The Economist produced a graph showing world GDP data and made the following points:
- India and China account for 65% of world growth
- Emerging markets contributions in 2016 were down to its lowest figure since 2008 – falling commodity prices would have been a factor
- Norway contributed less to global GDP with lower oil prices being prevalent.
- USA with increased government spending and greater export volumes improved its position
- Brazil has been in negative territory since mid 2014 – interesting point with significant government spending on hosting the Football World Cup and the Olympics.
Maybe a good starter for your classes asking the question who contributes most to world GDP?
Here is a good overview of President Obama’s economic legacy from PBS’s Paul Solman. Did his efforts to turn the country around after the 2008 financial crisis constitute a robust recovery, or too little, too late? Economics correspondent Paul Solman assembled a panel of economic experts to discuss employment across racial groups, the types of jobs created and the obstacles the president faced in enacting his economic agenda. Some of the comments are as follows:
- He saved us from a great depression.
- Over 15 million jobs have been added; 22 million more people have health insurance coverage than they did before.
- If we characterise an economy as being in a catastrophe at unemployment rates greater than 8 percent, the black unemployment rate is still above 8 percent. So, frankly, black Americans are still in a great depression, or great recession at the very least.
- The failure by the Obama administration to focus on economic growth.
- A long-term infrastructure program would have made a great deal of sense, and frankly still does today. But that’s not what the Obama administration proposed. I think we need to have a more holistic structural agenda for lower-income Americans, rather than just treating it as a problem of recession and recovery.
- We needed bolder, stronger, more fundamental, not tinkering, ideas to really structurally change the U.S. economy.
You may remember a previous post I did on ‘WetheEconomy’ now there is ‘WetheVoters’ The site has 20 short films designed to inform, inspire and ultimately activate voters nationwide with fresh perspectives on the subjects of democracy, elections and U.S. governance.
Below is a parody of the television programme “Real Housewives” with a political and economics twist. It shows a good example example of the current political climate and some possible avenues for change. On the one side you have Jessica who is concerned with the government balancing its budget and Lara who believes that the government needs to spend more on infrastructure etc to stimulate the economy and creates jobs. She also uses the austerity measures in the EU as an example to support her opinion. Jessica does make the point as to who is going to pay for all this spending – our kids. Then there is Vanessa who is neutral although does get into trouble by informing Lara that Jessica thinks the government should increase defence spending. From this point it gets quite heated but they do make up. Enjoy!
A hat tip to David Parr for this piece from the Visual Communication Guy on how umemployment data was presented by the media. The graph below shows US unemployment as presented by Fox News. Although it may seem quite genuine at first glance if you look closely you will see that the spacing of the dates on the horizontal axis are not consistent but manipulated in such a way to give the impression of accelerating unemployment. Furthermore as it is presented on TV you are unlikely to have the chance to pick the axis as your eyes are fixated with the rising line.
While there certainly was an increase in unemployment from the end of 2007 to June 2009, the chart from the Bureau of Labor Statistics tells a very different story than Fox News’ graphic. Although there is a steep increase in unemployment during the first 6 months of President Obama’s presidency, there was a plateauing and reason to suggest that the stimulus packages were starting to work.
Whether or not you like Fox News or whether you agreed with President Obama’s stimulus packages is beyond the scope of this article. What matters is that we recognize how information is being presented to us and how easy it is for media gurus to tweak information to tell completely different stories with the same data.
We might ask ourselves: in a country where we strongly believe in freedom of speech, where do we draw the boundaries, if any, on the visual representation of data in the mass media? Where does the communication start to become unethical, and, at what point should unethical turn into illegal?
From RT – China is poised to overtake the US as the world’s largest economy way ahead of schedule. The IMF predicts that by the end of the year China’s GDP, adjusted to the countries relatively low cost of living, will be $17.6 trillion, topping the US essentially that means, even though a typical person in China earns less than their American counterpart, they can afford more with their money.
Here is a videographic from The Economist showing the top three economies throughout history. Does China have the world’s largest economy? Is China’s economy bigger than America’s? Interesting how history repeats itself.
For both the newly appointed Governor of the Bank of England and the Chairwomen of the US Federal Reserve, Mark Carney and Janet Yellen respectively, the level of unemployment has been targeted as an indicator for increasing interest rates. It is encouraging that the unemployment rates have been dropping in both countries but for different reasons.
The flow chart below show that the US unemployment has dropped mainly because of the fact that people are leaving the workforce. Whilst across the Atlantic the UK’s fall in unemployment is more to do with conventional growth. However the US economy has experienced some significant growth which hasn’t feed through into more positive employment figures. On the contrary the UK economy has had weak growth but it has had little impact on employment figures. The Economist stated the following:
This divergence is commonly explained with nods to Britain’s “productivity puzzle”. America, the thinking goes, suffered a “normal” recession. Its low rate of inflation is symptomatic of weak demand, which can account for its output loss and much of the shortfall in jobs. In Britain, in contrast, tumbling demand has been matched by a strange decline in workers’ productivity. Falling productivity cushioned the economy against large job losses, since more workers were needed to do the same amount of work. But it also reflected a loss of productive capacity, the evidence for which was stubbornly high inflation. Since late 2007 annual inflation in Britain has been almost twice as high as in America, at 3.1% to 1.8%.
The US Federal Reserve announced on 18th December a tapering of its bond-buying program to $75bn a month beginning in January. This video from Paul Solman of PBS is a useful guide about the process and asks economists (including Robert Shiller) their opinion on the matter. Recently the Fed said that it would lower its monthly long-term Treasury bond purchases to $40 billion and mortgage-backed securities to $35 billion a month.
Here are a couple of graphs that I picked up from John Cassidy’s blog on the New Yorker website.
The first graph shows that at the start of the Second World War and the first oil-price shock of 1973, families in the bottom ninety-nine per cent saw their incomes rise sharply. With the exception of the late nineteen-nineties, the past forty years have been marked by slow growth. For those at the top of the income distribution, recent history has been very different. After growing modestly in the postwar decades, the incomes of families in the top one per cent took off in the late nineteen-seventies, and have been zig-zagging upward since then.
The second graph shows that in places where income is divided very unequally, and poorer groups get only a small slice of the pie, very few people manage to start at the bottom and end up at the top. With a measure of inequality on the horizontal axis and a level of social mobility on the vertical axis shows the evidence for metro areas across the United States.
The negative slope indicates that high levels of inequality are associated with low levels of social mobility. Obviously, correlation is not causation. But the relationship, which Princeton’s Alan Krueger, the former chairman of the Council of Economic Advisers, has dubbed the Gatsby Curve, is certainly suggestive. If nothing else, the chart implies that those hoping to rely on high levels of social mobility to offset the effects of rising income inequality are likely to be disappointed.
To measure policy-related economic uncertainty, the Economic Policy Uncertainty construct an index from three types of underlying components.
1. The first component is an index of search results from 10 large newspapers. The newspapers included in our index are USA Today, the Miami Herald, the Chicago Tribune, the Washington Post, the Los Angeles Times, the Boston Globe, the San Francisco Chronicle, the Dallas Morning News, the New York Times, and the Wall Street Journal. From these papers, they construct a normalized index of the volume of news articles discussing economic policy uncertainty.
2. The second component of our index draws on reports by the Congressional Budget Office (CBO) that compile lists of temporary federal tax code provisions. They create annual dollar-weighted numbers of tax code provisions scheduled to expire over the next 10 years, giving a measure of the level of uncertainty regarding the path that the federal tax code will take in the future.
3. The third component of our policy-related uncertainty index draws on the Federal Reserve Bank of Philadelphia’s Survey of Professional Forecasters. Here, they utilize the dispersion between individual forecasters’ predictions about future levels of the Consumer Price Index, Federal Expenditures, and State and Local Expenditures to construct indices of uncertainty about policy-related macroeconomic variables.
They find that current levels of economic policy uncertainty are at extremely elevated levels compared to recent history. Since 2008, economic policy uncertainty has averaged about twice the level of the previous 23 years. See animation from The Economist below.
America’s debt row makes economic policy more uncertain than amid actual war.