BRIEFLY NOTED: For 2024-01-05 Fr
Analytic functions & the miraculous effectiveness of Taylor series; Mike Konczal on how the “too hot” labor market is over; very briefly noted; did economists “take a beating” in 2023?; will employment growth fail to weaken?; & Tim Duy of SGH Macro Advisors also thinks the Fed is behind the curve on easing; how much of an information-technological revolution is now on our doorstep?; ChatGPT4 writes an article on “Tablets of Power: The Dual Roles of Literacy in Ashurbanipal’s Assyria”; gentry, culture, & the “left behind” places; & BRIEFLY NOTED: for 2024-01-03 We…
ONE VIDEO: Morphocular: It’s Actually Kind of a Miracle Taylor Series Work | Smooth vs. Analytic Functions:
ONE IMAGE: Mike Konczal: The “Too Hot” Labor Market Is Over:
Very Briefly Noted:
Economics: BLS: Steady-as-she-goes with the December Employment Report: ‘Total nonfarm payroll employment increased by 216,000 in December…. Employment continued to trend up in government, health care, social assistance, and construction, while transportation and warehousing lost jobs…. The unemployment rate was unchanged at 3.7 percent…. The labor force participation rate, at 62.5 percent, and the employment-population ratio, at 60.1 percent, both decreased by 0.3 percentage point in December…. Average hourly earnings for all employees on private nonfarm payrolls rose by 15 cents, or 0.4 percent, to $34.27…. Over the past 12 months, average hourly earnings have increased by 4.1 percent…. Average hourly earnings of private-sector production and nonsupervisory employees rose by 10 cents, or 0.3 percent, to $29.42…. The change in total nonfarm payroll employment for October was revised down by 45,000… and the change for November was revised down by 26,000… <https://www.bls.gov/news.release/empsit.nr0.htm>
David Reifschneider & David Wilcox (March 2022): The case for a cautiously optimistic outlook for US inflation: ‘The 2021 surge in inflation resulted mainly from COVID-19-related sectoral developments rather than the classic situation of aggregate demand outstripping the overall economy’s long-run productive potential…. Russia invaded Ukraine. As a result of the war, the inflation situation will probably get worse before it gets better…. Nonetheless, if the key considerations identified in this Policy Brief remain in place, and if monetary policymakers respond to evolving circumstances in a sensible manner, the inflation picture should look considerably better in the next one to three years… <https://www.piie.com/publications/policy-briefs/case-cautiously-optimistic-outlook-us-inflation>
Dan Hon: ‘Nothing like using a pi-hole to viscerally drive home the understanding that everything above the fold on a Google Search is an ad now… <https://mastodon.social/@danhon@dan.mastohon.com/111705319805159885>
Noah Smith: No, economists didn’t really have “a dreadful 2023”: ‘I saw a curious article in The Economist the other day, arguing that economists, as a group, had a “dreadful 2023”…. First, U.S. inflation fell without a recession… [and] research findings… challenged other research findings: Auten and Splinter published new estimates that show no rise in inequality…. Greaney challenged Hsieh and Moretti’s estimates of the benefits of allowing greater density in superstar cities…. Ward published new estimates of intergenerational mobility in America that showed an increase… due to increased mobility for Black people and other minorities.Moore, Olney, and Hansen showed that fentanyl deaths depend on proximity to fentanyl supply… not… the geography of “deaths of despair”…. This is just how science is supposed to work. New research comes along and improves on old research…. All of these four new pieces of research represent healthy debate and progress toward understanding our world. If these four papers are any indication, economists had a great 2023…
Regional Economics: Ziggy: ‘On at least one point, Brad is wrong. Until recently, the Big Square States did very well educationally, despite their agricultural focus. They were better than average on the K-12 level, and were proud of their many strong state research universities: e.g., Iowa, Kansas, Nebraska, Texas, Wisconsin. And that’s excluding those in the currently blue states: Minnesota, Colorado, Illinois at Urbana-Champaign (terminal cow country). Often I think that economics is downstream of culture. Has the spread of Southern culture preceded an economic and educational decline?… <https://braddelong.substack.com/p/gentry-culture-and-the-left-behind/comment/46653622?r=d0v>
Darrell Owens: Why I Used To Be a NIMBY: Reflections on how to change people’s minds in the housing debate…. Most people are not NIMBYs because they want higher property values…. Most people have an intimate attachment to their environment…. NIMBY worries are about parking, shadows and structures obscuring their comfortable lifestyle. And while one can repeat plenty studies on how infill housing reduces car dependency or studies showing very little if any impact of light and views from new homes, a lot of people are skeptical…. No matter how vicious the battle is, once the housing gets built, nobody cares. Very few people clamor for a time when they didn’t exist. The ones who were frightened, realize their fears didn’t materialize, and are often convinced that more housing is positive. And that’s the point: distinguish between the loud NIMBYs who have those nefarious motives and treat the well-intentioned ones with some respect. Because most NIMBY opposition to new housing is not a deeply held belief, they just need a little evidence…
Neofascism: Ian Buruma: Seeing Through the Fog of Immigration: ‘Today’s populist revolt is not really about refugees. The greatest resentment among supporters of the hard right is reserved for the so-called “liberal elites,” the highly-educated urban folks who Braverman, in her conference speech, called “the privileged woke minority, with their luxury beliefs.” These elites are generally blamed for everything from the loss of industrial jobs and uncontrolled immigration to the alleged “tyranny” of international institutions such as the World Health Organization and the European Union…. These resentments are driven by real or perceived loss of status in a fast-changing world. Industrial workers and miners may have faced harsh working conditions, but they could take pride in their unions, social groups, and cultural activities. Many of these have vanished… <https://www.project-syndicate.org/commentary/right-wing-populists-stoke-xenophobic-panic-by-ian-buruma-2023-10>
Economic History: Sara Butler: How to tell a Serf from a Slave in Medieval England: ‘How slavery transitioned into serfdom is… elusive subject…. [Plus] the distinction between the two states… is something we know little about…. The standard vocabulary for slavery (servus, mancipium, ancilla) was simply repurposed for medieval serfs makes it difficult to detect any transition…. When it comes to English serfs (also referred to as: villeins, customary tenants, bondsmen, and neifs), the long-standing scholarly consensus is that unfreedom actually had its perks…. Rising land values meant that the cash rents charged on villein holdings were generally lower than the real market value of [renting] land…. Back in the 1960s, Michael Postan observed that English serfs were far more interested in land acquisition than in manumission…. [But] a villein had no freedom of movement. If he wished to spend an extended time off the manor, he had to pay for a license to do so…. Glanvill and Bracton explain that a fugitive at large, breathing town air for more than a year and a day, obtained his freedom…. Alsford’s remarkable study demonstrates how rarely officials adhered to this tenet. The lord also had rights over the body of his bondsmen. It was acceptable for a lord to assault his villein, providing he could claim the purpose was disciplinary…. Serfs were understood to be a form of property. Richard Fitz Nigel’s Dialogus de Scaccario… a twelfth-century legal treatise) states… matter of factly: “the villein is a thing without rights, a mere chattel of his lord.” Lords could also sell their serfs… [usually] as part and parcel of an estate… <https://legalhistorymiscellany.com/2019/08/15/how-to-tell-a-serf-from-a-slave-in-medieval-england/>
Cryptogrifts & Their Enabling Suckers: Francine McKenna: Michael Lewis is wrong about the “profitability” of FTX US and FTX Trading: ‘It is kind of hard to understand why the expert financial shenanigans guy on the inside did not look at the audited financial statements Bankman-Fried touted to everyone else…. Lewis … says, but for the “bank run” on FTX, SBF had a profitable business with $1 billion in revenue, “it was real.” Ummmmm, no…. What I wrote for Coindesk in November 2022: “The third red flag is…. neither FTX Trading nor FTX US paid any federal income taxes”…
Central Country: Bill Bishop: New Minister of Defense and more signs of a PLA purge: ‘Admiral Dong Jun is the new Minister of Defense, replacing Li Shangfu…. Dong, a member of the Central Committee, has not been named a State Councillor or a member of the Central Military Commission. Those appointments will likely happen…. Also in the last several days three senior executives from the military industrial complex lost their positions as delegates to the CPPCC, and nine PLA officers… lost their positions as delegates to the NPC.… Te removals are a clear sign that at least some of the rumors of a significant purge in the PLA and military industrial complex have been accurate. Given the number… and the likelihood that we only see the ones senior… there may be a much larger network… involved. That would likely point to this case, or cases, being more about corruption rather than some vast espionage network that fed secrets to the US…
SubStack NOTES:
Economics: I am seeing a surprisingly large amount of things like this: claims that economists and their theories had a bad time in understanding the economy in 2023—in this case it is the idea of the Phillips Curve that is “taking a beating”.
But I have been running with the Phillips Curve of: Hazell, Jonathon, Juan Herreño, Emi Nakamura, & Jón Steinsson: 2022. “The Slope of the Phillips Curve: Evidence from U.S. States.” The Quarterly Journal of Economics 137 (3): 1299-1344. doi.org/10.3386/w28005>.
That Phillips Curve has certainly not taken any kind of “beating”, but has been a valuable tool.
What have taken a beating are assertions and assumptions that:
We should gauge the inflation-expectations term by looking backward at last-year inflation or sidewise at recent oil price movements rather than looking forward at the implied expected-inflation rates measured by TIPS-nominal Treasury breakevens.
We should believe that the short-run Phillips Curve turns sharply upward when a high-pressure labor market emerges when the inflation rate falls below
We should not think that there is anything special about the inflation process in a time of the rapid wheeling of the economy into a new sectoral demand configuration, as it did in 1947-1948... 1950-1952… 2021-2023.
But maybe what I am saying is that the Phillips Curve is, at least as I see it, much more a comprehensive filing cabinet for organizing thinking about inflation and demand episodes than a theory that can “take a beating”. We don’t so much disprove a theory as argue over parameters in a framework flexible enough to cover the possibilities. Even so, however, there were a lot of us who saw this episode as definitely not analogous to the 1970s:
Neil Irwin: ‘We’re now at 23 straight months with the unemployment rate below 4%, a period in which inflation has fallen from ~8% to ~3%. The Phillips Curve continues taking a beating… <threads.net/@jbdelong/post/C1uMsJwrZpY>
Economics: Those of us who believe in r* also believe that while labor demand continues to expand robustly, policy is sufficiently restrictive that it will not remain so for long. But our strong belief that it is time for the Fed to cut—that when inflation is near-target interest rates should be near-neutral—is a bet on the applicability here and now of the neo-Wicksellian “r*” framework:
Nick Bunker: ‘Last year’s relatively painless cooldown in the US labor market resulted from moderating but strong demand and rising labor supply. The December jobs report suggests the first trend looks set to continue in the year ahead. The continued bounce back in supply is less assured. Job gains are clearly slower than this time last year, with the three-month average gain falling to 165,000 last month from an average of 284,000 in December 2022. However, the current gains are still strong enough to keep the unemployment rate low given the slowing population.
A few sectors still account for the lion’s share of recent job gains, with more than 75% of December’s growth coming from Education & Health Services, Government, and Leisure & Hospitality…. Employers are still looking to hire, but they might be finding that the supply of easy workers isn’t as deep as it was recently.
The overall labor force participation rate dropped in December, as did the rate for so-called prime-age workers aged 25 to 54…. The prime-age participation rate stalled out this summer and has steadily declined since September.
Average hourly earnings as measured by the Bureau of Labor Statistics picked up last month, growing at a 4.3% three-month annualized rate…. Demand for workers remains robust.
The question raised by today’s report is whether supply can start rising again… <https://twitter.com/nick_bunker/status/1743272904219881791>
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