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zMacroeconomics > Notes > Flashcards

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
Q

Normal spending

A

rose 0.4% m/m, 3.3% y/y

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26
Q

Real spending

A

rose 0.4% m/m (adjusted for inflation)

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27
Q

PCE deflator

A

0.0% m/m, 1.3% y/y

(personal consumption expenditure)

28
Q

PCE core

A

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
Q

Savings rate

A

Savings / Disposable personal income = 4.2%

  • consumers lowered their savings rate and is a constraint on spending rowth
30
Q

Spending growth will be dependent on ___________

A

income growth

31
Q

GDP SAAR

A
  1. 7%
  2. 7%/4 - quarterly growth
32
Q

GDP notes

A

Recovery continues but remains tenuous

Growth < 3% prevents any improvement in labor market

Inventories subtracted 0.23% from GDP growth

33
Q

Year over Year GDP growth

constrained by:

A

up 2.3%

Constrained by: Deleveraging households

Spike in commodity prices

Soverign debt problems in Europe

U.S political uncertainty

34
Q

GDP =

A

Change in inventories + Final Sales

35
Q

Inflation numbers

A

0.6% m/m, 1.7% y/y

36
Q

Core inflation

A

0.1% m/m, 1.9% y/y

FED mandate <2%

37
Q

Expect lower inflation in 2012 due to:

A
  1. lack of broad pricing power
  2. subdued economic recovery
38
Q

Lower inflation will boost _______________

A

real disposable income growth rates

39
Q

Businesses are likely to slash___________________________________

A

prices (deflation) because inventories are lean

40
Q

Unemployment surveys

A

Establishment survey - ask business about payroll

Household survey - 60,000

41
Q

August unemployment =

A

8.1% down from 8.3%

12.5m

154.6m

42
Q

Labor force participation rate =

A

63.5%

*66% in dec. 2007

**went down, meaning more discouraged workers

43
Q

July to August Unemployment figures

A

Change in labor force = -369K

Change in Employment = -119K

Change in unemployment = -250K

44
Q

Key employment facts:

A

32 million jobs created each year

30 million jobs destroyed each year

= +2 million jobs

*Joseph schumpter “creative destruction”

45
Q

Frictional employment

A
46
Q

Structural employment

A

dynamic economy

47
Q

Structural factors that raise unemployment rate

A

Minimum wage rate

labor union wage contracts

efficiency wages

48
Q

August New Home Sales

A

373,000 SAAR

-0.3% m/m; 28% y/y

49
Q

New home sales in 2013 expectation

A

Expect 470,000 new home sales in 2013

50
Q

Demand side drivers of new home sales

A

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
Q

Supply-side drivers of new home sales

A

Low priced foreclosed homes are substituting for new home sales

Low inventory

52
Q

Inventory of new homes =

A

141,000 (record below and below long run average)

Housing backlag is falling fast due to low housing starts

53
Q

Months supply of new homes

A

current = 4.5 months

*6 months is 45 year average

54
Q

Median new home sales price =

A

267,900 (16%m/m; 17%y/y)

55
Q

Productivity =

A

2%

56
Q

Labor force growth rate =

A

1%

57
Q

Rule of 70 - US

A

Output (Y/N) will double in 70/2 = 35 years

58
Q

Standard of living is a function of ____________

A

labor productivity

59
Q

The average person can buy more goods if ___________________________

A

the average worker can produce more

60
Q

If economy doesnt grow, unemployment will rise _______

A

2.3%

61
Q

If economy grows 3.3%, ______________

A

Unemployment rate will not change

62
Q

Average worker hours

A

34.5 hours

63
Q

Average hourly earnings

A

$23.29 up 1.7% y/y

64
Q

Payroll increased ____________________

A

96,000 in august, still below the 200,000

65
Q

Labor utilization measure

A

= 58.3%

66
Q

Underemployment ratio

A

= 14.5%

zMacroeconomics (26 decks)

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