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