Posted on
September 19, 2011 by
nchestnut
By Matt McDonald, (202) 822-1205, mmcdonald@hamiltonps.com
Today, HPS releases the first report in a series of three intended to jumpstart a discussion of the economic policy path forward, both in terms of politics and policy.
This report is intended to provide an overview of our current economic challenges and a view of why it has been so difficult to restart growth. We find:
- The primary cause of the economic crisis in 2008 was a credit bubble, which caused inflated asset prices and elevated levels of debt, seen most notably in the housing market.
- When the credit bubble burst during the financial crisis, unemployment rose and asset prices fell, but the elevated levels of debt remained.
- Since the financial crisis in 2008, households and financial institutions have been working to reduce the debt accumulated in the years leading up to the collapse. This process has become known as “deleveraging” and generally involves the use of income to reduce outstanding loans rather than fund spending or investment.
- As individuals simultaneously increased savings to pay down debt,
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Posted on
September 9, 2011 by
nchestnut
1. Quick Reads: Reax to the American Jobs Act: David Brooks thinks President Obama has “earned a second date,” Justin Wolfers finds the plan very reasonable but Jonathan Tobin just sees more of the same from the White House while Reihan Salam finds Obama to be “clueless about jobs”
2. Forgotten Read: Do You Need a License to Earn a Living? You Might Be Surprised at the Answer CEA Chair nominee Alan Krueger’s 2006 column on the costs of increased government licensing
3. Graphic: US unemployment by state and county
4. Long Read: 9/11: Ten Years Later “Unforgettable stories from the event we will always remember – and its aftermath”
5. Song: @HPSInsight: Appropriate. @MattMcDonaldHPS selects The Counting Crows’ Rain King for today’s 9:30 song…
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Posted on
September 2, 2011 by
asmith
By Matt McDonald, (202) 822-1205, mmcdonald@hamiltonps.com
“Zero jobs growth.” Whatever the underlying numbers, the headline is a powerful one. The jobs report this month gives voice in data to the concern that we risk a double-dip recession and that the economy is now at stall speed.
This latest report sets a high-stakes table for the President’s joint address to Congress next week, and incrementally raises the pressure for further action by the Federal Reserve.
Scratching the surface, there is some good news to be had. In the household survey, we actually saw 331,000 new jobs, and perhaps even better than that, we saw 366,000 new entrants to the workforce, the highest number this year.
As this household survey drives the unemployment rate, the benchmark for the President to reach 8 percent by Election Day is essentially unchanged. The benchmark for the unemployment rate to get below 8 percent by Election Day was 272,000 jobs per month going into today’s report (see the memo). After today’s report, that benchmark is 270,000 jobs per month …
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Posted on
September 1, 2011 by
nchestnut
By Matt McDonald, (202) 822-1205, mmcdonald@hamiltonps.com
What if there is no economic recovery before the election? At the beginning of this year, the consensus view was that the economy was bad, but that it would be getting better “next quarter.” The better next quarter never came, and now the economic projections have been adjusted for the worse. The consensus now is that the economy won’t get better next year at all, and we are probably looking at a significant recovery only in 2013.
This view is reflected in the Federal Reserve’s unprecedented policy of keeping low interest rates in place for the next two years, and it has been reflected in recent private sector economic revisions. J.P. Morgan is now projecting an unemployment rate of 9.5 percent in the fourth quarter of 2012; Goldman Sachs is projecting unemployment of 9.25 percent. Both of these estimates are up from the current rate of 9.1 percent. Just today, the Office of Management and Budget released its Mid-Session Review, with official estimates at 9 percent unemployment in …
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