Explainer: What makes up the Gross Domestic Product?

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Bloomberg's David Wilson: U.S. Stock Success Without Profit Brings Doubt at Oaktree

More here.

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Not Many See Full Employment in U.S. Economy: Conference Update

From Bloomberg

Central bankers are already making waves at what may well be the monetary-policy event of the year in the U.S.

Federal Reserve officials and leading academics are gathered in Chicago Tuesday and Wednesday to debate whether policy makers need to overhaul their strategies, tools and communication for managing inflation and preparing for the next economic downturn. 

Federal Reserve Chair Jerome Powell kicked off the conference Tuesday with a few words on the global trade tensions that are rattling financial markets and leading investors to believe the Fed will cut rates soon.

Google claims: 100 percent renewable energy, for the second year in a row

From Google's blog 100 percent renewable energy, for the second year in a row

In 2017, we first reached our longstanding goal of buying enough renewable energy to match 100 percent of Google’s global annual electricity use. And we’re on a roll: during 2018, our purchases of energy from sources like solar and wind once again matched our entire annual electricity consumption. 

We’re the first organization of our size to achieve 100 percent renewable energy two years running, but just as important as reaching our goal is how we did it. Addressing climate change will require adding renewable energy wherever possible and, for us as a company, making decisions that have an impact beyond our walls. We’ve asked ourselves: how can we use our purchasing to do the most good in the broader energy system?

Our first priority is to use as little energy as possible, operating our offices and facilities sustain-ably, with a strong focus on our data centers.

‘Lost Decade’ Casts a Post-Recession Shadow on State Finances | The Pew Charitable Trusts

‘Lost Decade’ Casts a Post-Recession Shadow on State Finances | The Pew Charitable Trusts

Statista: Where U.S. home prices are rising the fastest (and slowest)

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How Far Does $100K Stretch In Boston? You'll Be Sorry You Asked | Patch

Patch: How Far Does $100K Stretch In Boston? You'll Be Sorry You Asked

Here's what the authors had to say:

"Massachusetts has a reputation as a high-tax state, but a whole host of high costs lands Boston in the bottom 10 when it comes to take-home pay on a $100,000 salary. City residents suffer from high rent and grocery costs as well, along with the second-highest healthcare expenses of any city.

• Federal income taxes: $17,262.50
• Net pay after income taxes: $74,197.70
• Annual rent: $32,496
• Annual groceries: $5,245
• Annual utilities: $1,874.64
• Annual driving costs: $8,037
• Annual healthcare: $9,234
• Income leftover: $17,311

Read more here. 

Outwitting Walmart: FEE on Aldi phenomenon

Mark Perry: "I love Aldi and so do a lot of other consumers."

Scott Sumner: The Myth of Stagnant US Wages: Fed Data Show the Story Was All Wrong

After the 2016 election, several pundits suggested that the Trump victory reflected frustration with stagnant real wages. Unfortunately, this argument is based on a misconception. The average hourly earnings series at the FRED (Federal Reserve Economic Data) data site only goes back 12 years, but real wages were doing well before the 2016 election:



By the way, in nominal terms, average hourly earnings are currently $27.77/hour. FRED does have a much longer series for average wages earned by production and nonsupervisory employees (which currently stands at $23.31):

I could not find median hourly wages, but they did have data on median weekly wages (currently $905):

There was a period of stagnant real wages, but it ended in the mid-1990s. All of these series show significant growth in real wages since the mid-1990s. Whatever explains the rise of populism in America, it is not stagnant wages. By the way, these time series understate the growth in total labor compensation, as the cost of fringe benefits such as health care has risen faster than nominal wage growth. 

Alternatively, if you believe that health benefits are nearly worthless (my view), then the nominal wage series should be deflated by a price index that excludes health care. That would show even more rapid growth in real wages.

PS. There is one downside to writing a post and then delaying the publication. Today’s Bloomberg has an article that makes many of the same points, and in some cases more effectively. But it doesn’t have my graphs.

This article was republished with permission from The Library of Economics and Liberty.

Scott Sumner

Scott B. Sumner is the director of the Program on Monetary Policy at the Mercatus Center and a professor at Bentley University. He blogs at the Money Illusion and Econlog.

This article was originally published on FEE.org. Read the original article.

Note on the April 2019 U.S. Employment Situation: U-Rate 3.6%; Jobs +263,000

OVERVIEW

• Total non-farm payroll employment increased by 263,000 and the unemployment rate declined to 3.6 percent, moving down 0.2 percentage point from the previous month according to the Bureau of Labor Statistics.  
• The Labor Force Participation (LFP) rate declined by 0.2 percentage point to 62.8 percent. Nonetheless, the rate was unchanged from a year ago. The Employment-Population ratio also remained at 60.6 percent. Since October 2018, the rate has been either 60.6 percent or 60.7 percent. 
• Professional and Business Services (+76,000) and Construction (+33,000) led all sectors in the April payrolls. Employment in Health Care (+27,000) did not finish in the top two sectors for growth but along with Professional Services (+535,000) added the most jobs over the past year with Health Care adding +404,000 jobs.
• With gains in nonresidential specialty trade contractors and in heavy and civil engineering, Construction has added 33,000 jobs. For the year, the sector has added 22,000 jobs. 
• Manufacturing sector employment (+4,000) changed little for the third month in a row. In the 12 months prior to February 2019 the industry added on average 22,000 jobs per month. 
• Average hourly earnings rose by 6 cents to $27.77. In April, average workweek for all employees decreased by 0.1 hour to 34.4 hours matching the rate for February 2019.  
• The number of persons employed part-time held was unchanged at 4.7 million in April. The number of long-termed unemployed (greater than 27 weeks) remained unchanged at 1.2 million and remained to account for 21.1 percent of all unemployed. 
• The following sectors saw little or no change in employment:  Mining, Wholesale Trade, Transportation and Warehousing, Information, Leisure and Hospitality, and Government.

ANALYSIS

This month’s report is a rebounding blockbuster, considering two months ago the U.S. stock market and policy makers were stunned by the creation of only 56,000 jobs. (The original number was 33,000).  

Wall Street estimated the April payrolls number at 185,000 jobs.  Earlier in the week, the ADP National Employment Report,  estimated the creation of 275,000 new private sector jobs; the BLS reported private sector job creation at 236,000 jobs. 

Retail trade changed little in April; the sector was down 12,000 jobs but the motor vehicle and parts dealers subsector added 8,000 jobs. General merchandise stores suffered a loss of 9,000 jobs. 

Revisions to previous reports were mixed. The February payrolls number was revised upward to 56,000 from 33,000 and the March number was revised down from 196,000 to 189,000. Still the revisions identified 16,000 more jobs than previously reported.  The three-month moving average settled at 169,000 per month. Similar revisions from the earlier three months resulted in a three-month average of 180,000. 

The unemployment rate of 3.6 percent is the lowest since 1969. 

The current economy, based on supply-side reforms, is benefiting workers and instilling confidence in consumers. Not so long ago, market watchers were worried about the slowdown in consumer spending as a bellwether of an almost certain downturn. 

On Thursday, the BLS reported than nonfarm business sector labor productivity increased 3.6 percent in the first quarter of 2019, with output increasing by 4.1 percent and hours worked increased 0.5 percent. Along with productivity (another blow-out number), the job market is at a sweet spot. 

Today’s report noted that average hourly earnings over the past year have increased by 3.2 percent.  Workers and consumers are more careful about how they treat homeowner equity which is 16 percent higher than 2006, the advent of the Great Recession. Apparently increased wages serve as a bulwark against reckless home equity borrowing. 

As a result, workers are saving more. The article to read is “Why Are Americans Suddenly Saving?” by Matthew C. Klein in Barron’s on April 22, 2019.

Source: Author’s calculations based on BLS and US Census historical data (Total Retail Sales)


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New home sales are up

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What do you do with your tax refund?

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“Heckman curve” update: The data don’t seem to support the claim that human capital investments are most effective when targeted at younger ages. « Statistical Modeling, Causal Inference, and Social Science

“Heckman curve” update: The data don’t seem to support the claim that human capital investments are most effective when targeted at younger ages. « Statistical Modeling, Causal Inference, and Social Science

The Non-Non-Libertarian FAQ | Nintil

The Non-Non-Libertarian FAQ | Nintil

Did the 2017 Tax Reform Discriminate against Blue State Voters? - Federal Reserve Bank of Atlanta

New Working Paper from the Atlanta Fed: Did the 2017 Tax Reform Discriminate against Blue State Voters? 

Statista takes a look at yesterday's JOLTS data

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Notes on the March 2019 U.S. Employment Situation: U-Rate: 3.8%; Jobs: +196,000

OVERVIEW

• Total non-farm payroll employment increased by 196,000 and the unemployment rate remained 3.8 percent, according to the Bureau of Labor Statistics.  
• The Labor Force Participation (LFP) rate was little changed at 63.0 percent. This gauge of employment has hardly moved over the past year. The Employment-Population ratio also remained at 60.6 percent.  
• Health Care (+49,000) and Professional and Business Services (+34,000) led all sectors in the March payrolls. Both sectors led job creation over the past twelve months with 398,000 and 311,000 jobs, respectively. 
• According to the BLS, the following sectors saw little or no change in employment:  Mining, Wholesale Trade, Retail Trade, Transportation and warehousing, Information, Financial Activities and Government.
• After adding 1,000 jobs in February, the Manufacturing sector lost 6,000 jobs, almost all of those jobs in motor vehicles and parts. 
• Average hourly earnings rose by 4 cents to $27.70. In March, average workweek for all employees rose by 0.1 to 34.5 hours after seeing a decline in February by 0.1 hour. 
• Employment continued to trend up in Food services and drinking places in March (+27,000), in line with its average monthly growth over the prior 12 months said BLS.
• The number of persons employed part-time held steady at 4.5 million in March.
• The number of long-termed unemployed (greater than 27 weeks) remained unchanged at 1.3 million. This group represents 21.1 percent of all unemployed.

ANALYSIS

Anyone looking for a stronger revision to the February employment situation report of 20,000 jobs will be disappointed by the final print for the month: 33,000.  That new number was the weakest since September 2017.

Even January was revised upward only slightly from the February-revised 311,000 to 312,000. 

The BLS said the revisions resulted in a three-month average of 180,000 (down for the same period for the first quarter of 2018).  

Still today’s number, a positive snap-back, encouraged some optimism. The headline of 196,000 new jobs did top Wall Street expectations of 180,000 for the month. Marvin Loh, global macro strategist at State Street, told Yahoo News that the March jobs report will be “the first clean one in a while” now the fallout from the government shutdown is mostly over. 

The widely-read ADP payroll processing firm survey earlier this week reported a gain of 129,000 private sector jobs, the BLS contrasted with 182,000 jobs. 

The question remains the cohort that is still sidelined from the job growth of the past decade. The BLS reports that 95.5 million were out of the labor force compared to 95.4 last March The employment-population ratio was 60.6 percent in March; the BLS noted that this ratio has been either 60.6 or 60.7 percent since October 2018. 

Two closely-watched indicators, persons marginally attached to the labor force and discouraged workers have changed little over the past year. 

This report also showed ongoing upside. The unemployment status by educational attainment showed declines among the four major groups. The unemployment rate for workers with a high school diploma but no college declined from 4.7 in March 2018 to 3.7 in March 2019. Those with the bachelor’s degree or more continue to see lower unemployment at 2.0 percent. 

The American jobs machine continues to grow over a longer-term horizon. Since January 2007, months before the Great Recession, the American economy has added 12.9 million jobs with the construction, manufacturing and information sectors the only losers over this period. (See chart.)

Source: Author’s calculations based on BLS historical data

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Accelerated states tax revenue system would help Commonwealth

State House News Service: Median home sale prices vary widely across Massachusetts

From Michael Norton at SHNS:

At $365,000, the year-to-date median home sale price in Massachusetts is up 4.9 percent over last year and raising eyebrows among buyers, sellers and those left on the outside of the market activity.

But data released Wednesday shows sellers are getting far higher prices in many areas while buyers have been able to purchase homes for much less in others, largely based around proximity to the Greater Boston area.

According to the Warren Group, year-to-date median home sale prices fell under the $365,000 statewide median in seven of the state’s 14 counties.

The lowest year-to-date median home sale price was in Berkshire County ($182,500, -2.9 percent), followed by Hampden County ($187,000, +5.7 percent), Franklin County ($210,000, +11.4 percent), Hampshire County ($255,000, +3.7 percent), Worcester County ($260,000, +3.1 percent), Bristol County ($289,000, +5.1 percent), and Plymouth County ($363,406, +8.3 percent).

Tax collections from legal recreational cannabis

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Venture capital is not distributed equally across the United States

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New NBER Working Paper: "Work of the Past, Work of the Future" by David Autor

From a new NBER Working Paper, "work of the Past, Work of the Future," by David Autor 

Abstract:

Labor markets in U.S. cities today are vastly more educated and skill-intensive than they were five decades ago. Yet, urban non-college workers perform substantially less skilled work than decades earlier. This deskilling reflects the joint effects of automation and international trade, which have eliminated the bulk of non-college production, administrative support, and clerical jobs, yielding a disproportionate polarization of urban labor markets. The unwinding of the urban non-college occupational skill gradient has, I argue, abetted a secular fall in real non-college wages by: (1) shunting non-college workers out of specialized middle-skill occupations into low-wage occupations that require only generic skills; (2) diminishing the set of non-college workers that hold middle-skill jobs in high-wage cities; and (3) attenuating, to a startling degree, the steep urban wage premium for non-college workers that prevailed in earlier decades. Changes in the nature of work—many! of which are technological in origin—have been more disruptive and less beneficial for non-college than college workers.

Gated copy here.

Who gets hurt with U.S. tariffs on cars?

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What do Americans think of a 70% marginal tax rate?

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The Tax System, Explained in Beer! By Johnston Grocke

With smart phones, who needs a digital camera?

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Statista: Chart: Where Labor Productivity Is Highest | Statista

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US EMPSIT: January 2019: U-Rate: 4.0%; Jobs: +304,000

OVERVIEW

• The unemployment rate rose slightly to 4.0 percent in January with payrolls expanding by 304,000 jobs, according to the Bureau of Labor Statistics.  
• The Labor Force Participation (LFP) rate changed little at 63.2 percent. The Employment-Population ratio also remained at 60.7 percent. Both measures are up 0.5 percentage points over the year. 
• Job gains took place in Leisure and Hospitality (+74,000) and Construction (+52,000) Health Care (+42,000) and Transportation and Warehousing (+27,000) In addition, Professional and Business Services added 30,000 jobs.
• According to the BLS, the following sectors saw little or no change in employment:  Wholesale Trade, Information and Financial Activities. 
• Over the year, average hourly earnings have increased by 85 cents or 3.2 percent. In January, the average hourly private nonfarm wage rang in at $27.56. The average workweek for all employees was unchanged at 34.5 hours. 
• The number of persons employed part-time increased to 5.1 million in January, most of it coming from the private sector and due to the shutdown.
• The number of long-termed unemployed (greater than 27 weeks) remained unchanged at 1.3 million. 

ANALYSIS

If anyone was looking for the federal government shutdown to pause the American jobs machine, they will have to look elsewhere. The economy entered its 100th straight month of increased employment. 

According to the latest measurement, the shutdown had minimal impact on job creation with the payrolls number arriving at 304,000.  

Wall Street economists expected a January print of approximately 170,000 jobs.  

On Wednesday, ADP, the payroll processing company, reported an increase of 213,000 private sector jobs in January. Today, the BLS reported the economy created 296,000 private sector jobs. Both measures generally track together (See chart above). 

According to the BLS, federal government employment was unchanged in January. The agency explained: “Federal employees on furlough during the partial government shutdown were counted as employed in the establishment survey because they worked or received pay (or will receive pay) for the pay period that included the 12th of the month.” 

Revisions to the two previous months resulted in a decline of 70,000 jobs. The November 2018 number was revised up from +176,000 to +196,000. However, the December number was revised downward from +312,000 to +222,000. 

The decline is explained by the BLS adjustment of its annual benchmarking process. Accounting for these revisions, the three-month average rang in at 241,000 per month. 

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