Long Run Growth of Financial Technology

From the abstract:

In most sectors, technological progress boosts efficiency. But financial technology and the associated data-intensive trading strategies have been blamed for market inefficiency. A key cause for concern is that better technology might induce traders to extract other's information from order flow data mining, rather than produce information themselves.

Defenders of these new trading strategies argue that they provide liquidity by identifying uninformed orders and taking the other side of their trades. We adopt the lens of long-run growth to understand how improvements in financial technology shape information choices, trading strategies and market efficiency, as measured by price informativeness and market liquidity. We find that unbiased technological change can explain a market-wide shift in data collection and trading strategies. But our findings also cast doubt on common wisdom. First, although extracting information from order flow does crowd out production of  fundamental information, this does not compromise price informativeness. Second, although taking the opposite side of uninformed trades is  typically called "providing liquidity," the rise of such trading strategies does not necessarily improve liquidity in the market as a whole. 

Long Run Growth of Financial Technology available at NBER.

The Limits of West Virginia's Recent Comeback - Bloomberg

The Limits of West Virginia's Recent Comeback - Bloomberg

Massachusetts adds 3,900 jobs in April 2017 as unemployment rate ticks up to 3.9 percent

OVERVIEW

• In its preliminary estimates, the Bureau of Labor Statistics suggests that Massachusetts added 3,900 jobs in April. The job gains over the previous month (March 2017) occurred in Professional, Scientific, and Business Services; Education and Health Services; Trade, Transportation, and Utilities; Other Services; Information; and Manufacturing.
• The state’s labor force participation rate increased to 66.5 percent from 65.9 percent with an increase of 33,000 entrants into the job market.
• Government lost 1,000 jobs in April but since last year the sector has added 7,700 jobs or 1.7 percent.

ANALYSIS 

• More workers are coming off the sidelines to enter the job market. The state’s unemployment rate for April 2017 increased only because the labor force saw an increase of 33,000 workers or 1.5 percent since last year. This represents a healthier view of full employment. The unemployment rate of 3.9 percent is still lower than the national rate of 4.4 percent. Since April 2016, the Administrative & Support, Waste Management, and Remediation sector added 7,000 jobs, the percentage leader at 3.9 percent. The Health Care and Social Assistance subsector continues to grow adding 18,300 jobs — at a 3.0 percent clip. Education Services has remained flat adding zero jobs while the Arts, Entertainment and Recreation subsector lost 1,300 jobs. Local government remains a strong jobs generator with 5,800 jobs. Despite well-known struggles, the Retail sector added 4,100 since last April.

For the past decade, Americans have been paying less for gasoline in real terms

The Grumpy Economist: WalBank

The Grumpy Economist: WalBank

Meltzer, Fed Historian Who Criticized Bailouts, Dies at 89 - Bloomberg

Meltzer, Fed Historian Who Criticized Bailouts, Dies at 89 - Bloomberg

Robots and Jobs: Evidence from US Labor Markets

Robots and Jobs: Evidence from US Labor Markets

Comments on the April 2017 BLS jobs report: U-Rate: 4.4%; Jobs: + 211,000

OVERVIEW 
* The unemployment rate declined to 4.4 percent in March while payrolls expanded by 211,000, according to the Bureau of Labor Statistics. 

* The Labor Force Participation (LFP) rate remained virtually the same as the previous month at 62.9 percent for April. The employment-population ratio also changed little at 60.2 percent 

* Employment rose in leisure and hospitality, health care and social assistance, financial activities and mining. 

* Employment in construction, manufacturing, wholesale trade, retail trade, transportation and warehousing, information and government were unchanged since March. 

* In April, the BLS reported that average hourly earnings for all employees increased by 7 cents to $26.19, representing a 2.5 percent year over year increase. 

 * Employment in mining rose by 9,000. The BLS noted a rebound off an October 2016 low, with the sector adding 44,000 since then. 

 * Employment in the professional services sector has grown by 612,000 over the past 12 months. 

 * The original and disappointing March employment situation report was revised down from an 98,000 increase to just a 79,000 increase. However, February was revised up from 219,000 to 232,000. 

Civilian Unemployment Rate 2007-present

ANALYSIS 

The payroll employment report beat Wall Street consensus of 191,000 jobs. The BLS private sector employment estimate arrived at 194,000 jobs beating another estimate. According to the ADP report earlier this week, private sector employment increased by 177,000 jobs from March to April. 

Over the past three months, the economy has added, on average, 174,000 jobs a month. The number of long-term unemployed (greater than 27 weeks) was unchanged. The number of involuntary part-time workers declined by 281,000 in April. 

The average workweek for all private payrolls increased by 0.1 hour to 34.4 hours. 

The Leisure and Hospitality sector led the April report with 55,000 new jobs. Since the end of the recession, the sector has gained approximately one percent in the share of total jobs in the U.S. private economy. 

The BLS noted that while Health Care and Social Assistance increased by 37,000 jobs in April, that number is below “the average gain of 32,000 per year.” Financial activities added 19,000 jobs with 14,000 of those jobs coming in the insurance sector. 

The LFP rate has changed little since February 2016. “Two hundred thousand for jobs growth is just such a huge number, you’d think we’d get to a point where employers have to raise wages, and we’re still not seeing it,” Tara Sinclair, an economist at George Washington University told the Washington Post. Even with a healthy job market, that wage goal remains elusive for workers.

PDF version of Research Note.

Trade between the U.S. and Canada

Courtesy of: Visual Capitalist