Lunch at the Labs

U.S. Economics

Some links related to current United States economics.

• Why The Right Should Care About Income Inequality

  From the conservative right!

  Widening inequality and slowing social mobility really is a problem in America, and government policies championed by the elite have exacerbated this inequality. Because the solutions fit naturally with conservatism, it's scandalous for the conservative party in America to not propose solutions-and it's politically suicidal for Republicans to pretend like widening inequality isn't a problem.
  ...
  The Solution Is Families First and Middle Class Capitalism.

• Job loss predictions over rising minimum wages haven't come true

  Eighteen states rang in 2019 with minimum wage increases - some that will ultimately rise as high as $15 an hour - and so far, opponents' dire predictions of job losses have not come true.
  ...
  Opposition to higher minimum wage laws is increasingly based in ideology and orthodoxy rather than real-world evidence, economists say.

• The great American labor paradox: Plentiful jobs, most of them bad

  Quality vs. Quantity

  The numbers tell one story. Unemployment in the US is the lowest it's been in 50 years. More Americans have jobs than ever before. Wage growth keeps climbing.

  People tell a different story. Long job hunts. Trouble finding work with decent pay. A lack of predictable hours.
  ...
  Right now the JQI is just shy of 81, which implies that there are 81 high-quality jobs for every 100 low-quality ones. While that's a slight improvement from early 2012 - the JQI's 30-year nadir - it's still way down from 2006, the eve of the housing market crash, when the economy regularly supported about 90 good jobs per 100 lousy ones.

• The World Has Gone Mad and the System Is Broken

  Ray Dalio

  They are doing this because they have an enormous amount of money to invest that has been, and continues to be, pushed on them by central banks that are buying financial assets in their futile attempts to push economic activity and inflation up. The reason that this money that is being pushed on investors isn't pushing growth and inflation much higher is that the investors who are getting it want to invest it rather than spend it.
  ...
  At the same time, large government deficits exist and will almost certainly increase substantially, which will require huge amounts of more debt to be sold by governments-amounts that cannot naturally be absorbed without driving up interest rates at a time when an interest rate rise would be devastating for markets and economies because the world is so leveraged long
  ...
  At the same time, pension and healthcare liability payments will increasingly be coming due while many of those who are obligated to pay them don't have enough money to meet their obligations.

• What are the Real Reasons for Declining Productivity?

  Mike Shedlock / Mish

  Real Productivity Decline, 10 Simple Explanations

  1. The internet boom and the rising productivity associated with it were very real. The rate of change in internet-related improvements has fallen since 2000.
  2. Decreasing marginal utility of robots.
  3. The Fed's easy money policies sponsored numerous corporate zombies. Those zombies survive only because of ultra-easy financing. Zombie companies are unproductive, by definition. Things are even worse in the EU because of negative rates.
  4. The Fed's easy money policies also sponsored a "store on every corner". There are far more retail stores, restaurants, fast food establishments, and outlet malls than needed.
  5. Marginal stores have to be manned by somebody and they are, by increasingly marginal employees as the unemployment rate declines.
  6. Demographics. As skilled workers retire, those workers are replaced by workers with lower skills.
  7. Health issues in general. Obesity and drug-related issues are on the rise as are time off for those reasons.
  8. Militant unions demand and receiving unwarranted pay, time off, and control over workplace conditions.
  9. Corporate buybacks mainly benefit CEOs and executives who cash out their shares and options. It takes careful investment, not reckless expansion, not buybacks to have productivity gains.
  10. It's the debt, stupid. Fiscal deficits are totally out of control. Interest on the national debt by itself is $574 billion. What are we getting for it?

• Manhattan's Retail Industry Is Imploding Before The Holiday Season

  Average asking rents across Upper Fifth Avenue, especially between 42nd and 49th streets, saw one of the steepest drops in retail rents in Q3, falling 25% YoY, reported Bloomberg, citing a new report from Jones Lang LaSalle Inc.

  As shown below, Lower Fifth, Broadway, Madison Avenue, SoHo, and Herald Square retail rents over the same period were in free fall. This is a reflection of the weakening consumer base ahead of the holiday season. There were several outliers, Upper Fifth and Times Square retail rents over the same period marginally declined. Meanwhile, the Meatpacking district saw rents jump 7.3% in Q3 YoY.