Growth at an Educational Price

By | 2017-10-02T08:33:38+00:00 October 2nd, 2017|Global Market Update|

Why is labor’s share of income going down? Source: Bureau of Labor Statistics For the past 50 years, labor’s share of our national income has been declining. This has had profound effects on inequality, taxes, and the structure of our economy. Labor’s share is the percentage of national income that goes to workers as compensation. It’s a pretty simple calculation: employee compensation (wages and benefits) divided by economic output. It’s been falling since the ‘50s, and quite steeply for the last 15 years. It’s [...]

Roses for Education

By | 2017-07-17T12:21:18+00:00 May 26th, 2017|Global Market Update|

Will education solve our problems? Photo Viktor Hanacek. Source: Picjumbo Economists of all stripes trumpet education as a key to improving economic outcomes. Whether it’s literacy, math skills, or the ability to write computer code, our society has become so technological, they state, that an extensive – and expensive – education is necessary to thrive in today’s world. This is nothing new. Education has been considered crucial to society since Plato wrote The Republic 2400 years ago. In fact, he thought that a complete [...]

The Wages of Sleep

By | 2017-07-17T12:21:20+00:00 May 3rd, 2017|Global Market Update|

Can we sleep our way to success? Illustration: Lorenza Walker: Source: Wikipedia We all know that sleep is good for our bodies – that it helps us heal and refresh ourselves, restoring our immune, nervous, and muscle systems. But can sleep be good for our finances, too? Because getting enough rest helps us concentrate and interact more positively with others, sleep could improve our wages. On the other hand, you obviously can’t work while you’re sleeping. How does sleep impact our earnings? It’s hard [...]

Foreign Stocks

By | 2017-07-17T12:21:28+00:00 March 8th, 2017|Global Market Update|

Will Trump’s travel ban hurt the economy? World population migration, 2016. Blue = gain; orange = loss. Source: Wikipedia The short answer is no. The US only accepted 70,000 refugees every year anyway. That’s a pittance in an economy that employs over 160 million people. A much bigger impact would come from a crackdown on illegal immigrants already in the US. The US employs about 8 million unauthorized immigrants – about 5% of the workforce. These people are concentrated in certain industries and certain [...]

Molasses?

By | 2017-07-17T12:21:40+00:00 October 18th, 2016|Global Market Update|

Why is the economy growing so slowly? Source: St. Louis Fed Since the Great Recession, the economy has never gotten back into high gear. We’ve always seemed to be teetering on the edge of another downturn. Quarterly economic growth has averaged 2%, while a normal recovery is usually above 3.5%. Why? First, the workforce is changing. We are now entering the period where baby-boomers are beginning to retire. Like most things the boomers have gotten involved with, they are transforming retirement. Their family finances [...]

Puzzling Out Productivity

By | 2017-07-17T12:21:44+00:00 September 7th, 2016|Global Market Update|

How can we get the economy moving? Photo: Doug Tengdin When people think of productivity they usually think about getting more done during their work-time, about working harder or smarter or more focused. But when we talk about productivity in the economy, we think about how much workers can get done within the structure of their jobs. Productivity is important. Economic growth is determined by labor growth times productivity growth. That’s all there is to it. So long-term trends in productivity are critical. They [...]

Stagnation Nation?

By | 2017-07-17T12:22:05+00:00 April 15th, 2016|Global Market Update|

Why is the economy moving so slowly? Photo: Osvaldo Gago. Source: Wikimedia There’s no question that economic growth has slowed. Over the past decade, the US economy has grown about 1.5% per year. The decade before that, it grew 3.4%, before that, 3%, and so on. What could account for poor performance? A big part of any economy is labor growth. If there aren’t enough workers, the economy can’t grow. For all the talk about robots and self-driving cars, we still need people to [...]

WDWW?

By | 2017-07-17T12:22:07+00:00 March 10th, 2016|Global Market Update|

What do workers want? Photo: D. Hannte. Source: Morguefile A recent study of over 19,000 employees and managers looked at what makes folks more productive at work. The answer was notable: people perform best when their physical, emotional, mental, and spiritual needs are met. When we feel energized, appreciated, focused, and purposeful, we’re happier and more effective in everything we do. What’s surprising is how important these factors are to profitability. When all four areas are covered, employees feel over twice as engaged in [...]

Business Investment Blues

By | 2017-07-17T12:22:19+00:00 December 2nd, 2015|Global Market Update|

Why is business investment so weak? Photo: Folkert Gorter. Source: Superfamous Business investment is critical to the economy. Our economy consists of about 70% consumer spending, 20% government spending, and 10% investment spending. But that 10% is the basis for future economic growth. This is how companies make themselves more productive, how they improve their processes, how they expand into new markets. But business investment has been weak during this expansion, and most recently has fallen to just 2.2%. For an economic component that [...]

Money for Nothing Forever?

By | 2017-07-17T12:22:26+00:00 September 23rd, 2015|Global Market Update|

Why are interest rates so low? Source: Morguefile It’s easy to see our ultra-low interest rates and blame the Fed. After all, they set short-term rates; they’re the ones managing the money supply; they’re the ones that oversee the banking system. But interest rates are low everywhere—not just in the US. And real interest rates—the difference between interest rates and inflation—have been falling for decades. Well before the financial crisis, long-term bond yields around the world began falling from 4% above inflation to roughly [...]