Knowledge@W. P. Carey -- Economics and Public Policy

Top Forecasters (Slightly) More Optimistic for 2010

Mon, 15 Jun 2009 19:16:52 EST

Each year, the W. P. Carey School evaluates the annual accuracy of projections from the 50 national economists that contribute to the consensus forecast reported monthly in Blue Chip Economic Indicators. Based on the School's tabulations, the most accurate forecaster is presented with the prestigious Lawrence R. Klein Award, named after the Nobel Prize winner and eminent economist. From time to time, it is useful to see what these past forecast award winners are saying about the economic outlook. For 2010, the accuracy award winners seem somewhat more optimistic than the current Blue Chip consensus.

Economy@W. P. Carey: The Consumer Still Not Back in the Game

Wed, 27 May 2009 15:23:34 EST

At mid-month, analysts had turned more pessimistic about the economy, as some of the promising "green shoots" of recovery appeared to have withered, writes Lee McPheters, editor of Economy@W. P. Carey. Economy-watchers (and the equity markets) had seized on a report that consumption spending was up by 2.2 percent in first quarter 2009. But the April release on consumer spending (set for June 1), is expected to show that the January and February increases were unsustainable, anomalous upticks.

Trade, China and the World Economic Order, Part 4: Balancing Business Imperatives and Policy Issues

Wed, 27 May 2009 15:23:34 EST

The way businesses and policymakers approach economic integration is quite different. Businesses tend to be pragmatic -- focusing on finding immediate solutions. Policymakers, on the other hand, are often more idealistic and focused on resolving "big picture" issues -- which can be much more difficult to do. As China and the U.S. continue to do business together, how to address those tough "big picture" issues, such as sustainability and human rights, without impeding economic integration at the company level -- is a key question. In the last of a four-part series, this piece addresses the overarching question of how to balance the benefits of economic integration -- which accrue to the people of the U.S. and China, as well as American and Chinese businesses -- with concerns about such issues as environmental and human rights protection. The discussion took place at the recent ASU/The Kearny Alliance Forum on Trade, China and the World Economic Order.

The End (of Recession) Is Near, But It Won't Be Pretty

Thu, 21 May 2009 17:34:06 EST

An anemic economic recovery will begin at the end of the year, but don't expect the pain to end anytime soon. That was the analysis provided by top economic experts from the W. P. Carey School of Business and the Arizona governor's office at the annual Economic Outlook Luncheon on May 20. Economists Dennis Hoffman and Lee McPheters shared the podium with Eileen Klein, director of the Arizona Governor's Office of Strategic Planning and Budgeting. Their message was that the economy will begin to regain strength, but the process will be slow. Meantime, if nothing is done to address the problem, the state's revenue gap will continue to widen over the next several years.

Take the Test: Third Annual Arizona Economic Confidence Quiz

Thu, 21 May 2009 17:40:18 EST

How confident are you that you understand the Arizona economy? This test of your economic knowledge was administered at the Annual Economic Outlook luncheon hosted by the W. P. Carey School's Economic Club of Phoenix. Some of the answers may surprise you!

Arizona and the Recession: Three Perspectives

Wed, 20 May 2009 19:32:49 EST

On May 20, the Economic Club of Phoenix presented its annual Economic Outlook Luncheon. W. P. Carey economists Lee McPheters and Dennis Hoffman sketched the current condition in Arizona and the U.S., then Eileen Klein, director of the Arizona Governor’s Office of Strategic Planning and Budgeting, presented the governor's strategy to meet those challenges. Knowledge brings you their speeches and accompanying slides.

Western Blue Chip: Arizona Had Weakest Labor Market Performance of All States in March

Wed, 06 May 2009 17:37:54 EST

All but three states reported losses in nonfarm employment in March 2009 compared to 12 months earlier, according to figures released by the U.S. Bureau of Labor Statistics. Nationally, the economy lost 4.8 million jobs over-the-year in March, and payroll employment fell by 3.6 percent. Only North Dakota, Louisiana, and Alaska escaped job losses, recording gains of less than one percent over the previous 12 months. Arizona's over-the-year job losses were the worst of all states, with employment decreasing by 6.9 percent from a year ago

Initial Claims: Green Shoots or False Signal?

Mon, 20 Apr 2009 18:07:15 EST

Current economic reports are grim, with indicators such as capacity utilization and housing starts at levels consistent with a deep contraction. Yet, there is a widespread view among analysts that the official end date of this recession is not that far off, sometime in late 2009. If this consensus is correct, then there should be some signs in the next few months of bottoming out in the economy. One harbinger of economic improvement can be found in the weekly reports on initial claims for unemployment insurance.

Forecasters See Economy Turning Positive in Second Half of 2009

Thu, 16 Apr 2009 18:27:28 EST

Economy-watchers anticipated poor performance from the economy in the first quarter of 2009, and they got what they expected when the Bureau of Economic Analysis released the advance report on Gross Domestic Product (GDP). GDP was down by an additional 6.1 percent in the first quarter, after plummeting 6.3 percent in the fourth quarter of last year (quarterly GDP changes are annualized and adjusted for inflation). The consensus view among economists is that one more negative quarter lies ahead, although the decline in Q2 will be a more modest decrease of 2 to 3 percent. But once the economy gets past these three quarters of carnage, analysts look for growth as measured by GDP to turn positive in the second half of 2009. The Round Number Forecast from the W. P. Carey School of Business is projecting that GDP will decrease by 3.0 percent for all of 2009 and increase by 2.0 percent next year. (Updated May 7, 2009)

Trade, China and the World Economic Order, Part 2: Has China's Accession to the WTO Made the World a Better Place?

Wed, 15 Apr 2009 17:48:32 EST

In 2001, China became the first centrally-planned economy admitted to the World Trade Organization (WTO) -- the only global international organization designed to facilitate multilateral trade between its member nations. The WTO's self-professed primary purpose is "to open trade for the benefit of all." The W. P. Carey School of Business and ASU's Sandra Day O'Connor College of Law are partnering with The Kearny Alliance to host three forums on trade, China and the world economic order. One question at the heart of the forum's discussion is this: Has China's membership in the WTO, in fact, made the world better off? The tentative answer, at least, seems to be yes.

Trade, China and the World Economic Order, Part 1: The Mechanics, and History, of Global Trade

Tue, 24 Mar 2009 20:28:43 EST

The world's two economic superpowers -- the United States and China -- face significant challenges as they confront the future possibilities of trade and a new world economic order. These partners in the world economy are entering uncharted territory, moving toward a world in which it is no longer clear that our current trade infrastructure is either sufficient or best fit for what lies ahead. The W. P. Carey School of Business and ASU's Sandra Day O'Connor College of Law are partnering with The Kearny Alliance to host three forums on trade, China and the world economic order. In the first of four Knowledge@W. P. Carey stories on the topic, we focus on the "mechanics" of trade as well as its history -- including the rise and fall of former economic leaders. As they say, "those who do not learn from history are doomed to repeat it."

Latest Numbers Indicate a Longer, Deeper Recession

Thu, 19 Mar 2009 17:52:18 EST

Two indicators of the severity of the current recession, depth and duration, worsened in the past month. The depth of the decline in inflation-adjusted Gross Domestic Product in the fourth quarter of 2008 was revised by the U.S. Bureau of Economic Analysis from a fall of 3.8 percent to minus 6.2 percent. The economy has not experienced a quarterly dip of this magnitude since the first quarter of 1982, when GDP fell by 6.4 percent. Research Economist Lee McPheters, editor of Economy@W. P. Carey, says the consensus from most observers is that the recession will be measured in quarters, not years, but it will be the worst downturn since the Great Depression.

Western Labor Markets Fared Best and Worst Since Recession Started

Wed, 11 Mar 2009 19:07:37 EST

Labor markets in the Western states are among those (a) hardest hit and (b) least affected by the current economic contraction, based on nonagricultural employment figures for January 2009, released by the U.S. Bureau of Labor Statistics. Wyoming has added jobs at a faster pace than any other state since the recession began, and Texas added the most new jobs during that period. But three of the five weakest labor markets in the country are from the West -- Arizona is tied with Michigan for last place, and Idaho and Nevada are ranked with Florida to round out the five poorest performers.

Does the Stimulus Plan Hit the Target for Job Creation?

Mon, 09 Mar 2009 18:05:09 EST

One of the features of fiscal policy initiatives is that they can be targeted to industries and geographic areas in greatest need. The American Recovery and Reinvestment Act (the "stimulus plan") is aimed at construction, energy alternatives, health care, education, and a number of infrastructure categories thought to not only create jobs but build a foundation for future growth. These industries have been listed in some detail in the actual wording of the Act. However, the geographic targeting is less precise, writes research Economist Lee McPheters, editor of Economy@W. P. Carey.

The Economic Minute: Help is Here � So When Will We Feel Better?

Wed, 04 Mar 2009 13:29:54 EST

The Economic Minute is a new feature of Knowledge@W. P. Carey. These brief recaps by W. P. Carey economists, first presented at Economic Club of Phoenix luncheons, are designed to bring you up to date on current conditions nationally and in the West. In this edition, research economist Lee McPheters, editor of Economy@W. P. Carey, details how much help is coming to hard-hit Arizona via the economic stimulus package.

High-Rolling Casinos Hit a Losing Streak

Mon, 02 Mar 2009 18:14:39 EST

The American gaming industry enjoyed an unprecedented run of luck during the late 1990s and the first half of this decade. Las Vegas casino owners built bigger, more luxurious -- and wildly expensive -- new properties, betting a bundle that the booming economy would keep their casinos full of gamblers and their hotel rooms loaded with tourists. But it all came tumbling down when the collapse of the capital markets began, throwing the U.S. economy, and the economies of most countries in the world, into a tailspin. The gaming industry "has suffered very substantially in the period since then," Gary Loveman told a ballroom full of business leaders attending a recent Economic Club of Phoenix luncheon. Loveman is chairman and CEO of Harrah's Entertainment Inc., the largest casino company in the world.

U.S. Economy: Stimulus Plan Not a Quick Fix

Mon, 02 Mar 2009 18:14:13 EST

We shouldn't expect the stimulus plan presented by Congress to the President to bring an early end to dismal data reports on the health of the economy. Conditions will continue to worsen for at least the next two quarters. Indeed, most analysts expect annualized growth in real Gross Domestic Product (GDP) to dip by as much as 5 percent in the current quarter. This will be the weakest quarter for GDP growth since a decrease of 6 percent logged in the first quarter of 1982.

Expecting the Unexpected: Why You Should Not Let Experience Be Your Guide

Wed, 11 Feb 2009 20:21:26 EST

More than year before the financial markets began their sickening plunge, Nicholas Taleb warned against the kind of conventional thinking, lazy assumptions and reliance on formulaic mathematics that led so many experts to assume that all the fundamentals were sound in the 21^st century economy. Taleb's book, "The Black Swan -- The Impact of the Highly Improbable," urged us to be aware of the limitations of our observations and experience and to admit the fragility of our "knowledge." Taleb admits that the more he learns, the less he realizes he knows, the less wedded to certainty he becomes. The result is a book that is like a Tao of economics in particular and life in general.

Western States Find Little Good News in Latest Economic Numbers

Wed, 11 Feb 2009 20:21:26 EST

Analysts are sifting through the latest economic data for their states, but there is little good news to be found. According to December figures on unemployment recently released by the U.S. Bureau of Labor Statistics, unemployment is up over last month in each of the 50 states. In addition, the U.S. Census Bureau's preliminary December statistics on single-family housing showed residential housing permits down in all states.

U.S. Economy: Depressing? Yes! Depression? No!

Wed, 28 Jan 2009 16:34:21 EST

Bad news is never welcome, and there is always plenty of it during recession. Research economist Lee McPheters, editor of Economy@W. P. Carey, concedes that while this recession lasts, more depressing headlines lie ahead. But, he says, it is still premature to conclude that "this is the worst we have ever seen." As of now, according to the received evidence to date, we are neither in nor on the brink of a repeat of the Great Depression of the 1930s. One indicator that bears watching, he says, is inflation-adjusted Gross Domestic Product.