Sunday, October 30, 2011

Can Spaceship Earth Carry Seven Billion Passengers, and More to Come?

According to the United Nations, the world population will reach 7 billion people this week. No one really knows the exact date, but the announcement has sparked a round of commentary, most of it pessimistic. The doubling of the world’s population over the past 50 years is the most rapid in history. Demographers expect another 3 billion at least before global population finally peaks early in the next century and begins a gradual decline. Can we make it until then? Or will our overburdened spaceship earth suffer environmental collapse?

Population growth poses real challenges for environmental policy. The more people, the more important it is to get things right in the relationship between people and the planet. At least three issues require even closer attention as the population grows than they would with a constant population. READ MORE>>>

Thursday, October 27, 2011

US GDP Data: Growth Stronger in Q3 as Economy Enters Expansion

There was a bit of joy in yesterday’s advance estimate of U.S. Q3 GDP both for traditionalists who focus on the real value of output (RGDP) and for the growing number of economists who track the nominal value (NGDP).

Real output was reported to have grown by 2.5 percent in the quarter, a bit stronger than analysts’ expectations. That was up significantly from 1.3 percent in Q2. RGDP passed a key psychological threshold as it edged above its previous peak, which it had reached all the way back in Q4 2007. After almost two years of recession and two years of slow recovery, the economy has finally entered its expansion phase. READ MORE>>>

Tuesday, October 25, 2011

Only Economists Can Save the Planet

Gernot Wagner’s But Will the Planet Notice? is the book I would like to get my neighbors to read. The ones who use canvas shopping bags, take short showers, recycle, and think that is enough. The ones who think “environmental economics” is an oxymoron. The ones who think concepts like markets, incentives, and property are the roots of our planetary problems, not the keys to solving it.

Wagner can speak to these people as a member of the same club. He is careful to point out that he, too, pays his dues—no plastic bags, no meat, no car, and a day job with the Environmental Defense Fund. But he also has a Ph.D. in environmental economics. That means that even though he may live like your average green progressive, he thinks differently. He thinks recycling is nice, but not enough, and that only economists can save the planet.

Saturday, October 22, 2011

US Inflation Data: Scant Fuel for Inflation Fears in September CPI Report

Although some observers still think the Fed's easy monetary policy risks a rise in the US inflation rate, there was scant fuel for their fears in the September inflation report from the Bureau of Labor Statistics. The all-items CPI for urban consumers rose at a seasonally adjusted annual rate of 3.7% in September, down almost a point from the August rate of 4.6%.

Wednesday, October 12, 2011

The Senate’s Currency Manipulation Bill is Not Only Bad Policy, but Unnecessary

China's currency manipulation is bad policy. So is the Senate's latest crackdown on it. The bill passed yesterday is not only bad policy, but unnecessary. Here's why.

First of all, before we get hysterical about Chinese policy, we should recognize that currency manipulation is the global norm, not the exception. By a recent count, only 14 percent of the IMF's member nations allow their exchange rates to float freely. Some 58 percent manipulate their exchange rates by holding them above or below the level to which the market would move them. READ MORE>>>

Saturday, October 8, 2011

US Labor Market Data: Job Growth Moderate, Unemployment Steady in September

The latest data from the Bureau of Labor Statistics show that the U.S. economy added 103,000 payroll jobs in September. That was the best number in five months, but is still well below the rates of job growth earlier in the recovery.

The service sector provided nearly all of the new jobs, with health care and temporary work leading the way. Goods producing sectors added just 18,000 jobs and manufacturing jobs actually fell in the month. Government jobs decreased by 34,000, continuing a steady decline.

A separate household survey that includes farm jobs and the self-employed showed that the labor force, which includes both employed and unemployed persons, grew by 423,000. Of these, 398,000 found jobs and 25,000 joined the ranks of the unemployed as soon as they started to look for work. The unemployment rate, which is the ratio of unemployed persons to the labor force, remained unchanged at 9.1 percent for the third month in a row.

The BLS also calculates a broader measure of unemployment called U-6. The numerator of U-6 includes the officially unemployed, plus persons marginally attached to the labor force who would like to work but are not looking because they think there is no work, plus part-time workers who would prefer full-time work, but can't find it. The denominator includes the labor force plus the marginally attached. U-6 increased from 16.2 to 16.5 percent in September, its fifth increase in the past six months.

Another important labor market indicator, the employment-population ratio, increased slightly in September, but remained just above its all-time low reached in July. The long decline in the employment-population ratio primarily reflects an aging population, but cyclical factors, like more discouraged workers, have also kept this indicator at a low level.

Follow this link to view or download a short classroom-ready slideshow with graphical presentations of the main employment indicators.

Thursday, October 6, 2011

What the Wall Street Protesters Want: An Economic Commentary on the "Contract for the American Dream."

Nearly every news story I read about the occupation of Wall Street begins by saying that the protesters are vague about what they want. Even Paul Krugman, who is supportive of the demonstrations, complains in today's New York TImes about a lack of specific policy demands. Maybe that is a valid critique of individual protestors, but if you look instead at what some of their sponsoring organizations say the protest is about, you get a different picture—one that is not only more specific but often makes surprisingly good economic sense. READ MORE>>>

Sunday, October 2, 2011

How Gordon Brown Saved Britain from the Euro and Why that Makes him a Hero

In his new book, Alistair Darling describes Gordon Brown's political style as "appalling," "volcanic," and "brutal." He should know. The two men sat together in the cabinet for years while Brown was chancellor. Darling then served as chancellor himself when Brown finally became prime minister. Now that Brown is out of office, it seems he has few political friends left. Still, his successors should erect a statue to him, for one accomplishment if nothing else: He saved Britain from the euro. Here's why that makes him a hero.

The story starts back in 1997, when Tony Blair was new to the job of prime minister. The euro was still three years away from realization, but already Blair was an enthusiast. Brown was skeptical, but he had a problem. Political solidarity required him to support the euro in principle, but his stronger sense of economic reality made him realize that it was a bad idea for the UK. His solution was to endorse the euro subject to the following five tests, which together were vague enough and tough enough that they could never be fully met: >>>READ MORE