links for 2008-04-12

• The Rise of the Mega-Region - WSJ.com
• Middle Class: Bad Times Hit Good Life - Pew Report
• The Fed and Democracy - Robert Reich
• Housing policy options - CBO Director’s Blog
• The decline of the white working class ... - Andrew Gelman
• Fed 2002 Transcripts: Buying Ginnie Mae MBS - WSJ Economics Blog
• A return of barter economy - Rybinski
• Would you steal a buck? How about a can of soda? - MIT News Office
• Env-Econ 101: Who pays a tax? (Part 2) - Environmental Economics

Comments

[anne]

http://krugman.blogs.nytimes.com/2008/04/11/depressed-consumers/

April 11, 2008

Depressed Consumers
By Paul Krugman

Surpassing the father [Chart]

Wow. The latest read on consumer confidence is stunningly bad. We're probably in the early stages of recession — but consumer sentiment is already worse than it ever got under Bush I.

Something's happening here. What it is ain't exactly clear. But my guess is that the way the Bush boom crested without ever leaving most people better off than they were in 2000, and the sense that there's something fundamentally rotten with the system, have produced a wave of disillusionment and revulsion that goes beyond the real economic effects so far.

[anne]

http://krugman.blogs.nytimes.com/2008/04/12/mega-skepticism/

April 12, 2008

Mega Skepticism
By Paul Krugman

Interesting contrast. Yesterday I read Glaeser and Gottlieb, * on what models of economic geography can tell us about appropriate government interventions. Their answer, in short, is not much: there are cross-cutting effects, and simple ideas like "help weak regions" or "promote density" are poor guides.

Today I read Richard Florida, ** who "knows."

Overall, I’ll go with ignorance.

It’s not at all clear to me that world competition is between mega-regions.
I’d say that there are two things that arguably define an economic unit for the purposes of economic geography. One is labor mobility: a region over which there’s high mobility of labor will be a region in which everyone with the same set of skills is paid more or less the same real wage (which may differ in money terms because of differences in the cost of living etc.). By that definition, the United States as a whole is the relevant unit: workers are as mobile between Chicago and Boston as they are between Baltimore and Boston.

The other definition is the reach of spillovers — positive externalities, for the econowonks. That’s probably much more localized: there’s a reason investment bankers cluster in expensive Wall Street or City of London locations. But again, it’s hard to see that this makes the Northeast Corridor, as opposed to individual metro areas within the corridor, a relevant unit.

So much as I might like to assert that I belong to a truly defining entity called Aceleland, I don’t think that’s a case you can make.

* http://www.brookings.edu/economics/bpea/bpea_conferencepapers_spring2008.aspx

** http://online.wsj.com/article/SB120796112300309601.html?mod=opinion_main_commentaries

[anne]

*** Acelaland = Acela Express, Boston - New York - Philadelphia - Washington, DC

[anne]

http://www.nytimes.com/2008/04/12/business/12charts.html?ref=business

April 12, 2008

Many More Are Jobless Than Are Unemployed
By FLOYD NORRIS

THE unemployment rate is low. The jobless rate is high.

Those two seemingly contradictory statements are especially true for American men in what should be the prime of their working lives. Those facts may help to explain the stark pessimism of Americans about the economy, and shed some light on the rise of illegal immigration as a political issue.

Men in the prime of their working lives are now less likely to have jobs than they were during all but one recession of the last 60 years. Most of them do not qualify as unemployed, but they are nonetheless without jobs.

The unemployment rate paints a less gloomy picture. Among men ages 25 to 54 — a range that starts after most people finish their education and ends well before most people retire — the unemployment rate is 4.1 percent. That is not especially low, but it is well below the peak rate in all but one post-World War II recession.

Only people without jobs who are actively looking for work qualify as unemployed in the computation of that rate. It does not count people who are not looking for work, whether or not they would like to have a job.

But there is another rate — called the jobless rate in this article — that counts the proportion of people without jobs. To be sure, some of them do not want to work. Some are raising families on a spouse’s income, or are disabled, retired or independently wealthy. But others may be discouraged workers, who would take jobs if they thought any desirable positions were available.

In the latest report, for March, the Labor Department reported the jobless rate — also called the “not employed rate” by some — at 13.1 percent for men in the prime age group. Only once during a post-World War II recession did the rate ever get that high. It hit 13.3 percent in June 1982, the 12th month of the brutal 1981-82 recession, and continued to rise from there.

To be sure, employment is a lagging economic indicator, and rates higher than this have prevailed after recessions ended. But this rate has arrived at a time when the government still hopes that a recession can be averted.

As can be seen in the accompanying chart, there has been a long-term decline in the proportion of prime-age men with jobs. That decline has been masked by rises in the number of older people with jobs and by a steady rise in the proportion of women working outside the home. But even among women there has been some slippage. The proportion of women ages 25 to 54 without jobs was 27.4 percent in March, a figure that is higher than it was during all but one month of the 2001 recession.

The negative trend can also be seen in the other chart, which shows the annual change in the number of working men in the 25 to 54 age range, using a three-month moving average to smooth the figures.

In the last half-century, that figure has turned negative only after recessions have been going on for at least a few months, although it has often stayed negative well after the recession officially ended. The lags have ranged from four months after the start of the 1960-61 and 2001 recessions, to 15 months after the beginning of the 1973-75 downturn, with an average lag of eight months. This year, the figure turned negative in January....

[anne]

Remember to gloat the next time, which will be soon an american or British economist explains to us about all the imagined problems sweeping through the continental European economies for sake of labor supportive policies.

[anne]

http://krugman.blogs.nytimes.com/2008/04/12/jobless-men/

April 12, 2008

Jobless Men
By Paul Krugman

Nice piece by Floyd Norris * about the long-term upward trend in the number of prime-age men who aren’t working, whether or not they’re formally counted as unemployed.

I just thought I’d add an international dimension. Here’s the same number computed for the United States and France, from 1985 to 2006.

I’ve written about this point before, as have John Schmitt and Dean Baker. A lot of what Americans believe about the contrast between the US and European economies comes from the late 1990s, when US employment performance was indeed much better. Nowadays, however, employment among prime-age adults is basically the same on both sides of the Atlantic. By this measure, “Eurosclerosis” is no worse in Europe than it is here.

Men not at work [Chart]

* http://www.nytimes.com/2008/04/12/business/12charts.html

[anne]

Notice how Paul Krugman is copying me.

[anne]

http://krugman.blogs.nytimes.com/2008/04/12/flight-to-safety-again/

April 12, 2008

Flight to Safety, Again
By Paul Krugman

“Run away, run away” [Chart]

A bit more reason to be concerned about the financial markets. Before the Bear Stearns rescue, there was a huge flight to safety in the markets, which pushed short-term Treasury yields to bizarrely low levels. After the rescue, those yields rose, as people began to think that maybe there were other assets that wouldn’t implode. But the flight to safety seems to have resumed.