Economy

Output Hits New Low in Kentucky Coal Country

The Hill: “Kentucky coal mines produced their smallest amount of coal in 62 years last year, a figure that’s likely to keep falling.”

“A preliminary report Monday from Kentucky’s Energy and Environment Cabinet said the state put out 61.4 million tons of coal in 2015, down 20.7 percent from the prior year and the lowest volume since 1954.”

“The coal industry in Kentucky had 8,401 people employed at the end of the year, a 28 percent plunge from the end of 2014, and less than half of the 2008 employment figure.”

Two Issues Have Fueled Trump’s Rise

Washington Post: “There is considerable evidence that Donald Trump has built his national lead in the Republican president primary on a powerful combination of economic anxiety, frustration with Washington and, in particular, concerns over immigration. Interviews with voters reveal it again and again, and so do public opinion polls.”

“You can see signs of it in this nifty new Wall Street Journal interactive that shows 4 out of 5 Trump supporters believe immigration (not just illegal immigration — all immigration) hurts the United States more than it helps. A majority say free trade is bad for America. Other groups of GOP voters look more kindly on trade and immigrants.”

“More directly, two questions in the latest Washington Post-ABC News poll show how Trump is drawing lopsided support in the Republican field from voters who worry about the economy and about immigrants.”

Which State Ranks Highest in Job Creation?

Gallup: “Minnesota led the 50 states on Gallup’s Job Creation Index with an average score in 2015 of +38, based on workers’ reports of hiring activity at their place of employment. Georgia and Utah were next at +36. North Dakota, which had been the top overall state each of the last six years, remains in the top 10.”

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“Alaska had the lowest Job Creation Index score in 2015 at +12, with 31% of working Alaskans saying their employer was hiring workers and 19% saying it was letting workers go. West Virginia was next at +18, followed by Wyoming at +20. Connecticut ranked in the bottom 10 again — the only state to finish in the bottom 10 each of the eight years of Gallup’s trend.”

“The weaker performance in energy-producing states presents an interesting economic challenge, as low gas prices benefit consumers, but at the same time, they are not good for energy companies or the Americans who work for them. That also underscores the vulnerability of state and local economies reliant on a specific industry. When that industry struggles, the local economy will as well. A diversified economy is the way to avoid booms and busts, although diversification may be a goal easier aspired to than achieved in reality.”

 

Did the Fed Make a Big Mistake?

Matt O’Brien in The Washington Post: “Markets sure seem to think that the Federal Reserve has made a big mistake.”

“It hasn’t just been stocks selling off 10 percent to start the year. It has also been bonds saying that they don’t think the Fed will come close to hitting its target of 2 percent annual inflation anytime in the next 10 years. Markets, in other words, have done everything short of holding a boom box outside of Fed Chair Janet Yellen’s window to beg her not to raise interest rates any more after the Fed hiked them in December for the first time in nearly a decade. And it just might work. After all, there’s no such thing as an atheist in a foxhole or an inflation hawk in a stock market crash, especially when prices were barely rising to begin with.”

“The fact, then, that the S&P 500 seems to be saying that the recovery is falling apart should make even the most committed inflation-fighter wonder whether there is actually anything to fight.”

“So will the economy fall into recession? On the one hand, it’s hard to see how the economy could be heading that way when it’s been adding an average of 284,000 jobs the last three months … On the other hand, though, things still seem fragile enough that it wouldn’t take a lot of bad news to turn our slow-and-steady recovery into none at all.”

Ylan Q. Mui: “Central banking is a long game. The Fed’s decisions take months — even years — to influence the economy. That’s why officials insist that they do not react to every hiccup in the markets. In a speech about a week ago, New York Fed President William C. Dudley said his outlook for the economy ‘has not changed much’ despite the volatility on Wall Street. Though some data have been weaker than anticipated, the job market has been stronger, he said.”

Millionaires Move to ‘Mayberry’

Wall Street Journal: “The real-life “Mayberry” is adding millionaires at the fastest pace in the country. As Andy Griffith’s birthplace, Mount Airy, N.C., claims to be the inspiration for the town featured in the 1960s television classic “The Andy Griffith Show”—but folks there have more than just southern charm in common the late actor. They’re also increasingly millionaires.”

“The Mount Airy metro area’s population of millionaire households grew by 332, or almost 30%, between June 2014 and June 2015, the quickest rate in the country, according to a report Phoenix Marketing International released Tuesday.”

“Just 3.8% of households have a million dollars or more in assets, below the national average of 5.4%. But its impressive growth of high-net-worth families likely reflects that well-off retirees are moving there in search of quintessential small-town life, said Randy Collins, Chamber of Commerce president.”

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“Among states, North Dakota recorded the fastest growth in millionaires in June 2015 from a year earlier, increasing more than 10%. The growth reflects rising wealth tied to the oil industry, which has slowed sharply in the past six months. “

“Maryland had the highest concentration of millionaires among states, accounting for 7.7% of households. Connecticut, New Jersey and Hawaii followed. Mississippi had the smallest concentration of millionaires and is the only state where less than 4% of households have $1 million or more in assets.”

A Different Way of Visualizing the U.S. Economy

Matthew Yglesias: “This cool diagram from HowMuch.net gives us a different way to visualize the entire US economy, depicting the whole thing as a big circle and then slicing it up by state, with each state’s area representing its share of total economic output:”

“Florida punches a bit below its weight in terms of population, in part because a large share of the state’s residents are retired. There are also disparities related to wealth. New Jersey has fewer people than North Carolina, Michigan, or Georgia, but it contributes more to the national economy since the productivity per worker in New Jersey is much higher.”

One Chart to Explain Politics Today

Inequality-and-Trump

Wonk Blog: “Imagine everyone, as in everyone around the world, lined up based on how much they make. (This would be adjusted for how much that buys in their home country, but don’t worry too much about that). Well, that would let us set up a global income distribution. The richest people in the richest countries—and, for that matter, everywhere else too—would make up the global top 1 percent. Working-class people in rich countries would be around the 80th percentile for the world. Middle-class people in middle-class countries would be, you guessed it, around the 50th percentile. And so on, and so on. Now, when you add it all up, it turns out that nobody has done worse the past 30 years than the working-class in countries like the United States, United Kingdom, and France. Their inflation-adjusted incomes actually fell over this period. It was the richest people in the richest countries and, even more so, middle-class people in emerging-market countries who did the best. China, though, really belongs in a category all its own here. It’s that bump all by itself in the middle.”

“This chart is really a Rosetta stone for politics today—and not just in the U.S. Almost every rich country has their own anti-trade, anti-immigrant party. France has the National Front. Britain has UKIP. And the rest of Europe has an assortment of populist parties straddling the far-right and far-left. In all these countries, the simple story is that being an elite means buying into globalization whether you’re an elite of the center-right or center-left. So the people who feel like they’ve been left behind don’t feel like there’s anyone to represent their interests.”

Renewables Finish Another Record-Breaking Year

Bloomberg: “Renewables just finished another record-breaking year, with more money invested ($329 billion) and more capacity added (121 gigawatts) than ever before, according to new data released Thursday by Bloomberg New Energy Finance.”

“This wasn’t supposed to happen. Oil, coal and natural gas bottomed out over the last 18 months, with bargain prices not seen in a decade. That’s just one of a handful of reasons 2015 should have been a rough year for clean energy. But the opposite was true.”

Bloomberg: “The 4 percent increase in clean energy technology spending from 2014 reflected tumbling prices for photovoltaics and wind turbines as well as a few big financings for offshore wind farms on the drawing board for years, according to research from Bloomberg New Energy Finance released on Thursday.”

“Another ‘strong year’ is in store for renewables in 2016, said Angus McCrone, chief editor at BNEF, stopping short of saying another record will be reached. “

Does Obama Have the Right to Brag Tonight?

Matthew Yglesias: “In tonight’s State of the Union address, Barack Obama is likely to try to argue loudly and proudly that life is pretty good in the United States of America. He’ll have a lot of data on his side as he tries to make his case … Compared to where it was when Obama took office seven years ago a huge array of indicators have gotten better.”

“The most recent jobs report, showing the economy added over 290,000 new jobs in December is fuel for the White House’s optimistic fire … The president’s economic advisors have developed an increasing level of confidence in the state of the economy … The 70 consecutive months of private sector job creation is a record. 2015 and 2014 were the second-best and best years of 21st century job creation. Nominal wage growth remains anemic, but thanks to low energy prices inflation-adjusted wage growth was actually pretty solid last year … the American economy at the beginning of 2016 is genuinely once again the envy of the world.”

“Obama’s problem in using this data to take a victory lap, is that normally a president likes to project a positive attitude when he knows the public already agrees with him … Somewhere between 60 and 70 percent of the public says the country is currently on the wrong track.”

Obama’s Impressive Failure to Fail on the Economy

Paul Krugman points out that dire warnings from Republicans about the effect of President Obama’s policies on employment have simply not come true.

“Politicians and pundits, especially on the right, constantly insist that presidential policies matter a lot. And Mr. Obama, in particular, has been attacked at every stage of his presidency for policies that his critics allege are ‘job-killing’ — the former House speaker, John Boehner, once used the phrase seven times in less than 14 minutes. So the fact that the Obama job record is as good as it is tells you something about the validity of those attacks.”

“More detailed examinations of labor markets also show no evidence of predicted ill effects. For example, there’s no evidence that Obamacare led to a shift from full-time to part-time work, and no evidence that the expansion of Medicaid led to large reductions in labor supply.”

“So what do we learn from this impressive failure to fail? That the conservative economic orthodoxy dominating the Republican Party is very, very wrong.”

“The Obama economy offers a powerful lesson in the here and now. From a conservative point of view, Mr. Obama did everything wrong, afflicting the comfortable (slightly) and comforting the afflicted (a lot), and nothing bad happened. We can, it turns out, make our society better after all.”

Can Job Growth Last?

FiveThirtyEight: “The U.S. job market ended 2015 on an unexpectedly high note. Now the question is whether it can sustain that momentum in a new year that is already off to a rocky start … Here are a few more observations from Friday’s report.”

“Watch the revisions: The monthly job figures are always volatile and subject to revision, but that’s especially true in December, when holiday-season hiring and other factors can make it tricky to adjust the numbers for seasonal patterns.”

“A slowing trend in job growth: Monthly job growth accelerated in December, but the more stable year-over-year trend now shows a clear sign of a slowdown. Employers are now adding jobs at a pace of about 2.7 million per year, down from more than 3 million at the start of the year.”

“Stronger wage growth: Average hourly earnings were up 62 cents in December from a year earlier, a 2.5 percent increase and the strongest gain of the recovery so far.”

“Better luck for the unemployed: Some 26 percent of unemployed workers found jobs in December, up from a low of 16 percent in 2010 and the highest mark of the recovery … Perhaps more importantly, fewer unemployed workers are giving up their search for work and leaving the labor force.”

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How Resilient is America’s Economy?

Neil Irwin asks the “giant question” for 2016: How resilient will the United States prove to be?

“On one hand, in an interconnected global economy, troubles in one place can spread easily, whether through financial markets, the banking system or trade linkages … On the other hand, in the past the United States has shown an uncanny tendency to benefit economically from tumult abroad.”

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“There are two basic questions about the notion that the United States can serve as an island of economic and political stability in a messy world. First, what happens if that changes? Second, what happens if it doesn’t?”

“The ‘things change’ situation is the risk that these global headwinds become too powerful for the United States to overcome.”

“The longer other global economies remain a mess and the United States remains on a relatively steady course, the more these same forces will reassert themselves. This means that an ever-strengthening dollar will hobble American exporters while fueling an American consumption binge. Broadly, it would mean that crisis-era hopes of a more balanced global economy might not come to fruition.”

“The best thing that could happen for the global economy would be for the mismatch between the United States and the rest of the world to end — and not because the United States falters.”

U.S. Economy Added 292,000 Jobs Last Month

New York Times: “The nation’s labor market capped off a year of steady growth with an impressive sprint as employers added 292,000 workers to their payrolls in December, the government said on Friday. The unemployment rate stayed at 5 percent last month.”

“The jobless rate, which has declined since topping the 10 percent mark in October 2009, is now hovering just above what economists consider full employment — the point where further declines could start to push up inflation.”

“The report announced each month by the Labor Department is by nature a single snapshot and because of the holidays, December is always a bit anomalous.”

“Economists say that in addition to fundamental shifts in the economy, continuing slack in the labor market is partly responsible for the lack of progress on wages. Many Americans have been forced to settle for part-time work or are too discouraged to keep job hunting after years of fruitless searching.”

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Will 2016 Be the True Test of Economic Recovery?

Ben Casselman in FiveThirtyEight asks: “Will 2016 be the year that the economic recovery at last translates into concrete gains for everyday Americans?”

“It’s far from certain that the economy will continue on the same path in the new year. U.S. factories are slowing output and shedding jobs as a weak global economy cuts into demand for American products overseas. Low energy prices are leading to job cuts in the oil and gas sector and are pushing a growing number of oil companies into bankruptcy. That leaves the recovery dependent on consumers, who became more confident at the end of the year but whose actual spending is growing more slowly. (Of course, if wages pick up, that could also lead to more spending.)”

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“Few economists expect a major slowdown in 2016, let alone a recession. And while such forecasts have a checkered history, there’s little reason to think the conventional wisdom is wrong this time around. The question, though, is whether 2016 ends up being yet another year of tepid and unequally distributed growth, or if it can instead mark a true turning point.”