More Jobs That Pay Decent Wages: How To Fight Poverty In The United States


Deniz IganBy Deniz Igan 

(Version in Español)

Something unusual happened this year. For the first time in almost ten years, a book by an economist made it to Amazon’s Top 10 list. Thomas Piketty’s Capital in the Twenty-First Century captured the attention of people from all walks of life because it echoed what an increasing number of Americans have been feeling: the rich keep getting richer and poverty in America is a mainstream problem. 

The numbers illustrate the troubling reality. According to the U.S. Census Bureau, 1 in 6 Americans—almost 50 million people—are living in poverty. Recent research documents that nearly 40 percent of American adults will spend at least one year in poverty by the time they reach 60. During 1968–2000, the risk was less than 20 percent. More devastatingly, 1 in 5 children currently live in poverty and, during their childhood, roughly 1 in 3 Americans will spend at least one year living below the poverty line.

Continue reading

China PMI Batters Global Markets…Are you kidding me?


Steve BarnettSteven Barnett

(Version in  中文)

“Economic Shifts in U.S. and China Batter Markets” continuing “Stocks Slide Globally…Investors Head for Exits” read the front page headline in last week’s New York Times. Not sure about the U.S. part, I’ll leave that to others. But, as for China, this seems quite a stretch. Could be the pundits are erring in blaming the market slide on China, or perhaps the markets are misreading news coming out of China.

The purported China trigger was a survey of manufacturers. The Purchasing Managers’ Index (PMI) fell somewhat, crossing the magic threshold from expansion to contraction. PMIs are useful, but let’s not get carried away. China’s PMI is not the best indicator for growth, the decline was rather small, and January and February data (because of the Lunar “Chinese” New Year) are hard to interpret.

Continue reading

U.S. Monetary Policy and Its Effects on Latin America


Alejandro WernerBy Alejandro Werner

(Version in Español and Português)

Some basic realities seem to be getting lost in the debate over the Fed’s “exit” from unconventional monetary policy and its impact on Latin America.

First, the still-loose stance makes sense. U.S. inflation is too low, the output gap too large, and the labor market too weak. And even during tapering, the Fed’s stance will remain highly loose. The 10-year Treasury rate, adjusted for core inflation, is about 230 basis points below its 30-year average and the inflation-adjusted Fed funds rate is 320 basis points below. These rates are likely to remain below their 30-year average for at least the next two to three years.

Continue reading

The U.S. Housing Market’s Road to Recovery


Jarkko TurunenBy Jarkko Turunen

(Version in Español)

A year ago, we were very concerned about lingering weakness in the U.S. housing market, which we saw as a major obstacle to the economic recovery.

But what a difference a year makes! As our latest report on the U.S. economy points out, the housing market recovery has been stronger than expected, and is providing a significant boost to private domestic demand and economic growth.

What has changed in the last 12 months? House prices have rebounded sharply and are currently about 7-12 percent above their level a year ago. Home sales increased by more than 15 percent over the same time period. Thanks to higher house prices and the positive effects of government housing finance programs, fewer homeowners are “underwater” (owe more on their mortgages than their houses are worth) or are behind on their mortgage payments, and fewer houses are entering foreclosure.

Continue reading

Latin America: Making the Good Times Last


By Nicolás Eyzaguirre

(Version in Español)

Last week I attended the Annual Meeting of the Inter-American Development Bank in Montevideo, Uruguay where I gave a preview for growth in the region.

If I had to summarize the global backdrop for Latin America in four words, I would say “favorable, but still risky.” The global setting is favorable for two reasons:

  • First, some of the recent data has come in a bit stronger than expected, particularly figures on U.S. economic activity and employment. In the emerging markets sphere, growth remains fairly solid. Notably, China continues to put in a good performance, even though growth is easing and its exports are down somewhat. Good growth in Asia supports demand for Latin America’s key commodity exports, keeping terms of trade favorable.
  • Second, major countries have taken some important policy steps to underpin global growth and stability. In Europe, the European Central Bank’s Long Term Refinancing Operation has eased liquidity pressures for European banks and sovereigns and headed off a large deleveraging that would have crimped growth. Also, stronger fiscal adjustment programs and progress in resolving Greece’s stresses have supported confidence. In the United States, the Federal Reserve’s lengthening into 2014 of its commitment to maintain ultra-low interest rates, along with the extension of payroll tax relief and unemployment benefits, are bolstering demand and employment.

Overall, conditions and the outlook remain relatively favorable for the region. Commodity prices continue to ride high, despite some recent setbacks, thanks to buoyant emerging-market demand. Accommodative monetary policies in the major countries, and ample liquidity, maintain easy financing conditions for the more creditworthy countries. Indeed, the reemergence of strong capital inflows is again putting unwelcome upward pressure on exchange rates in some financially-open countries.

Continue reading

Between a Rock and a Hard Place: U.S. Fiscal Policy


By Rodrigo Valdés

(Versions in عربي,  中文日本語EspañolFrançaisРусский)

The United States faces two pressing challenges to fiscal policy: raise the debt ceiling, and begin the arduous process of reducing deficits and debt.

And, right now, this leaves U.S. fiscal policy between a rock and a hard place. How much savings should be found and in what form are crucial questions. So is when to put those savings in effect. Continue reading

Follow

Get every new post delivered to your Inbox.

Join 775 other followers

%d bloggers like this: