Get real perspective on America’s unemployment
Wells Fargo has a nice chart depicting the relationship between real GDP growth and the change of unemployment rate, the so-called Okun’s Law:
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The two are negatively correlated. From regressional analysis, for unemployment rate to drop, the minimum real GDP growth rate required, on average, should be 3.4%. But the actual growth rate in 2011 was only 1.6%. So why have we been witnessing a drop of unemployment rate anyway?
The breakdown of this long-run relationship may be due to the drop of participation rate in labor market. The real unemployment rate, taking participation rate into account, should be much higher.
As shown in the graph, the current change of unemployment rate would require a much faster real GDP growth, at roughly 5%, three times of the current growth rate.
China GDP per capita, huge regional gap
Following my previous post on China’s fast catching-up with the developed countries, Economist Magazine has done some more interesting map works, matching China’s output-income data by provinces to the world’s individual countries. The map vividly shows the huge income gap among different Chinese provinces/regions.
More similar maps here.
The iPhone economy
How today’s globalization of manufacturing has changed American labor market.
How different are the spillover effects of manufacturing jobs vs. service jobs.
Do more choices make people happier?
It’s one of the fundamental assumptions in economics that people’s welfare will improve with more choices, and more varieties. In the following TED video, Sheena Iyengar at Columbia challenges such view with some vivid examples. She also offered some clever ways to avoid the problem of choice-overload.
Another strong reading on weekly jobless claims
On Thursday, the 4-week moving average of weekly jobless claims reached the lowest level since April 2008. The US labor market continues to show sign of thawing.
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If this trend continues, consumer confidence is likely to bounce back. Then the US will be on the track of a virtuous cycle: business investment will follow, so will bank lending. We need to wait for more data in coming weeks to confirm such trend.
Jim O’Neill updates on Chinese economy
Jim O’Neill, Chairman of Goldman Sachs Asset Management, discusses his outlook on China and global economy.
Platinum Super-attractive to Gold
Both precious metal, the current relative valuation of platinum vs. gold makes platinum a better bet than gold.
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