Econ70

This past Monday, twelve Pacific Rim nations (excluding China) that comprise 40% of world trade closed the Trans-Pacific Partnership free trade agreement. Assuming it’s ratified by all twelve nations, it should, by the year 2025, raise global GDP by 1%,…

The FDA uses one statistical standard when deciding whether to approve a new drug. The rule is designed to prevent bad drugs from being sold and good ones from being rejected. Instead, the rule should be based on illness severity…

The labor force participation rate (LFPR) is 62.4%, its lowest level since 10/77. Its peak was 67.3% in 4/00. Immediately following the Great Recession it was 65.5%. Amazingly, the male LFPR peaked in 10/49 at 87.4% and is now 68.7%,…

Last Friday’s September employment numbers were weak. Net new jobs were just 142,000, well below expectations, prior months’ employment gains were revised down, wage growth was flat, overtime hours fell, and the labor force contracted by 350,000. But with energy…

The Friday File: Ever wonder why supermarkets offer sale items with an absurd limit of 12/person? Anchoring bias and arbitrary rationing! Anchoring bias says that just seeing the number 12 in relation to soup will boost demand. Arbitrary rationing (any…

The economy goes through periods of higher and lower inflation and earnings. During these cycles different investments outperform, leading to changing asset allocations. When growth is good and inflation is low, debt and equity generally do well. When growth and…

At the height of the 2013 coal boom, the trading firm Glencore purchased mining firm Xtrata forming Glencore-Xtrata. The thought was combining low volatility Glencore with high volatility Xtrata, and in the process making a bigger firm, would improve results.…

While college students have borrowed over $1.2 trillion and seven million students are in default, more debt doesn’t appear to increase default rates. Of students that borrow less than $5,000, 34% default, those that borrow between $5,000 and $10,000 have…

Unless Speaker Boehner can raise the debt ceiling and fund the government through 2017 before he resigns on 10/31/15, the Fed may again delay raising rates. If these issues aren’t resolved, it will fall to presumed Speaker McCarthy to solve…

The Friday File: After two weeks, NFL teams are converting one-point conversions at a rate of 94.1%, down from 99.3% last year, due to a significant rule change making the kick 33 yards, not 20 yards. Last year, two-point conversions…