Latest Revisions Show Stronger Growth of both Real and Nominal GDP

The third estimate of Q3 2012 US GDP came out on December 20, just as the holiday season was in full swing and as the limited public appetite for economic news was focused on the fiscal cliff. The report deserved more notice than it got. The Bureau of Economic Analysis revised its estimate of real GDP growth upward to a respectable 3.1 percent from the 2.7 percent of the second estimate, which came out in November. The latest estimate looked even better set against the anemic 2.0 percent reported in October’s advance estimate. The latest report also revised the estimate for nominal GDP growth upward to 5.9 percent, the fastest in almost four years. >>>Read more

Follow this link to view or download a classroom-ready slideshow with charts and analysis of all the latest GDP and NGDP data

Classroom Debate Topic: Should We Keep the Charitable Deduction or Scrap It?

Here's a great topic for a debate that will fit in either your micro class (altruism, poverty, preferences) or your macro class (tax reform, fiscal cliff): What should we do about the charitable deduction? Keep it or scrap it?

Yale University's Robert J. Shiller has just weighed in with a New York Times op-ed titled "Please Don't Mess with the Charitable Deduction." He defends the deduction as an essential part of the great American tradition of giving.

Earlier this year I took the opposite position in a pair of posts. (Part 1 and Part 2). I argued that the popularity of the charitable deduction rests on a set of false premises. In reality, the deduction is best viewed not as a tax expenditure, and that not more than a third of the giving that qualifies for the deduction goes to truly charitable purposes. Furthermore, warnings that the nonprofit sector would face collapse without the charitable deduction are greatly exaggerated, if not altogether baseless.

What do your students think? Using these opposing pieces as a starting point, put them to work doing their own research and then let them try out their debating skills.

US CPI Drops Sharply in November; Inflation Expectations Remain Well Anchored

U.S. Consumer price inflation, which has been unusually volatile over the past year, turned sharply negative in November. According to data released today by the Bureau of Labor Statistics, the all-items CPI fell at an annual rate of 3.7 percent during the month of November. That was the most rapid rate of decrease since the worst months of recession in late 2008.

Much of the recent volatility in the CPI has come from the energy sector, particularly gasoline. Consumer inflation spiked at the end of the summer when gasoline prices rose 8.6 percent in August and 6.7 percent in September. Gas prices then fell by 0.5 percent in October and by 6.9 percent in November. >>>Read More

Follow this link to view or download a classroom-ready slideshow with charts of the latest CPI data

Michael Levi talks to James Stafford about Falling Oil Prices, the Shale Boom, and Carbon Pricing

In this exclusive interview, Oilprice.com publisher James Stafford talks with energy security expert Michael Levi, the David M. Rubenstein Senior Fellow for Energy and the Environment and Director of the Program on Energy Security and Climate Change at the Council on Foreign Relations (CFR), discusses. The interview was originally posted on Oilprice.com and is reproduced here with permission.

There’s been plenty of talk about potentially radical US foreign policy changes as a result of the shale boom. While one shouldn’t expect any dramatic US foreign policy move away from the Middle East, factors are influencing a greater focus on Asia. Only one thing is certain in this transforming world: The shale boom is real and the implications are many and difficult to predict.

In an exclusive interview with Oilprice.com publisher James Stafford, energy security expert Michael Levi, the David M. Rubenstein Senior Fellow for Energy and the Environment and Director of the Program on Energy Security and Climate Change at the Council on Foreign Relations (CFR), discusses:  

•    Why oil price stability is still all about the Middle East
•    Why the oil and gas industry is heading towards transformation
•    Why oil prices could drop substantially
•    Why the US shale boom is real
•    Why the shale oil boom won’t lead to major US foreign policy changes
•    Why Keystone XL is pretty much non-essential
•    Why we won’t see any radical change in renewables in the next five years
•    The carbon pricing remains the best way to achieve meaningful results on climate change

Green Illusions: The Good, the Bad, and the Ugly of Alternative Energy

Are solar, wind, and other alternatives the magic bullets that will solve the world’s environmental and energy problems? Take a closer look, says Ozzie Zehner in Green Illusions . Zehner not only argues that green energy has technological, environmental and economic limits, but also that without an appropriate policy context, some forms of alternative energy could do more harm than good.

The dirty secrets of clean energy

The first part of Zehner’s book—by far the best—is devoted to explaining why neither photovoltaic, nor wind, nor biomass, nor any of the other alternatives to fossil fuels will be able to deliver a future of abundant, cheap, clean energy. Chapter by chapter, he brings out the environmental and economic limitations of each technology. Among the highlights— Read more  

Update, May 2020: This book review was originally posted on the now-defunct Economonitor.com. I have reposted the review in full here.

US Unemployment Drops to 7.7 Percent, Lowest Since January 2009; Payroll Jobs Continue Steady Rise

The U.S. unemployment rate dropped to 7.7 percent in November, according to today’s data release from the Bureau of Labor Statistics. That was down 0.2 percent since October, and was the lowest rate reported since January 2009. Payroll jobs increased by 146,000 in the month, continuing a moderate but steady trend.

The unemployment rate is the ratio of unemployed persons to the civilian labor force, based on a monthly survey of households. Both the numerator and denominator of the ratio decreased in November. The ratio fell because the number of unemployed persons decreased by more than the number of the employed. Both the labor force participation rate and the employment-population ratio decreased slightly, with both figures returning to the values reported in September. >>>Read more