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I’ve found a lot of the recent discussion about the Fed to be, frankly, confused. So I thought it worth trying to put the issues into a broader context.
Read the Fed’s latest statement, and you’ll see many of the themes I’ve talked about recently. They’ve learned that the economy is not only weak, but that—as I’ve been forecasting for some time—“economic growth so far this year has been considerably slower than the Committee had expected.” Turn to the labor market, and they somewhat dryly note “a deterioration in overall labor market conditions.” And while they won’t use the word double dip, they do note that “downside risks to the economic outlook have increased.” Also, “inflation has moderated.” So there’s plenty of room for them to try to goose the economy. But how? Read More »
So by now you’re hopefully aware that the stock market completely bombed today. As I type, the Dow is down more than 500 points, its worst day since December 2008. (Official day’s tally is -512.76) And just like that it seems, the recovery is over. Well it was fun while it lasted; kind of.
Our resident macro economic guru Justin Wolfers has come up for air from his Twitter experiment (follow him @justinwolfers) and sent over this interesting sample of recent opinions from a handful of economically savvy folks, all giving their odds of the economy entering another recession:
Larry Summers: “at least a 1-in-3 chance.”
Marty Feldstein: “now a 50 percent chance.”
Ryan Avent: “more likely than not.”
Justin Wolfers: “40% chance and peak was 4 months ago” and “The guacamole has spoken.”
Don Kohn, Vincent Reinhart, Brian Madigan: “between 20% and 40%.”
Matt Yglesias: “precisely 31.22%.”
Brad DeLong: “the odds now are 50-50.”
Christy Romer: “The risks have gone up…compared to where we were six months ago.”
Bob Hall: “We certainly are in a more vulnerable situation now.”
Jeff Frankel: “not necessarily enough to push the probability over one half.”
Jay Carney: “we do not believe that there is a threat there of a double-dip recession.”
You may remember Phil Tetlock from our Freakonomics Radio hour-long episode “The Folly of Prediction.” He’s a psychologist at Penn and author of the deservedly well-regarded book Expert Political Judgment. Tetlock and some colleagues have embarked on an ambitious new study of prediction — and even better, they’re looking for volunteers. Specifically, they’re looking for people “who have a serious interest in and knowledge about world affairs, politics, and global economic matters and are interested in testing their own forecasting and reasoning skills.”
Doesn’t that sound like you? You need to be 18 or older, with a college degree. The project even pays a small honorarium. The start date has been pushed back to September, so you better act fast if you want in.
Here’s more information from Tetlock and colleagues: Read More »
I promised to give Twitter a real randomized trial. And so today, it begins. I woke up, flipped a coin, and it came up heads. Which means that today I’ll be tweeting. You can follow me @justinwolfers. What I do tomorrow is up to the coin.
I announced this experiment here three weeks ago, but wanted to spend some time getting used to this new medium. Here are eleven things I learned during my pre-experiment trial:
1. Twitter is fun. And addictive.
2. Information really does move at light speed. I find myself reading tomorrow’s newspaper, today. (But remember: tomorrow’s newspaper will be here in the morning.)
3. As a Twitter-virgin, I hadn’t previously realized how much more it is about sharing links than making glib statements. Hive-mind curation can be extraordinary. Read More »
I’m a long-time Twitter skeptic. It’s difficult for an economist to see a 140 char lmt as a ftr. My journalist friends tell me I’m dead wrong. And a recent long and boozy evening with co-founders Evan Williams and Jason Goldman convinced me to give it a try. Is Twitter worth the hype? Let’s find out.
Today I’m beginning my Twitter Experiment. I’m now tweeting @justinwolfers. I’m going to keep this up for a couple of weeks as a “burn in” period—basically so that I can learn the ecosystem before my experiment begins. Then on the morning of August 1, I’m going to wake up, and flip a coin. Heads, I’ll open Twitter; tails I won’t. And I’ll do the same on August 2, and then every day for three months. If the coin comes up heads, it doesn’t necessarily mean that I’ll tweet, just that it will be a Twitter-aware day; I’ll consume the stream, and tweet away if I feel the need. Tails, and I’ll simply tweet “Tails, goodbye,” close the stream (unless I need it for research) and then resist the urge to tweet for the rest of the day. Read More »
The Fed’s second round of monetary stimulus, the $600 billion QE2, ended on June 30. Since then, financial markets have rallied on news of another Greek bailout, and then fallen on weakening jobs and economic news from the U.S. The Dow is basically back to where it was when QE2 ended on June 30. So the world hasn’t ended, and yet there are those who think we need a third round. The minutes of the latest meeting of Federal Reserve officials, released Tuesday, show them divided on whether to implement a third round of monetary stimulus. Before we get ahead of ourselves, let’s first assess QE2. For that, we turn to two of our regular contributors, Justin Wolfers, and James Altucher. Read More »
My good friend Andrew Leigh is the winner of the Young Economist Award, granted every two years to the best Australian-based economist under the age of forty. It’s really a rather splendid achievement. And entirely well-deserved.
Andrew’s career has been quite extraordinary. You see, economics was neither his first career, nor is it his current career. He began life as a star lawyer—clerking for the Aussie equivalent of the Supreme Court, and joining one of the big city firms. He then moved on to his second act as a policy advisor for the center-left politicians in both Australia and the UK, and a think tank in the U.S.
Finally, he began his third act, as an academic economist. Read More »
I’m a bit late in posting this, but thought it worth posting a recent interview which I did with the brilliant and engaging Chrystia Freeland.
The main point is one I’ve explored here before: the fact that we are halfway to a lost decade. We also explore our longer-run malaise, and my concerns that long-term unemployment may impair our economic recovery. Read More »