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Economics 2012

Economics 2012. Are we there yet? Robert Ricketts Frank M. Burke Chair in Taxation Rawls College of Business Texas Tech University March 2012. World Industrial Production Now vs. Great Depression. Volume of World Trade Now vs. Great Depression.

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Economics 2012

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  1. Economics 2012 Are we there yet? Robert Ricketts Frank M. Burke Chair in Taxation Rawls College of Business Texas Tech University March 2012

  2. World Industrial ProductionNow vs. Great Depression

  3. Volume of World TradeNow vs. Great Depression

  4. World Equity MarketsNow vs. Great Depression

  5. Still, the Worst Downturn Since WWII—Although Things are Slowly Getting Better

  6. Unemployment is Dropping

  7. Payrolls are Increasing

  8. Where are the Jobs Coming From?

  9. How is it that Jobs Increase but the Unemployment Rate Stays the Same?

  10. Employment to Population Stabilizing?

  11. February Jobs Report Relatively Good

  12. Wages Remain Relatively Low

  13. Especially for Nonsupervisory Employees

  14. Business Production is Rising

  15. Labor Doesn’t Appear to be Sharing in Profit Growth

  16. Still, Inventories are Shrinking, Suggesting that Further Increases in Production are Ahead

  17. So How Quickly Must the Economy Grow to Return to “Full” Employment? New Website Hosted by the Atlanta Federal Reserve: http://www.frbatlanta.org/chcs/calculator/index.cfm The “Jobs Calculator” calculates the net employment change needed to achieve a target unemployment rate after a specified number of months. The user can adjust the target unemployment rate, the number of months, and the assumed labor force growth. Calculator estimates that the economy will have to generate between 297,000 and 318,000 jobs per month to reduce the unemployment rate to 5.0% in the next 24 months. (We have averaged about 160,000 jobs per month for the past year—private payrolls have increased at about 200,000 per month, while government jobs have been declining around 40,000 per month on average).

  18. Compare January Reports last 5 years • Jobs report – last 5 Januaries: • January 2008: +13,000 • January 2009: -820,000 • January 2010: -39,000 • January 2011: +68,000 • January 2012: +243,000

  19. So … What to Do? Current Debate is About What Government Should Do: • Nothing? • Stimulus—if so, what kind? • Infrastructure spending • Individual tax cuts • Corporate tax cuts • Other? • Is the budget deficit relevant?

  20. First, What’s Holding Down Consumption (besides job uncertainty)

  21. Why Credit Overhang is Different Now

  22. The Effects of “Austerity”

  23. Major Policy Initiatives and the Deficit

  24. Deficits and Government Spending—Comparing the Last Seven Administrations

  25. Components of Government Spending:1962-2022 (post 2012 figures projected)

  26. Reducing Unemployment and Government Spending are Inextricably Linked

  27. Spending—by the Numbers

  28. Maturity-Weighted Real Interest Rate on U.S. Treasury Debt

  29. “Out of Control” Spending?Do the Markets Anticipate Inflation?

  30. Same Graph: 2011-2012

  31. Actual Inflation

  32. Next Week • The Role of Tax Policy in the Recovery: Short and Long Run Issues • Budgetary considerations • Inequality and economic performance • Regulatory uses • Roadblocks Ahead? • Europe • Politics • Wall Street

  33. Unemployment is Taking Longer and Longer to Adjust

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