Relevant and even prescient commentary on news, politics and the economy.

NDd and Marketwatch

(Dan here)  Quoted is a summary and link to New Deal democrat‘s post at XE.com  on the pound sterling and Brexit impacting the US economy via Marketwatch:

The pound plunged early Friday as results from the U.K.’s referendum hit, but “since then the pound has gone sideways,” notes financial blogger New Deal Democrat in a post at XE.com.

“While the bottom isn’t necessarily in, barring new and worse developments out of Europe, I would expect the pound in the next few months to fluctuate about its value at the bottom Friday morning,” the blogger writes.

Any big Brexit-related damage to the U.K. currency has already happened, New Deal Democrat argues. It didn’t happen over three months to a year, but on that single Friday — “everybody” knew sterling was in trouble and decided to sell.

This call helps make the blogger upbeat on the U.S. economy, playing down fears about the almighty dollar hampering growth.

“While a strengthened US$ is a headwind, the lower interest rates that this year’s annual Europanic is bringing are a boon,” the XE.com post says. “I continue to see Brexit as ‘a fire across the river’ that should not have more than a minor effect on the U.S. economy.”

Go here to read the full post.

 

 

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The new parsimony

– by New Deal democrat

The new parsimony

I came across the below graph showing that relationship of average household net worth with average debt vs. the personal savings rate from the NY Fed last week (h/t The Conversable Economist):

The important point was that the relationship has changed since the Great Recession.  Even though there has been a big increase in average household net worth thanks in particular to the rebound in house prices, the personal savings rate remains elevated compared with its prior history.

This is evidence of something President Obama said during a recent interview, namely, that “Some people are still recovering from the trauma of what happened in 2007-2008,”

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The implications of the child care cost crush for median household income and "shadow unemployment"

by New Deal democrat

The implications of the child care cost crush for median household income and “shadow unemployment”

The other day I showed that there is compelling evidence that the primary reason for the long term decline in the Labor Force Participation Rate in the 25 – 54 age range is the increasing real cost of child care, coupled with stagnant to declining real wages in the lower paying jobs typically taken by the second earner in a two earner household.
Today I have a few more precise graphs, and discuss the implications for median household income and the issue of “shadow unemployment” or “missing workers.

First of all is a graph of the increase in the number of those aged 25-54 who are neither employed nor unemployed, but out of the labor force entirely:

Unfortunately this is not avaiable on FRED, but via the BLS, here are the number of people in that above group who tell the Census Bureau each month that they want a job now:

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