1. Why is UK employment up and output down?
2. Genetics vs. paleoanthropology?
3. Price inflation and stock returns (pdf), and here, and here, and most recently here; “There is a consistent lack of positive relation between stock returns and inflation in most of the countries.” I am urging a) a bit of caution, and b) engagement with the literature on this topic. I do favor a more expansionary monetary policy, but I see the balance of evidence as different from how it is frequently portrayed in the blogosphere.
4. New archery gold medal winner is legally blind, and here.
@2: Africans have very diverse DNA, hence the difficulty in using genetics as a marker
@3: from the paper: “Using data from 1966 – 2009, it appears that no correlation exists between any measure of price inflation and stock returns or dividend yield in the period 1983 –2009.” – WOW! using data only during the ‘bull market’ from 1983? And ignoring the inflation prone 1970s?
#4 Wonder if blocking out background distractions plays a positive role.
Regarding #2: Not really. See http://blogs.discovermagazine.com/gnxp/2012/07/the-new-york-times-is-ginning-up-fake-controversy/
David Glasner is a fellow-traveler of market monetarism (perhaps a full member) and he argues that an inflation correlation is indeed unusual. The fact that we have recently been seeing a correlation between inflation expectations and the S&P 500 is deemed as sign that THE FED IS DOING IT WRONG. Scott Sumner has similarly pointed out that in the 1970s rising inflation expectations would have been a bad sign for the stock market.
I suppose I should link directly to his paper, which explains that there isn’t a correlation from 2003-2008, but there is one from 2008-2010 (the latest his paper analyzes).
I was going to reference a Nick Rowe post but didn’t know the right term to search for. Thankfully on the front page now is his excellent explanation of Milton Friedman’s thermostat which (in competent hands reacting to exogenous shocks to keep an output constant) should be uncorrelated with observed outcomes.
Something that has me for bothered me time is the relationship between the money supply and the stock market.
Over the last 60 years there has been a very strong positive correlation between money supply growth and the S&P 500 p/e. But if money supply growth is a leading indicator of inflation shouldn’t the market have a negative correlation to money supply growth?
Of course the market is very strongly impacted by monetary policy, so apparently that is all that matters to the market, not the future inflationary impact of current policy.
Tyler, I don’t think that gentleman has won the gold yet. This was a first round, not a final round; he and his team are now the top seed, as I understand it.
A surprise Fed easing is a demand shock. There should be a positive correlation between news about inflation generated from a demand shock and stock returns. Not all shocks are demand shocks. Inflation from a supply shock can be bad for stock returns.
So I guess this is the phase of right-wing denial of the failure of austerity where the statistics are attacked. The coalition government has managed to drive the UK’s economy into a worse performance than in 1929-1932. Amazing….
Will Tyler retract his support for austerity now? We probably need another round of debate over Baltic microstates and small islands first.
As opposed to all those non-austerity countries over in Europe, which are just booming.
Maguro, Please list the non-austerity countries in Europe.
Well, there’s Greece and Spain. Or is their problem also “austerity”?
No austerity in Greece? Wow, just wow. I really hope this is trolling, I really do.
You know the number of Greek public employees has actually increased since 2009, right? That they still don’t have a primary surplus? That they haven’t bothered implementing any of the pro-growth reforms the troika has asked for?
It’s not austerity, it’s a circus.
“You know the number of Greek public employees has actually increased since 2009, right?” Yes, state employees are protected, so austerity has been concentrated elsewhere.
“That they still don’t have a primary surplus? ” Austerity can be self-defeating- no surprise there.
“That they haven’t bothered implementing any of the pro-growth reforms the troika has asked for?” There is austerity in Greece with little reform.
“It’s not austerity”: Except it is austerity…..
Economist1—what austerity? Spending is up every year in the coalition government.
Yes, Britain might prove the case that tax hikes to balance the budget harm the economy. But that’s the polar opposite of the case I presume you want to make.
Puplius- I think you’re still in denial phase- it’s time to move on to “blame the statistics” phase.
Real per capita speinding is down:
http://willwilkinson.net/flybottle/2012/05/07/austerity-facts/
I assume you don’t think UK has been austere because you don’t understand nominal vs. real and population growth. Or is it just dishonesty? Inquiring minds wish to know
@2 I think I am correct in that measurement of GDP values government output at cost of input, so removing expensive government workers (likely with negative productivity) and in the meantime hiring of private workers with positive productivity will apparently reduce GDP while increasing employment. Private industry wages in UK are generally well below the public sector, I bet the gap is huge in jobs being lost/gained. Rent seeking is rife in the UK public sector, thanks to the national debate being controlled by the BBC (a publicly quasi-state entity that is the poster child for how you can never kill a bureaucratic entity despite all rationale for its initial existence disappearing).
I take it you are referring to those numbers a blog commenter came up with. Not the most authoritative source, but I’ll take it at face value. It shows that, after a huge spending increase from 2007-2010, there was a slight decrease in 2011 and an even smaller decrease projected for 2012. So what? Spending is still higher in per capita terms than it was just a couple of years ago.
The coalition government is hardly an ideal test case of “austerity” policies.
Even if you want to make it a test case, you can hardly prove that this policy was worse than other hypothetical policies would have been. The economy of pretty much every other country in the Western world has suffered over the last few years, regardless of what policies have been pursued. The UK is far from the worst off. The most you can say is that the coalition’s policies have not been a magic bullet to fix the economy.
“I take it you are referring to those numbers a blog commenter came up with. Not the most authoritative source, but I’ll take it at face value.” You’re welcome to provide your own numbers- please do.
” It shows that, after a huge spending increase from 2007-2010, there was a slight decrease in 2011 and an even smaller decrease projected for 2012. So what?” This is austerity- that’s exactly my point. The coalition only gained power in 2010. This is why the economic recovery taking place, reversing the declines of 2009, came to an end. Just look at this chart: http://www.bbc.co.uk/news/business-17836624 The UK has just entered a new recession- the direct effect of austerity.
” Spending is still higher in per capita terms than it was just a couple of years ago. ” Not in real terms- it’s time to face facts.
“Even if you want to make it a test case, you can hardly prove that this policy was worse than other hypothetical policies would have been.” I rely on all the other austerity failures to show that- Greece, Spain, the Baltics, etc.
” The UK is far from the worst off. ” Just imagine if the Coalition had been in power in 2008! The UK has not been the most austere- that is clear, but I doubt that’s what you want to say here.
” The most you can say is that the coalition’s policies have not been a magic bullet to fix the economy.” Nope, but this is the best you can do, that is clear. It’s very underwhelming if this is the strongest statement a supporter of the Coalition can make
Not quite related, but I wonder if there are going to be any comments on the Wagenknecht’s proposed approach to Eurozone debt?
http://www.spiegel.de/international/europe/german-left-party-proposes-new-way-to-save-the-euro-a-846788.html
1. For the same reason why our employment is down but our production is up, except that their government is making the decisions. Their way won’t last very long.
In the links from Why is UK employment up and output down?:
“Bond investors warned on Wednesday that the UK could lose its triple-A credit rating as a result of the poorer than expected gross domestic product estimate”
this according to Robin Wigglesworth, Sarah O’Connor and George Parker of the FT on 7/26. The unnamed “bond investors” apparently are ignoring the continued decline in UK bond yields and the fact that, unlike, Spain or Italy, the UK has an actual central bank(!) that can produce as many pounds as necessary to service debt its debt and no chance of Parliament pulling a “debt ceiling” stunt as the Tea Baggers did in the US Congress.
Too bad reporters do not ask follow up questions when they get apparently nonsense quotes.
If you face falling oil consumption, then for a given stock of infrastructure and equipment, output and employment should fall. However, over time, employment should recover as workers and entrepreneurs find alternative uses for potential employees. Whether these alternative forms of employment are higher productivity than those lost is a function of whether oil as a binding constraint can be escaped. That is, it requires innovation, which may or may not occur. Put in layman’s terms, a former airline pilot or oil worker could become a gardner or a hedge fund manager. Which one of these he becomes is a function of the appetite of the economy for a given form of labor and the skills which the respective person possesses. Without innovation, a loss of oil might well lead to lower, or slow growing, productivity.
UK oil consumption is down 1.6% March to May compared to same period previous year; oil production is down 12% for the same period. Those oil jobs are good paying jobs. The UK looks like it’s being hammered on both ends of the energy spectrum.
Could #1 have anything to do with the Olympics?
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