An economic riddle: Where are all the construction workers?

New research by the Federal Reserve shows that the reason that the US construction labor market has been experiencing a worker shortage can be linked to the recent housing bubble and the recession. What makes this situation unusual is that this shortage is happening during a time with a fairly strong demand for labor and fairly high building activity. Dr. John J. Paciorek ran tests ruling out the ideas that a large number of workers are unemployed or have left the labor force being the cause. Paciorek notes that although the number of workers in the labor force is down from 2006, unemployment and departures from the labor force have returned to their normal historical rates. Paciorek attributes the shortage to a lack of new workers entering the labor force. The majority of these people not looking for construction jobs appear to be young people who have been scared away from the market by the housing bubble bursting in 2008.

http://finance.yahoo.com/news/an-economic-riddle--where-are-all-the-construction-workers-180950181.html

Venezuela's Economic Catastrophe isn't about to happen, it has happened.

This article is disputing an earlier piece in the Financial Times that argues that Venezuela's economy is going to collapse and there will be an imminent sovereign default. It is argued that the catastrophe has already happened, a sovereign default is expected, and criticizes the decisions that have lead up to this point, such as fixing market prices below where they would normally fall creating shortages instead of using taxes to distribute wealth more evenly. The economic crisis is not just because of the fall in oil prices and Venezuela's plan to double the amount of money in circulation would create massive inflation that will even further disadvantage the economy. 

The article instead supports a potential movement of Venezuela to a move to a free market by abolishing price controls, all subsidies, removing constraints on ownership and production all in order to gain a stable currency. It suggests that after the economy is stable again by introducing a free market, then it will be possible to rebuild the economy. The article remains hopefully regarding a successful bounce back of the economy provided that Venezuela goes on a free market as soon as possible. 


http://www.forbes.com/sites/timworstall/2016/02/07/venezuelas-economic-catastrophe-isnt-about-to-happen-it-has-happened/#198ac1385a1e

Built up by oil boom, North Dakota now has an emptier feeling

About eight years ago Williston North Dakota was a small town of about 12,000 people.  At that time we were in the peak of our last recession and oil prices were high. This was an economic boom for the town as oil drilling started to bring in billions.  Companies built “man camps” where workers would live; some held more than 2000 people.  Workers and new investment poured in from everywhere and good paying jobs were available. But with the recent drop in oil prices, drilling has been on a decline and jobs are much more scarce.  During the boom the town over built and now the businesses are struggling. Business is down 40 percent at local restaurants and stores, and people are losing their jobs. Just two years ago hotel rooms were booked and you had to wait in line to get seated. Now it is more of a ghost town, and doesn’t seem to be changing fast.  Williston’s revenue is down 23 percent from a year ago, and the housing market is also taking a hit. They have roughly 400 homes for sale and the prices on them are falling. Although times are bad in the town for now, there is some hope for the future. Once oil prices raise again it drilling will rise and there will be more jobs available. The town is ready for another boom as they now have plenty of space for new people.

http://www.nytimes.com/2016/02/08/us/built-up-by-oil-boom-north-dakota-now-has-an-emptier-feeling.html?ref=business&_r=0

Producers keep pumping, even with oil prices falling

                  In this CNBC article, "Producers keep pumping, even with oil prices falling", John W. Schoen explains what is occurring in the market for oil. The price for oil has dropped a tremendous amount and many firms in the market are continuing to produce despite selling barrels of oil cheaper than what it costs for them to produce. 

                A major problem firms are facing is the cost of shutting down and then restarting production once the price of oil rises. However, this is too costly for firms to do, so they have continued to produce despite the low prices. 

                 In addition, Canadian firms and US firms have been expanding their production leading to more output. Firms in the Middle East have also continued to produce contributing to the low oil prices. There have been some predictions that the price of oil could fall to almost 10$ a barrel.

               It will be very interesting to see what happens in the market for oil in the up coming months. I believe as long as firms wait around and refuse to cut production the price of oil will continue to fall. Some firms will be able to maintain this loss of selling barrels at a lower price than the cost of production, but after time I believe that many firms will eventually leave the industry. While some people believe that the demand for oil will pick up, I do not believe that it will be enough to raise the price of a barrel above the cost of production. Eventually firms will leave the industry because they will not be able to sustain such losses. 

             This could be a huge hit on countries such as Kuwait, Libya, Saudi Arabia, Iraq and other countries who have a large amount of there GDP dependent on oil production. Especially when the two countries with the most amount of oil in the world are not on that list. 

http://www.cnbc.com/2016/02/05/producers-keep-pumping-even-with-oil-prices-falling.html

Colombia's inflation soared to its highest rate in seven years as a result of a massive drought. This drought has caused  decrease in food supplies and a dip in the Colombian peso which has raised import costs. Food prices have risen 12% since the beginning of 2015 and health care costs have risen slightly more than six percent. The Colombian central bank has raised interest rates to 6% in order to curb the inflationary pressure. It is expected that Colombia will raise their interest rates even further in the coming months.
The Colombian peso has dropped 43% in the last 18 months. This makes it the second worst performing emerging-market currency in the world. The Colombian Central bank governor predicts that their inflation will drop to four or five percent by the end of the year, as the impact of the weather and the weak peso begin to subside.

http://www.bloomberg.com/news/articles/2016-02-06/colombia-inflation-soars-to-highest-signce-2008-amid-drought