One of the things I’ve been keeping an eye on is student debt, widely touted as the next bubble. As you can see in the following chart, student debt is at an all-time high, approaching a trillion dollars.
One of the things I’ve been keeping an eye on is student debt, widely touted as the next bubble. As you can see in the following chart, student debt is at an all-time high, approaching a trillion dollars.
I’ve been at the Goldman Sachs investor conference yesterday and today, listening to and learning from a group of very smart people. Among the smartest were Alan Simpson and Erskine Bowles, the cochairs of the commission that brought us the Simpson-Bowles (or Bowles-Simpson) budget plan. Unexpectedly, they were also the funniest, which, given their dire message, was a relief.
At Commonwealth’s National Conference last year, I gave a fairly detailed presentation on the budget problems we faced, noting that I believed any solution would eventually converge to something close to the Simpson-Bowles plan.
May 2, 2013
Recently, I’ve noticed some pushback on the notion of onshoring jobs. In particular, some economists I respect have noted that there’s little aggregate evidence of a systemic change so far. Most evidence is anecdotal, they say, and overall manufacturing continues to be relatively weak, despite some signs of strength.
I agree with that, but I don’t necessarily think it disproves the onshoring case. What we’re talking about here is a multi-year process, which will start slowly and then gather momentum—exactly as the offshoring process did. Second, in a time of global economic weakness, it’s hard to discern a nascent strengthening trend against a backdrop of much stronger global weakening. Third, we continue to see signs that manufacturing in the least expensive countries has its own sets of problems, which are becoming increasingly public.
A question I get periodically is whether the dollar is going to collapse. It comes in several different variants, but the crux is usually that, under the Fed’s policies, the value of the dollar has to decline since there are now so many of them in the system.
The most recent version of the question is whether the dollar will be replaced by the Special Drawing Rights (SDRs) developed by the International Monetary Fund. The answer is an unequivocal no, but the original question remains: Is the dollar going to collapse?
April 30, 2013
The deficit has dropped off the radar for a bit, what with the agreement to postpone debate about the debt ceiling and the generally improving economy, but recent events make it a good idea to check in and see where we are.
April 29, 2013
Over the past year, I’ve written about a number of issues that touch on demography, explicitly invoking it in discussions of employment and future growth. Like the group of blind men examining the elephant, however, I haven’t really considered the thing as a whole.
Demography, the study of the structure and characteristics of human populations, is almost unique in the economic universe in being something we can forecast with a great degree of certainty. We know, for example, how many people were born in 1965—that won’t change once the year is over—and we have a very good estimate of how many have died or had children since then. Unlike, say, employment, demography evolves over decades in a predictable way.
April 26, 2013
We’ve been talking about how the U.S. real economy, despite a second-quarter slowdown, continues to grow. The Fed by and large agrees, with several governors weighing in over the past couple of weeks to say that they see a sustainable recovery in place and that it’s time to start thinking about when and how to begin pulling back. You might be forgiven for thinking “Hooray!” After all, isn’t sustainable growth what we’ve been working toward for the past five years?
Although we do seem to have sustainable growth from multiple sources—housing, autos, and energy, among others—much of that growth is driven by current low interest rates, especially in housing. When the Fed starts pulling back, there is a reasonable possibility of higher interest rates, which will at least slow that growth.
April 25, 2013
Several data points have come through in the past couple of days that support some thoughts I’ve had for a while. I think it’s constructive to take a look at them to determine how we can expect the economy and financial markets to evolve in the near future.
