Jobs report crushes

Jobs were added over the expectation last month, but the wage growth disappointed. Data shows that the unemployment rated hit the eight-year low, which was held steady at 4.9%, and U-6 unemployment rate fell from 9.9% to 9.7%.

Average hourly wages fell 0.1% month-on-month and rose 2.2% year-on-year, both of them are not expected. Because of a calendar quirk falls outside the employment survey week, Pantheon Macroeconomics' Ian Shepherdson claimed that wage growth was consistently underestimated for February.

http://www.businessinsider.com/us-jobs-report-february-2016-2016-3

US Stocks Rise After Jobs Report; Energy and Metals Surge

           According to the New York Times, stocks keep rising for the fourth day after the US government giving the signal that there will be more job positions in future. The Dow Jones industrial average picked up 0.5 percent. According to the JOBS REPORT, about 242000 jobs were added in especially the construction and health care companies, and more people are still looking for work. Professionals in the article pointed out that these showed that the saying about the economy sliding is not warranted and we can expect the continuous growth of US employment and economy. Also, the positive job reports increase the climbing prices of metals, oil and the energy stocks. 

             The expectation of increasing employment and low inflation rate do attract more investment. What's more, as is mentioned in the article, the positive expectation of employment increases people's consume. The entertainment industries like the so called BIG SCREEN industry gets bigger. Overall, the new published jobs report brought positive influence of US economy.

 Here's the link: http://www.nytimes.com/aponline/2016/03/04/world/asia/ap-financial-markets.html 

All Clear on Recession Risk? Not Yet

In the recent months, many economic experts feared a recession. Those in the industry were calling on the Fed to not raise interest rate. Since February 11, some economic indicators are beginning to look up, including the "Cornerstone Macro" model for odds of a recession went down from 64% to 47% and the public fear of a volatile stock market fell back down to "December levels."

The article argues, however, that we are not out of the woods yet. Even though Macro economic metrics are declining, financial markets still have the odds of an economic crash higher than the average. The article states that, "our attention tends to be gripped by the speed at which markets move." While this is true if the investors in the economy feel pressure to leave the market and create a self fulfilling prophecy, what really matters is where we end up, not the trends. This being said, we cannot predict the future and only time will tell the state of our economy.

Link to Article

Borders could cost Europe $20 billion a year

Europe is back in deflation, and business and consumer confidence is sagging.The last thing it needs is another economic headache, but the refugee crisis might deliver one if it isn't fixed soon.To slow the influx of migrants, countries are reintroducing border controls in a region used to traveling and trading freely. If they return in full, the cost to Europe could be as high as 18 billion euros ($20 billion) per year, the European Commission said Friday.About 1.2 million people applied for asylum in the European Union last year, double the number in 2014, and more than half of them came from Syria, Afghanistan and Iraq.The influx shows no signs of abating: the International Organization for Migration estimates that 130,000 migrants crossed the Mediterranean sea to Europe in the first nine weeks of this year.The European Union is struggling to cope with the humanitarian emergency. Eight countries have reintroduced border controls in the last six months, threatening to blow apart the region's Schengen system of border-free travel and kill a core EU principle of freedom of movement.EU countries and Turkey will meet Monday to discuss the refugee crisis. The meeting has been billed as a last chance to save Schengen.If they fail, and border controls are reintroduced across the 26 members of the passport-free zone, the region will very quickly feel the pain."These costs would be concentrated on certain actors and regions but would inevitably impact the EU economy as a whole," the European Commission said Friday.Here's where the pain would be immediately felt, according to the Commission:

Higher transport costs

Countries such as Poland, the Netherlands or Germany would face more than 500 million euros of additional costs for the road transport of traded goods.For countries such as Spain or the Czech Republic, the additional costs to businesses would exceed 200 million euros.

Lost time for commuters

The reinstatement of passport checks would lead to delays at borders.That would cost Europe's 1.7 million cross-border workers, or the companies that employ them, between 2.5 billion and 4.5 billion euros in time lost. 

Fewer visitors

Europe's tourism industry would suffer too. The European Commission estimates that 13 million tourist nights could be lost, with a total cost of 1.2 billion euros. 

More officials 

Governments would have to hire more staff to police the borders, costing them about 1.1 billion euros more in administration costs.If the border controls remain in place long term, the costs will mount. A report prepared for the French government last month estimated that the return of border checks and passport controls could cost Europe as much as 100 billion euros ($110 billion) over a decade, knocking 0.8% of Europe's GDP by 2025 in the worst case.The Schengen area includes four countries outside the European Union -- Iceland, Lichtenstein, Norway and Switzerland. Six EU countries are not part of the zone -- they have either opted out of the agreement, or are still waiting to be admitted

Article can be found at: http://money.cnn.com/2016/03/04/news/economy/europe-borders-schengen-cost-of-collapse/index.html?iid=SF_LN 

U.S Trade Gap Widened in January

WASHINGTON—The U.S. trade deficit widened in January as both exports and imports decreased, indicating slower global economic growth remains a strain on the domestic economy. 

The trade gap expanded 2.2% from the prior month to a seasonally adjusted $45.68 billion, the Commerce Department said Friday. That was wider than the deficit of $44.0 billion expected by economists The Wall Street Journal surveyed. 

Exports remained under pressure from a strong dollar in January, falling 2.1% from the prior month. Imports dropped 1.3% in January after ticking slightly higher in December. 

January’s level of goods exported was the lowest since February 2011, indicating the global economy remained weak in the first month of this year. Swooning commodity prices and concerns over the extent of China’s economic slowdown prompted financial-market turmoil in the initial weeks of 2016.

Trade figures can be volatile from month to month. December’s deficit was revised to $44.70 billion, from the previously estimated $43.36 billion. 

In January, shipments of capital goods, industrial supplies, foods and consumer goods all decreased. The average price of a barrel of imported crude oil was $32.06 in January, the lowest level since April 2004. One bright spot was the automotive market: The U.S. exported and imported more cars and other vehicles in January than in December. 

A strong dollar and low oil prices are causing trade shifts. Exports to Canada, China, and South and Central America all hit multiyear lows, reflecting how expensive it has become for consumers in regions with slowing economies and weaker currencies to buy American products. By contrast, U.S. imports of cellphones, diamonds, and wine increased as a strong dollar made foreign products more affordable here. 

The dollar is expected to strengthen further this year provided the Federal Reserve proceeds with planned gradual increases in short-term interest rates. Higher U.S. interest rates will likely strengthen the dollar further, just as many central banks around the world are loosening monetary policy and pushing their currencies in the opposite direction. 

While falling commodity prices and slowdowns in major economies such as China and Brazil have hit net exports of goods and services in recent months, the domestic U.S. economy remains relatively resilient. 

Trade was a 0.25 percentage point drag on the economy’s overall 1% growth rate in the final quarter of 2015, according to a second reading of fourth-quarter gross-domestic product released last week. Some analysts said January’s trade report indicates the weakness in exports in the first month of the year is likely to translate into an even larger drag on growth from trade in the first quarter. 

However Jim O’Sullivan, an economist at High Frequency Economics, noted that “despite the drag from trade, overall growth still looks strong enough to generate ongoing labor market improvement—as was evident from the February employment report.” U.S. employers added a seasonally adjusted 242,000 jobs in February, the Labor Department said Friday, and the unemployment rate held steady at 4.9%.

Women's Businesses Get 5% of Federal Contracts, A Goal First Set in 1994

The federal government has finally reached its goal of awarding 5% of the money it spent on contractors to businesses owned by women, a goal originally set in 1994. About $17.8 billion of $90.7 that the Small Business Admin has awarded went specifically to women-owned businesses that are at least 51% controlled by women. The S.B.A has extended it aid to other sectors as well. They have begun to teach women entrepreneurs about federal procurement opportunities and they help guide them through the process of preparing bids. While there is still a long way to go, this represents a landmark achievement for the business world.
NY Times, Stacy Cowley, 3/3/16

Costco Raising Minimum Wage as Competition for Workers Grows

I thought that this article was interesting because there has been a lot of talk in the news about minimum wage increasing. This article talks about how Costco is raising there minimum wage by $1.50. There are mixed feelings about the hike in minimum wage, in another article they asked peoples opinions on raising the wage and they got mixed answers. on one side people are all for the hike cause they feel that it will make everyday expenses easier to pay for low income families. on the other hand their are people against this increase cause they say its going to just increase the cost of items they buy at the store and that's not fair because they aren't getting an increase in their wages.   

link:http://finance.yahoo.com/news/costco-raising-minimum-wage-competition-172259632.html

A Plan in Case Robots Take the Jobs: Give Everyone a Paycheck

    In a world like today where we can order Chipotle through our phones and talk face to face with someone living on the other side of the planet, it comes to no surprise that people would have the fear that robots could eventually outperform the role of humans. In many circumstances,  artificial intelligence can eliminate human error and make procedures faster and more efficient. Instead of fearing for this seemingly inevitable future event, in his New York Times article "A Plan in Case Robots Take the Jobs: Give Everyone a Paycheck," Farhad Manjoo explains that this fact may not be as negative as it seems. In fact, the author even believes that these robots will relieve the human race from the need to work. He states that “For a couple hundred years, we’ve constructed our entire world around the need to work. Now we’re talking about more than just a tweak to the economy — it’s as foundational a departure as when we went from an agrarian society to an industrial one.”
    The solution to the takeover of the robots would be to give everyone a paycheck in the form of “universal basic income,” or U.B.I. In other words, UBI would act like a form of welfare or social security in which "the government would send each adult about $1,000 a month, about enough to cover housing, food, health care and other basic needs for many Americans. U.B.I. would be aimed at easing the dislocation caused by technological progress." Obviously, this is a rather utopian way of thinking, but it provides some interesting questions when we relate it to the models that we learn about in class. For instance, how would the government increase the funds to be able to pay each citizen this amount of money? Would they have to increase government spending which would decrease national saving and private investment (crowding out), or would they increase taxes instead. Furthermore, how would this change the labor force participation rate and unemployment rate? These means of finding the percentages might have to be changed with less human capital used and instead a higher "A" value in the Cobb Douglas Production function. Additionally, would a country be able to continue growing past the steady state since the robots could be seen as an increase in the technological productivity of the country. In the end, I think that this article is very interesting to think about after combining all over the other things we have learned thus far in the semester.

http://www.nytimes.com/2016/03/03/technology/plan-to-fight-robot-invasion-at-work-give-everyone-a-paycheck.html?_r=0

Growth in the "Other" Dakota

North Dakota rose drastically at the discovery of oil within its borders. That was the main economic achievement that they had to boast about. In the past 11 years, their economy has doubled in size though growth has leveled out a bit there was, at least, some economic success up north.

While as South Dakota has generally remained resourceless. However in this past quarter, South Dakota lead the nation in growth. By a large margin too, adjusted for inflation it grew at a rate of 9.2% while the national average was about 1.9%. The majority of this growth came from the agriculture sector, which was about 6.9 points. This was a national trend, with growth in Iowa and Nebraska as well. This is a huge step in the right direction for South Dakota's economy, especially considering past methods of economic stimulation. 

In 2011, NPR ran a story about social services claiming Native American children as wards of the state. This would be perfectly acceptable if these were children in danger, however, most of the evidence were either fabricated or circumstantial. This meant that children were put into foster care which gave South Dakota an opportunity to take money granted by the US Federal Government for every child in social services. In addition, the welfare workers were paid for the amount of children they "saved." So a state with a struggling economy was incentivizing the removal of children from their homes without evidence. 

Needless to say, agricultural growth is a preferable stimulant to the economy. Despite evidence that the growth is only temporary, it is good to have. Agriculture was not the only growth they saw, which indicates that there is more to come from this state. Despite a lack of oil, there are plenty of methods for growth within this economy, it will be interesting to see where they go.

http://blogs.wsj.com/economics/2016/03/02/the-other-dakota-leads-the-nation-in-economic-growth/

http://money.cnn.com/2014/06/11/news/economy/north-dakota-economy/index.html

http://www.npr.org/2011/10/25/141672992/native-foster-care-lost-children-shattered-families

U.S.- India Solar trade dispute

In 2015, India grabbed attention among environmentalists, politicians and economists by announcing a targeted $250 billion investment into power generation, by the decade’s end. Impressively, $100 billion of this would be invested into renewable solar power energy.

According to Huffington Post, on Feb. 10, the United States filed a complaint with the World Trade Organization (WTO), stating that “India may be unfairly supporting the development of its solar power industry.”

Huffington further calls this complain ‘misguided,’ which is interesting.

To boost manufacturing, under a bigger program called “Make in India,” the Modi government has required that half the solar cells and modules under Phase II of the initiative be made in India. The U.S. does not agree.

The United States Trade Representative’s office moved to WTO against India’s domestic content requirements, saying it is discriminatory toward their U.S. solar cell developers and would hurt their exports. Since India enacted this domestic production requirement policy in 2011, U.S. exports of solar equipment to India have fallen by over 90 percent.

It should not matter who gets to gain financially so long as the idea is to promote renewable energy.

According to Big News Network, “The United States is keen to get India to change the requirements for domestic content as it is the second largest market after Japan.”

But at a time where pollution levels in India are increasing at an alarming rate, the focus should be quick and sustainable action, and not cat fight over who gets to gain the most. 

Here's the related articles:

http://www.huffingtonpost.com/2014/03/28/india-us-solar-wto_n_5031345.html

http://www.reuters.com/article/us-india-usa-solar-idUSKCN0VX1Y5

A new Deutsche Bank study estimates that nearly $328 billion in capital was illegally moved out of China in the past six months. This news has come at a bad time as a lot of capital is already expected to leave the country as the Chinese government is moving to weaken their currency. Even though China has strict capital controls, a number of organizations were about to dodge the government's strict regulations. 2015 Chinese banking statistics claim that there were $2.2 trillion in imported goods, yet Chinese customs could only account for $1.7 trillion of those imports. New measures to stimulate economic growth in the Chinese economy will not be effective until they can more closely monitor their import and exports markets.

http://www.marketwatch.com/story/billions-in-capital-moved-out-of-china-right-under-the-governments-nose-2016-03-01

Want the Economy to Grow? It's Time to Look at the Cities and Efficiency.

Republicans and Democrats say they will help the economy in different ways. Republicans say that they will reduce taxes and decrease government regulations, while Democrats say they will increase taxes for the wealthy. However, this article says that we should focus more on what is happening in the cities than increasing or decreasing taxes to grow the economy. Metro areas in the U.S. hold 83 percent of the population and the 100 largest metro areas hold 69 percent of all jobs and are responsible for three-quarters of the nation's GDP.  If we want to grow our economy, we should start looking into our cities and their productivity. How do we do this? According to case studies, we should look to encourage cities to become bigger and more dense. Looking into transport, if more people lived closer and in the city, transportation on the mass transit systems would increase, saving people from driving into the city. This would increase the productivity of the transit systems, as well as reducing travel times, fuel consumption and road accidents. We can also look at technology, and how this could also change the transportation and many other things to help the cities be more productive. The author was reinforced with this idea after he saw a route map of a low income worker in Atlanta, who takes a two hour journey to work that has 118 bus stops and a nine-minute train ride.

Does this sound like a realistic idea for the future?

Link: http://www.usnews.com/news/articles/2016-02-26/want-the-economy-to-grow-its-time-to-look-at-cities-and-efficiency

The Robots Are Coming for Wall Street

Automation software is beginning to take jobs from employees in finance. When software first started coming out, the takeover began with lower-paid clerks. Now, though, it has moved on to research and analysis. Software like Kensho has become capable of sifting through enormous data sets far more quickly and reliably than humans ever could. Daniel Nadler, the developer of Kensho, believes that soon, sophisticated interfaces will mean that clients no longer will need or even want to work with another human being. Kensho is widely used by Goldman Sachs, and job losses have already been seen at this high-status company. This scares many who believe that if jobs can be displaced at Goldman, they can probably be displaced even more quickly at other, less sophisticated companies, within the financial industry as well as without.

Software, like Kensho, is increasingly doing the work that has been the province of educated people sitting in desk chairs. The vulnerability of these jobs is partially due to the availability and declining price of computing power, as well as the steady rise of “machine learning” software that gathers and assimilates new information on its own.

Employment prospects vary by industry. In health care, human interaction is seen as necessary so automation threatens fewer jobs there. Finance, though, has more jobs at high risk of automation than any skilled industry due to it being built on processing information.

http://www.nytimes.com/2016/02/28/magazine/the-robots-are-coming-for-wall-street.html?ref=economy

Has the price of oil stopped crashing?

Lately, there have been signs of the oil price crashing coming to a halt, at least temporarily. On February 11th oil prices sunk down to $26.05, a thirteen-year all time low. In the last eleven trading days, the barrel price rose to $34 per. This 30% increase sent investors into somewhat of a panic. It’s definitely not for sure that the low oil prices are gone for good. The world oil supply is still plentiful and U.S. production has not decreased enough for a dramatic, sudden change in oil prices.
"Fundamentally, things are still extremely weak. It's being driven more by hope," said Matthew Smith, head of commodity research at ClipperData, which tracks global crude shipments. OPEC has brought about all the hope due to Saudi Arabia, Russia and other producers agreeing to a tentative deal on February 17 to freeze output. "That was the trigger. It helped us reach a bottom in oil," said Rob Thummel, a portfolio manager at energy investment firm Tortoise Capital.

Iran participation is also included in the deal. Iran Officials deemed the freeze a “joke” and reports are that Iran will still amp up output with the lifted sanctions.  "The recent output freeze talks are unlikely to have any immediate impact on market balances," Barclays wrote in a report. Analysts also pointed out that the countries that have agreed to freeze production are already producing close to their full capacity. Barclays referred to deal as a way to try to build trust for a possible team action plan between global producers. “It's made people think twice about betting against oil” said Mike Wittner, global head of oil research at Societe Generale. Although oil prices have been steadily higher for almost two weeks now, I do believe the very low oil prices will back soon.

http://money.cnn.com/2016/02/29/investing/oil-prices-surge-opec/index.html

Hollywood-How to make a hit film

       Since Oscar Nominations just came out recently, there seems to be a big change in movie industry during these years and also congratulations to Leonardo DiCaprio. 
       "IN 1983 William Goldman, a screenwriter, coined the famous saying that in Hollywood, “Nobody knows anything” when it comes to predicting which films will succeed at the box office. To find out how true that remains, we have analysed the performance of more than 2,000 films with a budget of more than $10 m, released in America and Canada since 1995, to see which factors help make a movie a hit." 
         The article mentioned several factors that explained "about 60% of the variation in box-office revenues. Adding an estimate of marketing costs increases our model’s accuracy by another 20 percentage points. That leaves about one-fifth down to factors not explained by the model. “John Carter”, a $275m science-fiction extravaganza that was one of the biggest turkeys in Hollywood history, should have earned $235m according to our model. It made just $73m when it was released in 2012. Clearly, no one yet knows everything." 

http://www.economist.com/news/business/21693594-how-make-hit-film-silver-screen-playbook

No Cashier Required: To Shop at This Store You Just Need a Phone

     A convenience store in Sweden is open 24 hours a day and has no employees. Customers download an app and register for the service which allows them to unlock the door to the store and are sent a monthly invoice for their purchases. The store features basics like milk, bread, and diapers and doesn't sell tobacco or medical drugs because of the risk of theft. Robert Ilijason, an IT specialist, developed the store after he had to drive over 20 minutes to convenience stores late at night in order to buy baby food and thought that other people who live in rural areas need a store more conveniently located to them. In order to prevent shoplifting, Ilijason has installed six surveillance cameras and he is alerted by text message if the front door stays open for longer than eight seconds.
    One major obstacle that Ilijason has faced is getting elderly residents acclimated to the modern technology that the store requires. Ilijason is figuring out ways to make the process easier such as by using a credit card reader to allow shoppers into the store.
     The idea of this store with no workers is exciting. It allows a store located in a rural area to be profitable enough to stay in business. However, the idea of stores like this popping up in the United States is troubling. Stores like this would put many people out of work and raise the unemployment rate. It makes me wonder where else technology like this could be used to replace workers and make businesses more profitable. I'm picturing a day where someone walks into McDonald's to use a kiosk that will send an alert back to the kitchen that will use machines to make the food.


http://www.nbcnews.com/tech/tech-news/no-cashier-required-shop-store-you-just-need-phone-n527881
   

US raises growth estimate for the last quarter of 2015

A lot of economists assumed that the annualized pace of the US economy would be 0.7% but surprisingly it increased to 1%. This was possible because businesses bought more stocks than before which raised their inventories, but they would have to keep up with the trend to avoid any further complications.
They are even predicting the the growth rate to be 2.5% in March 2016. But if you look within the trend, the rate of consumer spending decreased by 0.2%. The slowdown in consumer spending can make things worse. Many economists think that the growth can be held down because of the slower growing economies pushing down the prices of raw materials and deflation.

http://www.bbc.com/news/business-35671150

The real danger of Brexit

According to betting markets in Britain, the odds of them leaving the European Union (EU) are 2 to 1. Recent polls also suggest that about half of the voters are split on the decision. Many believe that it is possible to see Britain exit the EU within the next four months. Britain's exit from the EU would have a significant impact on the world economy in the short run and the long run. The exit would be a devastating blow to already struggling European economy, and would have a significant impact on the West. The move would not only disunite the EU, but would also weaken relations with the West, "who rely heavily on the balancing forces of America and Europe."

The case for Brexit (Britain's exit) is that Europe is slowing them down, and many believe that they could succeed as an open economy, while still trading with the EU and the rest of the world. Brexit would allow for new deals to be made with important countries such as China, India, and the United States and would increase their budget in the coming years.

Debate topics for Brexit:



Many believe that while Brexit could be beneficial in theory, it would not work out in practice. Britain's exit could lead to the EU imposing harsher penalties for others who wish to exit. Brexit supporters claim that the EU is more dependent on Britain than the other way around. The EU currently takes around half of Britains' exports, whereas Britain takes less than 10% of the EU's exports, dismissing the Brexit supporter's claims of dependence.

Finally, the EU plays an important role in the West's foreign and security policy, and Britain's exit would have serious implications. Without Britain the EU will not be able to pull their "global weight" which would be a big issue for the West. It will be interesting to see what Britain does in the coming months as it could have serious implications for the global economy.