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Book Bits | 5.26.2012
● The New Geography of Jobs
By Enrico Bonetti
Q&A with author via Forbes
Q: What is the New Geography of Jobs?
A: If you look at the economic map of America today, you do not see just one country. You see three increasingly different countries. On one hand there are cities like Seattle, San Francisco, Raleigh-Durham or Austin, with a strong innovation-based economy and workers who are among the most creative and best paid on the planet. At the other extreme are former manufacturing centers like Detroit, Flint or Cleveland, where jobs and salaries are plummeting. In the middle, there is the rest of America, apparently undecided on which direction to take.The difference between the three Americas was small in the 1980’s and has been growing ever since. My book explores this new geography of jobs, and especially its root causes and what it means for our country.
Federal Spending As A Share Of The Economy
In a previous post, I reviewed Rex Nutting’s report that the “Obama spending binge never happened” by reviewing annual percentage changes in federal spending. The numbers support Nutting’s conclusion, but there are several ways of analyzing the federal budget and the results leave plenty of room for debate when it comes to summarizing the government’s fiscal rectitude, or the lack thereof. For example, another method of evaluating federal outlays is by looking at dollar amounts as a percentage of the economy (GDP). By this standard, the Obama administration is open to more criticism vs. comparisons based on the rate of change in spending.
Budget Battles & Reality Checks
Earlier this week, MarketWatch’s Rex Nutting wrote that the “Obama spending binge never happened” and that federal government outlays have recently been rising at the “slowest pace since 1950s.” The claim was quickly attacked by some commentators of the Republican persuasion as a left-wing conspiracy. The motivation for trying to discredit the report is understandable, at least from a raw political perspective. The notion that federal spending hasn’t exploded under Obama doesn’t jibe with the political playbook these days for the loyal opposition. But facts are still facts and so the frenzy of efforts to dismiss Nutter’s column don’t stand up based on the numbers.
April Was Another Weak Month For Durable Goods Orders
New orders for durable goods suffered another sluggish month in April, the Census Bureau reports. Although orders overall edged up last month by a slim 1.5%, the April report follows a sharp 3.7% fall in March. Nonetheless, last month’s slight gain was enough to boost the annual pace of new orders a bit vs. the previous annual reading. That’s hardly a game changer, but the gain at least leaves room for another month of debate about whether durable goods orders–a key leading indicator–are giving way to the dark side of the business cycle.
Is The Decline In New Jobless Claims Losing Momentum?
For the fourth time in as many weeks, today’s update on initial jobless claims shows that new unemployment filings are hugging the 370,000 neighborhood on a seasonally adjusted basis. The fact that claims aren’t rising is an encouraging sign, of course. But the resistance at the 370,000 level, if it rolls on, will raise more questions about the labor market’s capacity for growth.
The Housing Recovery: An Update
Last December I wondered if the housing market was finally poised for a sustainable recovery after years of retreat. There were signs for thinking optimistically then and the latest numbers continue to suggest that mild growth will roll on.
Staring At The “Fiscal Cliff”
Does the government that governs least also govern best? The famous quote will be put to the test if Congress and the White house don’t resolve the “Taxmageddon” train wreck coming our way. What’s at stake? Perhaps economic growth, according to a new report from the Congressional Budget Office: “Economic Effects of Reducing the Fiscal Restraint That Is Scheduled to Occur in 2013.”
Bubbles, Rebalancing and Asset Allocation
Remember the bond bubble? This is the prediction that bonds are subject to irrational exuberance and so they’re vulnerable to a crash any day now. Analysts have been warning that the end is near for several years. Meantime, the rally rolls on.
Chicago Fed National Activity Index Rose In April
A broad reading on economic activity turned higher last month. “Led by improvements in production-related indicators, the Chicago Fed National Activity Index (CFNAI) rose to +0.11 in April from –0.44 in March,” the Chicago Fed reports. Meanwhile, the index’s three-month moving average slipped a bit to -0.06 from March’s +0.02. But that’s still far above the -0.70 value that the Chicago Fed advises is an early warning sign of a new recession. By that standard, we’ll need to see a dramatic deterioration in economic reports in the weeks ahead to argue convincingly that a new recession is fate. Some analysts already say the jig is up. Perhaps, but for the moment a dismal outlook from dismal scientists is still more of a forecast that a recognition of current conditions.