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Notes Flashcards

1
Q

Unemployent Insurance rates

A
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2
Q

Labor market is heading in ________ direction

A

right direction

*fewer firing, more hiring

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3
Q

What is a necessary condition for a strong labor market?

A

hiring

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4
Q

Private sector __________, Public sector ___________

A

Private sector hiring

Public sector firing

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5
Q

Public sector firing

A
  • 2 trilllion federal defecit
  • cant use debt bond
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6
Q

of jobless claism consistent with stable unemployment rate

A

350,000

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7
Q

Firms remain wary of hiring new workers despite strong profitability, because they have strong concerns over:

A
  1. Weak recovery
  2. Los consumer confidence
  3. Euro-zone debt crisis
  4. U.S. fiscal policy uncertainty
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8
Q

Number of continous unemployment claims

A

3.3 million

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9
Q

Maximum sustainable growth rate

A

3% (quarterly)

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10
Q

Reason why we are not recovering quickly

A

Deleveraging

-people/firms paying down debt

*arent spending money elsewhere

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11
Q

Anualized houses sold in July

A
  1. 47 million
    (372. 5 x 12)
    - up 2.3%m/m, up 10% y/y

*Sales moving in right direction

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12
Q

Median home price

A

$187,300

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13
Q

Months supply of homes

A

6.4 months

Total supply

Months sold

2.4 million / 372.5 thousand

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14
Q

Demand side factor of housing market

A
  1. Low mortage interest rate (increase), but tight credit (decrease)
  2. Rising consumer confidence
  3. Modest job and income growth
  4. Expect home prices to fall again in 2013 as foreclosed properties come
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15
Q

Supply side factors of housing market

A
  1. Large inventory of discounted foreclosed home (shadow)
    - prices down
  2. Falling inventory of homes
  3. Falling distressed home sales
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16
Q

Prices always go up on homes?

A

Sin of extrapolation

-future looks like the past

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17
Q

July Retail Sales

A

Retail sales rose 0.8% m/m, 4.1%y/y (3.8% excluding autos)

(9.6% annualized)

This strong of sales is unsustaiable - made up for June

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18
Q

Retail sales: debt payments

A

Debt payments are down and the pace of deleveraging is gradually slowing, which increases available cash

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19
Q

Factors reducing demand in retail sales

A
  1. Few new jobs
  2. Low income / wage growth 3.5% y/y
  3. High unemployment
  4. Low confidence (fiscal cliff budget debate and Euro-zone crisis)
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20
Q

Factors supporting consumer demand

A
  1. Reduced Social security withholdings
  2. rising home and stock prices (wealth effect)
  3. Private sector job growth
  4. Pent-up demand
  5. Falling debt payments
  6. Increased credit availability
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21
Q

Personal income in July

A

rose 0.3% m/m, 3.6% y/y

wage income rose 0.2% m/m, 2.4% y/y

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22
Q

lower interest rates

A

lower interest income

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23
Q

high profits for companies

A

higher dividends and proprietor’s income

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24
Q

Rental income is _______

A

rising, there are less homeowners

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25
Normal spending
rose 0.4% m/m, 3.3% y/y
26
Real spending
rose 0.4% m/m (adjusted for inflation)
27
PCE deflator
0.0% m/m, 1.3% y/y | (personal consumption expenditure)
28
PCE core
0.0% m/m, rose 1.6% y/y everything you buy except oil and food -lower inflation is benefitting us lower debt burdens free up income for spending more borrowing = raising cash flows
29
Savings rate
Savings / Disposable personal income = 4.2% - consumers lowered their savings rate and is a constraint on spending rowth
30
Spending growth will be dependent on \_\_\_\_\_\_\_\_\_\_\_
income growth
31
GDP SAAR
1. 7% 1. 7%/4 - quarterly growth
32
GDP notes
Recovery continues but remains tenuous Growth \< 3% prevents any improvement in labor market Inventories subtracted 0.23% from GDP growth
33
Year over Year GDP growth constrained by:
up 2.3% Constrained by: Deleveraging households Spike in commodity prices Soverign debt problems in Europe U.S political uncertainty
34
GDP =
Change in inventories + Final Sales
35
Inflation numbers
0.6% m/m, 1.7% y/y
36
Core inflation
0.1% m/m, 1.9% y/y FED mandate \<2%
37
Expect lower inflation in 2012 due to:
1. lack of broad pricing power 2. subdued economic recovery
38
Lower inflation will boost \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
real disposable income growth rates
39
Businesses are likely to slash\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
prices (deflation) because inventories are lean
40
Unemployment surveys
Establishment survey - ask business about payroll Household survey - 60,000
41
August unemployment =
8.1% down from 8.3% _12.5m_ 154.6m
42
Labor force participation rate =
63.5% \*66% in dec. 2007 \*\*went down, meaning more discouraged workers
43
July to August Unemployment figures
Change in labor force = -369K Change in Employment = -119K Change in unemployment = -250K
44
Key employment facts:
32 million jobs created each year 30 million jobs destroyed each year = +2 million jobs \*Joseph schumpter "creative destruction"
45
Frictional employment
46
Structural employment
dynamic economy
47
Structural factors that raise unemployment rate
Minimum wage rate labor union wage contracts efficiency wages
48
August New Home Sales
373,000 SAAR -0.3% m/m; 28% y/y
49
New home sales in 2013 expectation
Expect 470,000 new home sales in 2013
50
Demand side drivers of new home sales
Rising job growth, tight credit, rising confidence, underwater potential trade-up buyers (loan more than value of house - cant buy new home) also, more affordable homes
51
Supply-side drivers of new home sales
Low priced foreclosed homes are substituting for new home sales Low inventory
52
Inventory of new homes =
141,000 (record below and below long run average) Housing backlag is falling fast due to low housing starts
53
Months supply of new homes
current = 4.5 months \*6 months is 45 year average
54
Median new home sales price =
267,900 (16%m/m; 17%y/y)
55
Productivity =
2%
56
Labor force growth rate =
1%
57
Rule of 70 - US
Output (Y/N) will double in 70/2 = 35 years
58
Standard of living is a function of \_\_\_\_\_\_\_\_\_\_\_\_
labor productivity
59
The average person can buy more goods if \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
the average worker can produce more
60
If economy doesnt grow, unemployment will rise \_\_\_\_\_\_\_
2.3%
61
If economy grows 3.3%, \_\_\_\_\_\_\_\_\_\_\_\_\_\_
Unemployment rate will not change
62
Average worker hours
34.5 hours
63
Average hourly earnings
$23.29 up 1.7% y/y
64
Payroll increased \_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_\_
96,000 in august, still below the 200,000
65
Labor utilization measure
= 58.3%
66
Underemployment ratio
= 14.5%

zMacroeconomics (26 decks)

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