPs has occurred at all education levels, as is actually shown in a figure included in the piece. While the decline has been sharpest for less-educated workers, the figure shows a drop in EPOPs for prime-age men with a college degree of roughly five percentage points between 1975 and 2018. The drop for those with some college and with just a high school degree is larger (roughly 8.0 percentage points and 10.4 percentage points, respectively), but clearly, this drop cannot be explained by declining demand for workers with less education by itself.
In fact, if the story is that trade and technology have led to a decreased demand for workers with less skill, the implication is that it should have led to an increase in demand for workers with more skill. Other things equal, we would have expected that to mean an increased, or at least constant, EPOP for prime age men with college degrees.
In short, there clearly has been a drop in employment among prime age men, but this is not a new story, nor is it a simple story of changing skills demand in the labor market.
NPR had a piece on how the percentage of prime-age men (ages 25 to 54) in the workforce remains low, despite the relatively strong labor market. While the basic point is true, there are a couple of important qualifications. First, this is not a new story. The share of men who are employed has been dropping for a half-century. The second point is that, contrary to what is implied in the piece, the decline in employment rates has occurred for men at all education levels.
On the first point, if we look at business cycle peaks, we have a decline in prime-age employment to population (EPOP) ratios of 9.1 percentage points, taking business cycle peaks, from 95.6 in 1967 to 86.5 percent in the November data. (This assumes we are at a business cycle peak, which may prove not to be true.) I use employment rates since the decision to look for work, and therefore be counted as part of the workforce, is affected by the structure of unemployment benefits, which has been frequently changed over this period.
Most of this drop took place prior to 1990 when the prime age male EPOP peaked at 90.0 percent, 5.6 percentage points below its 1967 peak. The drop in the remaining 29 years has been just 3.5 percentage points, as shown below.
Prime Age (ages 25-54) Male Employment to Population Ratios
Source: Bureau of Labor Statistics.
The other point is that the drop in EPOPs has occurred at all education levels, as is actually shown in a figure included in the piece. While the decline has been sharpest for less-educated workers, the figure shows a drop in EPOPs for prime-age men with a college degree of roughly five percentage points between 1975 and 2018. The drop for those with some college and with just a high school degree is larger (roughly 8.0 percentage points and 10.4 percentage points, respectively), but clearly, this drop cannot be explained by declining demand for workers with less education by itself.
In fact, if the story is that trade and technology have led to a decreased demand for workers with less skill, the implication is that it should have led to an increase in demand for workers with more skill. Other things equal, we would have expected that to mean an increased, or at least constant, EPOP for prime age men with college degrees.
In short, there clearly has been a drop in employment among prime age men, but this is not a new story, nor is it a simple story of changing skills demand in the labor market.
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The Washington Post had an article telling readers “retail drug prices declined last year for the first time since 1973.” While the article refers to a study done by the Center for Medicare and Medicaid Services, it is not clear that this decline would have much meaning for anyone. As the piece notes, many people were still paying more for drugs in 2018 than 2017 because they faced higher deductibles and co-pays from insurance.
It is also important to note that this study only looked at the retail drug market. That excludes drugs purchases by hospitals, nursing homes, and other institutions. If their spending is included, total spending on prescription drugs rose by 4.0 percent in 2018. Furthermore, it is on a path to increase by more than 8.0 percent in 2019 (National Income and Product Accounts, Table 2.4.5U, Line 121).
The piece also notes a sharp increase in the cost of health insurance in 2018, which it speculates could have been due to an increase in taxes on insurance in 2018. That does not appear to be the cause since insurance costs have been increasing even more rapidly in 2019.
The Bureau of Labor Statistics reports that the cost of health care insurance (administrative expenses and profits — not premiums) increased by 20.1 percent over the last twelve months and rose 2.1 percent in October alone. This rise cannot be explained by a tax increase that took effect at the start of 2018.
The Washington Post had an article telling readers “retail drug prices declined last year for the first time since 1973.” While the article refers to a study done by the Center for Medicare and Medicaid Services, it is not clear that this decline would have much meaning for anyone. As the piece notes, many people were still paying more for drugs in 2018 than 2017 because they faced higher deductibles and co-pays from insurance.
It is also important to note that this study only looked at the retail drug market. That excludes drugs purchases by hospitals, nursing homes, and other institutions. If their spending is included, total spending on prescription drugs rose by 4.0 percent in 2018. Furthermore, it is on a path to increase by more than 8.0 percent in 2019 (National Income and Product Accounts, Table 2.4.5U, Line 121).
The piece also notes a sharp increase in the cost of health insurance in 2018, which it speculates could have been due to an increase in taxes on insurance in 2018. That does not appear to be the cause since insurance costs have been increasing even more rapidly in 2019.
The Bureau of Labor Statistics reports that the cost of health care insurance (administrative expenses and profits — not premiums) increased by 20.1 percent over the last twelve months and rose 2.1 percent in October alone. This rise cannot be explained by a tax increase that took effect at the start of 2018.
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The NYT had an article that focused on Buchanan County, Virginia as an example of a left-behind area in the United States. The county’s economy had centered on coal.
While the discussion implies that its downturn is a recent story, the data presented in the piece shows that most of the decline occurred more than two decades ago. The county had more than 5,000 coal mining jobs in the early 1980s. This had fallen to just over 1,000 by the late 1990s. While there was some uptick in coal jobs from 2009 to 2013, the current level is not very different from the level of twenty years ago.
This pattern of decline is also captured in the data on per capita disposable income shown in the article. This fell from around 85 percent of the national average in the early 1980s to around 65 percent by the end of the decade. There have been fluctuations since then, but it is roughly at the same level today.
The timing here is important, since it is wrong to imply that the decline of the coal areas is a new phenomenon. There was a sharp downturn in coal employment in the 1980s, that bottomed out in the late 1990s. Since then the changes have been largely cyclical. By contrast, the loss of millions of manufacturing jobs due to trade in the last decade was a much more recent and far-reaching phenomenon.
The NYT had an article that focused on Buchanan County, Virginia as an example of a left-behind area in the United States. The county’s economy had centered on coal.
While the discussion implies that its downturn is a recent story, the data presented in the piece shows that most of the decline occurred more than two decades ago. The county had more than 5,000 coal mining jobs in the early 1980s. This had fallen to just over 1,000 by the late 1990s. While there was some uptick in coal jobs from 2009 to 2013, the current level is not very different from the level of twenty years ago.
This pattern of decline is also captured in the data on per capita disposable income shown in the article. This fell from around 85 percent of the national average in the early 1980s to around 65 percent by the end of the decade. There have been fluctuations since then, but it is roughly at the same level today.
The timing here is important, since it is wrong to imply that the decline of the coal areas is a new phenomenon. There was a sharp downturn in coal employment in the 1980s, that bottomed out in the late 1990s. Since then the changes have been largely cyclical. By contrast, the loss of millions of manufacturing jobs due to trade in the last decade was a much more recent and far-reaching phenomenon.
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This vocabulary problem is apparent in a lengthy (and interesting) piece on efforts by drug companies to push opioids in large part by denying their addictiveness. These companies would have had far less incentive to lie about the dangers of opiods if they were selling at generic prices from the day they were approved by the Food and Drug Administration.
The incentive to mislead clinicians and the public about the safety and effectiveness of drugs is one of the main problems of using patent monopolies as a way to finance research. It would be good if reporters were allowed to talk about this fact.
This vocabulary problem is apparent in a lengthy (and interesting) piece on efforts by drug companies to push opioids in large part by denying their addictiveness. These companies would have had far less incentive to lie about the dangers of opiods if they were selling at generic prices from the day they were approved by the Food and Drug Administration.
The incentive to mislead clinicians and the public about the safety and effectiveness of drugs is one of the main problems of using patent monopolies as a way to finance research. It would be good if reporters were allowed to talk about this fact.
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