Economics Roundtable

Technical Problems 1/21/15

The website was down for a day and a half, but is back up now.


May 2014 Payroll Employment

After 76 months, we finally got back to the prerecession level of payroll employment.

Click on the image to get a bigger version.


Jobs

The best summary of the state of our economy is the graph (below) of employment as a fraction of population for people over 16 years old. The decrease is large, but the most troubling feature of the graph is the flat trend .


Click on the image to get a bigger version.


Graph-of-the-Year Candidates

Donald Marron likes European interest rates. Click on the image to get a bigger version. Can you find three distinct subperiods?

Brad DeLong favors the U.S. gdp gap.


Remember M1?

Money Supply M1 growth is now over 20% per year over a 12 month lag. M1 growth has touched 20% before, but not with excess reserves of $1.6 trillion. Where is M1 headed?


Click on the chart for a larger version.


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- Recent Entries


February 27, 2015, 5:03 pm, 1430659

If you haven’t been living under a rock for the last two days, you’ve probably noticed that the internet is losing its mind over the infamous dress that’s seen by some as black and blue and by others as white and gold.

This got us thinking: regardless of how you see ...


February 27, 2015, 5:03 pm, 1430655
Employees prepare boxes of chocolate bars for shipping at the Theo Chocolate factory in Seattle, Wash. Bloomberg News

Growth in the U.S. economy cooled in the final ...


February 27, 2015, 5:03 pm, 1430656

The Wall Street Journal’s Daily Report on Global Central Banks for Friday, February 27, 2015:

Sign up for the newsletter: http://on.wsj.com/grandcentralsignup

Highlights


Hilsenrath’s Take: Role of New York Fed Stirs Divisions in Central Bank Fed’s Williams ...


February 27, 2015, 5:03 pm, 1430657
Atlanta Fed President Dennis Lockhart Bloomberg News

Federal Reserve Bank of Atlanta President Dennis Lockhart continues to cautiously eye favoring an interest rate increase this summer, although ...


February 27, 2015, 5:03 pm, 1430658
St. Louis Fed President James Bullard Bloomberg News

Federal Reserve Bank of St. Louis President James Bullard warned that if the U.S. central bank isn’t raising rates ...


February 27, 2015, 5:03 pm, 1430654
New York Fed President William Dudley Zuma Press

Federal Reserve Bank of New York President William Dudley said Friday that while he sees no urgency to raise ...


February 27, 2015, 5:03 pm, 1430650
Bloomberg News

Congressional Republican leaders named Keith Hall on Friday as the next director of the Congressional Budget Office, an influential nonpartisan budget scorekeeper.

The CBO plays an important role ...


February 27, 2015, 5:03 pm, 1430649

The Federal Reserve‘s second-in-command said Friday raising rates at some point over the middle of the year isn’t set in stone.

Fed Vice Chairman Stanley Fischer acknowledged broad-based expectations that the Fed will raise rates at either its June or September policy meetings, but added they could easily be foiled.

“We are ...


February 27, 2015, 5:03 pm, 1430648

Vitor Constancio, vice president of the European Central Bank, played down worries in financial markets that the ECB will not be able to find enough bonds to complete its “quantitative easing” as planned.

Starting next month the ECB plans to buy €60 billion of debt securities a month until September 2016. ...


February 27, 2015, 5:03 pm, 1430651

The first Nobel Prize in economics to ever go up for auction sold for $390,848 late last night, according to seller Nate D. Sanders Auctions.

That’s more than for prizes in physics, but far from the million-plus payouts for prizes for medicine or peace.

Only a small number of Nobel Prizes ...


February 27, 2015, 5:03 pm, 1430653
The U.S. economy expanded at a 2.2% pace in the fourth quarter, with stronger consumer spending offsetting declines in business investment, exports and government spending. Associated ...


February 27, 2015, 5:03 pm, 1430652

Federal Reserve officials who want to boost short-term interest rates soon warn that if the central bank waits too long, rate increases will ultimately have to be more aggressive and potentially disruptive to the economy.


February 27, 2015, 5:03 pm, 1430647
Next week’s calendar is chock-full of important data, especially the February jobs report Friday. Weather and West Coast port problems could distort some numbers, however, so be cautious. Here are five things to watch.


February 27, 2015, 5:03 pm, 1430646

Alejandro Justiniano, Giorgio Primiceri, and Andrea Tambalotti at Vox EU:

Credit supply and the housing boom: ... Conclusion In this column, we argued that any reconstruction of the fundamental causes of the housing and credit boom that preceded the Great Recession must be consistent with four stylised facts: house prices ...


February 27, 2015, 5:03 pm, 1430645

What are these series?

They are log GDP for the first terms of the most recent seven presidencies, SAAR, normalized to the quarter of inauguration.

Figure 2: Nominal GDP, billions of $, ...


February 27, 2015, 5:03 pm, 1430644
From housing economist Tom Lawler:

The National Association of Realtors reported that its Pending Home Sales Index, designed to gauge contract-signing activity on MLS-based existing home sales, increased by 1.2% on a seasonally adjusted basis from December to 104.2 in January. A value of 100 is equal to ...


February 27, 2015, 4:44 pm, 1430643
The Journal's rundown of the biggest news stories and exclusive features from Washington on politics, policy, financial regulation, defense and more.


February 27, 2015, 4:44 pm, 1430642
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February 27, 2015, 4:35 pm, 1430641

The Tax Policy Center’s recent panel discussion on the Affordable Care Act’s tax-based system of subsidies and penalties highlighted the convoluted way the ACA promotes health insurance. As a thought experiment, imagine if we funded public education the same way we pay for the ACA’s exchange-based insurance.

Their goals are ...


February 27, 2015, 4:04 pm, 1430640
(Don Boudreaux)

Here’s a video of a talk that Deirdre McCloskey gave last November at Wabash College on Piketty’s smash best-seller on economic inequality.  (The lecture series is named after the late, great Ben Rogge, who was an economics professor at Wabash.)

Around the 15-minute ...


February 27, 2015, 4:04 pm, 1430639
(Don Boudreaux)

In the latest (Winter 2015) issue of the Independent Review, I review Edmund Phelps’s 2013 book, Mass Flourishing.  Here are my opening few paragraphs:

Vertigo. That’s the sensation I experienced when reading Edmund Phelps’s Mass Flourishing: How Grassroots Innovation Created Jobs, Challenge, and Change. The fault, however, isn’t Phelps’s; it’s mine. ...


February 27, 2015, 4:04 pm, 1430638
Visiting Fellow Ramesh Ponnuru discusses the DHS funding fight on Fox News' 'Happening Now.'


February 27, 2015, 4:04 pm, 1430634

This article was originally published in Chinese in the March issue of China Policy Review.

The strategies that raise a country from poor to middle-income status will not work to raise it from middle-income to rich. Economically, there is no reason to expect the strategies ...


February 27, 2015, 4:04 pm, 1430637

This week, the Federal Communications Commission voted to regulate the Internet. What’s next? We’ve gathered the latest thoughts from AEI experts on the FCC decision and what it means for the future.

Daniel Lyons: “What’s next on ...


February 27, 2015, 4:04 pm, 1430636
DeWitt Wallace Fellow, James Pethokoukis, discusses inflation rates, GDP, and net neutrality on CNBC's 'Closing Bell.'


February 27, 2015, 4:04 pm, 1430635
Senior Fellow John Bolton discusses his speech at CPAC on Fox Business' 'Money with Melissa Francis.'


February 27, 2015, 3:33 pm, 1430630
In the wake of existing home sales reports on Monday, and new home sales yesterday, GDP and residential investment forecasts came tumbling down.

Check out the latest "GDP Nowcast" from the Atlanta Fed.



"The GDPNow model forecast ...


February 27, 2015, 3:03 pm, 1430569

Senate Budget Committee Chairman Mike Enzi (R-WY) and House Budget Committee Chairman (R-GA) jointly named Dr. Keith Hall the new Director of the Congressional Budget Office, succeeding the outgoing director, Dr. Douglas Elmendorf.

Dr. Hall has served the federal government in a number of important posts including Chief Economist ...


February 27, 2015, 3:03 pm, 1430568

The Federal Reserve and investors believe the central bank will raise interest rates at some point in 2015, the Fed’s Vice Chairman Stanley Fischer said Friday, offering little more in the way of clues as to the exact timing or his personal preference.

“The FOMC and market participants anticipate that ...


February 27, 2015, 3:03 pm, 1430567
A review of policy normalization by Fed Vice Chairman Stanley Fischer: Conducting Monetary Policy with a Large Balance Sheet (excerpt)

Turning to policy normalization, the FOMC and market participants anticipate that the federal funds rate will be raised sometime this year. We have for some years been considering ways ...


February 27, 2015, 2:44 pm, 1430566

The Great Recession has been characterised by an unprecedented decline in GDP, and unemployment rates remain above pre-Great Recession levels in many countries. This column argues that economic growth is a ‘one size fits all’ solution for the problem of unemployment, because the unemployment rates of different kinds of workers ...


February 27, 2015, 2:34 pm, 1430565
Teaser:

Congressional ...


February 27, 2015, 2:05 pm, 1430562

February 27, 2015, 2:05 pm, 1430561

Michael Pettis has an excellent short essay on this point, here is one (scary) excerpt:

A debt crisis must be resolved quickly because there is a self-reinforcing component within the process that can be extraordinarily harmful. High levels of sovereign debt create uncertainty about how the costs of resolving ...


February 27, 2015, 2:04 pm, 1430560
(February 27, 2015 03:56 PM, by David Henderson) Various friends on Facebook have been venting, quite justifiably, about the Federal Communications Commission's vote to regulate the Internet as a public utility. Some of the more extreme venters have claimed that it will slow down communication and reverse much... (0 COMMENTS)


February 27, 2015, 2:04 pm, 1430559

According to a Washington Post story, the German army is so poorly funded that it cannot afford machine guns for its armored vehicles. German soldiers tried to hide the fact — and you have to give them credit for ingenuity — by using broomsticks ...


February 27, 2015, 2:04 pm, 1430558
Read the reportDownload the one page summary

Shale development may be the key to the US remaining the sole superpower for the next two generations. ...


February 27, 2015, 2:04 pm, 1430557

Former CBO boss Donald Marron offers a modestly positive take on dynamic scoring:

Some advocates hope that dynamic scoring will usher in a new era of tax cuts and entitlement reforms. Some opponents fear that they are right.

Reality will be ...


February 27, 2015, 2:04 pm, 1430556

If you are worried that someday California will fall into ocean, then you might also be worried about the future fate of Silicon Valley, America’s entrepreneurial capital. But here is some good news,


February 27, 2015, 1:23 pm, 1430553
The fact that a few large players have such influence over vital services should make us all queasy


February 27, 2015, 1:03 pm, 1430490

Yesterday we published an overview and dynamic modeling results for a business tax proposal by Representative Devin Nunes (R-CA). This tax plan has been developing for several years now, largely without heavy media attention.

It has now reached the point where it should probably turn more heads.

Some tax plans, ...


February 27, 2015, 1:03 pm, 1430489

Currently, federal, state, and local governments levy gas taxes in order to fund road construction and repair. The taxes and spending associated with roads is an example of the benefit principle of taxation. This principle states that the taxes one pays to the government should be connected to the ...


February 27, 2015, 1:03 pm, 1430487
New York Fed President William Dudley Zuma Press

Federal Reserve Bank of New York President William Dudley said Friday that while he sees no urgency to raise ...


February 27, 2015, 1:03 pm, 1430488
Employees prepare boxes of chocolate bars for shipping at the Theo Chocolate factory in Seattle, Wash. Bloomberg News

Growth in the U.S. economy cooled in the final ...


February 27, 2015, 1:03 pm, 1430486
The U.S. economy expanded at a 2.2% pace in the fourth quarter, with stronger consumer spending offsetting declines in business investment, exports and government spending. Associated ...


February 27, 2015, 1:03 pm, 1430483
Bloomberg News

Congressional Republican leaders named Keith Hall on Friday as the next director of the Congressional Budget Office, an influential nonpartisan budget scorekeeper.

The CBO plays an important role ...


February 27, 2015, 1:03 pm, 1430484

The first Nobel Prize in economics to ever go up for auction sold for $390,848 late last night, according to seller Nate D. Sanders Auctions.

That’s more than for prizes in physics, but far from the million-plus payouts for prizes for medicine or peace.

Only a small number of Nobel Prizes ...


February 27, 2015, 1:03 pm, 1430485

Federal Reserve officials who want to boost short-term interest rates soon warn that if the central bank waits too long, rate increases will ultimately have to be more aggressive and potentially disruptive to the economy.


February 27, 2015, 1:03 pm, 1430482

I am here today:

NATIONAL BUREAU OF ECONOMIC RESEARCH, INC.
EF&G Research Meeting
Manuel Amador and Andrea Eisfeldt, Organizers
February 27, 2015
Federal Reserve Bank of San Francisco
101 Market Street
San Francisco, CA

PROGRAM
...


February 27, 2015, 1:03 pm, 1430481

How well did Greece do?:

What Greece Won, by Paul Krugman, Commentary, NY Times: Last week, after much drama, the new Greek government reached a deal with its creditors. ... So how did it go?

Well, if you were to believe many of the news reports and opinion pieces of ...


February 27, 2015, 1:03 pm, 1430480

Click on graph for larger image.

The final Reuters / University of Michigan consumer sentiment index for February was at 95.4, up from the preliminary reading of ...


February 27, 2015, 12:44 pm, 1430478
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February 27, 2015, 12:44 pm, 1430477
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February 27, 2015, 12:44 pm, 1430479
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February 27, 2015, 12:44 pm, 1430474
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February 27, 2015, 12:44 pm, 1430476
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February 27, 2015, 12:44 pm, 1430475
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February 27, 2015, 12:04 pm, 1430469
(Don Boudreaux)

Mike Munger’s latest EconTalk episode with Russ - on Mike’s new book (co-authored with Kevin Munger), Choosing in Groups – is great.

Inspired by this post by Tyler Cowen, my unconventional colleague Bryan Caplan shares some of his conventional views, such as this one (that I also share):

Most ...


February 27, 2015, 12:04 pm, 1430468


February 27, 2015, 12:04 pm, 1430467
by Joseph Joyce America’s Current Accounts Deficits: Not Quite Déjà Vu The U.S. current account deficit has narrowed since 2006, when it reached $807 billion, which represented 5.8% of U.S. GDP. By 2013 the deficit had fallen to $400 billion, worth 2.4% of GDP. But the IMF last October projected ...


February 27, 2015, 12:04 pm, 1430466

This spring, Congress is considering the long-overdue reauthorization of the No Child Left Behind Act. In the 14 years since the law was passed, AEI Education has devoted extensive analysis to how it worked in practice. We have distilled our work into a series of brief chapters to provide a ...


February 27, 2015, 12:04 pm, 1430465

The 2003 Iraq War remains one of the most controversial US foreign policy and military decisions made in the last century. While pundits across the political spectrum continue to debate the past, the reality is that Iraq remains on the frontlines of the Middle East’s sectarian and ethnic fault lines. ...


February 27, 2015, 12:04 pm, 1430463

Few people expect much to happen on health care in the 114th Congress, certainly not President Obama. He plans to continue bending and twisting his interpretation of Obamacare’s many complex provisions as necessary to keep it afloat and to avoid dealing at all with opposition to the law among the ...


February 27, 2015, 12:04 pm, 1430464

Prime Minister Shinzo Abe ’s latest plan to shake up Japan is an ambitious goal to increase the number of women in the workforce and rectify the labor market’s long-standing gender imbalance. Yet by establishing national benchmarks for “womenomics,” Mr. Abe risks embracing the very kind of centralization that his ...


February 27, 2015, 12:04 pm, 1430461

Recall the exit polls from the 2012 presidential election. Mitt Romney had a slight edge over President Obama on the economy and the budget. By eight points, voters said they preferred a smaller government with fewer services. Among those who wanted someone with ...


February 27, 2015, 12:04 pm, 1430462

Albert Einstein famously observed that a sure sign of insanity was to keep repeating exactly the same experiment and yet to expect a different result. One has to wonder whether the same might not be said of Greece and its European partners as they have agreed to extend Greece’s borrowing ...


February 27, 2015, 12:04 pm, 1430460

The latest tales of State Department ethics violations, foreign money, and special access would be surprising if they were about anyone but Hillary Clinton.

Throughout her political career Clinton has always blended cash and policy. She’s not merely corporatist by disposition, like, say Tim Geithner or Lindsey Graham. She’s not simply ...


February 27, 2015, 12:04 pm, 1430459

Canaries are not very formidable birds, but they have their uses. For instance, coal miners learned over a century ago that when canaries gag and drop dead at the bottom of the cage, it’s a sign that maybe there’s something wrong with the air in the mine.

MSNBC is not a ...


February 27, 2015, 11:33 am, 1430457
Fourth quarter GDP was revised lower today to 2.2 percent from 2.6 percent previously estimated.

Looking ahead, I think we are going to see some shocking downward estimates in the months to come. Meanwhile, a shocking PMI report came out today.

Chicago PMI Crashes to 5 1/2 Year ...


February 27, 2015, 11:33 am, 1430456

The House recently changed the rules of budget scoring: The Congressional Budget Office and the Joint Committee on Taxation will now account for macroeconomic effects when estimating the budget impacts of major legislation. Here are three things you should know as we await the first official dynamic score.

1. Spending and ...


February 27, 2015, 11:03 am, 1430395

In filing my own taxes, the most difficult part to calculate has always been the Qualified Dividends and Capital Gain Tax worksheet. I often have to do it several times in order to make sure I did not mess it up. And I work for Tax Foundation! I ...


February 27, 2015, 11:03 am, 1430392
A crowd protests inside the Wisconsin State Capitol this week in opposition to a right-to-work legislation. A ranking of America’s most-unionized states didn’t include any industrial Midwestern states, long ...


February 27, 2015, 11:03 am, 1430393

Deflation, narrowly defined, returned to the U.S. in January for the first time since 2009 as consumer prices fell 0.1% from a year earlier. Because this was due to cheaper gasoline, economists were quick to dismiss the significance. Excluding food and energy, “core” prices were still up 1.6% from ...


February 27, 2015, 11:03 am, 1430394

Stagnant wage growth and stubbornly high unemployment have plagued the U.S., Europe and other advanced economies in the wake of the global financial crisis.

An employee prepares a chromatography on ...


February 27, 2015, 11:03 am, 1430391

The Federal Reserve and Chairwoman Janet Yellen make policy decisions based on economics and not politics, Federal Reserve Bank of Cleveland President Loretta Mester said Thursday.

Reuters

“I don’t ...


February 27, 2015, 11:03 am, 1430390
While the Fed has acknowledged the drop in inflation expectations, it has also regularly dismissed its significance, emphasizing instead the stability of survey based measures.  Bloomberg ...


February 27, 2015, 11:03 am, 1430388

Federal Reserve Chairwoman Janet Yellen indicated this week the central bank is considering a shift away from its pledge to be “patient” in deciding when to start raising short-term interest rates.


February 27, 2015, 11:03 am, 1430387
Bank of Japan Gov. Haruhiko Kuroda has a vision. Agence France-Presse/Getty Images

Japan needs a surge of power to blast its way out of deflation’s gravitational pull, ...


February 27, 2015, 11:03 am, 1430389

Federal Reserve Bank of San Francisco President John Williams said the door is open to central bank interest rate increases any time from mid-June onward.

San Francisco Fed President John ...


February 27, 2015, 11:03 am, 1430384
Atlanta Fed President Dennis Lockhart Bloomberg News

Federal Reserve Bank of Atlanta President Dennis Lockhart continues to cautiously eye favoring an interest rate increase this summer, although ...


February 27, 2015, 11:03 am, 1430385
St. Louis Fed President James Bullard Bloomberg News

Federal Reserve Bank of St. Louis President James Bullard warned that if the U.S. central bank isn’t raising rates ...


February 27, 2015, 11:03 am, 1430383

The Wall Street Journal’s Daily Report on Global Central Banks for Friday, February 27, 2015:

Sign up for the newsletter: http://on.wsj.com/grandcentralsignup

Highlights


Hilsenrath’s Take: Role of New York Fed Stirs Divisions in Central Bank Fed’s Williams ...


February 27, 2015, 11:03 am, 1430386


February 27, 2015, 11:03 am, 1430380
The U.S. economy expanded at a 2.2% pace in the fourth quarter, with stronger consumer spending offsetting declines in business investment, exports and government spending. Associated ...


February 27, 2015, 11:03 am, 1430379

Federal Reserve officials who want to boost short-term interest rates soon warn that if the central bank waits too long, rate increases will ultimately have to be more aggressive and potentially disruptive to the economy.
But according to a new paper to be presented at a University of Chicago Booth ...


February 27, 2015, 11:03 am, 1430381
New York Fed President William Dudley Zuma Press

Federal Reserve Bank of New York President William Dudley said Friday that while he sees no urgency to raise ...


February 27, 2015, 11:03 am, 1430382
Employees prepare boxes of chocolate bars for shipping at the Theo Chocolate factory in Seattle, Wash. Bloomberg News

Growth in the U.S. economy cooled in the final ...


February 27, 2015, 11:03 am, 1430378
From the NAR: Pending Home Sales Rise in January to Highest Level in 18 Months

The Pending Home Sales Index, a forward-looking indicator based on contract signings, climbed 1.7 percent to 104.2 in January from an upwardly revised 102.5 in December and is now 8.4 percent above January 2014 ...


February 27, 2015, 10:44 am, 1430377
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February 27, 2015, 10:44 am, 1430376
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February 27, 2015, 10:44 am, 1430375

THE LAST few weeks have seen a flurry of good data about the America economy. Firms added more than 1m new jobs, in net terms, in the three months to January, the best showing since 1997.At 5.7%, America’s unemployment rate is now ...


February 27, 2015, 10:35 am, 1430374

By James Kwak

Supposedly President Obama is making “middle-class economics” one of the key themes of his final two years in office. I don’t really know what this is supposed to mean in a country where people making ten times the median household income call themselves “middle class” and there are tens of ...


February 27, 2015, 10:34 am, 1430373

The neutrality of the net: Set. Tax effects? Unclear. That’s the conclusion of Politifact after the Federal Communications Commission approved controversial regulations that will treat the Internet like a public utility. The fact checkers examined the question after GOP Senator Mike Lee claimed that net neutrality was a “massive ...


February 27, 2015, 10:34 am, 1430372

This is one of a series of guest TaxVox blog posts discussing dynamic scoring.

The House recently changed the rules of budget scoring: The Congressional Budget Office and the Joint Committee on Taxation will now account for macroeconomic effects when estimating the budget impacts of major legislation. Here are three things ...


February 27, 2015, 10:34 am, 1430371

Simon's claim that fiscal austerity has been a disaster reminds me of a big bias in the media - the misuse of the word "cost".

Very often, when the press use the word "cost" to describe a policy, what they really mean is a transfer. ...


February 27, 2015, 10:04 am, 1430368
(Don Boudreaux)

In a very real way, I’m grateful to Uncle Sam for his idiotic policy during the 1970s of putting price ceilings on energy.  Those ceilings bestowed upon me a great deal of first-hand experience with gasoline shortages and with waiting in the resulting long queues.  Those experiences were ...


February 27, 2015, 10:04 am, 1430367

February 27, 2015, 10:04 am, 1430366

This editorial will be published in the March 9 edition of The Weekly Standard.

In late 2001, when initial military operations in Afghanistan produced surprising successes, the opening skit on Saturday Night Live was a send-up of the daily press conference given by Secretary of Defense Donald Rumsfeld. Actor Darrell Hammond ...


February 27, 2015, 10:04 am, 1430365

These days, 20something marriage has gotten a reputation for being a bad idea. That’s partly because parents, peers, and the popular culture encourage young adults to treat their twenties as a decade for exploration and getting one’s ducks in a row, not for settling down. In the immortal words of ...


February 27, 2015, 9:23 am, 1430363
No time for writing this week, so I'm listing blog posts and articles that caught my eye recently:

1. Liftoff levers. John Cochrane is doing a fantastic job explaining how the Fed's reverse repo operations are supposed to work. Start with this post, and then read


February 27, 2015, 9:03 am, 1430301

The Wall Street Journal’s Daily Report on Global Central Banks for Friday, February 27, 2015:

Sign up for the newsletter: http://on.wsj.com/grandcentralsignup

Highlights


Hilsenrath’s Take: Role of New York Fed Stirs Divisions in Central Bank Fed’s Williams ...


February 27, 2015, 9:03 am, 1430300
From the BEA: Gross Domestic Product: Fourth Quarter 2014 (Second Estimate)

Real gross domestic product -- the value of the production of goods and services in the United States, adjusted for price changes -- increased at an annual rate of 2.2 percent in the fourth quarter of 2014, according ...


February 27, 2015, 8:35 am, 1430299
Asset allocation is second to none in the hierarchy of critical investment decisions, but benchmarking and general analysis in this space can be a slippery affair. That’s no surprise, since portfolio design and management deserves to be customized for each investor. But while asset allocation is largely an insular project, ...


February 27, 2015, 8:35 am, 1430298

The neutrality of the net: Set. Tax effects? Unclear. That’s the conclusion of Politifact after the Federal Communications Commission approved controversial regulations that will treat the Internet like a public utility. The fact checkers examined the question after GOP Senator Mike Lee claimed that net neutrality was a “massive ...


February 27, 2015, 8:05 am, 1430294

This week we released two new sections of our principles of economics class, price ceilings and trade. Most textbooks discuss how price ceilings create shortages and deadweight loss. Modern Principles delves much deeper to explain how price controls impede the operation of the price system creating economic discoordination and a misallocation ...


February 27, 2015, 8:04 am, 1430293
(Don Boudreaux)

… is from page 128 of James Grant’s superb 2014 book, The Forgotten Depression – a volume about the U.S. experience with the depression of 1920-21 and the rapid recovery from that depression, a recovery not engineered, steered, or ‘stimulated’ by the state:

As far as the political-eocnomic mind ...


February 27, 2015, 7:33 am, 1430290

Short and funny.

Although we refer to this as an upgrade, it is, at best, a lateral move. The software does the same things as before, except your favorite features have been moved to a place where you will never find them again.

...


February 27, 2015, 7:33 am, 1430289

I have no personal knowledge of any of these except for the thumbs-down--which I second--on the Hollywood Walk of Fame.

See also the probably more controversial "The 16 Most Disappointing Places To Visit On Earth".


February 27, 2015, 7:33 am, 1430288

Zhongmin Wang:

In a new RFF discussion paper, “Egregiousness and Boycott intensity: Evidence from the BP Deepwater Horizon Spill,” we ... explore the relationship between boycott intensity and media coverage, due to the latter’s ability to ...


February 27, 2015, 7:03 am, 1430237

Federal Reserve Bank of St. Louis President James Bullard warned that if the U.S. central bank isn’t raising rates by the end of September, it could be a bad thing for the economy.

In an interview with the Wall Street Journal late Thursday, the official said his expected economic outlook suggests ...


February 27, 2015, 7:03 am, 1430236

Federal Reserve Bank of Atlanta President Dennis Lockhart continues to cautiously eye favoring an interest rate increase this summer, although he added he still needs to see more data to support such an action.

When it comes to lifting the Fed’s short-term interest rate target off the near-zero levels its occupied ...


February 27, 2015, 6:44 am, 1430235
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February 27, 2015, 6:35 am, 1430234
● U.S. Durable Goods Orders Rebound 2.8% In January | RTT ● Jobless Claims in U.S. Jump by Most Since December 2013 | Bloomberg ● Consumer Prices Drop, Primarily Because of Falling Gas Prices | NY Times ● Dollar on track for eighth month of gains on U.S. data, Fed ...


February 27, 2015, 5:33 am, 1430229

I've written it before, I'll write it again: I love the Internet.


February 27, 2015, 5:03 am, 1430190
Bank of Japan Gov. Haruhiko Kuroda has a vision. Agence France-Presse/Getty Images

Japan needs a surge of power to blast its way out of deflation’s gravitational pull, ...


February 27, 2015, 5:03 am, 1430189


February 27, 2015, 5:03 am, 1430188

Perhaps the only thing cooler that the JPL's image of the dwarf planet Ceres taken by the Dawn probe....


February 27, 2015, 5:03 am, 1430187

February 27, 2015, 3:03 am, 1430158
Federal Reserve Board Chairwoman Janet Yellen testifies during a House Financial Services Committee hearing on Capitol Hill on Wednesday. Getty Images

Federal Reserve Chairwoman Janet Yellen headed to Capitol Hill ...


February 27, 2015, 3:03 am, 1430157

Like waistlines, American homes keep getting bigger.

The median size of completed homes last year hit a new record of 2,415 square feet, according to the Commerce Department.

Home sizes grew in every year ...


February 27, 2015, 3:03 am, 1430152

The Wall Street Journal’s Daily Report on Global Central Banks for Thursday, February 26, 2015:

Sign up for the newsletter: http://on.wsj.com/grandcentralsignup


Highlights

Hilsenrath’s Take: That Didn’t Go Well, Madame Chair Fed’s Yellen Fends Off Charges of Partisan ...


February 27, 2015, 3:03 am, 1430153
Automated welding machine robots assemble automobile bodies last last year. Getty Images

Some economists call it the “great decoupling.”

For decades, U.S. productivity and total employment rose in ...


February 27, 2015, 3:03 am, 1430155

Greece’s central bank said on Wednesday it will propose to the government the appointment of economist Theodoros Mitrakos as its new deputy governor.

The Bank of Greece’s general council has proposed that Mr. Mitrakos replaces Ioannis Papadakis, whose term at the bank is up in early March, the bank said in ...


February 27, 2015, 3:03 am, 1430156
MIT economics professor David Autor says, “If we automate all the jobs, we’ll be rich.” Dominick Reuter for The Wall Street Journal

David Autor knows a lot about ...


February 27, 2015, 3:03 am, 1430151
The drop in the consumer price index is centered in energy prices, with the gasoline index alone plunging 18.7% in January over December. Getty Images

The U.S. ...


February 27, 2015, 3:03 am, 1430154
Federal Reserve Board Chairwoman Janet Yellen listens to questions during a House Financial Services Committee hearing on Capitol Hill on Wednesday. Getty Images

Federal Reserve Chairwoman


February 27, 2015, 3:03 am, 1430147

Stagnant wage growth and stubbornly high unemployment have plagued the U.S., Europe and other advanced economies in the wake of the global financial crisis.

An employee prepares a chromatography on ...


February 27, 2015, 3:03 am, 1430146

Deflation, narrowly defined, returned to the U.S. in January for the first time since 2009 as consumer prices fell 0.1% from a year earlier. Because this was due to cheaper gasoline, economists were quick to dismiss the significance. Excluding food and energy, “core” prices were still up 1.6% from ...


February 27, 2015, 3:03 am, 1430150
A child shops at a food bank in Utica, N.Y. A new report shows the gaps in median income and wealth between black and Hispanic Americans and white Americans ...


February 27, 2015, 3:03 am, 1430145
A crowd protests inside the Wisconsin State Capitol this week in opposition to a right-to-work legislation. A ranking of America’s most-unionized states didn’t include any industrial Midwestern states, long ...


February 27, 2015, 3:03 am, 1430148

Bank of England Deputy Governor Minouche Shafik Thursday said the central bank’s next monetary policy move will likely be a gradual and limited rise in its benchmark interest rates.

But in a speech at Warwick University, she also said the central bank will ease policy if a period of very low ...


February 27, 2015, 3:03 am, 1430149

A mix of falling inflation and rising wages last month gave Americans their biggest real raise in more than six years.

Inflation-adjusted average hourly earnings jumped a seasonally adjusted 1.2% in January, the ...


February 27, 2015, 3:03 am, 1430143
While the Fed has acknowledged the drop in inflation expectations, it has also regularly dismissed its significance, emphasizing instead the stability of survey based measures.  Bloomberg ...


February 27, 2015, 3:03 am, 1430144

The Federal Reserve and Chairwoman Janet Yellen make policy decisions based on economics and not politics, Federal Reserve Bank of Cleveland President Loretta Mester said Thursday.

Reuters

“I don’t ...


February 27, 2015, 3:03 am, 1430142

Federal Reserve Bank of San Francisco President John Williams said the door is open to central bank interest rate increases any time from mid-June onward.

San Francisco Fed President John ...


February 27, 2015, 3:03 am, 1430141

Federal Reserve Chairwoman Janet Yellen indicated this week the central bank is considering a shift away from its pledge to be “patient” in deciding when to start raising short-term interest rates.


February 27, 2015, 3:03 am, 1430139


February 27, 2015, 3:03 am, 1430140
Bank of Japan Gov. Haruhiko Kuroda has a vision. Agence France-Presse/Getty Images

Japan needs a surge of power to blast its way out of deflation’s gravitational pull, ...


February 27, 2015, 2:44 am, 1430138

There is no consensus among economists on the forces that drove the historical rise of US house prices and household debt that preceded the Global Crisis. In this column, the authors argue that the fundamental factor behind that boom was an increase in the supply of mortgage credit. This rise ...


February 27, 2015, 2:05 am, 1430137

I’ve long suggested that those worried about inequality, envy, and relative deprivation should tax Facebook rather than the private fortune of Bill Gates.  Most envy is local, and connected to people you know and whose lives you are in touch with.  Along these lines, here is some recent ...


February 27, 2015, 2:04 am, 1430136

If you have trouble registering for this event, please email conferences@aei.org.

The Federal Communications Commission (FCC) is moving to reclassify wired and wireless Internet services as a public utility under Title II of the Communications Act. The vote, expected to occur on February 26, is among the most controversial issues ever ...


February 27, 2015, 2:04 am, 1430135

The United Kingdom is currently undertaking the most ambitious overhaul of its welfare system in 60 years — most significantly, the development and rollout of Universal Credit, a new benefit system designed for the 21st century.

We welcome you to join us at AEI as UK Secretary of State for Work ...


February 27, 2015, 1:33 am, 1430134
In 2006-2007 I called for a recession. We got a big one. I called for another one in 2011, as did the ECRI. That recession never happened.

50% is not a very good recession predicting track record except in comparison to consensus economic opinions that have never once in ...


February 27, 2015, 1:03 am, 1430081

Federal Reserve Bank of San Francisco President John Williams said the door is open to central bank interest rate increases any time from mid-June onward.

San Francisco Fed President John ...


February 27, 2015, 1:03 am, 1430080

Federal Reserve Chairwoman Janet Yellen indicated this week the central bank is considering a shift away from its pledge to be “patient” in deciding when to start raising short-term interest rates.


February 27, 2015, 12:05 am, 1430078

That is the new Robert D. Putnam book and it focuses on the widening opportunity gap among America’s young.  Much of the work is narrative and case studies, starting with Port Clinton, Ohio but not stopping there.  Any Putnam book is an event, and this one ...


February 27, 2015, 12:04 am, 1430077
(February 27, 2015 12:09 AM, by Bryan Caplan) As soon as Tyler posted his "Totally Conventional Views Which I Hold," I felt the urge to do the same. In no particular order:1. Most academics are out of touch with the real world and have little useful to say... (0 COMMENTS)


February 26, 2015, 10:44 pm, 1430015
A


February 26, 2015, 9:33 pm, 1430011

The Swedes really don't like cash. First, consider that Sweden is the only country in the world that I'm aware of where reliance on paper money is in decline. Second, no country's central bank has produced a ...


February 26, 2015, 9:33 pm, 1430010

1. Chart of the Day. Thanks to globalization and trade, clothing is an amazing bargain for US consumers. While consumer prices have increased more than 64% on average over the last several decades since 1993 (and average wages by 90%), the CPI for ...


February 26, 2015, 9:03 pm, 1429948
The following important older post on inflation from Professor Krugman explains why I follow various measures of underlying inflation: Core Logic

[T]he idea of core inflation. Why do we need such a concept, and how should it be measured?

So: core inflation is usually measured by taking ...


February 26, 2015, 8:04 pm, 1429944
(February 26, 2015 07:06 PM, by Scott Sumner) During periods where there is an enormous demand shortfall, such as the 1930s and the period after 2008, there is a resurgence of interest in demand-side models. This is good. But it also produces an unfortunate side effect---mission creep. Demand... (0 COMMENTS)


February 26, 2015, 8:04 pm, 1429943

At the maximum inflation of the tech stock bubble, the Nasdaq stock index reached its peak of 5,048 on March 10, 2000. It closed yesterday, February 25, 2015, at 4,967, so the media is full of excitement about how, after 15 years, the Nasdaq is almost back to its peak.

But ...


February 26, 2015, 8:04 pm, 1429942

1. Chart of the Day. Thanks to globalization and trade, clothing is an amazing bargain for US consumers. While consumer prices have increased more than 64% on average over the last several decades since 1993 (and average wages ...


February 26, 2015, 7:33 pm, 1429940
For those professors starting to write economics final exams, I suggest that you post the following two comments that were posted on the NY Times webpage. Ask your students for an evaluation of the logic behind each of them. Each quote highlights that economists have failed in our educational mission ...


February 26, 2015, 7:03 pm, 1429878

International tax reform done on a multilateral basis—also known as the OECD’s Base Erosion and Profit Shifting (BEPS) initiative—may have additional positive effects beyond, at least theoretically, better distributing tax revenue according to economic activity. A recent TPC/UCLA conference on international tax reform highlighted a less discussed ...


February 26, 2015, 7:03 pm, 1429877

Nevada appreciates the razzle-dazzle.

After a week of meetings to promote our new book on Nevada tax reform, I was invited to address the annual dinner of the Nevada Taxpayers Association in Carson City yesterday. For a variety of fairly dull reasons, at the last minute I swapped out my ...


February 26, 2015, 7:03 pm, 1429876
While the Fed has acknowledged the drop in inflation expectations, it has also regularly dismissed its significance, emphasizing instead the stability of survey based measures.  Bloomberg ...


February 26, 2015, 7:03 pm, 1429875

NEW YORK–Federal Reserve Bank of San Francisco President John Williams said the door is open to central bank interest rate increases any time from mid-June onward.
In an interview with The Wall Street Journal, Mr. Williams expressed a good deal of confidence in the U.S. outlook, especially on hiring. He ...


February 26, 2015, 7:03 pm, 1429874

Federal Reserve Chairwoman Janet Yellen indicated this week the central bank is considering a shift away from its pledge to be “patient” in deciding when to start raising short-term interest rates.

She has said “patient” means the Fed won’t raise its benchmark federal funds rate at its next two meetings. ...


February 26, 2015, 7:03 pm, 1429873

Political Calculations criticizes me for comparing Wisconsin economic performance against Minnesota, but not other neighbors.

Normally, we’re entertained by Chinn’s analysis, since it frequently involves comparisons of the job growth between Wisconsin and its western neighbor Minnesota since Walker was sworn into office in January 2011, which we find funny ...


February 26, 2015, 7:03 pm, 1429872
Freddie Mac reported that the Single-Family serious delinquency rate declined in January to 1.86%, down from 1.88% in December. Freddie's rate is down from 2.34% in January 2014, and the rate in January was the lowest level since December 2008. Freddie's serious delinquency rate peaked in February 2010 ...


February 26, 2015, 6:04 pm, 1429866
(Don Boudreaux)

In Montgomery County, MD, (where Russ lives), the personal possession and discharge of firecrackers and other fireworks is prohibited.  (It’s “unlawful.”)  In bordering Fairfax County, VA, (where I live), the personal possession and discharge of firecrackers and other small fireworks is not prohibited. (It’s “lawful.”)

Suppose that some officious ...


February 26, 2015, 6:04 pm, 1429865

Download the report here.

View the interactive guide of the 50 states to see how states are changing by demographics like race, age, ...


February 26, 2015, 6:04 pm, 1429864

Fed chair Janet Yellen’s speech on inequality is back in the news thanks to yesterday’s rough-and-tumble Congressional hearing. I wrote about this a bit back at the time.

Speaking in Boston last ...


February 26, 2015, 6:04 pm, 1429862
Sir, Fred Bergsten (Letters, February 17) charges that the FT is “thoroughly confused”. Alas, it is Dr Bergsten whose political tactics are both confused and wrong-headed.

First, let me say that the trade community (at least the free ...


February 26, 2015, 6:04 pm, 1429863

As the endgame for America’s nuclear negotiations with Iran looms, I hope that Washington is paying attention to the critical flaws in both its failed agreements with North Korea and the ineffective sanctions imposed on the country in response. I wrote in last month’s issue how Pyongyang has constantly


February 26, 2015, 5:33 pm, 1429858


February 26, 2015, 5:33 pm, 1429857
A chart of Ukraine's currency is nonsensical once again today.



Supposedly the hryvnia rallied again today, if only by a miniscule amount 0.15%. Yet, once again the chart is complete nonsense.

Black Market Rate

The


February 26, 2015, 5:03 pm, 1429794

Corporate tax rate cuts are good for economic growth, and they aren’t bad for government revenues, either.

In fact, eliminating the corporate income tax would actually increase annual federal revenue in the long run. This is due to two main factors: economic growth and the distribution of corporate ...


February 26, 2015, 5:03 pm, 1429789
Federal Reserve Board Chairwoman Janet Yellen testifies during a House Financial Services Committee hearing on Capitol Hill on Wednesday. Getty Images

Federal Reserve Chairwoman Janet Yellen headed to Capitol Hill ...


February 26, 2015, 5:03 pm, 1429790

The Wall Street Journal’s Daily Report on Global Central Banks for Wednesday, February 25, 2015:

Sign up for the newsletter: http://on.wsj.com/grandcentralsignup


Highlights

Hilsenrath’s Take: Goodbye Patient; Hello Reasonably Confident Yellen Puts Fed on Path to Lift Rates


February 26, 2015, 5:03 pm, 1429788

Like waistlines, American homes keep getting bigger.

The median size of completed homes last year hit a new record of 2,415 square feet, according to the Commerce Department.

Home sizes grew in every year ...


February 26, 2015, 5:03 pm, 1429793
Scott Alvarez in May 2012. Bloomberg News

The most contentious exchange during Janet Yellen‘s appearance on Capitol Hill on Tuesday was about public remarks made ...


February 26, 2015, 5:03 pm, 1429791
Bank of England Gov. Mark Carney. The BOE has launched a new research program that seeks answers to most of the big questions facing central bankers.


February 26, 2015, 5:03 pm, 1429792

Inserting sanctions for currency manipulation into trade agreements could harm the appropriate conduct of monetary policy, Federal Reserve Chairwoman Janet Yellen said Tuesday.

Ms. Yellen was asked about the idea during testimony before the Senate Banking Committee. She said that because monetary policy can affect the value of exchange rates, any ...


February 26, 2015, 5:03 pm, 1429787
MIT economics professor David Autor says, “If we automate all the jobs, we’ll be rich.” Dominick Reuter for The Wall Street Journal

David Autor knows a lot about ...


February 26, 2015, 5:03 pm, 1429784
Automated welding machine robots assemble automobile bodies last last year. Getty Images

Some economists call it the “great decoupling.”

For decades, U.S. productivity and total employment rose in ...


February 26, 2015, 5:03 pm, 1429783

The Wall Street Journal’s Daily Report on Global Central Banks for Thursday, February 26, 2015:

Sign up for the newsletter: http://on.wsj.com/grandcentralsignup


Highlights

Hilsenrath’s Take: That Didn’t Go Well, Madame Chair Fed’s Yellen Fends Off Charges of Partisan ...


February 26, 2015, 5:03 pm, 1429785
Federal Reserve Board Chairwoman Janet Yellen listens to questions during a House Financial Services Committee hearing on Capitol Hill on Wednesday. Getty Images

Federal Reserve Chairwoman


February 26, 2015, 5:03 pm, 1429786

Greece’s central bank said on Wednesday it will propose to the government the appointment of economist Theodoros Mitrakos as its new deputy governor.

The Bank of Greece’s general council has proposed that Mr. Mitrakos replaces Ioannis Papadakis, whose term at the bank is up in early March, the bank said in ...


February 26, 2015, 5:03 pm, 1429780

A mix of falling inflation and rising wages last month gave Americans their biggest real raise in more than six years.

Inflation-adjusted average hourly earnings jumped a seasonally adjusted 1.2% in January, the ...


February 26, 2015, 5:03 pm, 1429781
A child shops at a food bank in Utica, N.Y. A new report shows the gaps in median income and wealth between black and Hispanic Americans and white Americans ...


February 26, 2015, 5:03 pm, 1429782
The drop in the consumer price index is centered in energy prices, with the gasoline index alone plunging 18.7% in January over December. Getty Images

The U.S. ...


February 26, 2015, 5:03 pm, 1429779

Bank of England Deputy Governor Minouche Shafik Thursday said the central bank’s next monetary policy move will likely be a gradual and limited rise in its benchmark interest rates.

But in a speech at Warwick University, she also said the central bank will ease policy if a period of very low ...


February 26, 2015, 5:03 pm, 1429776
A crowd protests inside the Wisconsin State Capitol this week in opposition to a right-to-work legislation. A ranking of America’s most-unionized states didn’t include any industrial Midwestern states, long ...


February 26, 2015, 5:03 pm, 1429775

The Federal Reserve and Chairwoman Janet Yellen make policy decisions based on economics and not politics, Federal Reserve Bank of Cleveland President Loretta Mester said Thursday.

Reuters

“I don’t ...


February 26, 2015, 5:03 pm, 1429778

Stagnant wage growth and stubbornly high unemployment have plagued the U.S., Europe and other advanced economies in the wake of the global financial crisis.

An employee prepares a chromatography on ...


February 26, 2015, 5:03 pm, 1429777

Deflation, narrowly defined, returned to the U.S. in January for the first time since 2009 as consumer prices fell 0.1% from a year earlier. Because this was due to cheaper gasoline, economists were quick to dismiss the significance. Excluding food and energy, “core” prices were still up 1.6% from ...


February 26, 2015, 5:03 pm, 1429774
While the Fed has acknowledged the drop in inflation expectations, it has also regularly dismissed its significance, emphasizing instead the stability of survey based measures.  Bloomberg ...


February 26, 2015, 4:44 pm, 1429772
A


February 26, 2015, 4:44 pm, 1429773
A


February 26, 2015, 4:44 pm, 1429771
A


February 26, 2015, 4:44 pm, 1429770
A


February 26, 2015, 4:44 pm, 1429769

Last year's most popular guest, Duke University's Mike Munger, was back on EconTalk this week, discussing the process of choosing in groups.

Their conversation ranged from Odysseus to the Lewis and Clark expedition, and more. Now it's your turn...Choose one of the questions below and submit your reply via email ...


February 26, 2015, 4:44 pm, 1429768

I want to thank everyone who responded to the Benn Steil continuing education post. Most of the responses were related to the question about war's impact on GDP and why I thought war was bad for the economy even though it boosts GDP.

Listener/reader David Hurwitz did a nice job ...


February 26, 2015, 4:34 pm, 1429767

It’s been just over a year since I started posting TPC’s Daily Deduction. It’s high time I let you in on a little secret: Whenever I tell people that I write about “tax news and research” I get the exact same reaction. Imagine furrowed eyebrows, coupled with a sad, “Oh.”

Every. ...


February 26, 2015, 4:34 pm, 1429766
A


February 26, 2015, 4:04 pm, 1429765
(Don Boudreaux)

This post is inspired by some comments at this EconLog post by David Henderson.

…..

Money prices set by market forces play a uniquely important role in directing and disciplining economic actions.  This role is both so central to an economy’s health, as well as so deeply ignored or ...


February 26, 2015, 4:04 pm, 1429764

Last week, The New York Federal Reserve Bank released a lot of data shedding new light on student loan debt. One of the findings that has received the most attention (see here,


February 26, 2015, 4:04 pm, 1429763

On Friday, the U.S. House will vote on the Student Success Act (H.R. 5). The bill would revamp the Bush-era No Child Left Behind Act (formally known as the Elementary and Secondary Education Act). It’s a promising bill and one that deserves the enthusiastic support of conservatives.

The Student Success Act ...


February 26, 2015, 4:04 pm, 1429762

Last week, the Wall Street Journal reported on a series of satellite images, released by IHS Jane’s, showing Chinese island construction in the South China Sea. On the same day, February 18, the Center for Strategic and International Studies’ Asia Maritime Transparency Initiative ...


February 26, 2015, 3:33 pm, 1429758
Right-to-Work legislation is sweeping the Midwest. It's one of many reforms needed to makes states more competitive, reduce cost pressures on infrastructure projects, and hold down the necessity of tax hikes.

Today the Wisconsin Senate Passed 'Right to Work' Legislation.

The proposal would let workers opt ...


February 26, 2015, 3:23 pm, 1429757
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The last payroll employment report from the U.S. Bureau of Labor Statistics (BLS) included some relatively good news on wages. Private average hourly earnings rose an estimated 12 cents ...