CERF Blog

The February United States jobs report sent the equity markets up this morning while respected commentators like Edmund Phelps, (Columbia, Economics Nobel in 2006), remark that they worry that the “recovery” might not have legs. It always a bit odd to discuss growth that is less negative but that is the situation we are in… Read more

Vince Reinhart released a fascinating piece on February 25, 2010. I highly recommend reading it in its entirety. Here, I’d like to talk about two paragraphs: How will the Fed raise the short-term market interest rate? The old-fashioned way of tightening monetary policy is to shrink the amount of reserves outstanding by selling assets. Over… Read more

A lot of people who watch trade flows think that the United States is making a mistake by losing its manufacturing activities to other countries. They recognize that other countries can provide some manufactured goods at lower cost than the United States, lowering costs for consumers, and they recognize that free trade levels the playing… Read more

Data released today reveal a United States economy that remains unsettled. Mass Layoffs The Bureau of Labor Statistics’ report shows a 2 percent uptick in January seasonally-adjusted mass layoffs from December. The jump in mass layoff initial claimants for unemployment insurance was even larger at 19 percent over December. Gross Job Gains This report, which… Read more

Prices The January Producer Price Index (PPI) data released yesterday February 18, appeared to show that price pressures were building up again with finished goods prices rising 4.6 percent over 12 months ago, and rising 1.4 percent over the prior month. The January Consumer Price Index (CPI) data, released today, showed that the all-items inflation… Read more

Today’s not-much-noticed Industrial Production data release showed that January’s Industrial Production was up a bit from December. This report also indicated that capacity utilization increased a bit in January from December. Notice, charts below, capacity utilization and industrial production have been improving for 6 months now. This is enough to indicate a trend, indicating that… Read more

I’ve seen lots of proposals on how to accelerate our economic recovery, but I haven’t seen any investment tax credit proposals. Maybe there are some out there, but I haven’t seen them. The idea has merit, and now might be a good time to implement it. Business investment has been extraordinarily weak for a long… Read more

The Eurozone is a confederation of 16 European countries. When joining, countries abandon control of their currency to the European Central Bank, and they agree to significant constraints on their monetary policy. Why would they do this? Countries join hoping to benefit from increased trade efficiency and access to markets. Are the benefits of joining… Read more

The January United States jobs report contains mixed results that, to us, provide hints of a recovery to come. More on the recovery later. The bad news from the jobs report first: long term unemployed persons, (those who have been unemployed for 27 weeks or longer), climbed by about 500,000 to just under 6.5 million… Read more

David Ricardo, the British economist who died in 1823, gave the world two deep economic insights. The first, the concept of comparative advantage, became economic gospel, used ever since to justify specialization and trade. The second, the concept of Ricardian Equivalence, has become almost as universally accepted. Ricardian Equivalence asserts that only the amount of… Read more

Dan Hamilton & Mary Hanley The January 27, 2010 DataQuick press release shows that California Notices of Default (NOD’s) fell from 111,689 in third quarter of 2009 to 84,568 in the fourth quarter of 2009. That is almost a 25 percent drop in NOD’s. NOD’s have been falling for three quarters now, which is a… Read more

Bill Watkins & Dan Hamilton On January 26th, the blogger named Effective Demand commented on our January 25-th entry “Targeting Nominal GDP, Purchasing Homes, and Economic Recovery”. We thank you for your comment. We agree with you that too many people own homes, hard choices need to be made, and short sales or foreclosures must… Read more

We are thrilled to see the first estimate of the 4th quarter GDP come in way above our forecast, but we wish we had forecast the change. We do expect to see the initial estimate revised down in subsequent releases. Why did the GDP estimate come in so strong? Mostly, it was investment. Fourth quarter… Read more

Bill Watkins and Dan Hamilton Scott Sumner maintains a blog in which he has argued that the FED should not target interest rates, but instead target nominal GDP. When the economy experiences a Liquidity Trap, as it arguably did in late 2008 and 2009, reducing the short-term target interest rate becomes ineffective as interest rates… Read more

The Oregon Employment Department’s Labor Market Information System released December 2009 jobs and employment data for Oregon’s counties today. In most respects, Central Oregon’s labor market is not significantly changed from November, and very close to our forecast. The Bend MSA (Deschutes County) seasonally-adjusted unemployment rate fell from 14.2 percent in November to 14 percent… Read more