What is the Council of Economic Advisers and Does it Really Matter?

When President Donald Trump formally announced his Cabinet, one of the surprises was that the list of 24 Cabinet-level officials did not include the chair of the Council of Economic Advisers (CEA).  There is no formal requirement that an economic adviser be part of the Cabinet. However, Barack Obama started a new trend by appointing the last four council chairs as part of his Cabinet. Being part of the Cabinet is important because it ensures economic as well as political considerations are part of presidential decisions.

Not only has the position now been eliminated from Cabinet meetings, but the council’s website has also been turned off. Only archival versions from past administrations remain.  This apparent sign of disrespect for the role of the CEA, along with the fact that President Trump has yet to actually nominate a council chair, has caused some to worry that he won’t be getting much economic advice from actual economists. A website that takes bets on who will fill various posts in Trump’s Cabinet suggests he may not even fill the position.
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Why Wall Street’s Dow 20,000 is totally meaningless

The Dow Jones Industrial Average just broke 20,000 for the first time.  Traders and investors cheered this historic high of the world’s most famous stock market index, which is composed of 30 of the biggest and best-performing American companies and is frequently used as a barometer of the strength of the economy.

However, it’s hardly a surprise that the Dow hit this particular milestone. It and other major stock indexes like the Standard & Poor’s 500 have two key features that ensure that they will continually rise and break new zero-filled records: They ignore inflation and are heavily curated. Continue reading

What Has Happened to Maternity Leave Over Time?

The recent presidential campaign reminded us that the U.S. is one of only a handful of countries that doesn’t require companies to provide paid maternity leave. Maternity leave is important. One of the key reasons is because medical researchers have shown overwhelmingly positive effects when parents are able to spend time with their newborn children.
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Outlook 2017: Get ready for a recession

My outlook for 2017 and beyond is that the U.S. economy will likely see another recession. Yes, the economic picture currently looks wonderful. The Dow and S&P 500 are at record levels. Unemployment is well below 5 percent of the labor force. Inflation is still tame. The U.S. dollar is strong.

The U.S. economy has grown dramatically over the long-run. GDP has increased by one-third since the beginning of the 21st century, even after adjusting for inflation.

However, capitalist economies do not simply grow steadily larger. Instead, their long-term growth is periodically punctured by downturns. Continue reading

Has Black Friday’s death been greatly exaggerated?

Black Friday is hyped as one of the biggest in-store shopping days of the year, with stores trumpeting giant sales and even bigger advertising campaigns.  Some pundits claim that Black Friday is dying and is no longer relevant. However, the National Retail Federation issued a strong denunciation of these articles and declared that Black Friday is “far from gone.”  Which is the true story? Is Black Friday dying or still relevant? Continue reading

How to get the most candy on Halloween (without resorting to extortion)

Halloween is here, the night every year when children dress up in costumes and go “trick or treating.”  On the surface, that activity appears to be a relatively benign one. What could be more innocent than cute youngsters collecting sweets?

Halloween, however, is actually one of our only holidays based on extortion. When children scream “trick or treat,” they are essentially demanding candy in exchange for not doing a prank or something else that is nasty. Continue reading

Why is taking photographs banned in many museums and historic places?

Have you ever pulled out your camera or phone in a museum or historic place and suddenly found a staff person telling you “no photographs”?  I was in London recently and it happened repeatedly in places like Westminster Abbey, Buckingham Palace and Parliament. The no-photos policy is not limited to just England but is a worldwide phenomenon. Visitors cannot take photos in places like the Sistine Chapel in Rome, the Van Gogh Museum in Amsterdam or inside Thomas Jefferson’s Monticello home.

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Great news for women: The gap between male and female earnings is narrowing.

Each year in September, the U.S. Census Bureau releases a report showing how income and poverty have changed over time. The most recent report, which came out on Sept. 13, was filled with great news. Compared with the previous year, average inflation adjusted income soared 5.2 percent. The U.S. poverty rate fell 1.2 percentage points, resulting in 3.5 million fewer people living in poverty. Even the number of people without health insurance fell by 4 million people in the past year.

While these statistics got the headline attention they deserve, there is one piece of great news in the report that hasn’t attracted as much attention but is just as important. The gap between women’s and men’s earnings shrank to a new record low. The median woman working a full-time year-round job now earns 80 percent of the median earnings given to men working full-time. Continue reading

A common misperception about Labor Day is we all get the day off.

Labor Day is a U.S. national holiday held the first Monday every September. Unlike most U.S. holidays, it is a strange celebration without rituals, except for shopping and barbecuing. For most people it simply marks the last weekend of summer and the start of the school year.

The holiday’s founders in the late 1800s envisioned something very different from what the day has become. The founders were looking for two things: a means of unifying union workers and a reduction in work time. Continue reading

How to kiss babies, Donald Trump style

Politicians have a long history of trying to be elected by kissing babies. However, with about four million babies being born in the U.S. each year, there isn’t enough time in the current presidential race to kiss enough newborns to make any real difference. So Trump is trying to find another way to convince Americans he cares about babies. Continue reading

Do Businesses Have to Accept Cash?

We’ve been talking about society’s transition to a cashless society for a long time, but it begs an important question: Can stores and other retail establishments refuse to take your dollars and cents?  As odd as it sounds, this is not hypothetical anymore as a small number of stores and industries have stopped accepting cash and allow payment only by credit card, debit card or via a smartphone app. Continue reading

Will Cleveland get an economic boost from the GOP Convention?

The Republican National Convention is coming to Cleveland, and boosters are cheering the millions of dollars it will bring to northeast Ohio’s businesses.  There are lots of impact studies of previous Republican and Democratic nominating conventions. Each seems to produce more eye-popping figures than the last. However, some academics and journalists suggest these conventions really have no impact on the local economy.

Which is the true story? Continue reading

Brexit backers claim U.K. is drowning in EU regulations – are Americans underwater too?

On June 23, the United Kingdom will decide whether to leave the European Union or stay. The vote is nicknamed Brexit, short for British Exiting. One reason the debate is important outside of the U.K. is that it is partly a referendum over the amount of government regulation voters want. Continue reading

Was the May 2016 Jobs Report Really That Bad?

This past Friday, the Bureau of Labor Statistics issued a press release stating the monthly employment figures for May 2016.  The headlines following the report’s release emphasized that the U.S. economy created only 38,000 additional jobs in May 2016. This figure promptly caused the stock market to fall. The next day’s Wall Street Journal front page led with a story declaring “Weak Hiring Pushes Back Fed’s Plans” for an interest rate hike. But the true figure was much higher than 38,000 jobs.

The actual number of additional jobs created between April and May was 651,000! This much larger figure is calculated using numbers found in table B1’s top line located on the press release’s 28th page. Continue reading

Is Marriage Becoming Obsolete?

June kicks off the wedding season in the U.S.!  No matter whether you love or hate them, an astounding trend is happening.  There are fewer weddings every year.

The number of U.S. marriage ceremonies peaked in the early 1980s.  Back then there were almost 2.5 million marriages recorded each year.  Since the early 1980s, however, the total number of people getting married each year has steadily fallen.  Now, in the mid-2010s, only about 2 million marriages happen a year.  This is a drop of almost half-a-million marriages a year since the early 1980s peak.  To provide a frame of reference the reduction in weddings means more people are now injured in U.S. car crashes than getting married each year. Continue reading

What is Brazilian President Dilma Rousseff’s real crime?

Dilma Rousseff, Brazil’s first female president, is about to go on trial. She is temporarily suspended from office while Brazilian politicians debate whether she broke the country’s laws.

Her crime is she allegedly borrowed about US$11 billion from Brazil’s state banks – about one percent of GDP – to fund long-running social programs for small farmers and the poor while trying to get reelected, which concealed a budget deficit. Continue reading

Could gambling be the secret to saving when rates are so low?

Many interest rates in the U.S. are close to zero and even negative in some parts of the world, like Japan.

Not unexpectedly, U.S. savings rates are also quite low as individuals ask themselves: “Why save a lot of money at a bank if I get no return?”

This situation has many commentators wringing their hands because low savings rates are a problem for many reasons.

Individuals who don’t save face spending their golden years of retirement in poverty, instead of plenty. In addition, people with no savings face financial problems and potential ruin when unexpected large expenses occur and cannot help out their children with large bills like college or a down payment on a first home.

In the absence of a rapid increase in interest rates, which appears unlikely, is there anything we can do to change this problem and get people to save more?

As odd as it may sound, gambling could be part of the answer. Continue reading

Why is corruption so costly?

The news is currently filled with stories of corruption.  A global group of media outlets just broke the story of secret offshore bank accounts in Panama, which suggests widespread corruption in the Russian government and elsewhere. For months, stories of the Brazilian government’s bribery scandal have filled the news. Other headline-grabbing events include Malaysia’s prime minister allegedly siphoning almost a billion dollars from a state development fund. Continue reading

Are Blondes Really Dumb?

Blondes are often stereotyped as dumb. The dumb female blonde is a staple of Hollywood movies such as Reese Witherspoon in “Legally Blonde.” Amazon currently sells many joke books that poke fun at blondes’ lack of intelligence. While they are derided for their supposed stupidity, until now no one has actually investigated “Are blondes really dumb?” Continue reading