Professor Salmon Namala
16 May 2015
1) America the Relatively Beautiful
The bow-tie-wearing president of Estonia, Toomas Hendrik Ilves, told a story in Davos about a young Estonian inventor he invited to tea in the summer of 2011 who told him he was moving to the U.S. in two weeks to make his fortune. His name is Hardi Meybaum, and he co-founded a computer-aided-design company called GrabCAD. Last fall the now-Boston-based company was sold for $100 million. Said Ilves: “That never would have happened in Europe.”
2) America’s economy booming again
The U.S. economy is booming again—which is one reason President Obama ...view middle of the document...
Meanwhile, the U.S. itself still has serious long-term challenges. The technology and globalization that are enriching some Americans are impoverishing others.
5) The bounce back of America’s economy will be shortly lived
That’s not to say that all of America’s economic ills have been cured. That 5.6 percent unemployment rate in December? Nice, but the supply of labor is tightening mostly because so many people have stopped looking for work. The share of the population in the labor force fell by three percentage points during and after the financial crisis and hasn’t rebounded since. Bond yields—i.e., interest rates—are falling again. A decline in the price of money signals a lack of demand for loans, which in turn indicates a loss of confidence by business and investors in future growth. The yield on 10-year Treasury bonds, which briefly got to 3 percent a year ago, is back down to 1.8 percent, close to historic lows
Concepts that relate to macroeconomics
1) The business cycle
i) a downturn in the economy.
ii) period of economic upturn in which output and employment are rising
c) the short-run alternation between economic downturns, known as recessions, and economic upturns, known as expansions.
d) After a slow and uninspiring recovery from the depths of the recession, it’s still difficult to embrace the idea that the U.S. economy is booming again
2) Unemployment Rate (Cyclical UE)
e) the percentage of the total number of people in the labor force who are unemployed.
iii) the deviation of the actual rate of unemployment from the natural rate due to downturns in the business cycle.
f) The U.S. economy has generated jobs at a pace of a quarter million per month over the past year. The unemployment rate—5.6 percent, the lowest since 2008
g) he phenomenon of growing economic linkages among countries.
h) If the U.S. hopes to sustain its growth, let alone improve on it, then the world’s other economies need to grow, too, so they can buy more of what America makes.
i) a rise in the overall level of prices.
j) In December the median annual U.S. household income, at $54,417, was 4.4 percent lower than the inflation-adjusted figure for January 2000, according to Sentier Research. That’s not progress. It’s regress.
k) Japan, the first nation to get stuck in a slump more than two decades ago, has managed to generate a little bit of long-sought inflation lately, but not the growth to go with it.
5) Gross Domestic Product
l) Creditors panicked, and lending froze. In the last quarter of 2008 the gross domestic product
m) The total value of all final goods and services produced in the economy during a giving year
6) Labor Force (LFPR)
n) the number of people who are currently working plus the number of people who are currently looking...