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Unemployment Is Low, But It Can Still Go a Lot Lower — And It Should

by XLNCharlidftxdy Posted on January 10, 2015

Mother Jones

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Justin Wolfers makes a good point today. There’s a concept in economics called NAIRU, which rather awkwardly stands for the Non-Accelerating Inflation Rate of Unemployment1. Basically it means that there’s a “natural” rate of unemployment in the economy2, and if you go below it then inflation will start to accelerate. When that happens, the Fed raises interest rates to slow down growth before inflation gets out of hand.

But what’s the actual value of NAIRU? Based on past experience, most economists think it’s around 5.5 percent or so—which happens to be where we are now. And yet, inflation is still very low, and definitely not accelerating. This could be just a temporary phenomenon as we recover from a huge balance-sheet recession, or it could be something more permanent. For two reasons, my guess is that it’s mostly the latter. First, inflation has been steadily dropping for 30 years in the US, and there’s some reason to think that it’s the 70s that were a high-inflation anomaly, not the rest of the low-inflation 20th century. Second, there’s reason to think that the headline unemployment rate is not measuring quite the same thing as it used to. If you look at long-term unemployment, marginally attached workers, and the decline of the labor force participation ratio—which has been falling for 15 years now—it appears that a headline rate of 5.5 percent probably implies more slack in the economy than it used to. Here’s Wolfers on the natural rate of unemployment:

The problem, though, is that no one really knows what that rate is. Our uncertainty is even greater today than it normally is, because no one knows the extent to which those workers who dropped out of the labor force in response to the financial crisis will return when jobs become plentiful. By this view, today’s most important macroeconomic question is what the natural rate actually is.

The latest jobs report helps answer this question. The unemployment rate has fallen to 5.6 percent, and there are still no signs that wage inflation is rising. Indeed, with wage growth running at only 1.7 percent, the economy is telling us that we still have the ability to bring many more of the jobless back into the fold without setting off inflation.

It is only when nominal wage growth exceeds the sum of inflation (about 2 percent) and productivity growth (about 1.5 percent) that the Fed needs to be concerned that the labor market is generating cost pressures that might raise inflation. So the latest wage growth numbers suggest that we are not yet near the natural rate. And that means the Fed should be content to let the recovery continue to generate more new jobs.

There’s one more thing to add: Even when unemployment falls to around 4 percent, we should remain cautious. We’ve tolerated an inflation rate that’s under the Fed’s 2 percent target for the past five years. There’s no reason we shouldn’t tolerate a catch-up inflation rate that’s a little over the Fed’s target as we begin to recover. If inflation runs at 3-4 percent for the next five years, it’s probably a good thing, not a bad one.

1Obviously economists could have used a branding expert to help them with this. On the other hand, if they’d done that we might have ended up with Xarelxo or JobsMax™. In any case, we’re stuck with it for now.

2The idea here is that even a thriving economy has a certain amount of natural unemployment as people leave their jobs and move to new ones—because new sectors pop up, old companies go out of business, etc. That’s a good thing and a perfectly natural one in a competitive economy that’s producing lots of innovation. Trying to push unemployment lower than the natural rate is basically fruitless.

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Unemployment Is Low, But It Can Still Go a Lot Lower — And It Should

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Sorry, but your shrimp platter didn’t come from the Gulf

by WilmerBelanger Posted on October 30, 2014

shrimply appalling

Sorry, but your shrimp platter didn’t come from the Gulf

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30 Oct 2014 6:50 PM

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We already knew about the mangroves. We knew about the bycatch and habitat destruction. Heck, we knew about the whole SLAVERY thing, but that didn’t stop us from gobbling shrimp scampi like they’re going extinct. And, still, we hoped there might be a better way.

Now, clearly sensing we might need another deterrent to stop eating ALL THE SHRIMP all the time, the world sent us some new bad news about the tasty, tasty crustaceans: They’re probably not what you think they are.

In a report released Thursday, ocean-advocacy group Oceana conducted a survey of 111 restaurants and grocery stores across the U.S., and found that more than a third of the sampled shrimp were vaguely labeled, or else mislabeled entirely.

The confusion begins with the fact that there are 41 species of shrimp sold in the U.S., but any of them may just be labeled as “shrimp.” It deepens when it turns out that many of those labeled “Gulf” or “wild-caught” were really a species of farmed shrimp. It’s easy to prawn off these crustaceans as more valuable versions of themselves when more than 90 percent of the U.S. shrimp is imported, and only a small percent of that is ever inspected. Still, the depth and variety of deception is shrimply staggering. Consider this from the Guardian:

Unexpectedly, some of the shrimp that were identified in the survey were genetically unknown to science, and one sample taken from a bag of frozen seafood even turned out to be a banded coral shrimp — a species renowned on reefs and coveted as a ‘pet’ shrimp by aquarium enthusiasts, but certainly not as food. “It’s one of the things you look for on a reef,” Warner says. “How it ended up in a bag of salad-size shrimp, I have no idea.”

New York had one of the highest rates of shrimp-fraud, with 43 percent of samples misrepresented — but no one got off scot-free.

The only possible way to feel WORSE about eating shrimp is to go eat 101 of them at Red Lobster’s Endless Shrimp promotion. That’s REALLY going to hurt.

Source:
A third of US shrimp is ‘misrepresented’

, Guardian.

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Sorry, but your shrimp platter didn’t come from the Gulf

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Target Officially Rejects Assault Weapons in Its Stores

by Latosha27M Posted on July 2, 2014

Mother Jones

A month after images first surfaced of pro-gun activists flaunting semiautomatic rifles at Target stores, the retailer has become the latest US company to officially reject firearms in its outlets.

“Our approach has always been to follow local laws, and of course, we will continue to do so,” Target said in a statement Wednesday. “But starting today we will also respectfully request that guests not bring firearms to Target—even in communities where it is permitted by law.”

The move follows weeks of pressure from Moms Demand Action for Gun Sense in America, which used social media, online petitions, and protests at Target stores to call for such a change.

Still reeling from its disastrous failure to secure customers’ personal data, Target leaders “were really nervous” after the gun issue emerged, a person with direct knowledge of the company’s discussions about it told me. “This was the last thing they needed.” Still, the company endured weeks of negative attention on the issue, even as Texas authorities and one of Target’s corporate strategic partners made clear that Target was trying to stop the guns from coming in.

Target joins a growing list of corporations—including Starbucks, Jack in the Box, Chipotle, Sonic, and Chili’s—that have reacted to demonstrations by open-carry activists by announcing that they don’t want people carrying guns on their premises.

Whether open-carry activists will comply with Target’s request appears to be an open question. One of the first to comment on Target’s posted statement was Kory Watkins—a leader of a Texas open-carry group that’s conducted provocative demonstrations, used disturbing intimidation tactics against women, and harassed a Marine veteran—who said he plans to pack heat at Target “today and tomorrow and whatever days I want.”

Carrying rifles on display in public is legal in Texas, although regulations governing Target’s sale of alcoholic beverages forbid guns on their premises, and armed patrons who don’t leave upon request could be subject to criminal trespassing charges, according to the Texas Alcoholic Beverage Commission.

For more of Mother Jones’ award-winning reporting on guns in America, see all of our latest coverage here, and our special reports.

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Target Officially Rejects Assault Weapons in Its Stores

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Raw Data: America Is Still Producing Lots of Inventive Young Companies

by JanessaChubb Posted on May 15, 2014

Mother Jones

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Here’s a quick follow-up to my post last week about the decline in new business startups over the past few decades. Does this suggest that America is getting less entrepreneurial? In one way, yes: some of it is probably due to big national chains making it harder to start small family businesses, and some of it is probably due to an aging population. Economically, however, the triumph of gigantic chain stores isn’t necessarily a bad thing, and the aging of the baby boomers should be thought of as a separate demographic issue, not a business startup issue.

Still, economists all agree that the key to a healthy economy is young, growing companies (not small businesses pe se). So how are we doing on that score? Over at Slate, Jordan Weissman points to a study by Paul Kedrosky that tries to quantify the number of startups that grow to $100 million or more in a fairly short period. The chart on the right shows his results. There’s a spike during the dotcom boom of the late 90s, and a dropoff during the Great Recession—a period too recent to have yet produced very many $100 million companies anyway—but there’s basically no secular decline at all. Roughly speaking, America has been producing about 150 small, fast-growing companies per year for the past three decades.

This is just a single data point, and Kedrosky warns that his data is necessarily pretty rough. But it does suggest that although America might be producing fewer new coffee shops and boutique clothing stores, it’s not necessarily losing its inventive edge.

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Raw Data: America Is Still Producing Lots of Inventive Young Companies

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This Holiday Season, Brick-and-Mortar Stores Had Fewer Customers But Bigger Sales

by Hermine73K Posted on January 17, 2014

Mother Jones

The Wall Street Journal reports that foot traffic in retail outlets plummeted this holiday season:

A long-term change in shopper habits has reduced store traffic—perhaps permanently—and shifted pricing power away from malls and big-box retailers.

….Traffic to U.S. retailers was hurt during the financial crisis and recession, when job losses soared and shoppers kept a tight grip on their dollars. But nearly five years into the recovery, it appears many of those shoppers may never be coming back….Shoppers don’t seem to be using physical stores to browse as much, either. Instead, they seem to be figuring out what they want online then making targeted trips to pick it up from retailers that offer the best price.

This is actually not quite the tale of woe that it sounds like. It’s more interesting than that. In the past, brick-and-mortar outlets complained about shoppers coming to stores to check out the merchandise but then buying online. Now the tables have turned: shoppers are going online to check out prices and products, and then making a quick trip to pick up their goods instead of driving around town to a bunch of stores to do comparison shopping.

The result is that foot traffic is down, but sales are up: holiday spending increased 2.7 percent in 2013 compared to 2012. That’s not a great number, and obviously profits have taken a big hit as stores try to compete with low internet prices. Still, if sales are up 2.7 percent and foot traffic is down 14 percent, that means your staffing cost per dollar of sales is down. This is not unalloyed bad news for physical stores.

I’m not trying to be Pollyanna-ish here. Obviously brick-and-mortar stores have big challenges. Still, they might be able to thrive if they can learn to adapt to an environment in which there’s less casual browsing and more serious, targeted shopping. Anybody who’s worked in retail knows that you treat these kinds of shoppers differently, and perhaps the brick-and-mortar world needs to transition to a model in which they treat their customers by default as targeted shoppers. After all, there are still plenty of us who don’t believe everything we read online and still want to see things with our own eyes before we buy them.

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This Holiday Season, Brick-and-Mortar Stores Had Fewer Customers But Bigger Sales

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