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Can Ireland Outsmart the European Central Bank? Print
Written by Dean Baker   
Friday, 30 March 2012 11:50

Okay, that may not be a very high bar, but the real issue is whether Ireland and other debt-troubled countries get around the straight-jacket being imposed by the ECB. Philip Pilkington and Warren Mosler have a plan that might do the trick: tax-backed bonds.

The idea is that a country like Ireland or Greece could issue bonds which, in the event of default, could be used to pay taxes in the issuing country. This means that if Greece issued a 10,000 euro bond, and suddenly found itself unable to meet an interest payment, the holder of the bond could then sell it to a person or corporation who owed Greece taxes. It would be worth 10,000 euros as a tax payment, so the holder of the bond would then presumably be able to sell it for pretty close to 10,000 euros.

This should ensure that Greece has a ready market for its bonds at a fairly low interest rate. As long as the Greek government is able to collect taxes, there will be demand for these bonds.

Of course what this implies is that the bonds are being used effectively as currency. Given the concerns of the people putting together the euro, they certainly should have outlawed this sort of move. After all, if larger euro zone countries went this route, they could issue huge amounts of tax-backed bonds. This could lead to much stronger growth but, horrors of horrors, it could make it difficult to keep inflation down to the sacred 2.0 percent target (moment of silence, please).

It would be remarkable if the euro designers did not write rules that prohibited member states from going this route. But hey, these folks missed the huge asset bubbles in the housing market that collapsed and sank the world economy, so clearly they are not the sharpest tools in the shed.

It would be great if the debt-troubled eurozone countries explored this tax-backed bond option. If it can be done, it should be.

 
Case-Shiller Index Virtually Flat in January Print
Written by Dean Baker   
Tuesday, 27 March 2012 11:45

After six consecutive months of falling, the Case-Shiller 20-City Index showed signs of stabilizing in January with the index remaining virtually flat. However, there were sharp divergences in price paths across cities, with four (Phoenix, Washington, D.C., Miami and Minneapolis) showing gains of more than 1.0 percent in January. San Francisco and Portland each had price declines of 0.6 percent. Prices in Cleveland fell by 0.7 percent, and prices in Atlanta fell by 1.1 percent.

There have been some reports of rising rents in many areas, ostensibly due to the fact that people who have lost their homes are now being forced to find rental housing that is in short supply. This really does not make sense as a national phenomenon. Rental vacancy rates continue to be at near-record levels, exceeded only by the peaks reached in 2009 and 2010 near the trough of the recession.

There also is zero evidence of upward pressure on rents in the Consumer Price Index series. The owners' equivalent rent series, which pulls out the impact of utilities and exclusively measures rent of shelter, is below its pre-recession level after adjusting for inflation. If anything, it has trended slightly downward over the last two years.

For a more in-depth analysis, check out the latest Housing Market Monitor.

 
Affording Health Care and Education on the Minimum Wage Print
Written by John Schmitt and Marie-Eve Augier   
Monday, 26 March 2012 09:00

The current value of the federal minimum wage — $7.25 per hour — is often compared to the cost of living, the average wage in the economy, or the productivity of the average worker. By all of these benchmarks, the current federal minimum is well below its historical levels.

But the current minimum wage looks even worse when compared with two kinds of purchases strongly associated with a middle-class standard of living or the ability to move up to the middle class: health insurance and a college degree.

The table below shows the results of a simple exercise. We ask how many hours did a minimum-wage worker have to work to pay for a year of college education (at various kinds of institutions) or a year of health insurance (for an individual or a family). The table compares the experience facing a minimum-wage worker in 1979 — when the minimum wage was $2.90 per hour — with that of a minimum-wage worker in 2010 or 2011 — when the minimum wage was $7.25. (All wages and prices, here and below, are in current dollars — that is the actual dollar value at the time, without any adjustment for inflation. The point is to compare the minimum wage in place in each period with the actual cost of health and education services at the same point in time.)

A minimum-wage worker in 1979, making $2.90 per hour, had to work 254 hours in a year to pay the $738 annual cost of tuition at a public four-year college in that same year. By 2010, minimum-wage workers at $7.25 per hour had to spend 923 hours to cover the $6,695 annual tuition at a public four-year college. (All our calculations ignore taxes and subsidies. More on that later.)

min-wage2a-2012-03

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Labor Market Policy Research Reports, March 19 – 23, 2012 Print
Written by Marie-Eve Augier   
Friday, 23 March 2012 14:00

Here’s a roundup of the labor market research reports released this week:


Center for American Progress

The Economic Consequences of Cutting the Supplemental Nutrition Assistance Program
Jeffrey Thompson and Heidi Garrett-Peltier

The Costly Business of Discrimination: The Economic Costs of Discrimination and the Financial Benefits of Gay and Transgender Equality in the Workplace
Crosby Burns


Center on Budget and Policy Priorities

Ryan Budget Would Slash Snap Funding By $134 Billion Over Ten Years: Low-Income Households in All States Would Feel Sharp Effects
Dorothy Rosenbaum

President’s Proposal to Raise Rents on Some of the Nation’s Poorest Households Would Cause Serious Hardship
Barbara Sard

CBO Shows Ryan Budget Would Set Nation on Path to End Most of Government Other Than Social Security, Health Care, and Defense By 2050
Robert Greenstein

What You Need To Know About Premium Support
Paul N. Van de Water

 
The Asianization of America? Print
Written by Nicole Woo   
Wednesday, 21 March 2012 16:54

Well, not quite.  While Asians were the fastest growing racial group in the U.S. between 2000 and 2010, they still make up only about 5% of the population.  This is according to the a new Census brief released today, The Asian Population: 2010.

This brief is features several colorful maps and graphs showing the U.S. Asian population in states, cities, even counties.  It also has an interesting discussion of "race alone-or-in-combination concepts" and multiple race reporting, reflecting how the Census has been evolving over the past decades along with our racially-diversifying population. 

This useful new Census brief confirms what CEPR found last year in our report, Diversity and Change: Asian American and Pacific Islander Workers.  The Census brief is based on the 2010 Census data, while most of CEPR's analyses were based on the 2009 American Community Survey.  Also, CEPR's report looks at AAPI workers, while Census looks at the overall Asian population (and does not include Pacific Islanders, unless in combination with Asian, in this brief).  Still our findings match up very well.

Census-asian-2010-map

Some small differences occur when looking at states.  While the 9 states with the largest Asian population match perfectly (CA, NY, TX, NJ, HI, IL, WA, FL and VA), Census ranks Pennsylvania 10th, while CEPR ranks it 12th.  In 10th and 11th places in CEPR's report are Massachusetts and Maryland, respectively.

And CEPR's report looks at several aspects that the Census brief doesn't get to, such as immigration status, country of birth, educational attainment, industry, unemployment, home ownership, disabilities and unionization.  However, Census says that over the coming decade, it "will release additional information on the Asian population."  Stay tuned!

aapi-2011-07-fig2.7

 
The Process is Forever Changed, for the Better Print
Written by Dan Beeton   
Wednesday, 21 March 2012 15:00

In the wake of Jeffrey Sachs’ unprecedented open candidacy for World Bank president comes important news that developing country economists may also join the race: former minister of finance for Colombia and former senior UN official José Antonio Ocampo, and Nigerian finance minister and former high level World Bank official Ngozi Okonjo-Iweala. (Okonjo-Iweala is denying she will seek the position.) If this happens, in a similarly public way, as it appears it will, this will be a huge and irreversible step forward for World Bank governance reform.

It would be a leap closer toward what the World Bank’s members have officially adopted as their preference for choosing the Bank’s leader: an open, merit-based process. A contest, of sorts, between Ocampo and Sachs (and perhaps Okonjo-Iweala) – presumably with developing country support behind them – would be a sea change from the Bank’s past practice of putting the U.S.’ (and the Global North’s) interests first in selecting presidents, with developing countries excluded. The succession this time is far different than in 2005, for example, when the Bush administration simply declared that Paul Wolfowitz would helm the Bank, to howls of protest but no-known alternative nominees.

The Obama Administration is now in a bind, facing the prospect of missing the March 23 nomination deadline as it scrambles to find a candidate who won’t be too offensive, or look especially unqualified next to two (or three) economists with experience in economic development in developing countries. That certainly leaves out Larry Summers, who reportedly is opposed even within the G7, and the administration’s other rumored options, such as UN Ambassador Susan Rice, who also may have other career goals in mind.

All this shows the importance of what Sachs has done with his campaign, unprecedented in both its openness and its calls for reform.  Sachs has said all along that he welcomes other candidates, and a merit-based process. Due in large part to his campaign, it’s something of a new ball game.

There’s a long way to go before the World Bank presidency process is truly democratic. The one-dollar/one-vote system of governance ensures that the U.S. and other rich countries have disproportionate weight in making these and other important decisions. But it is clear that Sachs – and Ocampo and Okonjo-Iweala, if he indeed is joined by them – have won considerable gains in forcing open this process.

This post originally appeared on the site World Bank President.

 
Congressional Budget Office Projects the Return of the Housing Bubble Print
Written by Dean Baker and David Rosnick   
Monday, 19 March 2012 13:58

The Congressional Budget Office (CBO) does not exactly have a stellar record when it comes to economic forecasting. Back in 2001 failed to see the collapse of the stock bubble that led to the recession that year even though it was already well underway. It forecast both a decade of solid economic growth and continued strong capital gains and capital gains tax revenue.

CBO also never noticed the housing bubble. In January of 2008, one month after the recession is now dated as having begun and a year and a half after the housing bubble had begun to deflate, CBO projected nothing but blue skies. The annual Budget and Economic Outlook showed nothing by continued growth, low unemployment and near balanced budgets.

This track record suggests that CBO’s economic projections warrant serious scrutiny. In carrying through such due diligence, we happened to notice an unusual aspect to the projection in the most recent Budget and Economic Outlook.

These projections show that Federal Housing Finance Administration’s House Price Index will rise by 20 percent over the course of the decade after adjusting for inflation. This projection is striking because it suggests a sharp divergence from the pre-bubble pattern to house prices.

CBO-Jan2012_EconomicBaseline_Release_28963_image001

Source: Congressional Budget Office and authors' calculations.

Robert Shiller constructed a series on house prices in the United States from 1890. This series showed that from 1890 until the beginning of the housing bubble in the late 90s, house prices essentially tracked the overall inflation rate. CBO’s projection implies that it expects house prices will regain at least part of their bubble value.

This projection has some important implications for its economic projections. Higher house prices imply greater wealth. With the value of residential housing roughly equal to GDP at present, if house prices rise by 20 percent, it implies an increase in housing wealth equal to 20 percent of GDP. Assuming a wealth effect on consumption of 6 percent (i.e. homeowners spend another 6 cents annually for every additional dollar of housing wealth), this will translate into an increase in annual consumption of 1.2 percent of GDP.

If there is a multiplier on this consumption of 1.5, then the effect of CBO’s projected return of the bubble is to raise annual GDP by roughly 1.8 percent. Presumably higher house prices also imply greater levels of construction. If this 20 percent rise in real house prices increases construction by just 5 percent above trend levels, then the impact of this projected bubble is to raise projected GDP by more than 2.0 percentage points.

Of course CBO might be proven right and we may see house prices return to levels that are well above their long-term trend. However if they are wrong then it seems likely that the recovery will be even slower than CBO is now projecting, with the economy taking even longer to get back to its potential output and for the unemployment rate to fall back to more normal levels.

 
New CEPR Issue Brief Shows Minimum Wage Has Room to Grow Print
Written by John Schmitt   
Monday, 19 March 2012 08:30
It is coming up on three years since the last increase in the federal minimum wage  –to $7.25 per hour– in July 2009. 
 
By all of the most commonly used benchmarks – inflation, average wages, and productivity – the minimum wage is now far below its historical level. By all of these reference points, the value of the minimum wage peaked in 1968. If the minimum wage in that year had been indexed to the official Consumer Price Index (CPI-U), the minimum wage in 2012 (using the Congressional Budget Office’s estimates for inflation in 2012) would be at $10.52. Even if we applied the current methodology (CPI-U-RS) for calculating inflation –which generally shows a lower rate of inflation than the older measure– to the whole period since 1968, the 2012 value of the minimum wage would be $9.22.
 
min-wage1-fig1-2012-03
 
Using wages as a benchmark, in 1968 the federal minimum stood at 53 percent of the average production worker earnings. During much of the 1960s, the minimum wage was close to 50 percent of the same wage benchmark. If the minimum wage were at 50 percent of the production worker wage in 2012 (again, using CBO projections to produce a full-year 2012 estimate), the federal minimum would be $10.01 per hour.
Read more...

 

 
Labor Market Policy Research Reports, March 12-16, 2012 Print
Written by Marie-Eve Augier   
Friday, 16 March 2012 13:15

Below are reports on issues relating to labor-market policy released over the past week:


Center on Budget and Policy Priorities

TANF Weakening as a Safety Net for Poor Families
Danilo Trisi and LaDonna Pavetti, Ph.D.

President’s Budget Not Sufficient to Renew Rental Assistance Fully for Low-Income Households:

HUD Budget Also Includes Proposals that Could Cause Serious Hardship for Some of Nation’s Poorest People
Douglas Rice and Barbara Sar


National Employment Law Project

Testimony of Tsedeye Gebreselassie on A-2708:  Minimum Wage for Tipped Workers before the New Jersey Assembly Labor Committee
 
CPI Rose 0.4 Percent in February Print
Written by David Rosnick   
Friday, 16 March 2012 10:40

In the largest gain since last April, the Consumer Price Index rose 0.4 percent in February, according to the latest Bureau of Labor Statistics' reports on the consumer price, US import/export price and producer price indexes. The CPI has averaged an annualized rate of inflation of 2.5 percent over the last three months.  Last month’s bump was largely driven by energy prices, which rose 3.2 percent from January to February.  Excluding volatile food and energy prices, the core CPI rose 0.1 percent in the month and has grown at a 1.9 percent annualized rate since November.

Medical care services was unchanged in February, including the second consecutive fall in the price of professional medical services of 0.2 percent.  This is the first time that professional medical services has seen consecutive declines in price, and the 0.4 percent annualized rate of decline since November represents the first three-month fall on record.  The price of hospital services was flat last month.

For a more in-depth analysis, check out the latest Prices Byte.

 
Larry Summers: The Wrong Person for World Bank President Print
Written by Dean Baker   
Monday, 12 March 2012 15:28

Larry Summers is beginning to look more and more like the second incarnation of Richard Nixon. He just keeps coming back.

According to the rumor mills and betting lines, Summers is now the top contender for World Bank president. If track records mattered, Summers would be nowhere in contention.

Just looking at the economics (i.e. ignoring his stormy tenure as president of Harvard), Summers would not seem to be the sort of person who should be given another position of responsibility. In the 90s, Summers was a top advisor and eventually Treasury Secretary in the Clinton administration as it rushed full speed down the road of financial deregulation. He was among the loud voices dismissing then head of the Commodity Futures Trading Commission Brooksley Born’s concerns about unregulated derivatives.

Summers was also a central figure in the engineering of the bailout from the East Asian financial crisis. This bailout sent the dollar and the trade deficit soaring. The resulting build up of reserves by developing countries created the fundamental imbalance in the U.S. and world economy, which still has not been corrected.

Summers completely bought into the Great Moderation myth that Alan Greenspan had somehow ended economic instability for all time. At the famous Greenspanfest held at Jackson Hole in 2005, Summers derided the skeptics as financial “Luddites.”

Just as there was supposedly a new Dick Nixon running for president in 1968 there was supposedly a new Larry Summers who entered the Obama administration as head of the National Economic Council in 2009. Summers had supposedly learned his lessons and recognized that giving Wall Street complete free rein may not always be the best policy.

There is not much evidence of the new Larry Summers in the policy decisions of the Obama administration. While exactly who said what and when is hotly contested in the various accounts coming out now about the administration’s economic policy, the basic facts are not in dispute.

The administration left the financial sector largely intact. Huge too big to fail banks that were almost certainly insolvent (e.g. Citigroup and Bank of America) were nursed back to something resembling health with massive amounts of government assistance. The Obama administration blocked efforts to close or break up these behemoths.  

The Obama administration pushed through a stimulus package that was clearly too small to restore the economy to health and then began touting the green shoots of recovery and saying that deficit reduction would now be its priority. As a result, millions of workers are needlessly unemployed and unable to care properly for themselves or their families.

We may never know exactly how much of the blame for these failures should rest on Larry Summers’ shoulders, but it is hard to believe that the head of the National Economic Council, the person who is supposed to summarize all the relevant views for the president, doesn’t have some responsibility.

In short, Summers’ record as an economic adviser has provided a trail of disasters that few can match. Does it make sense to give him yet another opportunity to do even more damage?
 
Labor Market Policy Research Reports, March 5-9, 2012 Print
Written by Marie-Eve Augier   
Friday, 09 March 2012 15:20

Center for Economic and Policy Research

Long-term Hardship in the Labor Market
John Schmitt and Janelle Jones


Center on Budget and Policy Priorities

Incomes at the Top Rebounded in First Full Year of Recovery, New Analysis Of Tax Data Shows: Top 1 Percent’s Share Of Income Starting To Rise Again
Hannah Shaw and Chad Stone


Demos

Employment Credit Checks: The Case for Requiring Employers to Use More Accurate and Fair Assessments


Economic Policy Institute

Entry-Level Workers’ Wages Fell in Lost Decade
Lawrence Mishel


UCLA Institute for Research on Labor and Employment

California Crisis: The United States and California Two and a Half Years After the End of the Great Recession
Lauren D. Appelbaum

 
Jobs Day Print
Written by John Schmitt   
Friday, 09 March 2012 11:15

Justin Wolfers correctly tweets this morning that: “As unemployment falls, so will long-term joblessness.”

But, it could still take a very long time.

The labor-market categories that Janelle Jones and I have been focusing on in two recent reports – the long-term unemployed, discouraged workers, the marginally attached, and those part-time for economic reasons – have so far not responded much to job growth and the decline in the overall unemployment rate.

I was struck by these lines from the Bureau of Labor Statistics summary of today’s jobs report:

The number of long-term unemployed (those jobless for 27 weeks and over) was little changed at 5.4 million in February. These individuals accounted for 42.6 percent of the unemployed.

In February, 2.6 million persons were marginally attached to the labor force, essentially unchanged from a year earlier.

Among the marginally attached, there were 1.0 million discouraged workers in February, about the same as a year earlier.

The number of persons employed part time for economic reasons (sometimes referred to as involuntary part-time workers) was essentially unchanged at 8.1 million in February.

You can read Dean Baker's take on the jobs numbers here.

 
Troika Greece Program Could Easily be Derailed by Smaller Bond Swap Print
Written by Juan Antonio Montecino   
Thursday, 08 March 2012 12:20

The deadline for Greece's bond swap, the so-called PSI (Private Sector Involvement), is approaching tonight (10 p.m. Greek time).  As part of Greece's latest bailout agreement with the European Central Bank, European Commission, and the IMF (the so-called Troika), Greece needs to achieve the near universal participation of private bondholders in a debt-restructuring plan to lower the face-value and interest rates on 206 billion euros of privately-held bonds.  

Under the terms of the bailout program Greece must reduce its debt to 121 percent of GDP by the year 2020, a level the Troika considers sustainable, and the upcoming bond deal is essential to reaching this target.  Under the official terms Greece has offered private bondholders, old bonds would be exchanged for new bonds with a face value of 46.5 percent of the original.  The new bonds would make annual coupon payments of 2 percent between 2012-15, 3 percent for 2016-20, 3.65 percent in 2021, and 4.3 in 2022-42.  

As reported today by Bloomberg, bondholders representing around 60 percent of all outstanding privately-held bonds have announced they will participate in the swap.  It remains to be seen how many more will accept the deal before the official deadline tonight but even if voluntary participation remains low Greece recently inserted collective action clauses into bonds that were issued under Greek law.  These stipulate that so-called holdouts, bondholders who refuse to accept the deal, can be forced to accept the terms of the swap if a large enough number of bondholders (usually a super majority) vote to participate.

Read more...

 

 
And the Struggle Continues… Print
Written by Janelle Jones   
Thursday, 08 March 2012 08:00

Here at CEPR we like to fight for the underdog, so as economic blogs are all aflutter over the recent string of positive numbers, we’d like to remind you that for many, the struggle continues. Since our recovery began in 2009, the unemployment rate, and especially the U-6 rate, which adds in the discouraged, marginally attached, and part-time for economic reasons, has remained stubbornly high. The persistence of these measures, along with the proportion of the labor force that has been unemployed for at least six months (LTU/(E+U)), can be seen in the figure below.

lth-2012-3-8-fig1

John Schmitt and I use these expanded measures to describe something we call “long-term hardship.” Looking specifically at the unemployment rate for the overall population, blacks, and Latinos, we can see that some are being left even further behind than others.

Read more...

 

 
Demographics of Long-Term Hardship Print
Written by John Schmitt and Janelle Jones   
Wednesday, 07 March 2012 16:00

In a new report out yesterday, we examine the demographics — gender, race, and age — of long-term hardship in the labor market. The report follows up on a paper (pdf) we did in January that made the case for looking beyond the standard “long-term unemployment” measure, to include the “discouraged,” the “marginally attached,” and the involuntarily part-time.

The new paper describes the people who are currently experiencing long-term hardship. While the economic recovery is on track for some, others are being left further behind. This chart, for example, shows the race and gender breakdown of the short-term unemployed (STU), the long-term unemployed (LTU), the unemployed and underemployed using the Bureau of Labor Statistics “U-6″ measure, and those not in the labor force (NILF).

lth-fig3-2012-03

Our main conclusion, from the paper:

…by whichever measure  –the standard long-term unemployment rate or an expanded “long-term hardship” measure…– the data … show that the burden of long-term joblessness is borne unevenly. Blacks and Latinos, less-educated workers, and younger workers are all much more likely to be unemployed, long-term unemployed,  “discouraged,” “marginally attached,” or involuntarily part-time, with terrible consequences for these groups’ current and future economic, social, and health outcomes.
 
Mitt Romney: the Candidate of Change? Print
Written by Dean Baker   
Wednesday, 07 March 2012 04:26

In 2008, then Senator Obama famously ran as the candidate of hope and change. If former Massachusetts Governor Mitt Romney ends up getting the Republican nomination he may be the candidate of change in 2012, but with a somewhat different meaning.

Last month, Governor Romney told reporters that he favored indexing the minimum wage to the rate of inflation, which would mean that it would automatically rise to keep pace with the cost of living. (He took the same position in January when asked a question by a staffer from the National Employment Law Project Action Fund.) If the minimum wage had been indexed to the consumer price index since its last increase in July of 2009, it would be $7.60 an hour today instead of $7.25. Furthermore, with inflation projected at roughly 2.0 percent a year over the next decade, indexing would translate into an annual increase of 15-16 cents an hour going forward. 

But that was last month. This week Governor Romney came out against increasing the minimum wage when he was interviewed on Larry Kudlow's show on CNBC. Romney told Kudlow:

"So, certainly, the level of inflation is something you should look at and you should identify what’s the right way to keep America competitive. So that would tell you that right now, there’s probably not a need to raise the minimum wage.”

The minimum wage is not the only economic issue on which it seems that Romney has changed his position. At the start of the health care debate in 2009, he urged President Obama to look to the Massachusetts reform he implemented as a model, including the use of mandates. He is currently taking a somewhat different position toward the plan that President Obama pushed through Congress, which is based on the Massachusetts plan.

 
Divergent Revolutions for Blacks, Latinos and Whites Print
Written by Janelle Jones   
Tuesday, 06 March 2012 16:15

This post originally appeared on the Council on Contemporary Families' website in response to the article "Is the Gender Revolution Over?"

As Cotter, Hermsen, and Vanneman argue, the extent of the gender revolution has been exaggerated. In the years between the passage of the Equal Pay Act in 1963 and 2010, the pay gap has closed at less than half-a-cent per year. Currently, women make about 75 percent as much as men.

Some racial groups, however, have experienced more closing of the gap. In 1980, black women earned 76 percent of what black men earned. By 1990, that had risen to 88 percent.  The rate of progress did slow in the 1990s, as Cotter et al found for women as a whole. Still, by 2010, black women made 92 percent as much as black men, which at first glance suggests more progress in gender equality among African-Americans.

Part of this greater convergence in wages is caused by a divergence in educational completion. In 1980, equal numbers (17 percent) of black men and women had a college degree or higher. Thirty years later, the percent of black women with a bachelor's or advanced degree had risen to 19 percent but dropped to 16 percent for men, which suggests that the progress of black men may have stalled more than the progress of black women.

Read more...

 

 
Brazil's GDP Slows, Weighed Down by Falling Manufacturing Print
Tuesday, 06 March 2012 15:35

Brazil’s GDP growth slowed dramatically in 2011, falling from 7.5 percent growth in 2010 to 2.7 percent last year. In the fourth quarter, it grew by just 1.4 percent on an annualized basis. This is actually an improvement over the third quarter, when GDP fell at an annual rate of 0.3 percent.

GDP growth in the fourth quarter was divided fairly evenly among industries, with one exception: manufacturing, which shrank at a 9.5 percent annualized rate. Over all of 2011, it has remained flat, growing just 0.1 percent over its 2010 level. But since June it has seen two quarters of consecutive negative growth and fallen to 5.7 percent below its pre-recession peak of 2008.

ladb-2012-03-06-blog

The sector with the best performance since the recession has been finance and insurance, which grew 3.9 percent in 2011 and is now 23.1 percent above its pre-recession peak.  This is a continuation of a long-term trend toward finance and away from manufacturing: over the last five years, overall GDP growth has averaged 4.2 percent per year, while the finance and insurance sector has averaged 9.8 percent and manufacturing has averaged just 1.8 percent growth annually.

For a more in-depth analysis, read our latest Latin America Data Byte.

 
Borderline Print
Written by John Schmitt   
Monday, 05 March 2012 16:45

Yesterday’s New York Times has a high-production-values piece on differences in the recent labor-market performance of France and Germany. Reporter Steven Erlanger, whose foreign reporting I’ve admired in other contexts, builds the story around a comparison of two small towns –Sélestat and Emmendingen– located on either side of the French-German border. Unfortunately, the side-by-side comparison is not well-situated in the available national data, and the story falls quickly into a “lazy Latins” versus “industrious Prussians” frame that gives a misleading picture of the economic problems facing France today.

Let’s take a closer look at one particularly problematic sentence that captures the core themes of the piece:

But while the French may admire German rigor, they are reluctant to make some of the same sacrifices, including longer hours and less job security.

So, the Germans are rigorous, make sacrifices, work long hours, and accept less job security; the French are reluctant, work less, and cling to their job security.

This may be the way folks on the ground tell the story, but we actually have a lot of reliable internationally comparable data that suggest this view is almost entirely wrong.

Read more...

 

 
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