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CPI: April 2015

Posted on May 22, 2015 | 0 comments

The Bureau of Labor Statistics (BLS) released its April 2015 Consumer Price Index (CPI) report. Click here to read the report.

The CPI decrease 0.2 percent over the last 12 months (see the figure below). This reading remains well below the Fed’s inflation target of 2 percent.

Core CPI–which excludes food and energy prices–increased 1.8 percent over the last 12 months.

The following figure shows both CPI and Core CPI since April 2014.

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OECD on Income Inequality

Posted on May 21, 2015 | 0 comments

The Organization for Economic Cooperation and Development released a new report on income inequality on today. A key finding in the report is that while in the 1980s the top 10 percent of earners had incomes that were seven times as large as those of the bottom 10 percent, that ratio had risen to 9.6 across the OECD’s 34 members by 2013. In The U.S., that ratio rose from 15.1 in 2007 to 18.8 in 2014, a level of inequality only surpassed by Mexico. See the figure below from the WSJ.

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UK Slips into Deflation

Posted on May 19, 2015 | 0 comments

The UK slipped into deflation for the first time in more than half a century. See the figure below from the Financial Times.

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Prices fell 0.1 percent in the year to April. The best comparable data suggests that this is the lowest UK inflation reading since early 1960. Click here to read a related article.

Richard Thaler & Behavioral Economics

Posted on May 11, 2015 | Comments Off

Richard Thaler has an interesting article in the New York Times in advance of his new book Misbehaving: The Making of Behavioral Economics, which has received good reviews. Read it the article here.

Thaler argues that “economists discount any factors that would not influence the thinking of a rational person. These things are supposedly irrelevant. But unfortunately for the theory, many supposedly irrelevant factors do matter.”

It was this disconnect between theory and reality that led to the birth of behavioral economics. Despite much effort, the application of the findings of behavioral economics to societal problems has only recently been catching on. Fortunately, writes Thaler, “economists open to new ways of thinking are finding novel ways to use supposedly irrelevant factors to make the world a better place.”

US Productivity Declines

Posted on May 8, 2015 | Comments Off

Productivity in the US decreased at a 1.9 percent seasonally adjusted annual rate in the first quarter, from the previous period.  See the figure below.

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Productivity is measured as the output of goods and services per hour worked. Productivity has declined for the second consecutive quarter for the first time in 25 years–the last time productivity decline for two consecutive occurred in the depths of the 1981-82 recession.

This is a concerning development because real wage growth is correlated with productivity, in the long run.

April Jobs Report

Posted on May 8, 2015 | Comments Off

The Bureau of Labor Statistics (BLS) released its April 2015 jobs report on Friday. Read the BLS report here.

The U.S. added 233,000 jobs in April 2015. Over the past three months, job gains have averages 191,000 per month. The unemployment rate declined in April to 5.4 percent.

The labor force participation rate in April was little changed at 62.8 percent and the employment-population ratio was unchanged at 59.3 percent.

Here are other highlights from the April report:

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 2.5 million persons. The number of long-term unemployed has decreased by 888,000 over the last 12 months. They account for 29 percent of the unemployed.

Individuals working part time because their hours had been cut back or because they were unable to find a full-time job was little changed at 6.6 million persons in April.

The number of discouraged workers in April 2015 was 756,000 persons, which was little changed from a year earlier. Discouraged workers are persons not currently looking for work because they believe no jobs are available for them.

Your College Major Plays a Big Role in Pay

Posted on May 8, 2015 | Comments Off

Melissa Korn had an interesting article in the the WSJ this week. Read it here. The point of her story is that going to college pays off, but how much depends greatly on the area of study. Below is a figure from the article. It shows annual wages of college graduates by major over a career (ages 25-59) in thousands of dollars.

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The Other, Other White Meat: Alligator

Posted on May 6, 2015 | Comments Off

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Arian Campo-Flores has an interesting article on the market for alligator meat. Click here to read the article. Apparently, the prices for cuts of alligator tail, ribs and tenderloin have doubled in the past three years. The meat costs $12 to $15 a pound wholesale today, up from $6 or $7 a pound in 2012.

Why are prices rising? An increase in the demand for (farm raised and wild) alligator meat around the country. The meat is a lean, high-protein alternative to the other white meats: chicken and pork. As a result, both foodies and chefs have embraced the alligator meat.

Discussion question:

As the price of alligator meat rises, what do you expect to happen to the supply side of the alligator meat market over then next few years?

Free-Trade Agreements

Posted on May 4, 2015 | Comments Off

Greg Ip has a nice article on the President’s signature free-trade initiative, the 12-nation Trans-Pacific Partnership. Click here to read it.

The chart below (from the article) shows how as global trade has expanded, tariffs have steadily declined from close to 15 percent in the 1960s to under 7 percent today. It also shows how public support is weaker now that additional gains (in terms of tariff reductions) are harder to come come by–a political case of diminishing marginal returns.

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GDP 1st Quarter 2015 (First Estimate)

Posted on Apr 29, 2015 | Comments Off

GDP nearly stalls in the first quarter. The U.S. Bureau of Economic Analysis (BEA) has issued the following news release today:

Real gross domestic product — the value of the production of goods and services in the United States, adjusted for price changes — increased at an annual rate of 0.2 percent in the first quarter of 2015, according to the “advance” estimate released by the Bureau of Economic Analysis. In the fourth quarter, real GDP increased 2.2 percent. See the figure below from the WSJ. Click here to read the full report.

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Eurozone Grows

Posted on Apr 23, 2015 | Comments Off

Greg Ip (WSJ) has a nice article on the Eurozone. Read it here.

Greg’s headline news is that austerity is no longer a drag on growth, monetary stimulus has accelerated, the financial sector is healing, oil and the euro are cheap, and the structural fixes to eurozone economies are bearing fruit. Because of these economic changes, the IMF revised up eurozone growth to 1.5 percent this year and to 1.6 percent next year (see the figure below–bottom right chart).

Screen Shot 2015-04-23 at 9.08.15 AMOf course, challenges remain. Economic growth is too slow. And Greece has the potential to be a political time bomb–one that could destabilize the eurozone.

China Cuts Required Reserve Ratio

Posted on Apr 21, 2015 | Comments Off

On Sunday, China’s central bank announced a one-percentage point cut in the required reserve ratio to 18.5 percent. See the figure below. Click here for a related story from the WSJ.

Screen Shot 2015-04-21 at 7.55.54 AMSunday’s announcement was the second reduction in less than a quarter and the biggest since December 2008–months after Lehman Brother’s filed for bankruptcy, which denotes the beginning of the global financial crisis.

China is cutting the required reserve ratio to add liquidity to its financial system. This decision comes on the heals of a deceleration in China’s economy to a 7% year-to-year growth for the first quarter, the slowest pace in six years.

 

CPI: March 2015

Posted on Apr 18, 2015 | Comments Off

The Bureau of Labor Statistics (BLS) released its March 2015 Consumer Price Index (CPI) report. Click here to read the report.

The CPI decrease 0.1 percent over the last 12 months (see the figure below). This reading remains well below the Fed’s inflation target of 2 percent.

Core CPI–which excludes food and energy prices–increased 1.8 percent over the last 12 months.

The following figure shows both CPI and Core CPI since March 2014.

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Majors That Pay You Back

Posted on Apr 17, 2015 | Comments Off

Why does one job pay more than another job? The answer: the interaction of supply and demand determines market salaries. So, before you progress too far in your academic career, it might be worth your while to take a peek at the equilibrium salaries for a major that interests you. Below are the top 30 majors ranked by mid-career salary according to Payscale.com 2014-15 list of Bachelor’s Degrees by salary potential.

Another payscale.com fun fact is this: what you study in college has an even bigger impact on your future salary than where you study it.

You can view the full list by clicking here.

Rank Major Starting Salary Mid-Career Salary
1 Petroleum Engineering $102,300 $176,300
2 Actuarial Mathematics $60,800 $119,600
3 Nuclear Engineering $67,000 $118,800
4 Chemical Engineering $69,600 $116,700
5 Electronics & Communications Engineering $64,100 $113,200
6 Electrical & Computer Engineering (ECE) $66,500 $113,000
7 Computer Science (CS) & Engineering $66,700 $112,600
8 Computer Engineering (CE) $67,300 $108,600
9 Electrical Engineering (EE) $65,900 $107,900
9 Aerospace Engineering $64,700 $107,900
11 Materials Science & Engineering $64,000 $105,100
11 Physics $57,200 $105,100
13 Computer Science (CS) $61,600 $103,600
14 Statistics $54,900 $103,100
15 Mechanical Engineering (ME) $62,100 $101,600
16 Computer Science (CS) & Mathematics $63,200 $101,400
17 Software Engineering $61,700 $99,800
18 Business & Information Technology (IT) $56,900 $99,100
19 Economics $51,400 $97,700
20 Industrial Engineering (IE) $61,900 $97,200
21 Applied Mathematics $54,300 $96,500
22 Management Information Systems (MIS) $56,300 $95,500
23 Government $45,100 $94,400
24 Civil Engineering (CE) $55,100 $93,400
25 Mathematics $50,300 $92,900
26 Biomedical Engineering (BME) $59,600 $92,200
27 Civil & Environmental Engineering $55,900 $91,800
28 Architectural Engineering $57,000 $90,400
28 Environmental Engineering $51,400 $90,400
30 Aviation Management $48,100 $90,000

Duration of Job Loss in Tampa Bay

Posted on Apr 15, 2015 | Comments Off

The figure below illustrates Tampa Bay’s job loss duration because of the Great Recession and the last two U.S. recessions. As of February 2015, seven years and two months have passed since the recession began in December 2007 and the area remains net negative 7,200 jobs, which is 0.5 percent lower than the employment level observed in December 2007.

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Measuring Specialization in Tampa Bay, FL

Posted on Apr 13, 2015 | Comments Off

The following reports Tampa Bay’s 2014 employment shares by sector relative to the U.S. Higher ratios indicate the employment sectors in which Tampa Bay specializes. The analysis neutralizes common macroeconomic events in the dataset by comparing local sector shares relative to national sector shares. The analysis reveals that the top sectors in Tampa Bay are: insurance; wired telecom; banks; finance and insurance; financial activities; real estate; other telecom; and physicians.

Screen Shot 2015-04-09 at 11.28.40 AMClick on the figure to enlarge. The percentages next to the job type report its share of the Tampa Bay labor market.

U.S. Consumers Will Open Their Wallets Soon Enough

Posted on Apr 10, 2015 | Comments Off

Bloomberg Businessweek’s Peter Coy writes about the U.S. consumer in the latest issue. Click here to read the article.

Here is a summary of Peter’s point:

The U.S. personal savings rate was 5.8 percent in February—the highest rate since 2012. Because consumer spending is nearly 70 percent of the U.S. economy, an increase in the savings rate has a significant negative impact on short run economic growth. This is why some are concerned about an increase in the savings rate. However, others believe that the increase is no more than a blip. Indeed, three economists from Deutsche Bank Securities in a March 25 report called U.S. Consumers: Still Shopping, Not Dropping report that “concerns about the outlook for the consumer are overstated.” Their model predicts the savings rate will fall to 3 percent to 3.5 percent by 2017. Such optimism is supported by the continued increases in the average hourly earnings, a rise in stock and home prices and a weekly Bloomberg Consumer Comfort Index that is at its highest level since before the great recession. See the chart below (click on the chart to enlarge.

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Case-Shiller HPI: Tampa Bay

Posted on Apr 9, 2015 | Comments Off

Tampa Bay’s Case-Shiller overall home price index (HPI) declined 48 percent from peak to trough during the great recession. It has subsequently increased 33 percent. See the figure below for data from January 2000 through January 2015.

When segmented into three tiers, the lowest tier was most impacted by the housing collapse. The low tier fell 63 percent from peak to trough. It has since increased 60 percent.

The middle tier declined 52 percent from peak to trough. It has since increased 37 percent. And the highest tier declined 43 percent from peak to trough. The high tier segment has since increase 30 percent.

The housing recovery in Tampa is continuing at a moderate pace.

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March Jobs Report

Posted on Apr 3, 2015 | Comments Off

The Bureau of Labor Statistics (BLS) released its March 2015 jobs report on Friday. Read the BLS report here.

The U.S. added 126,000 jobs in March 2015, compared with an average monthly gain of 269,000 over the prior 12 months.

The unemployment rate was unchanged in March at 5.5 percent.

The labor force participation rate in March was little changed at 62.7 percent and the employment-population ratio was unchanged at 59.3 percent.

Here are other highlights from the March report:

The number of long-term unemployed (those jobless for 27 weeks or more) was little changed at 2.6 million persons. The number of long-term unemployed has decreased by 1.1 million over the last 12 months. They account for 29.8 percent of the unemployed.

Individuals working part time because their hours had been cut back or because they were unable to find a full-time job, at 6.7 million persons, increased in March.

The number of discouraged workers in March 2015 was 738,000 persons, which was little changed from a year earlier. Discouraged workers are persons not currently looking for work because they believe no jobs are available for them.

GDP 4th Quarter 2014 (Third Estimate)

Posted on Mar 27, 2015 | Comments Off

The U.S. Bureau of Economic Analysis (BEA) has issued the following news release today:

Real gross domestic product — the value of the production of goods and services in the United States, adjusted for price changes — increased at an annual rate of 2.2 percent in the fourth quarter of 2014, according to the “third” estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 5.0 percent.

See figure below.

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Read the release here.

Ripple Effect: African Currencies

Posted on Mar 25, 2015 | Comments Off

The rise in the value of the U.S. dollar over the last few months is having a ripple effect. Once such effect is the relative decline of African currencies. See the chart below from the WSJ.

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As African currencies decline relative to the dollar, African businesses are struggling to find enough U.S. dollars to buy imported goods. As a result, profit margins are shrinking because imported goods are becoming extraordinarily expensive. Local business are apparently struggling to find alternatives goods to sell and many store shelves are remain empty–highlighted in the picture below.

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CPI: February 2015

Posted on Mar 25, 2015 | Comments Off

The Bureau of Labor Statistics (BLS) released its February 2015 Consumer Price Index (CPI) report. Click here to read the report.

The CPI was unchanged over the last 12 months (see the figure below). This reading remains well below the Fed’s inflation target of 2 percent.

Core CPI–which excludes food and energy prices–increased 1.7 percent over the last 12 months.

The following figure shows both CPI and Core CPI since February 2014.

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March FOMC Meeting

Posted on Mar 18, 2015 | Comments Off

The Federal Reserve concluded its latest Federal Open Market Committee (FOMC) meeting today.

The two most important paragraphs from the announcement are:

“Information received since the Federal Open Market Committee met in January suggests that economic growth has moderated somewhat. Labor market conditions have improved further, with strong job gains and a lower unemployment rate. A range of labor market indicators suggests that underutilization of labor resources continues to diminish. Household spending is rising moderately; declines in energy prices have boosted household purchasing power. Business fixed investment is advancing, while the recovery in the housing sector remains slow and export growth has weakened. Inflation has declined further below the Committee’s longer-run objective, largely reflecting declines in energy prices. Market-based measures of inflation compensation remain low; survey-based measures of longer-term inflation expectations have remained stable.”

and

“To support continued progress toward maximum employment and price stability, the Committee today reaffirmed its view that the current 0 to 1/4 percent target range for the federal funds rate remains appropriate. In determining how long to maintain this target range, the Committee will assess progress–both realized and expected–toward its objectives of maximum employment and 2 percent inflation. This assessment will take into account a wide range of information, including measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial and international developments. Consistent with its previous statement, the Committee judges that an increase in the target range for the federal funds rate remains unlikely at the April FOMC meeting. The Committee anticipates that it will be appropriate to raise the target range for the federal funds rate when it has seen further improvement in the labor market and is reasonably confident that inflation will move back to its 2 percent objective over the medium term. This change in the forward guidance does not indicate that the Committee has decided on the timing of the initial increase in the target range.”

You may also read the complete announcement here.

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