The economy charges ahead
Neil Irwin The New York Times
“You could be forgiven for not noticing it, but the U.S. economy is gaining momentum,” said Neil Irwin. The political news from Washington has been so dramatic that a steady stream of better-thanexpected economic data hasn’t gotten much attention. On nearly every front, “the economy seems to be enjoying consistent, broad-based growth.” Retail sales rose 0.4 percent in January, while manufacturing output rose 0.5 percent. The number of permits issued for new housing units “is up 8.2 percent from a year ago, as the housing recovery kicks into a higher gear.” The economy added 227,000 jobs in January, improving an already low unemployment rate. Meanwhile, “the number of people filing new claims for jobless benefits each week keeps hitting lows not seen since the 1970s.” All of this good news creates “a puzzle” for Federal Reserve Board Chair Janet Yellen. The central bank must figure out how much it needs to raise interest rates to keep inflation in check without stopping the expansion “in its tracks.” Things could also go south if President Trump triggers a protectionist trade war, or disappoints the stock market, which is surging on his promises to cut taxes and regulations. But for now, “things are looking pretty good for 2017 if Trump and Yellen can avoid messing it up.”
Industrial revolutions aren’t easy
Tyler Cowen Bloomberg.com
“Why should it be different this time?” That’s the typical response I get when I raise concerns about what automation might mean for the future of jobs, said Tyler Cowen. People point out that centuries ago the Western world successfully replaced most of its agricultural jobs with ones in industry and the economy continued to grow. So when self-driving vehicles and automated checkouts displace truck drivers and grocery clerks in coming years, they argue, new jobs will spring up elsewhere and the economy will keep ticking along. “As economics, that may well be correct,” but it ignores the massive turmoil that such transitions can generate. When farmworkers migrated to the city for factory jobs in the early years of Britain’s Industrial Revolution, standards of living dropped. By some estimates, real wages fell about 10 percent from 1770 to 1810; it took another 60 years before workers enjoyed sustained wage gains. Politically, the disruption wrought by industrialization resulted in the rise of socialist ideologies. Those theories inspired the Western social welfare state, but they also laid the foundations for the Soviet Union. The original Industrial Revolution was “eventually a boon for virtually all of humanity.” With luck, the next one will be, too, but that doesn’t mean the process of adaptation will be easy.