Uncertainty and Unemployment

http://www.economist.com/blogs/graphicdetail/2013/01/focus-3

This article begins by pointing out that economic uncertainty has a negative impact on consumer demand as well as the unemployment rate. It goes on to explain two uncertainty indices used to measure uncertainty in the economy. The first is the economic policy uncertainty index, which is based on statements made in the media as well as the rate of disagreement between economics forecasters. The second is the hiring-uncertainty index, which relies on feedback from different employers regarding their hiring intentions. As stated in the article and illustrated on the graph, these two indices have been highly correlated with one another and with the unemployment rate until recently. This presents the question: as these two indices diverge, which one, if either, will the unemployment rate follow? If I had to choose between the two, I would say that the unemployment rate will most closely follow the hiring-uncertainty index. This is because unemployment rates are directly related to hiring patterns- as more firms hire more workers, more people are employed and the unemployment rate drops. However, because employers tend to hire less workers in times of uncertainty and more when the economy is stable, I feel that the hiring uncertainty index will rely heavily on the economic policy uncertainty index. If this is the case, I believe that the two indices should eventually fall back into a rhythm, and the unemployment rate will once again become consistent with both.

Young Wild & Jobless in Spain

In this recent article on bbc.co.uk it gives an overview to a rising problem of unemployment for youths from ages 16-24 years old in Spain and other European countries.  The current unemployment rate in Spain is 24.3% which is even larger than the rate in Greece who is still recovering from their recent economical collapse.  Of the 24.3% unemployed 51.5% of those people are under 25 years old.  This being said these numbers of the youth that are unemployed cause more of a ruckus then there truly is because throughout the article it switches back and forth between the jobless rate and the unemployment rate.  This being said it would be a more accurate measure to use the unemployment rate when assessing the problem with youth unemployment because the jobless rate includes college students who cannot work even if they wanted to.  These numbers though do shed light on a growing problem in Eurozone where the Eurostat estimates there were 5.8 million people under 25 that were unemployed, which is around 23.7% and 3.73 million in the Eurozone (24.4%).

http://www.bbc.co.uk/news/business-21180371

Unemployment rate in DC increases

According to this article, along with the Labor Department data, the unemployment rate in Washing D.C. has increased in the past nine months. The mayor Vincent Gray has shared his discontent with the rate reaching 8.5 in December. Before this increase in job losses, there was a nine month period of a decrease in unemployment, and Gray attributes this to his administration job policies coming into affect. Overall, Gray is not too worried about this slight increase because they have grown so much, it should not be too much of an impact. Since one year ago, the District added 2,900 jobs and still drastically changed the unemployment rate from 10.1%. Gray is optimistic and only sees a dip in the rate after a long increasing period.

Other states have also changed in unemployment but in different ways. For 22 states, unemployment has decreased and another 16 states with an increasing unemployment rate. Leaving 12 states with an unemployment rate that has not been affected and have stayed completely the same.

http://www.washingtonpost.com/local/dc-unemployment-rate-increases-slightly-ending-9-month-streak-mayor-says-hes-disappointed/2013/01/18/f3205e14-618e-11e2-8387-f5a6926d3170_story.html

U.N. Agency Warns of Rising Unemployment

The United Nations said on Monday 197 million people worldwide are jobless, and an additional 39 million have given up looking for work. As we all know, high unemployment rates in the developed world weigh on demand and hold back economic growth. The UN blames the governments trying to balance their budgets for such high worldwide unemployment. Many governments tried to counter the financial crisis with fiscal stimulus, which resulted in a deeper recession for many countries. Today, many people in the developed nations are leaving the job market altogether. The labor force participation rates are falling dramatically and masking the true extent of the jobs crisis. Therefore, the International Monetary Fund's Director is urging governments to focus on "growth that can actually deliver jobs."

Check the weather...for Inflation.

http://www.businessweek.com/articles/2013-01-10/why-are-food-prices-rising-check-the-weather

This is a simple article in which the author reviews the devastating effects of extreme weather on agriculture production; the subsequent results come in the form of food shortages and rising prices. Furthermore, the article provides details on the local, regional and global effects of this erratic weather by explaining the loss of crops, and the significant monetary consequences as a result. For example, the severe drought in the US Central and Southern Plains of 2011 resulted in the significant fall in wheat output, costing the US an estimated $20 billion. An example such as the one above that causes global shortages tells us that nature is in fact inflationary - more demand but fewer goods available is a recipe for higher prices. This raises the question of wether there is a solution, or maybe we must simply continue to weather the storms? Is there any way of mitigating Mother Nature's force? But as for now, we must contend with the fact that crop production will fall, farmers will continue to suffer losses, you will pay more for rice (for example), prices will rise, and with all this, Economists must/will rise to the occasion. 

Dr. Doom was wrong

http://business.financialpost.com/2013/01/21/how-roubini-got-it-wrong-on-a-greece-eurozone-exit/

In this article, the author shows that the man famous for predicting economic crisis 'got it wrong' on Greece's situation in the Eurozone. Economist Nouriel Roubini was labeled a skeptic and 'Doctor Doom' when he correctly predicted that the housing market collapse would create a global recession. This time however he had predicted that Greece would exit the Eurozone by now.

Since this has not happened, and the fact that Europe is again stabilizing financially, we can conclude that Roubini was wrong. The reason for this, as explained by the author, was that Roubini could not have seen the support of the European community and the Greeks' ability to sacrifice short-term gains for long-term, bigger gains. 

Chinese Economy

The Chinese economy is the second largest in the world; second to the United States of America. China has taken on an important role in manufacturing, producing many of the goods sold in the United States and Europe. In an article written by Damian Grammaticas, China correspondent for BBC, the decline and rebound of the Chinese economy is discussed. Grammaticas highlights that China suffered its slowest period of economic growth in 13 years, witness in the third quarter of 2012, an increase in Gross Domestic Product (GDP) of 7.4%. GDP increased by 7.8% in the fourth quarter of 2012. This shows signs that the economy is back on track. Grammaticas also highlighted that while China did see a decline in growth, their growth rate is still very high compared to other countries, about 2% in the United States. China is a "transition economy", the population is shifting from low-income earners to middle-income earners. This points to future growth showing similar patterns as the economy works out its "growing pains". All in all, the future is bright for the Chinese economy, which is closely tied to the health and stability of the economies of the rest of the world.


http://www.bbc.co.uk/news/business-21071546

The Fed Drives Best at Higher Speeds

http://www.nytimes.com/2013/01/20/business/fed-monetary-policy-drives-best-at-higher-speeds.html?ref=business

This article discusses the recent monetary policies Bernanke has implemented in order to help the economy continue to recover. They are currently using expansionary monetary policy in the form of open market operations through buying bonds. This approach includes the risk of creating inflation; but in her article Romer states that Bernanke and the Fed may argue that a strong dollar isn't necessarily desirable in a weak economy. This article also suggests that the current open market operations could be accelerated in order to bring back a strong economy faster. A pressing concern that is mentioned is the Fed's commitment to their new policies. According to Romer, it is important that they do not appear shaky on the policies that they implement and that a fast and aggressive approach is needed in order to bring back a strong economy as quickly as possible.

New Model Army- something to think about!

This is an article from The Economist which discusses the validity of macroeconomic models. It focuses on the fact that not all economic agents are included in these theoretical models that have been used over the years, such as banks. This is worth taking into consideration because , like the macroeconomic indicators used to measure the performance of the national economy, each economic model has its strengths & weaknesses and if banks & other financial institutions are to be included in the model, it's highly likely for the accuracy and validity of these models to increase as more economic 'agents/participants' are encompassed into the theories being analyzed, giving more details about the bigger picture.

http://www.economist.com/news/finance-and-economics/21569752-efforts-are-under-way-improve-macroeconomic-models-new-model-army?zid=307&ah=5e80419d1bc9821ebe173f4f0f060a07

How Economists do their jobs

http://www.economist.com/news/21567079-meet-economists-who-are-making-markets-work-better-micro-stars-macro-effects

Using some good examples, this article shows how economists around the world are using their knowledge, experience and thinkings everyday to helps their firms, or in a broader sense, the economy as a whole. The examples are varied, ranging from how Mr. McAfee used his experience at his previous company Yahoo to solve the same bandwidth problem his current company Microsoftwas was facing; to how Susan Athey of Microsoft utilized her economic knowledge to make both internet advertisers and users better off in a seemingly unavoidable trade-off between the two.

These examples are convincing not because they were all from well-known companies and individuals, they were also rationalized well. This article really helps me understand the role of an Economist better, and how economy theories can be applied to great effects.