Robots and Sectoral Shifts

http://www.businessweek.com/articles/2013-02-11/will-robots-create-economic-utopia#p1

This article discusses the possibility of a major sectoral shift in the future due to increased advancements in the fields of automation and mechanization. This does have the potential to create structural unemployment which could leave many workers short of a job but historical trends suggests that this will not create any sort of disaster.

The economies of the developed world have already experienced major sectoral shifts in the form of the industrial revolution. It is hoped that while the coming sectoral shift may have consequences in the relatively short term - it will be beneficial in the very long run due to increased efficiency of capital which will contribute to improving the returns to labor based on the Cobb-Douglas production function. And with proper government intervention in the training of unskilled workers, new jobs can also sprout up to keep the natural rate of unemployment under control.

Egyptian Crisis takes its toll on the economy

http://www.bbc.co.uk/news/business-21343867

As a result of increasing instability in Egypt, the economy has seen its tourism sectors get crippled and a constant fall in foreign investment, both important earners of foreign capital.  The inflow of foreign currency allows for the government to pay for imports, like food and fuel. The government however hopes to convince the IMF, along with other international financial institutions, to provide a $ 4.8bn loan “to shore up finances” so that it can pay for its imports. This, on the other hand, may result in an increasing national debt and, in the future, Egyptian society may face austerity measures and other financial constraints as a result of conditions imputed by these institutions, although there is much to happen before that.

U.S. Consumer Sentiment Climbs

Hurray! This essentially menas people think the economy is doing well, which it is. According to the article, industrial production has picked up since a .1 percent slump in January. As well, there has been a climb in housing valuation, to be accompanied by lower mortgage rates. For more good news, stocks are climbing, improvements in the labor market are becoming apparent.

The article talks of only a few headwinds. Consumers are expecting inflation to increase to 3 percent, as opposed to 2.9 percent in the previous month. As well, President Obama's new policy is raising payroll tax to the 2010 level of 6.2 percent.

Although there are some negatives to come, things could be looking up.

Obama's Controversial Minimum Wage Proposal

http://www.washingtonpost.com/blogs/the-fix/wp/2013/02/13/the-minimum-wage-fight-explained/

In President Obama's State of the Union Address, he proposed the idea of raising the minimum wage to $9 an hour. While some find this increase dramatic and unnecessary, others are fighting to raise it even higher, up to $10 an hour. Most individuals are in favor of this increase, two-thirds of Americans and even half of Republicans. House Speaker, John Boehner, is opposed to this increase and thinks it will raise unemployment, which is likely if employers are forced to pay their employees more. Although this increase is quite controversial at the moment, it is important to keep in mind that a minimum wage increase will not effect very many people, mostly teenagers.

Indian Exports rise, snap 8-month fall

The article talks about the 0.8% rise in export levels of India in January 2013 , this rise was seen after a straight eight month decline. The imports increased by 6.1 % , the trade deficit has further widened to about $ 20 Billion in January .

The current account deficit is set to be at $87.9 billion which is 4.7 % of the country's GDP against the 4% or the $76 which was expected earlier. The regional bank of India is comfortable with the CAD in the range of 2.5-3 % but seeing this gap widen , policymakers are under pressure to boost the FDI to prevent the steep depreciation in the Indian rupee.

The government hopes that this increase in levels of export would help the situation but think that it is only marginal , and it should help narrow the trade gap at the end of the fiscal. The government has also offered sops to boost shipments from the country.

http://timesofindia.indiatimes.com/business/india-business/Exports-rise-snap-8-month-fall/articleshow/18491493.cms

Tesco's House Arrest-like Armbands

http://www.businessweek.com/articles/2013-02-13/tesco-monitors-employees-with-motorola-arm-bands#r=nav-r-story

This article describes how one Tesco's distribution centers requires all its employees to wear specially designed armbands. The devices are developed to measure worker productivity so closely that the technology also knows when they take a bathroom break.

Produced by Motorola, these armbands monitor every aspect of a workers activity; the device collects data on speed, competency, and then compares it to a benchmark that every worker must meet. The only time they are turned off is during the lunch break. Tesco refuses to disclose whether this technology has actually made its employees more efficient.

If this is the route that better and more efficient technology is on, then one can only imagine what kind of devices we'll be wearing when we enter the labor force...

Effects of deflation in Japan

The global economic crisis hit Japanese economy hard, making it contract for the third straight quarter at the end of last year. The decrease in external demand for Japanese products and a weak domestic demand (pushed down by deflation in the economy) were the reason why GDP declined. In order to reverse the effects of deflation, Japan´s new government approved a stimulus package of 10.3 trillion yen ($116bn), which includes investment in infrastructure and incentives for businesses to boost investment, resulting into the creation of 600,000 jobs and is estimated to grow the economy in 2%. At the same time, Japan´s Central Bank doubled its inflation targets to 2% in order to combat deflation, which has been negatively affecting Japanese aggregate demand, since consumers tend to push off purchases in hope to get a cheaper deal in the future.

Inflation relations with real wages

What inflation does to real wages

I think this article is an interesting one that is directly related to what we are talking about in class. In the article it speaks about how many people think wage rates increasing leads to the inflation rate increasing, where in actuality the real wage rates decrease in times of inflation. Michael Pento is the Senior Economist for Euro Pacific Capital, a pretty quick read as well as interesting, give it a look. 

Housing to drive economic growth (finally!)

http://money.cnn.com/2013/01/27/news/economy/housing-economic-growth/index.html?iid=SF_E_Highlight

This article discusses some details about how the housing market will most likely be the biggest driving force behind economic growth for this year. They said that the market will be at its strongest since before the recession. A particularly interesting concept that was also mentioned was the trickle down effect that will improve the overall economy because of this strong housing market. There will be a vast number of new homes being built and that will create new construction jobs and it will also increase jobs in the housing appliance industry. These new jobs will create a larger number of people with disposable income that will then spend it in the economy and stimulate economic growth.

Federal Medical Spending Costs Decreasing

http://www.nytimes.com/2013/02/12/us/politics/sharp-slowdown-in-us-health-care-costs.html?ref=us&_r=0

This New York Times article outlines a curious trend which has been revealed in figures published last week: the cost of medical care in the US has been rising much more slowly than projected. As a result, projections for future government spending have decreased greatly; by 2020, the government is expecting to save hundreds of billions on Medicare and Medicaid.

Reasons for the decline in health costs are subject for debate. Many argue that the fall in price is the result of changes in the way that doctors deliver medicine; skeptics argue that the trend is only the result of a slow economy.

This could be promising news for a nation with an overwhelming government spending deficit. If medical costs continue decreasing, healthcare can become more widespread while the budget deficit remains under control. We can only hope that these low costs aren't just another side effect of our currently-slowed economy.