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Recent layoffs at Big Tech don’t spell economic doom [Matthew Yglesias, Slow Boring]

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• Emily Stewart is a writer for Vox who wrote a piece about how widespread layoffs in the tech and media sectors don’t necessarily foretell broader problems in the economy.
• The next day, Vox Media announced layoffs of approximately 7% of the company’s staff, which some people used as an opportunity to dunk on Stewart.
• Stewart points out that the widespread attention given to the Vox layoffs illustrates her point.
• She explains that the media industry is an extreme outlier in terms of attention paid versus objective economic significance.
• Stewart notes that there has never been a month that didn’t feature a million people losing their jobs, and that since the pandemic settled down, we’ve been in a two-year period of structurally low layoffs.
• She also points out that big tech companies have been super-sizing at an incredible pace, and that now that they’re contracting, lots of places would like to hire engineers.
• Stewart suggests that the upside of the layoffs is that it will make it easier for people who have startup ideas to get them off the ground, and that it will also make it easier for government agencies to use signing bonuses and other private sector tactics to attract and retain labor.

Published January 30, 2023
Visit Slow Boring to read Matthew Yglesias’s original post Recent layoffs at Big Tech don’t spell economic doom

Can The Housing Market Stabilize? [Joseph Politano, Apricitas Economics]

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• The US housing market is in a nearly unprecedented place due to rising interest rates and the pandemic.
• Mortgage rates have started to retreat, but the housing market is still trying to adjust to higher rates.
• Real private residential fixed investment has fallen 20% throughout the year and now sits well below pre-pandemic levels.
• The number of units under construction is still near all-time highs, protecting employment in the housing sector.
• Home prices are still elevated, but the Case-Shiller National Home Price Index just took a dip for the first time in years.
• The homebuying market remains anything but stable, with new home sales dipping below the pre-pandemic average.
• The housing market feels more like a passenger than a driver, with movements in the labor market dominating the housing market.

Published January 28, 2023
Visit Apricitas Economics to read Joseph Politano’s original post Can The Housing Market Stabilize?

January 25, 2023 [Heather Cox Richardson, Letters from an American]

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• Democrats are staying out of the way while House Republicans make a spectacle of themselves, giving power to extremists like Marjorie Taylor Greene and facing financial improprieties from George Santos.
• Senate Republicans are staying out of debt ceiling negotiations until the House Republicans come up with a viable plan.
• President Joe Biden has signed an executive order to promote competition in the economy, reclaiming the country’s long tradition of opposing economic consolidation.
• Biden’s executive order has resulted in a sharp drop in mergers and acquisitions, and the December jobs report showed strong job growth and a decrease in unemployment.
• The CHIPS and Science Act has attracted multibillion-dollar private investments and created jobs accessible to those without college degrees.
• The Inflation Reduction Act has capped the cost of insulin for those on Medicare, made hearing aids available over the counter, and expanded subsidies for the Affordable Care Act.
• Biden is taking to the road to tout his successes to the country, especially to those places most skeptical of the government.

Published January 26, 2023
Visit Letters from an American to read Heather Cox Richardson’s original post January 25, 2023

What Even is a “Mild” Recession? [kyla scanlon, Kyla’s Newsletter]

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• Everyone is anticipating a recession, but no one knows when or how it will come.
• The consensus is that it will be a mild recession, like a splinter in your finger – something annoying but manageable.
• The Scoville test for the economy is an imprecise measurement based on human subjectivity.
• Data points such as industrial production falling, retail sales falling, and the Empire manufacturing index falling to its lowest level since May 2020 are all signs of a slowdown in the economy.
• The Fed is unlikely to budge despite the caution signs, and the worry is that they will go too hard.
• On the other hand, there are some inflationary pockets such as China reopening, labor market gaps, and bond investors going hog wild for bonds.
• It will be a delicate balance between the Fed, the labor market, consumer health, and housing.
• There is a general level of acceptance that rugged individualism distorts how we think about the economy, and if we can create a world where people are taken care of, it will be net positive for everyone.
• Pepsi CEO believes labor costs will be the source of inflation, rather than commodities
• Labor market is expected to remain tight
• This is due to the recent increase in minimum wage and providing insurance to workers who work 24 hours/week

Published January 19, 2023
Visit Kyla’s Newsletter to read kyla scanlon’s original post What Even is a “Mild” Recession?

The Eggconomy [kyla scanlon, Kyla’s Newsletter]

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• Eggs are expensive right now, but they are actually less expensive than they were – according to Brighton Capital, the wholesale price for large conventional eggs has fallen from $5.10/dozen to $4.63.
• The eggconomy is emblematic of the broader economy – driven by the laws of supply and demand, and the hen/human ratio is at a 15-year low.
• The Federal Reserve is focused on a few things within their 2% inflation target – Fed cred, Fed recession goals, Fed beef, and 2% inflation.
• A soft landing would be when vacancies can decline substantially taking pressure off inflation without driving unemployment way up.
• The housing market is bonkers – housing inflation, consumers freaking out, and rents slowing down.
• Flight delays due to an ancient piece of technology is emblematic of a lot of American infrastructure.
• The debt ceiling debate is a stupid bargaining chip in a larger stupid circus.
• The economy is a fragile piece of technology that needs to be carefully managed.
• Hope is an ax you break down doors with in an emergency – it calls for action and is impossible without it.

Published January 12, 2023. Visit Kyla’s Newsletter to read kyla scanlon’s original post.

American transit agencies should prioritize ridership over other goals [Matthew Yglesias, Slow Boring]

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• The United States struggles to create cost-effective rail infrastructure and attract mass transit ridership due to a lack of clear mandates to prioritize ridership.
• Ridership vs. coverage tradeoffs are common in transit planning, but without a clear mandate to prioritize ridership, agencies don’t ask the right questions.
• Amtrak’s wish list map is an example of a plan that does not prioritize ridership.
• The Transit Cost Project has highlighted the sources of expense in projects like the Second Avenue Subway and the Green Line Extension.
• Ridership is a good proxy for other goals like environmental benefits, racial and socioeconomic equity, and economic development.
• Setting a clear and simple task of spending money on things that people will use is the best way to ensure cost-effectiveness and success.

Published January 5, 2023. Visit Slow Boring to read Matthew Yglesias’s original post.

The Fed is Hiking Up That Mountain [kyla scanlon, Kyla’s Newsletter]

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• The Fed is approaching economic switchbacks, which could make the overall endeavor of a soft landing easier, but could also make the climb more difficult if ignored.
• The Fed wants to slow down the labor market, but is cognizant of the potential for an unwarranted easing in financial conditions.
• Complacency is pervasive in the labor market, with workers not being respected and incentives leading to less disruption.
• The Fed is trying to bring the labor market back into balance, but there is a need for central bankers to not always rely solely on their econometric models and instead throw in some human nature common sense.
• Albert Camus said it best when he said “real generosity toward the future lies in giving all to the present.”

Published January 5, 2023. Visit Kyla’s Newsletter to read kyla scanlon’s original post.

Income inequality has been falling for a while now [Matthew Yglesias, Slow Boring]

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• Obama-Biden economics have achieved more than people realize, with inequality decreasing and median wages and household income reaching all-time highs by the end of Obama’s term.
• Biden’s policies have continued this trend, with inflation-adjusted median earnings in the third quarter of 2022 higher than in the third quarter of 2019 and the lowest-wage workers seeing particularly strong wage performance.
• The tax and transfer system in the US has become more egalitarian since the Reagan era, with the Obama administration raising taxes on the rich to expand the welfare state.
• To continue this trend, Biden should focus on enacting pro-growth, pro-equality regulatory changes on a bipartisan basis and avoiding new rounds of commodity shocks.

Published January 3, 2023. Visit Slow Boring to read Matthew Yglesias’s original post.

December 29, 2022 [Heather Cox Richardson, Letters From An American]

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  • President Joe Biden signed into law the bipartisan year-end omnibus funding bill passed by the House and the Senate.
  • The $1.7 trillion measure funds the military and domestic programs, public health and science, law enforcement, and programs to prevent violence against women.
  • Trump and his cronies remain determined to return to power, either to stop this federal action Trump incorrectly calls “Marxism” or to use the government to enforce right-wing religious values.
  • Establishment Republicans came around to backing Trump in 2017 after he promised them lower taxes and less regulation.
(more…)

Repost: Why immigration doesn’t reduce wages [Noah Smith, Noahpinion]

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  • Immigration does not reduce wages for native-born Americans, except in a few special circumstances.
  • Immigration increases labor supply and labor demand, which tends to cancel out the downward pressure on wages.
  • Economists have done a lot of research on the question of whether immigration lowers wages, and have found very small or no labor market impact.
  • Studies on refugee waves have found no negative effect on native-born wages, and some studies have even found that immigration increases native-born wages in the long run.
  • Other studies have looked at internal migration in the U.S. and found that inflows of internal migrants cause a boom in housing construction, which supports local labor markets.
  • George Borjas wrote a paper claiming to find negative effects for a very small slice of less-educated minority workers, but other economists found that even that drop was actually the result of a change in measurement.

Click HERE for original. Published December 27, 2022

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