Death of the U.S. sock industry

Check out this story from NPR about the Invisible Hand at work. You can also listen to the story if you prefer. It is an excellent article about the pros and cons of globalization in the once thriving U.S. sock industry.

Goalies, Stop Jumping.

Staying with our sports theme this week, check out this bit of economic research on goalies and penalty shots. It might surprise you. Isn't it funny how economics can be used to explain almost anything?

Should College Athletes Share in the Revenues

Check out this local story from the Chronicle. It is an old argument, that college athletes (especially football players) are bringing millions of dollars into their schools, and that they should be getting some of that money. Would that be the end of college fooball as we know it, if we started paying players? What about the free education these players are getting? What do you think?

Debunking some myths regarding healthcare

Many of the current presidential candidates are railing about the failure of the U.S. healthcare system and calling for major reform. In this editorial, economist Greg Mankiw looks deeper at some of the claims being made.

Thinking about your future

Still trying to decide what to major in in college, how about oil. Read this article about the looming shortage of petroleum engineers, geologists, and oil industry workers in general.

Devices Enforce Cellular Silence, Sweet but Illegal

I want one of these. Check out this NY Times article on cell phone jammers. May we never have to listen to someone's personal details in an elevator, checkout line, or waiting room again.

Maybe its not as bad as we think

Today is Jobs Day. Here’s what you need to know about the October employment report:
+166,000 net new jobs were added in October. This is almost twice what the markets expected.

The unemployment rate is unchanged at 4.7%.

The US economy has created 1.68 M net new jobs over the past year, and 8.3 M since the labor market turnaround in August 2003.
We’ve had 50 months (4 years and 2 months) of continuous employment growth, a new record.

Wages are up 1.2% over the past year, adjusting for inflation.
In other economic news, on Wednesday we got GDP data:

GDP grew 3.9% in the 3rd quarter, well above market expectations of about 3%. This is the strongest quarterly GDP growth in 1½ years. Extra happy.

We can see the effects of a strong labor market in the consumption numbers – people are working and their real incomes are climbing, so they’re buying more stuff. Since consumption is about 70% of the economy, strong consumption growth is critical to continued GDP growth.

Housing is still a drag – it knocked 1.1% off the third quarter growth number. This is bad but unsurprising. The silver lining is that there’s no evidence the housing decline is spilling over into consumption.

Business investment was solid. Investment in “equipment and software” grew at a 6% rate, the best in 1½ years.

Exports continue to be strong, and they now make up 1 in 8 dollars of our GDP (12%). The rest of the world is growing, and they’re buying our stuff.

This last point is a useful reminder – world economic growth is not a zero sum game. When other countries’ economies grow, they buy more US goods. That’s good for us.

It’s no fun unless you have a picture. The yellow bar shows the total of 3.9% GDP growth. The other bars show where the growth is coming from.

This is my favorite way to show what’s actually going on – you can see that most of our growth is coming from consumption, that business investment and exports are important, and that housing is still a big drag.

We also had some happy news that productivity grew 2.6% in the 2nd quarter of this year. Higher productivity means each worker makes more stuff. Over time, productivity growth leads to wage growth.

Wednesday the Federal Open Market Committee cut the fed funds rate by a quarter point, to 4.5%. They also cut the discount rate by the same amount, to 5%. The FOMC also put out a statement. Since we don’t comment on the Fed’s monetary policy actions, I’ll leave it at that.

There are, however, some clouds going forward.

It’s probably going to take a while to work out of the housing downturn. We expect housing will continue to be a drag on GDP growth.
Oil prices are nearing an all-time inflation-adjusted high (depending on how you measure inflation).

The credit markets are still working through problems that first appeared in August.
One of our favorite words when talking about the US economy is “flexible” – we have extremely flexible labor and capital markets. When bad things happen (e.g., a factory closing, wildfires, housing and credit market troubles), a flexible economy can adjust and recover quickly and with the smallest amount of pain. We’re seeing the benefits of a flexible economy now.

Halloween Spending

Check out this slide show about the money that Americans spend on Halloween. It is very interesting and eye opening. Remember consumer spending is the key to keeping the economy going. Maybe we should create a few more holidays in order to fend off recession.

Womenomics; The New Defining Force in the Economy

"It found that over the past decade or so increased female participation in the paid labour force has contributed more to the growth of the world economy than either booming China or new technology"
Let the battle begin.

Cupcake Ban

Say it ain't so. A ban on cupcakes, could anything be more un-American? What are the economic implications?

Public school or Private; Does it really matter?

According to this report, its not the type of school you went to, but those chats around the dinner table that really make the difference.

Is this a case of Capitalism run amok?

Read this interesting but somewhat frightening article about the global market for human organs.
". . . If you lose your job, you can sell your home. If you lose your home, you can sell your possessions. If you lose your possessions, you can prostitute yourself. And if you lose everything else, you can sell one more thing: your organs."
What is your reaction?

Global Perspectives Survey

Check out this interesting article about attitudes on a variety of topics from countries around the world. Of particular interest are the attitudes about trade.

Protectionism in sports

What a timely article. Since we are currently studying protectionism, what are your thoughts on this article. The head of the European Soccer Association wants to limit the number of foreign players on European teams. What will be the consequences of such actions?

Consumers fight back against scalpers

Ever try to buy tickets to a concert only to find out that they are already sold out. Read about what consumers in Australia are doing to fight back against scalpers.

Myths about the rich

The 2007 edition of the Forbes 400 wealthiest Americans was released last week. As in years past, it's one of the more useful economic annuals when it comes to laying bare the folly of antitrust, worries over the wealth gap, and perhaps silliest of all, the assumption that the rich became that way for exploiting the non-rich

A lesson in supply and demand

The ethanol boom of recent years — which spurred a frenzy of distillery construction, record corn prices, rising food prices and hopes of a new future for rural America — may be fading.

Only last year, farmers here spoke of a biofuel gold rush, and they rejoiced as prices for ethanol and the corn used to produce it set records.

But companies and farm cooperatives have built so many distilleries so quickly that the ethanol market is suddenly plagued by a glut, in part because the means to distribute it have not kept pace. The average national ethanol price on the spot market has plunged 30 percent since May, with the decline escalating sharply in the last few weeks.

Shift your demand curve to the right and watch equilibrium price and quantity rise. Then, push your supply curve to the right far enough so that price falls (by 30%).

Outsourcing; Is it really a problem?

When the politicians begin complaining about outsourcing in the American economy, have them read this article.

Every Breath You Take

Columbia Business School's Dean Glenn Hubbard sings about wanting Alan Greenspan's job that went instead to New Fed Chair Ben Bernanke. Parody created by Columbia Business School students.

Is a new tax the answer to Global warming?

Check out Greg Mankiw's article about the use of a carbon tax to limit pollution and the spread of global warming. Does this idea make sense to you?