Macroeconomic Patterns and Stories
The story of this book began with my dif?cult transition from teaching international economics and econometrics in Economics Ph. D. programs at Harvard and UCLA to teaching in the MBA programs at the Anderson School at UCLA. On the basis of 20 years of apparent teaching success in Ph. D. education, I arrived at the Anderson School in 1990 with a self-image as a star teacher, but I was greeted with highly disturbingmediocreteachingevaluations. Facedwithadatasetthatwasinconsistent with my view of reality, I did what analysts usually do – I formulated a theory why the data were misleading. Here is how I thought about it. Two aspects of the course – content and amu- ment – drive numerical course evaluations. If you rank courses by the average of the content score and the amusement score, then the component that can be measured most accurately will determine the ranking. Do you understand why? It is what - eraging does: it eliminates the noise. Suppose, for example, that a student cannot tell anything about the content, and the content score is simply a random number, varying from student to student. Those random numbers will average out across students to about the same number for each course. As the average course content score is about the same for every course, it is the amusement score that will drive the rankings.
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12 We Can Also Analyze
In that Order
I think I Can Help
It Will Help You More Than Them
The Key Pattern
171 Updated Displays
122 Contributions to GDP Growth
1221 Normal Trend Contributions to GDP Growth
1222 Abnormal Cumulatives
Its a Consumer Cycle Not a Business Cycle
124 Eight Consumer Cycles a Disarmament Downturn and an Internet Rush Comeuppance
1241 The 1953 Department of Defense Downturn
1242 The 2001 Internet Comeuppance
125 Housing False Positives and False Negatives
Growth Unemployment Inflation and Interest Rates
Gross Domestic Product
2111 Adjustments to GDP
2113 GDP Works Fine for us
213 Whats Gross About Gross Domestic Product?
215 What Does SAAR Mean?
216 What Is an Annualized Compound Rate of Growth?
What Does Growth of Real GDP Look Like?
223 How Much Is 10 Trillion? Does Dividing by Employment Help?
The Index Number Problem and Chain Indexes
The Seasonal in GDP Is Very Large
The Components of GDP C+I+G+XM
311 National Income and Employee Compensation
32 How Is GDP Actually Measured?
C I G X M?
331 Which Are the Most Volatile Components of GDP?
GDP and National Income
Current Employment Statistics
It Takes Three
Current Population Survey
413 Initial Jobless Claims
42 Industry Composition of Payroll Jobs
Inflation and Interest Rates
51 A Price Is a Ratio
53 Two Views of Inflation
54 Interest Rates on ShortTerm US Government Securities
The Price of Durability and the Compensation for Waiting
551 A Look at the Data
56 Interest Rates on LongTerm US Government Securities and Monetary Policy
562 Real Returns on OneYear and TwoYear Treasuries
57 What Determines the Shape of the Yield Curve?
572 Why Is the Yield Curve Sometimes Steep and Sometimes Inverted?
573 What Determines the Level Not the Slope of the Yield Curve?
Q and A from BLS Web Site Regarding the CPI
Risk Characteristics of Bonds
62 Forecasting and Regression Toward the Mean
63 Persistence Momentum
64 Pictures that Help to Understand the Numbers
A Recession Symptoms
Unwanted Idleness Recessions and Recoveries
712 Identifying the Recessions in the Unemployment Data Is Childs Play
Capacity Utilization in Manufacturing
Hours per Week in Manufacturing
Normal Growth Sputters Spurts Recessions and Recoveries
Recession Comparison Charts
812 Real GDP
822 Capacity Utilization in Manufacturing
823 Hours per Week in Manufacturing
83 Other Indicators
832 Employment in Manufacturing and Construction
Who Struggles and Who Does Well in Recessions?
91 Job Losses in Recessions Affect Some Sectors More than Others
911 The 2001 Recession Was an Anomaly
912 With that Anomalous 2001 Recession What Will the Next Recession Be Like?
92 Many Sectors Lose Profits in Recessions
Part III B Recession Stories
101 How Do Economists Explain Unwanted Idleness?
1011 The Job Cycle Is Mostly Construction and Manufacturing
103 Soaking the Rich When Times Are Bad
104 Making Do with the Old Car
105 A Pyrrhic Victory of Hope Over Reason
Supply and Demand Models of Unemployment
111 The HarrodSamuelson MultiplierAccelerator Model
112 Some Acceleration Facts
113 The Supply Chain BullWhip
114 Rush to Exploit New Ideas
1142 The Simple Agronomy of an Idea Rush
1143 Kondratieff Long Waves
115 Ponzi Schemes and Asset Bubbles
1151 Housing Bubbles
C Recession Early Warning Signs
Clues Temporal Ordering of Components of GDP
121 Help from Sherlock Holmes
Our Collective Bipolar Disease
127 Numbers If the Pictures Are Not Enough
1272 A Summary Table
More Clues Episodic Forecasting with Components of Conference Boards Index of Leading Indicators
132 Forget that Expectations Variable
133 Only a Few of Those Components Predict Oncoming Recessions
134 Combining the Components into an Overall Index
Description of Leading Indicators
The Art of Drawing Causal Inferences from Nonexperimental Data
142 Cause Intervention
1421 Our Hypothetical Interventions Are Very Few
143 There Are Many Roadblocks in the Way of Causal Inferences
1431 We Can Pretend to Draw Causal Inferences Even If We Cannot Do It
144 Use Biological Not Mechanical Metaphors
In Search of Recession Causes
151 What Are We Looking for?
152 Fiscal Policy Seems to Both Cause and Prevent Recessions
1522 Federal Taxation Might Matter
153 The Causal Path Through Houses and Cars
1531 Housing Predicts Recessions
1532 Consumer Durables Spending Predicts Recessions
1533 Housing and Consumer Durables Are Predicted by Interest Rates
1534 Not So Fast
1535 The Fed Raises ShortTerm Interest Rates at the Ends of Expansions
The Wealth Effect or Not?
1537 Two Stories of How Monetary Policy Causes Recessions
Two More Causes
Expansions With and Without Spurts
The Life Cycle of US Expansions Sputters and Spurts
161 Production and Employment During Expansions
1612 Labor Markets Sometimes Tighten Twice During Expansions
1613 Cycles in Hours and Unemployment
1614 Spurt Comparison Graphs
162 What Caused the Spurts?
1621 A Big Fiscal Stimulus Has Three Times Rejuvenated a Sputtering Economy
1622 The Reagan Spurt Was Helped by Falling Interest Rates Falling Oil Prices and a Falling Value of the Dollar Which Stimulated Exports
1623 Animal Spirits and the Mad Dash for the Web Drove the Clinton Spurt
Presidents and Fed Chairmen
The Longer Run Savings Investment Government Borrowing Foreign Lending and Your Home
Savings and Investment
1712 Flows and Not Stocks
1713 Savings Depends on What Consumption Is
172 Do We Save Enough?
1723 Do We Save Enough?
1731 US Savings and Investment
1732 What If There Is a Big Tax Cut and Public Savings Declines?
174 Crowding Out Ricardian Equivalence or Twin Deficits in the 1990s?
182 Its Transfers
1821 Transfers Are Done also by State Governments
1822 Those Transfers Are Mostly Social Security Medicare and Medicaid
1823 The States Do Not Run Deficits
184 The Outstanding Federal Debt Is Great Enough to Be Worrisome
TrickleDown Social Responsibilities
1851 Being a GrownUp
1852 The Debate over the Privatization of Social Security Is Confusing All of Us
The External Deficit and the Value of the Dollar Hus in Charge?
The Current Account The Capital Account
192 What Determines the Value of the Dollar and the External Deficit?
1922 The Real Exchange Rate
1923 The Demand and Supply of US Dollars
Good or Bad?
193 How Can the US External Deficit Close?
Foreign Investors Go Elsewhere
More US Savings
The Ups and Downs of Real Estate Values Can You Rely on Your Home To Pay For Your Retirement?
202 It Is Not Real Until You Realize It
203 What Determines the Price and What Determines the Value of Your Home?
2032 Do not Confuse the Rental Market and the Ownership Market
2033 Survivor Investing Can Temporarily Disconnect Earnings and Valuations
2035 Fundamental Valuation Depends on the Growth of Earnings and the Discount Rate
2036 A House Has a pe Ratio Too
The Very Persistent Gap Between Values and Prices
Its a Volume Cycle Not a Price Cycle
Homework re the LA Market
Home Ownership Data from the Survey of Consumer Finances
Rents or Asset Prices in the CPI?
There Is no Such Thing as a Housing Shortage
Supply Restrictions Do not Guarantee that Prices Can Only Go Up
Other editions - View all
2001 recession assets average beneﬁts billion business cycle buyers capacity utilization causal cause coefﬁcient components of GDP consumer durables contribution to GDP current account Cycle Peak decline deﬁcit demand difﬁcult displayed dollar downturn earnings economic economists equipment and software exports Fed Funds rate ﬁgure ﬁnance ﬁnancial ﬁnd ﬁrms ﬁrst forecast foreign GDP growth going Gross Domestic Product housing illustrated in Fig important income increase inﬂation intensive margin interest rates Internet Rush inventories inverted yield curve Korean War manufacturing mean monetary policy nondurables normal numbers ofﬁce ofﬁcial one-year bond p/e ratio Patterns and Stories payroll jobs Ponzi scheme predict problem production proﬁts quarter Reagan Real GDP real rate recession regression rent rental residential investment Ricardian Equivalence rise savings sectors share of GDP Table tax cut Treasury two-year bond unemployment rate unwanted idleness variables weak weekly hours yield curve