The relationship between venture capital and growth

https://commons.wikimedia.org/wiki/File:Investing_money.jpg

From "Financing Ventures," a new paper by Jeremy Greenwood, Juan Sanchez and Pengfei Han 

Abstract: 

The relationship between venture capital and growth is examined using an endogenous growth model incorporating dynamic contracts between entrepreneurs and venture capitalists. At each stage of fi nancing, venture capitalists evaluate the viability of startups. If viable, VCs provide funding for the next stage. The success of a project depends on the amount of funding. The model is confronted with stylized facts about venture capital; viz., statistics by funding round concerning the success rate, failure rate, investment rate, equity shares, and the value of an IPO. Raising capital gains taxation reduces growth and welfare.

The paper is available here.

Massachusetts State Tax Revenue by Source: Fiscal 2018

From the Office of State Auditor, "Determination of Whether Net State Tax Revenues Exceeded Allowable State Tax Revenues - Fiscal Year 2018."

Comments on the MA Employment Situation for August 2018: U-Rate: 3.6%; Jobs: +6,100 jobs; +68,100 YoY

OVERVIEW

• The state’s unemployment rate remained at 3.6 percent in August  according to the federal Bureau of Labor Statistics. 
• Over the last 12 months, Massachusetts added 68,100 jobs. 
• The Labor Force Participation rate increased three-tenths of a percentage point to 67.6 percent. 
• The state’s labor force population stands at 3.806 million. Since August 2017, the LFP rate is up 2.1 percentage points. 
• The largest private sector job gains took place in the Education and Health Services (+2,500) the Leisure and Hospitality (+1,700), Professional, Scientific and Business Services (+1,500), Information (+900) and Construction (+500).
• Manufacturing and Trade, Transportation and Utilities each lost 600 jobs.  Other Services lost 100 while Government added 100 jobs; over the past year this sector lost 500 jobs.

ANALYSIS

The August unemployment rate in Massachusetts again was three-tenths of a percentage point lower than the national rate of 3.9 percent. 

"The August estimates indicate the Commonwealth’s labor force and employment are at their highest levels while our unemployment rate remains consistently low - all indicators of the continuing positive economic outlook for the Commonwealth of Massachusetts." Labor and Workforce Development Secretary Rosalin Acosta said last Friday.  

Massachusetts is the locomotive pulling New England states. New Hampshire was the only other New England with a statistically significant change from last August. Maine, along with New Hampshire and Vermont were the NE states with unemployment rates significantly different than the U.S. rate. Only one state, Connecticut saw a downturn in its LFP rate from 66.2 to 65.6 percent. 

Year to date, all NE states are near the November 2017 estimates for 2018 by the New England Economic Partnership.  (MA: 3.7; ME: 3.3; RI: 4.0; VT:3.0; NH 2.5 and CT: 48.) 

NAM's Monday Economic Report: A look at JOLTS

http://tinyurl.com/yanwqev3

U.S. Employment Situation August 2018: U-Rate: 3.9%; Jobs: +201,000

OVERVIEW

• The unemployment rate remained 3.9 percent in August with payrolls expanding by 201,000 jobs, according to the Bureau of Labor Statistics.
• The Labor Force Participation (LFP) declined to 62.7 percent. The Employment-population ratio also declined in August by 0.2 to 60.3 percent. The number of unemployed for the month was 6.2 million, little changed from July. 
• Among the major groups, the unemployment rate for adult men was 3.5 and 3.6 percent, respectively. Among minority groups, unemployment was 6.3 percent (Blacks), 3.0 percent (Asians) and 4.7 percent (Hispanics). 
• In August, employment grew in the Wholesale trade, Health care, Professional services, Transportation and warehousing, and Mining.
• Professional and business services added 53,000 jobs. 
• Wholesale trade added 22,000 jobs while Health care added 33,000. Wholesale trade benefited from the growth in durable good wholesale subsector while health care benefited from gains in the ambulatory and hospital subsectors.
• Manufacturing changed little in August. 
• Month over month, employment in the other major sectors—Retail trade, Financial activities, Leisure and hospitality—changed little. 
• Over the year, average hourly earnings have increased by 77 cents or 2.9 percent. In August the average hourly private nonfarm wage rang in at $27.16.
• The average workweek for all employees was unchanged at 34.5 hours. 
• The number of persons employed part-time for economic reasons changed little over the month but was down by 830,000 over the year.

ANALYSIS

Job growth continued into August with 201,000 payroll jobs added. The consensus estimate centered around 191,000, according to CNBC. 

Employment growth in August fell in line with the average monthly growth of 196,000 for the past 12 months. 

The BLS reported that 204,000 private sector jobs were created during the month. Earlier in the week, ADP reported an increase of 163,000 nonfarm private sector jobs for August.  Hindsight took some —but not much— enthusiasm out of previous two monthly payrolls reports.  The BLS revised the payroll number for June 2018 to 208,000 from 248,000 and did the same for July 2018 — revising that month’s number to 147,000 from the 157,000 previously reported. 

Examining five years of August data, economists expect the month’s numbers to be revised upward. The new numbers show the three-month average showed up at the rate of 185,000 jobs. The number of long-term unemployed (for more than 27 weeks or more) was little changed in August although over the past year the number had declined by 403,000. This group accounted for 21.5 percent of U.S. unemployment. 

The energy sector, after a near two-year slump, generated 104,000 jobs “almost entirely in support activity for mining.”  

Manufacturing is at a sweet spot, while employment changed little in this sector, employment was up by 254,000 with more than three fourths coming the durable goods segment. 

The latest jobs and wages reports provide little ammunition for doves at the Federal Reserve Bank. There are no reasons to keep interest rates low. The Fed wanted to see growth in wages before hiking and its clear wages are moving in the right direction. 

The economy is at a peak. Business confidence is up and supported by consumer optimism. “Today’s strong economy is finally translating into wage gains for more workers,” Andrew Chamberlain, chief economist of the labor-market research firm Glassdoor told MarketWatch.

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