Total US GDP Grows 3.2 Percent in Q4. That’s Nice, but Why do We Pay So Little Attention to Per Capita Measures?

According to today’s advance estimate from the Bureau of Economic Analysis, U.S. real GDP expanded at an annual rate of 3.2 percent in the fourth quarter of 2013. That brought GDP growth for the entire year to 2.74 percent, nearly equaling the 2.77 percent of 2010, which was the strongest since the recovery began. As the following chart shows, most of the growth came in the second half of the year.

The biggest driver of the expansion was personal consumption expenditure. Consumption contributed 2.26 percentage points to GDP growth, the most in three years. Export growth was also exceptionally strong, contributing 1.48 percentage points, while imports barely changed. The contribution of investment to GDP growth was down sharply from the preceding quarter. The negative contribution of the government sector, which has been shrinking steadily under the impact of federal austerity measures, took an unusually large bite out of GDP in Q4. >>>Read more

Follow this link to view or download a classroom-ready slideshow with charts of the latest data from the national income accounts

Italy's Slow Growth will Challege New Prime Minister Renzi

Matteo Renzi is poised to take over as Italy’s youngest-ever prime minister. He has a clear mandate to get the Italian economy back on track, but everyone, including Renzi himself, knows that he faces a daunting task. Here are two charts that show just how far Italy’s growth and living standards have slipped and how hard it will be to reverse the trends.
In terms of growth of real GDP, Italy has been at the bottom among the advanced economies of the OECD for a decade. In the following chart, Italy stands out not for having the slowest-growth in each given year, but rather, for the consistency of its slow growth. Before the global crisis, there were years when Japan or Germany grew more slowly than Italy, but both of those have recovered more strongly. After the crisis, Greece has grown even more slowly, and Spain almost as slowly, but both of those were coming off strong-pre-recession booms. Among OECD countries, only Portugal (not included in the chart) equaled Italy’s average growth rate since 2000 of just 0.3 percent.

But, you might say, isn’t Italy wealthy enough to coast for a while and still maintain a high standard of living? That is true, to a degree.>>>Read more

Despite Weak Growth of Payroll Jobs, the January Employment Report is Fundamentally Positive

Although the news that the U.S. economy generated just 113,000 new payroll jobs in January 2014 disappointed many observers, the latest report from the BLS on the employment situation was fundamentally positive. That was evident not only from the 6.6 percent unemployment rate, down nearly half a percentage point over the last two months, but also from many underlying measures of employment stress—part-time work, long-term joblessness, and others.

Let’s start with the bad news and get it out of the way. January’s 113,000 new payroll jobs marked the second month in a row of low job growth. December’s even lower figure was revised up by just 1,000 jobs to 75,000. Even here, though, the news was not all bad. The relatively robust November job gain was revised up from a first-reported 203,000 to 274,000. In addition, the BLS rebenchmarked its data, as it does each year, to reflect a more comprehensive count of payrolls. The rebenchmarking increased job growth for the year by 136,000, bringing the total gain to 2,322,000. The following chart shows the rebenchmarked data.

Data from the household survey were considerably more upbeat than those from the establishment survey on which the data for payroll jobs are based. The two surveys differ in several ways. Among other things, the household survey includes self-employed and farm workers. It also counts workers, not jobs; one worker with two jobs gets double-counted in the establishment survey.

The household survey showed strong improvement in the labor market—630,000 more employed workers and 115,000 unemployed than in December. The unemployment rate fell to 6.6 percent, the lowest in more than five years.  In contrast to December, when a decrease in the unemployment rate was largely attributed to a decrease in the labor force, the number of people working or looking for work rose by 523,000. Both the labor force participation rate and the employment-population ratio increased.
 >>>Read more

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

A Universal Basic Income: Conservative, Progressive, and Libertarian Perspectives (Part 3 of a Series)

The idea of a universal basic income (UBI) has been getting a lot of attention recently, sparked in part by the Swiss decision to hold a referendum on the idea. A UBI differs from other income support policies in that it provides a cash grant, large enough to meet basic needs of living, to every member of society, regardless of other sources of income.

The first post in this series compared a UBI to other income support policies in terms of effectiveness in reducing poverty, work incentives, targeting, and administrative efficiency. The second post argued that a UBI with a per person grant approaching current official poverty thresholds would be affordable without increasing the federal budget deficit, raising marginal tax rates, or radically raiding the fortunes of the rich. This third post looks at the varying perspectives of conservatives, progressives, and libertarians, explaining why there are both supporters and opponents of a UBI in each camp.>>>Read more

How Alarmed Should We Be About the Rise in Part-Time Work?

The share of part-time workers in the U.S. labor force rose to unusually high levels during the recession of 2007-2009 and has fallen only slowly during the subsequent recovery. As the following chart shows, the share of workers putting in less than 35 hours a week hit a low of 15.5 percent of the labor force in October 2007 and then rose sharply to a peak of 18.1 percent in May 2009. As of December 2013, the share of part time work was still over 17 percent, less than halfway back to the pre-recession low.

Many observers find the trend toward part-time work alarming. In her blog for The New York Times, Catherine Rampell writes,

One of the more unsettling trends in this recovery has been the rise of part-time work. We are nowhere near recovering the jobs lost in the recession, and the track record looks even worse when you consider that so many of the jobs lost were full time, whereas so many of those gained have been part time.

Elsewhere, a writer for the Minnesota Budget Project laments,

Many workers are struggling to climb out of the Great Recession. They are still looking for jobs, working part time, earning less than they did before the recession, or accepting jobs that don’t meet their abilities.

How worried should we be? To understand what is going on, we need to dig beneath the summary statistics shown in the chart and look the details, some of which I find surprising. >>>Read more

Could We Afford a Universal Basic Income? (Part II of Series)

The first post in this series looked at the economic case for a universal basic income (UBI), by which I mean an unconditional grant, paid to every individual, that would be sufficient to maintain a decent minimum standard of living. In that post, I argued that replacing the many overlapping income support policies currently used in the United States with a UBI would be more effective in raising the incomes of poor and near-poor households while strengthening work incentives and improving administrative efficiency.

The evident economic downside is that a UBI would be less narrowly targeted on the poor than existing programs. Because it would not, by its nature, be means tested, it would channel billions of dollars in grants to middle- and upper-income households. Some think that would make a UBI unaffordable without ruinous tax increases, deficits, or cuts to other government programs. This post looks at some of the fiscal realities of a UBI and concludes that such a program might not be fiscally unrealistic after all. >>>Read more

US Unemployment Rate Falls to Five-Year Low of 6.7% in December but Job Growth Lags

The Bureau of Labor Statistics reported today that the U.S. unemployment rate fell to 6.7 percent in December. As the following chart shows, unemployment has not been that low since October 2008, more than five years ago. According to the household survey, on which the unemployment rate is based, the number of unemployed workers decreased by 490,000 in the month. The labor force decreased by 347,000 workers, leaving a net increase of 143,000 employed workers.

The BLS also tracks the number of nonfarm payroll jobs, based on a separate survey of employers. Payroll job gains for December, at 74,000, were the weakest for the year. Goods-producing industries lost 3,000 jobs, mostly because of a decline in construction activity. Manufacturing gained 9,000 jobs. Private service sector jobs rose by 90,000. Government jobs decreased by 13,000 for the month. The weak job numbers for December were partly offset by an upward revision of 38,000 to job growth previously reported for November. >>>Read more

Follow this link to view or download a classroom-ready slideshow with charts and analysis of the latest employment report