US labor market developments have come to center stage and play a fundamental role in the inflation debate. Why has job creation been weaker than expected, even as the US economy reopened with a bang?
Labor demand greatly outstrips labor supply: Job openings have outpaced new hires by a spectacular margin (over 3 millions in April) and many employers report difficulties in finding workers despite the still high level of unemployment. What happened to labor supply? …
This is a true story.
A US-based Italian friend of mine decided to travel to Europe this spring. Vaccinated and full of confidence as he would only traverse countries whose governments follow the science, he planned the adventure and set out.
The planning itself was a cliff-hanger: the purchase of tickets followed by a nerve-wrecking daily check of fast-changing travel rules. Italy, his destination country, had established a complex system of restrictions based on a 5-tier ranking of countries of departure, reason for travel, nationality, occupation, length of stay and more. …
The FDA and CDC have recommended to halt the use of the Johnson & Johnson (J&J) Covid-19 vaccine “out of an abundance of caution”. They have done so because six cases of blood clots have occurred after over 6.8 million doses of the vaccine had been administered, as of April 12.
The Wall Street Journal notes these are instances of a brain blood clot which is extremely rare in the general population, affecting about 5 people per million per year.
So, how risky is the vaccine?
In this age of extreme policy measures and polarized reactions it’s difficult to get a sober assessment of major policy initiatives, and Biden’s infrastructure plan is no exception. Here is how I look at it.
1. Infrastructure is a lot more than roads and bridges. Knee-jerk accusations that only about 6–7% of the planned $2.2 trillion in spending goes to “true” infrastructure, namely roads and bridges, therefore are ludicrous. A reliable and efficient energy grid and internet network, for example, are crucial parts of a modern infrastructure.
2. Manufacturing will keep gaining prominence; it needs a better public-private partnership. After…
Throughout the Covid-19 pandemic, “follow the science!” has been repeated like a mantra. Yet we have followed science at a safe distance at best.
Europe’s AstraZeneca vaccine saga is the latest example. Some people suffered blood clots after receiving the vaccine. Many EU countries, including France, Germany and Italy, promptly stopped administering it, demanding an investigation by the European Medicines Agency (EMA). This might seem reasonable, even scientific. Except that the share of vaccine recipients suffering blood clots does not appear to be any higher than their share in the general population. There is no evidence that the vaccine caused…
Greater inequality will be the heaviest legacy of the pandemic. Inequality of incomes, and of job opportunities.
Long term unemployment is a red flag. Most economists have upbeat projections for 2021 economic growth, especially in the US. They have good reasons: the economy has showed a remarkable ability to bounce back when restrictions on business activities are eased. With vaccination campaigns underway, this year we should move towards full reopening, and generous fiscal and monetary support will then boost spending and growth.
But long-term unemployment strikes the wrong note:
Nothing gives the measure of how much the world has changed better than hearing someone say something you would never have expected them to — the kind of statement that makes you think “Who would’ve thunk it?”
Exhibit A: When I worked at the International Monetary Fund, the insider joke was that IMF really stood for “It’s Mostly Fiscal”, because the institution believed sound public finances were the bedrock of good economic policy. But times have changed. As the Fund unveiled its January outlook update this week, it stated that “circumstances have changed in a way that justifies the rethinking…
The year 2020 has tried to teach us many lessons (though we took away some of the wrong ones); here are the seven that stuck with me, and the one resolution they suggest for 2021.
1. Technology: Give it a Go — Fighting a virus is no game
As we fought the pandemic and struggled to keep our economies alive, innovation scored some important wins: 3D printing helped accelerate the production of Personal Protective Equipment; manufacturing platforms helped companies adapt to the disruption in global supply chains; and remote working worked, for some jobs. …
Paul Krugman published an exquisitely sophisticated analysis of the Covid-19 situation, as befits an economics Nobel laureate. The piece, “Why Can’t Trump’s America Be Like Italy?”, appeared a few days ago in the New York Times.
Summarized for mere mortals like the rest of us, Krugman’s argument runs as follows — pay close attention, because the logic is a bit subtle:
Trump bad. Italy: no Trump. US: Trump. Italy: no coronavirus. US: apocalypse.
Irony aside, the article highlights some important open questions.
First question: how should we compare today the experience of different countries in the pandemic?
If you live…