How Monetary Policy Happens
Sadly, this video (via Felix Salmon) offers one of the more informative (if somewhat problematic) explanations of how the Federal Reserve works and the rationale behind the latest round of quantitative easing.
Policy Points
Picturing The National Debt
The Web site Mint.com has a nice graphic showing just who owns the United States’ $13 trillion in outstanding debt. As the graph shows, some two-thirds of the debt is owned by American sources, primarily the Federal Reserve. Among foreign creditors, Chinese and Japanese sources account for the two largest sources.
Around The Dial – Nov. 12
Economic policy reports, blog postings, and media stories of interest:
- Free Exchange graphs the deleveraging of household debt.
- Kevin Drum wonders if the deficit commission is serious.
- Felix Salmon wonders something similar.
- CBPP notes that the GOP budget plan will hit states hard.
The Benefits of Extending Unemployment Insurance
When Congress returns next week, it will consider whether or not to extend the recovery act provisions related to unemployment insurance set to expire at the end of the month. A new report from the Economic Policy Institute finds that extending those provisions would generate the equivalent of over 720,000 full-time jobs in a cost-effective manner. From the report …
Using a methodology described in Mishel and Shierholz (2010), we find that of the $104.7 billion increase in GDP related to continuing the unemployment extensions through 2011, some 37.4%, or $39.1 billion, will be recouped both in higher revenues, as more people and firms pay taxes, and in lower expenditures. Consequently, the effective cost to the budget of continuing the unemployment insurance extensions for a year is $25.9 billion instead of $65 billion. This means that the continuation of unemployment insurance extensions through 2011 will create 723,000 full-time-equivalent jobs at a cost of less than $36,000 per position. That alone is a good deal for all involved, but when we remember that these expenditures will at the same time be providing a lifeline to millions of families of the long-term unemployed during the worst downturn in seven decades, the case for continuing the extensions could not be clearer.
NC Unemployment Claims: Week of 10/23
For the benefit week ending on October 23rd, 12,972 North Carolinians filed initial claims for state unemployment insurance benefits, and 115,871 individuals applied for state-funded continuing benefits. Compared to the prior week, there were more initial and continuing claims. These figures come from data released by the U.S. Department of Labor.
Averaging new and continuing claims over a four-week period — a process that helps adjust for seasonal fluctuations and better illustrates trends — shows that an average of 14,514 initial claims were filed over the previous four weeks, along with an average of 116,752 continuing claims. Compared to the previous four-week period, there were more initial and continuing claims.
One year ago, the four-week average for initial claims stood at 17,339 and the four-week average of continuing claims equaled 179,989.
While the number of claims has dropped over the past year, so has covered employment. Last week, covered employment totaled 3.7 million, down from 4 million a year ago.
The graph (right) shows the changes in unemployment insurance claims (as a share of covered employment) in North Carolina since the recession’s start in December 2007.
Both new and continuing claims appear to have peaked for this business cycle, and the four-week averages of new and continuing claims have fallen considerably. Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it difficult to find new positions.
Also, little change has occurred within recent months. Since April 2010, the four-week average of initial claims consistently has ranged between 14,075 and 11,200.
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