National / International News

Answering your economics questions with Jim Tankersley

Marketplace - American Public Media - Fri, 2014-08-01 01:00

For today’s blog, here’s a little something different. My good friend Jim Tankersley is a talented economics correspondent for the Washington Post, and the editor of a new project there, Storyline, which tells economic stories the right way: about people.

We spoke together at a conference on inequality at Kenyon College this spring, and we stay in regular touch. We talk about the economy, our lives, his son, and baseball. This week, we decided to take a few questions from readers and people on twitter. Below are a few of our answers (plus one shot at a New York Times economics correspondent. All’s fair in love, war and journalism).

We hope you like it!

1. Can you ask (Lizzie) to weigh in on that Brookings report on student debt? Does she think it’s an overstated problem?

Lizzie O’Leary: Oh, good. You tossed me the hot potato of student loans. I guarantee that any way I answer this, someone is going to want to punch me in the face.

The Brookings report got a lot of attention because it basically said hey, there’s not a loan crisis and we’re paying the same amount of our incomes in loans as we used to be.

Plus, they say those loans help you get a better gig, and it comes out in the wash. In econo-speak, that’s an “increase in earnings received over the course of 2.4 years would pay for the increase in debt incurred.”

There are a couple places where I’m skeptical. The data only runs through 2010. Since then, tuitions have continued to rise and median wages haven’t kept up with them.

In addition, the Brookings report looks at income, not wealth. Sure, your income can go up, and that will help you pay your loans. But let’s say you came from a family with very little money. Those loans may have helped you get a better job after school, but there’s no cushion if something happens to your income (you get sick, you lose your job, etc). And that’s the intersection between democratized access to expensive education and student loans that worries me.

2. Should I ever go to grad school?

Jim Tankersley: Lizzie, I’m so glad you took the college / loans question. When I go out on reporting trips and tell people I write about the economy, someone always asks about student debt, why it’s going up so much and whether college is worth it. Usually I say yes, it’s almost always worth it if you make it all the way through, but I also talk about community college and technical school and finding the right fit for you, and I ramble, and people start getting that face-punching look, so I try to head them off by making a joke about USC. *Everyone* loves a good USC joke.

Hardly anyone asks about grad school, but they should. Grad school is a huge economic decision. Tuition is expensive. If you go full time, you’re not working – or working as much as you could. On the other hand, you are, very broadly speaking, setting yourself up for higher future earnings and better odds of getting a job. As these charts show. (I’ve made them USC colored; my mom has a degree from USC; sorry about the jokes earlier, Mom!)

Source: Bureau of Labor Statistics

The Washington Post

Of course, as they say, your results may vary, especially depending on what grad school you’re thinking about. Which brings me to the other half of this answer, economically: The value of work isn’t just about money. There’s value in enjoying what you do, as the president of the American Enterprise Institute, Arthur C. Brooks, argues. Will that grad degree help you land that job you love? Make that part of your utility-function calculation, too.

3. Should I buy a house?

O’Leary: Should you buy a house? Ask me that and I have 800 other questions for you.

I could talk to you about interest rates (they’re good right now). Down payments (how much can you afford?), and calculators (http://www.trulia.com/rent_vs_buy/). But to me, it’s about words, not numbers.

What is a house to you? If your answer is a place to live and build equity, then yes, by all means. If it’s a cash register, then nope. Houses are the single biggest asset most Americans will have. But they sure don’t appreciate like investment portfolios (yes, yes, I know the market is risky).

Since 1983, stocks and financial assets have returned 7%. Homes have returned 1.6%.

Bonus: you can listen to me interview Ray Boshara from the St. Louis Fed about this. 

4. Any sectors where job growth or job decline surprises you?

Tankersley: This is not a surprise to smart folks who listen to Marketplace, but it is a fact that never fails to astonish me about the last few years: Manufacturing in America is absolutely crushing it right now, in terms of economic output. But it is not, how do you say, doing much hiring. There are reasons for this – automation being the main one; it just takes fewer people in an actual factory to produce the same amount of stuff these days – but those reasons have not stopped many people, including President Obama and his team, from predicting a much larger wave of manufacturing job creation than what we’re seeing. The surprise is that they keep predicting it.

5. Is our current economy the new “normal”? High inequality gap, shrinking middle class, etc?

Tankersley: Teaser alert: I have an entire multi-part series in store for this topic. Short preview: There’s plenty of evidence that the American economy isn’t working the way it used to – in the rising tide lifting boats sense – but also there’s nothing in American history that suggests we are stuck in our current economic situation.

O’Leary: I sort of hate this question because … I’m afraid it might be true … at least in the short term.

Do you remember that panel on inequality we were on together at Kenyon? I feel like no one there had a good answer about how we get out of this moment.

And to me, it’s not just about income inequality, but about wealth inequality.

Which means … it’s harder to buy houses, build assets, and pass things on to your kids.

This research on home ownership by African Americans is pretty telling, I think, about how much inequality eats away at our ability to build wealth for future generations.

And I don’t think we can actually get out of this until we, as a country, figure out how to pay people higher wages across the board.

Tankersley: That Kenyon panel was dispiriting. The room was full of hopeful young scholars and we – you and Ross Douthat and I – we crushed their spirits!

O’Leary: We totally did. But we swore. Which I think was maybe cool? We were the journalist panel and we were supposed to be saltier than the economists.

Tankersley: To your point on compensating people better: I think there’s a real sense in America, a correct one, among a wide swath of people, that people like me aren’t getting ahead.

O’Leary: Right. BUT — who is a part of that “like me”?

Tankersley: It’s psychologically powerful, that sense. Here is some research from USC on this topic.

But this is a storytelling question and answer column. So back to our New Normal question:

What’s the story of the American economy right now, would you say? WHO is the story of the economy?

O’Leary: Running in place is the answer to your first question. So that’s GDP, and productivity, and manufacturing all going up … but it still doesn’t mean we see the kinds of jobs that mean you can send your kids to school without debt.

And who? I think that’s an hourly wage earner. Someone who’s working in health care, maybe.

Or that lovely Navy chaplain I met, Jason DiPinto. Served in Afghanistan (before he was in the Navy), and still can’t afford to buy a house.

It just seems like maybe someone or some THING isn’t holding up its end of the bargain.

And I think on a gut level, beyond all the numbers, people feel that.

(Pause)

We’re depressing everyone.

Tankersley: We’re horrible people.

O’Leary: No! I’m an optimist!

Tankersley: Let’s just move on to the last question.

6. (Submitted by New York Times economics correspondent Neil Irwin) Which has higher marginal product of labor, 100 duck-sized horses, or 1 horse-sized duck?

O’Leary: They are both more productive than a New York Times economics correspondent.

 

A preview of the jobs report for July

Marketplace - American Public Media - Fri, 2014-08-01 01:00

Economists expect businesses and government agencies added about 230,000 jobs in July, and unemployment held steady at 6.1 percent.

“We’ve seen not only a sustained uptick in job growth, with more than 200,000 new jobs being added month in and month out, but the quality of jobs has improved," says Greg McBride is at Bankrate.com.

McBride says a lot of new jobs are in business services; blue-collar work has also picked up.

But take-home pay hasn’t — at least for most Americans, says John Canally at LPL Financial:

“Manufacturing — for the most part, wages there remain stagnant. [It’s the high-end,] high value-added jobs that require master’s degree or some advanced training [or even more], that’s where you’re seeing most of the wage gains [accrue to].”

And economists say spending on big things — like new cars and fancy summer vacations — won’t really take off until wages go up across the board.

More Deadly Fighting In Gaza Puts Cease-Fire In Question

NPR News - Fri, 2014-08-01 01:00

Renee Montagne talks with NPR's Emily Harris in Gaza City for an update on the cease-fire that went into effect Friday morning. Just hours later, there were reports of more deadly fighting.

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Big Data Firm Says It Can Link Snowden Data To Changed Terrorist Behavior

NPR News - Fri, 2014-08-01 01:00

For months, U.S. officials have said secret data from former NSA contractor Edward Snowden was affecting the way terrorists communicate. A Massachusetts company says it has found proof.

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Tensions Stir At EPA Hearings On New Emission Rules

NPR News - Fri, 2014-08-01 01:00

As the EPA develops new carbon emission rules for existing power plants, the agency is holding a series of public hearings around the country where coal industry advocates made their concerns known.

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Inquiry Shows CIA Spied On Senate Panel That Was Investigating The Agency

NPR News - Fri, 2014-08-01 01:00

CIA director John Brennan apologized to Sen. Dianne Feinstein, who had accused the CIA of spying on her committee's computers. Brennan at first denied it.

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VIDEO: Civilians in Ukraine flee fighting

BBC - Fri, 2014-08-01 00:59
Civilians from towns around the area of Eastern Ukraine where flight MH17 was shot down are continuing to flee heavy fighting.

VIDEO: Royal Navy rescues BBC's faulty forecast

BBC - Fri, 2014-08-01 00:56
BBC weather presenter Carol Kirkwood got a helping hand from members of the Royal Navy when a technical problem meant the graphics did not work for her weather forecast.

Exam body to check 'extra help' data

BBC - Fri, 2014-08-01 00:45
The exams regulator Ofqual is to collect information on how many private school students receive extra time in exams, compared with state pupils.

Israel and Hamas truce under way

BBC - Fri, 2014-08-01 00:41
Israel and Hamas begin a 72-hour truce, but hours later several Palestinians die by Israeli fire in apparent response to a rocket attack.

Boys arrested for Cadbury home arson

BBC - Thu, 2014-07-31 23:51
Three boys are arrested on suspicion of arson after a fire destroys the former home of the Cadbury family in Birmingham.

Games cyclist tests negative for Ebola

BBC - Thu, 2014-07-31 23:47
An athlete competing at the Commonwealth Games in Glasgow has tested negative for Ebola, organisers confirm.

Hopes 'bleak' for landslide missing

BBC - Thu, 2014-07-31 23:45
Officials say hopes of finding any more survivors from a landslide that buried a village are fading, as the number of bodies found reaches 66.

Multiple Taiwan gas blasts kill 25

BBC - Thu, 2014-07-31 23:29
A series of gas explosions in the southern Taiwanese city of Kaohsiung kills at least 25 people and injures about 267 others.

Weekly Wrap: Jobs Friday

Marketplace - American Public Media - Thu, 2014-07-31 23:15

David Gura talks wtih Fortune's Leigh Gallagher and FT Alphaville's Cardiff Garcia.   

Listen to their conversation in the audio player above.

Bank of Ireland makes £259m profit

BBC - Thu, 2014-07-31 23:09
Bank of Ireland announces it made a pre-tax profit of 327m euros (£259m) over the past six months and its Northern Ireland business is now profitable again.

Child savours Games silver medal

BBC - Thu, 2014-07-31 22:50
Scottish hurdler Eilidh Child says winning silver at Glasgow 2014 is "one of the best moments" of her career.

Muhammad Ali gloves fetch $400,000

BBC - Thu, 2014-07-31 22:31
The gloves worn by boxer Muhammad Ali during the "Fight of the Century" against Joe Frazier have been sold for nearly $400,000.

Nearly half sonic booms over Wales

BBC - Thu, 2014-07-31 22:28
Almost half the sonic booms recorded in the UK in the last five years happened in the skies above Wales with one breaking windows and closing a supermarket after ceiling tiles fell.

Hours After It Began, Gaza Cease-Fire Appears To Unravel

NPR News - Thu, 2014-07-31 22:11

The three-day truce that began this morning seems to be crumbling, with Israel and Hamas accusing each other of violating it. Four Palestinians were reportedly killed in the southern town of Rafah.

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