Friday, March 31, 2017

The latest GDP figures for 4th Quarter 2016

Real gross domestic product (GDP) increased at an annual rate of 2.1 percent in the fourth and final quarter of 2016. This latest report is the third estimate of U.S. GDP from the Bureau of Economic Analysis. Real GDP for 2016 grew at a 1.6 percent. 

Here is my commentary on yesterday's report.



Wednesday, March 29, 2017

Christopher Caldwell explains Vladimir Putin

"How to think about Vladimir Putin" by Christopher Caldwell of the Weekly Standard over at Hillsdale College's Imprimis is one of the best summaries of the Russian leader. It's really a must read.
Putin did not come out of nowhere. Russian people not only tolerate him, they revere him.
Read the whole piece.

Tuesday, March 28, 2017

"I took multivitamins every day for a decade. Then I found out they're useless."

Read and weep.
Though the FDA says on its vitamins information page that there "are many good reasons toconsider taking supplements," it indicates vitamins only "may be usefulwhen they fill a specific identified nutrient gap that cannot or is not otherwise being met by the individuals' intake of food." The CDC estimated in 2014 that "nine out of 10 people in the U.S. are indeed getting enough of some important vitamins and nutrients."
So why are so many Americans still taking multivitamins? Steven Salzberg, a medicine professor at Johns Hopkins, told NPR multivitamins are "a great example of how our intuition leads usastray." "It seems reasonable that if a little bit of something is good
for you, then more should be better for you. It's not true," Salzberg said. "Supplementation with extra vitamins or micronutrients doesn't really benefit you if you don't have a deficiency."
Americans' abysmally bad diets also give vitamin companies some marketing ammunition. When the average American is eating just one ortwo servings of fruits and veggies a day (experts recommend as many as 10 servings of fruits and veggies a day for maximum benefits), a little boost of vitamins might seem like a good idea. But popping a pill isn't going to make up for all those lost servings. "Food contains thousands of phyto-chemicals, fiber, and more that work together to promote goodhealth that cannot be duplicated with a pill," said nutritionist Karen Ansel.
I expect people to say that this is all a plot by BigPharma.

Monday, March 27, 2017

Can a carbon tax be progressive?

From Vertical and Horizontal Redistributions from a Carbon Tax and Rebate
by Julie Anne Cronin, Don Fullerton, Steven E. Sexton 

Abstract:

Because electricity is a higher fraction of spending for those with low income, carbon taxes are believed to be regressive. Many argue, however, that their revenues can be used to offset the regressivity. We assess these claims by employing data on 322,000 families in the U.S. Treasury's Distribution Model to study vertical redistributions between rich and poor, as well as horizontal redistributions among families with common incomes but heterogeneous energy intensity of consumption (different home heating and cooling demands). Accounting for the statutory indexing of transfers, and measuring impacts onannual consumption as a proxy for permanent income, we find that the carbon tax burden is progressive, rising across deciles as a fraction of consumption. The rebate of revenue via transfers makes it even more progressive. In every decile, the standard deviation of the change in consumption as a fraction of consumption varies around 1% or 2% and is larger than the average burden (about 0.7%). When existing transfer programs are used to rebate revenue, the tax and rebate together increase that variation to more than 3% within eachdecile. The average family in the poorest decile gets a net tax cut of about 1% of consumption, but 44% of them get a net tax increase. Relative to no rebate, every type of rebate we consider increases this variation within most deciles.

Link: NBER #23250 

Robots and the economy

Robots and Jobs: Evidence from US Labor Markets by Daron Acemoglu, Pascual Restrepo. Abstract:
As robots and other computer-assisted technologies take over tasks previously performed by labor, there is increasing concern about the future of jobs and wages. We analyze the effect of the increase in industrial robot usage between 1990 and 2007 on US local labor markets. Using a model in which robots compete against human labor in the production of different tasks, we show that robots may reduce employment and wages, and that the local labor market effects of robots can be estimated by regressing the change in employment and wages on the exposure to robots in each local labor market—defined from the national penetration of robots into each industry and the local distribution of employment across industries. Using this approach, we estimate large and robust negative effects of robots on employment and wages across commuting zones. We bolster this evidence by showing that the commuting zones most exposed to robots in the post-1990 era do not exhibit any differential trends before 1990. The impact of robots is distinct from the impact of imports from China and Mexico, the decline of routine jobs, offshoring, other types of IT capital, and the total capital stock (in fact, exposure to robots is only weakly correlated with these other variables). According to our estimates, one more robot per thousand workers reduces the employment to population ratio by about 0.18-0.34 percentage points and wages by 0.25-0.5 percent.
Gated version available at the National Bureau of Economic Research.