You can find my next blog at
www.southmountaineconomics.com
I'm taking a hiatus from blogging for about a month. But I will be focusing on innovation and growth.
(If there's any problem with getting to the blog, let me know)
' [...]You can find my next blog at
www.southmountaineconomics.com
I'm taking a hiatus from blogging for about a month. But I will be focusing on innovation and growth.
(If there's any problem with getting to the blog, let me know)
' [...]To confirm the rumors: I was not offered a position by Bloomberg.
To my friends at BusinessWeek, both old and new: We had a fantastic run, and I loved working with you all. Sometimes we were good, sometimes we were great, but we always had integrity and soul (yes, that's' [...]
The headline number for this morning's PPI report was an 0.6% decline in the price of finished goods less food and energy ("core PPI"). In fact, core finished goods PPI has fallen for 4 out of the past 6 months. So if we just look at this number, inflation [...]
Next week I'm looking forward to speaking at two important innovation-related conferences. On Thursday I will be in Chicago at "Innovating Our Way to Prosperity" put on by The Institute for Work and the Economy. It's obviously a critical topic these days, given the weak state of the job' [...]
Here's more bad news for jobs.
According to this morning's trade report, the advanced technology trade deficit widened to $18.2 billion in the third quarter, up from $12.9 billion in the second quarter of 2009 (advanced technology products include 10 categories, such as information and communications, biotechnology, and aerospace).
The [...]
...if anyone is interested.
Following my usual practice, I regret to inform you that I've reduced my investments in domestic equities. I think this play still has another unhappy act to run before the (perhaps) happy ending. But is there an intermission?
' [...]Over the next week, as I clean up my desk, I'm going to be doing short reviews of books that I have been meaning to write about. Let's start with Profit Power Economics, a fascinating new book which combines corporate strategy and economics. The author, Mia de Kuijper, runs her' [...]
In recent months, I've repeatedly made the point that the financial crisis was a symptom, not a cause. Innovation was weaker than expected, private sector job growth outside of healthcare was virtually nonexistent, while real wages and real stock values showed little gains from the late 1990s to the end' [...]
This morning's productivity numbers showed a huge gain in output per hour in the third quarter--up at an annual rate of 9.5% in the nonfarm business sector.
But here's something else. If we are to believe these numbers, the biggest financial crisis since the Great Depression has actually produced [...]
I'm about to go down to DC to attend this conference (I'm giving the after-dinner remarks as well)
Measurement Issues Arising from the Growth of Globalization
This is a very important conference as we try to figure what is *really* going on in the U.S. economy. I'll be writing more' [...]
This morning Warren Buffet's company Berkshire Hathaway announced that it was buying Burlington Northern Santa Fe in a deal valued at $44 billion. In the announcement, Buffett called the purchase an "all-in wager on the economic future of the United States."
Is Buffett right that a bet on Burlington Northern is [...]
Ford's 3rd quarter earnings report, released this morning, showed a surprisingly large net income of almost $1 billion. The company reported that it:
...reduced its Automotive structural costs by $1 billion in the quarter, largely driven by lower manufacturing and engineering costs, which included benefits from improved productivity, personnel reduction [...]
One of my favorite commenters, Ajay, writes:
Wow, when the chief economist at Businessweek is capable of writing a sentence like "if U.S.-based companies are doing their research and product development overseas and their production there as well, it's tough to see how ordinary workers in the U.S. will gain," it's [...]
Posting for Michael, who’s traveling:
If you care about R&D, product design, worker training, or any of that other good stuff, you might want to look at my new cover story. I’ll be adding to this over the weekend.
Here's a bit of a good news-bad news chart.
The rate of job cuts for production workers in manufacturing has slowed dramatically in the past few months, as companies start to rebuild inventories.
However, they are still aggressively slicing their nonproduction workers--engineers, managers, sales staff, and [...]
This morning the BLS released its "International Comparisons of Manufacturing Productivity and Unit Labor Cost Trends, 2008". And guess what? According to the BLS, the U.S. manufacturing sector had the fastest productivity growth in the world in 2008--1.2%, tied with South Korea. Meanwhile, Japan, Canada, Germany, France and Japan [...]
I'm looking for a bit of help for a story I'm doing on problems in the labor market for 'knowledge workers'. I'd like to talk to scientists, engineers, designers, etc who have lost their jobs in the last year. So if you know anyone in that category who is willing' [...]
I will be speaking Tuesday in DC. The conference? The Jobs Deficit: The Challenge of Putting America Back to Work, put on by the New America Foundation. I'm going to focus on the role of innovation in generating jobs.
People probably already know that BusinessWeek, after 80 years with McGraw-Hill, has been sold to Bloomberg. I'm hoping to be able to continue this blog--I'll let you all know how things are shaking out.
[...]I have an admission to make--I had never heard of Elinor Ostrom before this morning's Nobel prizes in Economics were announced. Ostrom, the 2009 winner along with Oliver Williamson of the "Sveriges Riksbank Prize in Economic Sciences in Memory of Alfred Nobel 2009", was honored "for her analysis of" [...]
Yes, the headline number on this morning's trade report improved. But that was misleading. In fact, the non-oil trade deficit widened for the second straight month (19.8 billion in June, 23.6 billion in July, 24.3 billion in August).
That's not a good thing. It means that the fundamental imbalances in [...]
I've written a series of blog posts arguing that real earnings of young college grads have been falling since 2000, not just in inflation-adjusted dollars, but also relative to less educated peers. (for example, see "Earnings of Young College Grads vs College Costs" and "Yet More on Young'" [...]
As the labor market continues to deteriorate, the topic on the top of everyone's mind is: Where are the growth areas for the future?
That question is unanswerable, but we can get a grip on a related issue: Which occupations have fared the best--and the worst--during the downturn?
Here's the chart [...]
Today's employment report shows that the recession has finally hit education. With the new school year starting, September education jobs fell by 0.9%, or 121K jobs, compared to September 2008. This is a record drop, based on data going all the way back to the 1950s.
The chart tells the' [...]
Guest blog from Economics Editor Peter Coy
When you've studied "eight centuries of financial folly," as international economists Carmen Reinhart and Kenneth Rogoff have, patterns begin to emerge. The most striking pattern they've found is that people never learn. We gullible humans make the same mistake time after time, which is [...]
Warning: I'm going to violate all the canons of journalism by putting my conclusions at the end.
In my first post on the journalism job market, I broke down journalistic employment by industry. In response, Jeff Jarvis quite correctly wondered “Is journalism an industry?”
Perhaps not—but journalism certainly' [...]
Most forecasters expect third quarter real GDP growth to be positive, perhaps as much as 3%. This will be widely hailed as a sign that the nasty recession of 2008-2009 has come to an end. Indeed, the Fed's statement today that "economic activity has picked up" seems to fuel the' [...]
When I was out in Telluride this week at the Economic Summit on Early Childhood Investment(no, please don't show me any sympathy), I heard a very interesting talk from Congressman Jared Polis. Polis, with a long history as an entrepreneur and an education supporter, was discussing ways to get the' [...]
Next week I'm going to be a keynote speaker at the Telluride Economic Summit on Early Childhood Investment. It's a very important topic: economic research shows without a doubt that spending money on kids in their early years has a really high payoff. As James Heckman wrote in a [...]
I'm going to give a shot at assessing the state of the journalism job market, based on government data and what I know about the dynamics of labor markets and industries. I'll need at least two posts, and maybe three. This first post will take the long view, looking back, [...]
After all the good comments, I figured I'd pour a few more facts onto the fire.
First, here's a comparison of real earnings changes by age and sex, for college grads. Clearly, the young male college grads have done the worst by far over this business cycle. Older female college [...]
Here's another appalling chart:
The top line is the cost of private four-year institutions, adjusted for inflation. The bottom line is the real annual pay of young full-time workers with a bachelor's only (where young means '25-34'). The college cost data comes from the College Board, and the [...]
To me, this chart sums up everything that is wrong with this economy, on so many different levels.
I've run similar charts like this before. But now, with the just-released income data from the Census Bureau, we can see for the first time the entire business' [...]
Hint: It's not the U.S.
I was nosing around the OECD stats on health spending, which include the category "Total expenditure on health, Per capita US$ PPP" (PPP stands for "purchasing power parity", which is the right way to adjust prices across countries). So just for fun, I decided to [...]
As we wait for Obama's speech tonight, I can't do any better than to channel Andrew Sullivan:
the end-result looks to me more and more like a simple extension of healthcare security to a lot of people without any real or strong mechanisms to curtail the soaring costs that are' [...]
Consider this a memorial service. Back in June, I wrote a post called "A Lost Decade for Jobs", where I pointed out that 10-year private job growth was rapidly heading for zero.
Well, folks, it finally happened this morning. The employment report shows that private sector employment in August [...]
Ok, now I'm getting aggravated. On the front page of the NYT this morning, Peter Goodman wrote:
Given that consumer spending has in recent years accounted for 70 percent of the nation’s economic activity, a marginal shrinking could significantly depress demand for goods and services, discouraging businesses from hiring more' [...]
I'm a bit late to the party here, partly because I don't view Bernanke's reappointment as a particularly important economic event. The central bank did what it was supposed to--when faced with a burning financial crisis, throw liquidity at it until the crisis is under control. In that sense, Bernanke [...]
It warms my tough old economist heart to see the new General Motors bringing back workers and adding overtime in response to the "cash for clunkers" initiative. As Americans get rid of those unsightly gas-guzzling wrecks in the driveway, the auto industry is revving up again.
But what [...]
There I was on Sunday, strolling down the (small) main street of my (small and quiet) suburban town. And when I say quiet, I mean it--the dog days of August, and no one was on the street. I look down, and here's what I see taped to the sidewalk.
[...]
Alas, I have succumbed to the twitterness of it all. You can find me on Twitter at @MichaelMandel. I cannot promise how regular I will be, but I'm going to try it out.
' [...]
I've been fairly grumpy this past week, dissing the employment and the productivity stats. But this morning I saw a number that I liked: The non-oil trade deficit, which shrunk to about $20 billion in June.
Why is the nonoil trade deficit important? To my mind,' [...]
The second quarter productivity numbers came out today, and they were a mixed bag. On the good side, nonfarm business productivity looked like it jumped at a 6.4% annual rate in the second quarter. Manufacturing productivity, according to the release, went up at a 5.3% annual rate.
But please don't' [...]
Oh guess what? You won't be surprised at this.
The last decade has the slowest economic growth rate in the postwar period.
From the second quarter of 1999 to the second quarter of 2009, real GDP grew at a 1.9% annual rate. That beats (in a negative sense) the 2.0%' [...]
Not that anyone cares...but I try to align my portfolio with my views on the economy and the markets. So before the jobs report came out this morning, I shifted my portfolio away from domestic equities.
That's because I think we're heading for a weak second half of the year.' [...]
This morning's jobs report seemed to show a firming-up of the labor market, with the unemployment rate dropping a tad, from 9.5% to 9.4%. Job losses have slowed too, down only 247,000 in July.
But one month's numbers do not make a recovery. I'm betting that this may be just' [...]
Imagine that you are heading down a path, and there's a brick wall in front of you--10 feet tall by 10 feet wide. The only way you can get to the path on the other side of the wall--your intended destination--is by going sideways, in a completely different direction.
A new academic paper makes a credible argument that stock option contracts for executives can cause excessively large swings in the economy. The paper, which I think is destined to become a classic, has a great title: "Some Unpleasant General Equilibrium Implications of Executive Incentive Compensation Contracts. "
John [...]
The point of competitive swimming is to go faster, right? So why ban form-fitting high-tech swimsuits which help competitors go faster? Here's an excerpt from a Newark Star-Ledger piece on high-tech swimsuits:
Turns out, the LZR suits were just the beginning. In the past 18 months, Speedo's design led to [...]
The BEA just came out with its revised GDP numbers for the past few years. And not really a surprise, the recession now looks a lot worse than the data previously showed. From the fourth quarter of 2007, when the recession officially started, to the first quarter of 2009, the [...]
This may be too wonky, but here goes...
Remember that earlier this year I was rereading Taleb’s The Black Swan. I drew some conclusions about technology and financial regulation. First, Taleb helped me understand what it means for technological change to be fundamentally unpredictable. Second, I got new insight [...]
I'm going to be thinking more about the economics of climate change and the environment going forward. In that vein, I just saw an interesting post from Rob Stavins of the Kennedy School, summarizing the economics of carbon sequestration--that is, using forests as "biological scrubbers by removing (sequestering) CO2'" [...]
You know what they say: If you fall off a horse, get right back up and try again.
I made such a mosh of the previous post on the space program, so here's something simpler. This chart plots the share of federal spending going to space flight and research, versus [...]
In response to the multitude of critical comments on the original version of my previous post, I took a deeper look at the case of integrated circuits. Based on that, I'm prepared to offer at least a partial retraction.
The best source I found was a 1996 book called Journey' [...]
Sigh. I had to retract and redo the original post, in light of some absolutely correct comments. The original version of the post is at the bottom, so you can see the problems. I clearly overstated my case there. Sorry about that--MM
Yes, let us celebrate the 40th anniversary of the [...]
Beautiful warm weather the entire trip, and a wonderful time--maybe I'll post some pictures!
I see that Peter did a great job while I was gone. I'll be back in the blogging business tomorrow.
[...]
Guest blog from Economics Editor Peter Coy
Daniel Gross wrote a column yesterday called "The Recession Is Over!: What America's best economic forecaster is saying." Gross, the Moneybox columnist for Slate and the business columnist for Newsweek, cited the conclusion of Economic Cycle Research Institute managing director Lakshman Achuthan [...]
Guest blog from Economics Editor Peter Coy
I've been scrounging around lately for evidence to make a case for optimism. It's for a double issue in August. Just found a great example today. Hat tip to Greg Mankiw for pointing out this article [...]
Guest blog from Economics Editor Peter Coy
Yes, according to the Bureau of Labor Statistics' JOLTS (Job Openings and Labor Turnover Summary), there were just under 2.6 million job openings on the last business day of May. (The report was released July 7.) These are' [...]
Guest blog from Economics Editor Peter Coy
Are older workers crowding out younger ones in this recession? It's tempting to say so, considering that employment has risen 1% among people 55 while it has fallen 5% among people 20 to 54 (see chart). Andrew Sum and colleagues at Northeastern University' [...]
Guest blog from Economics Editor Peter Coy
Paul Krugman accuses the news media of ignoring economists who favor more fiscal stimulus. In his post today, he says they're being treated like "unpersons." Unperson is a term from George Orwell's Nineteen Eighty-Four for people erased from the' [...]
Guest blog from Economics Editor Peter Coy
Two excerpts from an article I wrote for BusinessWeek that ran online on Jan. 7, 2009, called "What the U.S. Can Learn From Japan's Lost Decade."
Fiscal conservatives in the U.S. worry about huge deficits, but one lesson from Japan is that halfway [...]
Guest blog from Economics Editor Peter Coy
Fed watchers note: Fed Vice-Chairman Donald Kohn is testifying this Thursday on the topic of Federal Reserve independence. It's before the House Financial Services Subcommittee on Domestic Monetary Policy and Technology. Should be interesting, coming on the heels of Fed Chairman Ben Bernanke's efforts [...]
Guest blog from Economics Editor Peter Coy
Breaking a tidbit of economic news here: I just got off the phone with Yale's Robert Shiller, who has some interesting responses to the posting this morning on voxeu.org by Charles Calomiris and others that questions the existence of a "wealth effect" from [...]
Guest blog from Economics Editor Peter Coy
Ouch. Merrill Lynch didn't pick the best time to upgrade its outlook for the U.S. economy. The research note on the upgrade hit my email inbox at 8:12 a.m.--minutes before the Labor Dept. announced a worse-than-expected decline of 467,000 jobs in June.
To be fair,' [...]
Guest blogger Peter Coy will be filling in for me for the next two weeks while I am taking a vacation (at home and in Scotland). You may know Peter as the writer of many of BW's economics cover stories and as a main contributor to the Hot Property blog. [...]
After this morning's report, here are four unfortunate facts about the job market.
1) Manufacturing jobs are falling at their fastest rate since 1946, down -12.2% over the past year.
2) Private sector jobs outside of manufacturing are also falling at their fastest rate since 1946, down -4.0% over the past [...]
Amity Shlaes has a very interesting commentary on Bloomberg. Shlaes responds to the Sanford scandal this way:
...instead of blowing up their marriages, Republicans might try blowing up their party platform.
The single most-profitable franchise for the Republican Party is growth, the kind of growth that sustains the [...]
I'm going to make a forecast: Over the next couple of years, U.S-based companies will begin to realize that they made a big mistake relying so heavily on off-shoring.
Ironically--or perhaps not so ironically--it may be GE leading the way, just as GE and Jack Welch led the massive offshoring' [...]
Here's a three-part quiz about jobs. Answers and a bonus question at the bottom (don't peek!).
1. Which of the following manufacturing industries has lost more jobs since 1998?
a) Computers and electronic product manufacturing
b) Motor vehicles and parts manufacturing
2. Which of the following manufacturing industries has the largest' [...]
Private sector job growth was almost non-existent over the past ten years. Take a look at this horrifying chart:
Between May 1999 and May 2009, employment in the private sector sector only rose by 1.1%, by far the lowest 10-year increase in the post-depression period.
It's impossible to [...]
Wall Street's embrace of foreign markets makes it nearly impossible for national regulators to keep watch over what's being sold abroad and to whom.
This sentence comes from one of the most important stories BusinessWeek has run this year, "The Perils of Global Banking," by David Henry and Matthew [...]
In the popular children's book series Where's Waldo?, you look at complicated cartoons and try to find the little character Waldo.
For years (literally!) I've engaged in a variant of that game, which I call "Where's the Hedge Funds? I'd look at the quarterly Federal Reserve Flow of Funds release--filled" [...]
I've been watching the unemployment rate for college-educated workers rise from 2.3% a year ago, to 4.8% in May. But even that figure, I think, understates the pain in much of the 'well-educated' labor market.
So I separated workers with a bachelor's degree or better into two categories. One category' [...]
Paul Kedrosky just did a new report for the Kauffman Foundation entitled "Right-Sizing the U.S. Venture Capital Industry." Paul's main point--the VC industry needs to shrink to match the pool of opportunities:
It seems inevitable that venture capital must shrink considerably. While there is no question that venture capital [...]
On the New York Times Economix blog, David Leonhardt brings up another implication of the innovation shortfall:
The reason that job growth was mediocre in the 2000s and that job losses have been so high during this recession has been an absence of hiring. You can see this in [...]
According to the official statistics from the BEA, real manufacturing output, or value-added, grew at a 2.6% annual rate between 1998 and 2007. That's barely a hair below the 2.7% growth rate for the entire economy.
More astonishingly, every major durable goods industry (with the exception of primary metals) grew [...]
Try this:
"We live in an era of rapid innovation." I'm sure you've heard that phrase, or some variant, over and over again. The evidence appears to be all around us: Google (GOOG), Facebook, Twitter, smartphones, flat-screen televisions, the Internet itself.
But what if the conventional wisdom is wrong? What if [...]
Sorry I've been delinquent here...I've been focused on a big story, and I don't seem to have enough bandwidth to do a good job blogging at the same time.
But until I'm out from under, here's a healthcare question for you to chew on. If you had a choice, which [...]
I just wanted to let the readers of this blog know that I'm a finalist for the Loeb Award for Business and Financial Journalism in the commentary category.
And I wanted to thank all you folks as well. What's fun is that the award entry included a post from' [...]
If you're an engineer, a networking/IT/software worker, or a 'creative' type, you have the right to feel terrible. The stretch since Lehman went bankrupt has been absolutely horrible for most professionals (Exceptions: Education and healthcare occupations, and perhaps legal).
I just did some analysis on BLS data, and the results were' [...]
Overall, this morning's labor report was not fun reading. Overall, the unemployment rate rose to 8.9%, and the number of jobs dropped by 539K. Manufacturing jobs dropped by 149K, somewhat slower than the previous 2 months but still harsh.
But the real news is that in every age group, the [...]
Obama wants to raise taxes on U.S.-based multinationals. I think that if he wants to create jobs, he's making a big mistake. Take a look here.
....to the degree that the new proposals bite, U.S.-based multinationals will find themselves at a bigger tax disadvantage compared with multinationals based outside [...]
First, my apologies for disappearing for a bit. I was travelling, and then got otherwise distracted.
People have hypothesized that it's easier to start companies during downturns, because labor, rent, and other resources are cheaper (in economic jargon, the 'opportunity costs' are lower). And there have been plenty of news [...]
In the Reverse Black Swan Part I, I drew three conclusions from Taleb's work.
1) Unexpected technological breakthroughs are possible. That's good
2) The timing and nature of the breakthroughs cannot be controlled. That's bad
3) Unexpected large bad events are possible as well. That's bad. In fact, we can get [...]
A major underlying cause for the financial crisis has been unexpected and repeated failures in nonfinancial innovation over the past ten years. These disappointments, in the aggregate, undercut the long-term growth rate, and gradually dragged all those leveraged bets into the red.
The technological failures continue, unfortunately, as per this [...]
Retail sales in March fell by 1.1%, with the biggest drop coming in electronics and appliance stores, which fell by 5.9%. This provoked a herd of handwringing among economists, investors, and journalists. The WSJ wrote:
U.S. retail sales in March made a broad-based decrease that left a shadow over [...]
I was just cleaning out my inbox, and found a PR email from April 2006. The title:
CEO of Major Icelandic Bank Disputes Dire Forecasts
The email from the PR firm was offering me the chance to speak with the CEO of Glitnir bank in Iceland.
One topic he was apparently willing [...]
My new favorite chart: Goods imports versus home prices, indexed to start with September 2001 in both cases. They both zoom up, and they both collapse to roughly the same level.
Added April 10:
By request, here is home prices versus nonoil imports. The same pattern holds. [...]
This morning's trade report shows that the trade bubble continues to collapse--and that's good news.
The trade deficit shrunk to $26 billion in February, or an annual rate of $313 billion, down from $743 billion a year ago. Goods imports alone are down 33% over the past year. Leaving out oil, [...]
BusinessWeek and other magazines have famously been attacked for the magazine cover curse--the idea, true or false, that magazine covers are a contrarian indicator. I've never believed this, based on my read of history. (The most cogent commentator on the magazine cover indicator is Barry Ritholtz. See here, for' [...]
...ah, come on, you know, the answer. It's a good time to be part of the government.
According to today's job market report, the unemployment rate for government workers is 2.8%. The next lowest is 4.5% for private education and health services. Oddly enough, the unemployment rate for financial activities [...]
