South By North Strategies, Ltd.

Around The Dial – May 6

Economic policy reports, blog postings, and media stories of interest:

• Joe Stiglitz asks if the Euro can be saved.
• Economix argues for the instability of the Euro.
• Slate explains the fall of Newsweek.

NC Unemployment Claims: Week of 4/17

For the benefit week ending on April 17th, 12,066 North Carolinians filed initial claims for state unemployment insurance benefits, and 177,883 individuals applied for state-funded continuing benefits. Compared to the prior week, there were fewer initial and continuing claims. These figures come from data released today 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 13,463 initial claims were filed over the last four weeks, along with an average of 185,618 claims. Compared to the previous four-week period, both initial and continuing claims were lower.

One year ago, the four-week average for initial claims stood at 26,430 and the four-week average of continuing claims equaled 225,893.

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 average of new claims has fallen to a level last seen in September 2008. Yet continuing claims remain at an elevated level, which suggests that unemployed individuals are finding it extremely difficult to find new positions.

British Election Day Explained

To mark the British Parliamentary elections, The Stash dug up a 1983 video by the precursor to the Liberal Democratic Party in which Mr. Fawlty explains how the electoral system works and how proportional voting  could improve fairness.

Around The Dial – May 5

Economic policy reports, blog postings, and media stories of interest:

• Calculated Risk offers evidence for a second half slowdown.
• Macroblog inquires into job creation at small firms.
• The CBO looks at tax arbitrage by universities.
• New Deal 2.0 explains borrowers’ gifts to banks.

Tax Misperceptions

Over at Economist’s View, Mark Thoma asks if the popular misperception that federal income taxes have risen is due to the Obama administration being too clever for its own good.

This is partly the administration’s own doing. There is a theory that says people will spend more of their tax cuts if they are unaware that they have happened, so the administration decided not to publicize the tax cut portion of the stimulus bill.
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This was successful in that people were (and are) generally unaware that 40% of the stimulus package came as tax cuts. And some of this money was spent and that helped to stimulate aggregate demand. But it was politically unsuccessful for two reasons. First, as documented above, many people believe taxes have increased when, in fact, they have decreased for most taxpayers. Second, the administration has not been able to take credit for the stimulus that resulted from the tax cuts (and the criticism over the government spending portion of the stimulus package generally fails to recognize the large component of the package due to tax cuts).
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My view is that the attempt to hide the tax cut from consumers wasn’t needed. This was a balance sheet recession — consumers took huge hits to the value of their houses and retirement savings — and consumers aren’t going to go back to their usual consumption habits until the balance sheets are repaired. The faster that balance sheets are repaired, and tax cuts can help with that, the faster that consumers will return to normal levels of consumption. That means saving is needed, not consumption, and attempts to hide tax cuts from consumers and fool them into doing the opposite, consuming rather than saving. That would not be their first choice if they were fully informed.