EconVue Spotlight

This Memorial Day weekend we received the sad news that President Carter’s foreign policy advisor and strategist Zbigniew Brzezinski passed away.  His voice and intellect are irreplaceable in Washington today.  We send our heartfelt condolences to his nephew  Nicholas Benes, a member of our EconVue family.  Nick has shared his personal tribute.   I agree with him that it is very well worth your time to read Brzezinski's bracingly prescient 2012 interview in the Financial Times : https://www.ft.com/content/4d03c5f6-3ac1-11e1-a756-00144feabdc0 
 
Mr. Brzezinski’s last tweet on May 4th was: “Sophisticated US leadership is the sine qua non of a stable world order.  However, we lack the former while the latter is getting worse.”
 
Next week, I will be attending the Chicago Federal Reserve’s annual  Automotive Outlook Symposium  in Detroit. Our next newsletter will be a special report on the auto sector, a fascinating mix of smokestack industry and leading edge high technology.

STORIES IN OUR SPOTLIGHT

World

Don't be alarmed by the end of QE
Adam Glapiński, 5/24/2017 OMIFF

The governor of the Bank of Poland says it is time to end quantitative easing and unconventional monetary policy, and that is nothing to lose sleep over.

World Bank's star economist Paul Romer is sidelined in war over words
Andrew Mayeda 5/25/2017 Bloomberg

Herding 600 economists--not easy.  See Romer’s blog on this subject  Romer Slaughters Kittens which points to the need for reform in World Bank research and economics in general. 

The disappearing computer 
Walt Mossberg 5/25/2017 Recode  

Ambient computing is the future says Walter Mossberg in his last column.  He envisioned the way computers would affect our lives today decades ago. 

U.S.

Re-estimating the president’s budget with reasonable economic assumptions
Committee for a Responsible Federal Budget 5/23/2017

Who believes in US GDP growth @3%?

Beware shorting impeachments
Global Macro Monitor 5/18/2017 

But bad things can happen when the White House is distracted, raising global macro risks.

Sooner or later, the stock market will catch up to our volatile president 
Sebastian Mallaby 5/24/2017 Washington Post

From Sebastian Mallaby, Greenspan's biographer.

Karen Petrou on kicking the Fed habit
Federal Financial Analytics 5/26/2017

The Fed’s afraid to take its enormous hand off the market’s steering wheel.

From main street to wall street: economic growth, monetary policy, and the Federal Reserve 
Loretta Mester, 5/8/2017 Chicago Council on Global Affairs (Video)

Cleveland Federal Reserve President Loretta Mester talks about returning to conventional monetary policy. My question to her about labor mobility led me to some new research on millennials below.

Millennials

Parental proximity and the earnings consequences of job loss
Patrick Coate 2/9/2017 Federal Reserve Bank of Cleveland

Labor mobility slows: Young adults who lose their jobs but live near parents recover faster than those who don't.

David Schleicher on local and state regulation and declining mobility 
Macro Musings 5/24/2017 (Podcast)

Lack of labor mobility, especially for post-crisis, security-conscious millennials has long term implications for US economics and politics. Schleicher, both a law professor and economist at Yale, is one of the bright new policy stars and someone to watch.

The gig economy workforce will double in four years 
Rani Molla 5/25/2027 Recode 

The gig economy workforce (not measured by the Bureau of Labor Statistics) will double in four years, more than either the finance or construction sectors.
 

China

China may have 90 million fewer people than claimed (that’s twice Spain’s population)
Wendy Wu 5/23/2017 South China Morning Post
  
Moody's downgrade puts China between a rock and a hard place
Joyce Ho 5/24/2017 Nikkei Asian Review

Slowing growth and rising debt.

Alibaba bets on do-it-yourself globalization
Louise Lucas 5/22/2017 Financial Times

China's electronic Silk Road.

The canal that will sink S’pore’s maritime-trade dominance is one step closer to fruition
Jonathan Lim 5/18/2017 Mothership.sg

In a blow to Singapore, China and Thailand sign a deal to build a new canal.

Why most older Chinese women do not work
Andrew Batson's Blog 5/26/2017

Chinese women retire early for grandma duty: raising the retirement age to 60 would increase the employment rate by 28% for ages 50-59.

Poor pay, rising violence leads to acute nursing shortage
Song Shiqing and Huang Liyao 5/26/2017 Caixin

New research into foot-binding has modern-day implications
Yi Shu Ng 5/26/2027 Mashable

Economics — not sex — was behind this cruel Chinese practice, according to new research.  It made young women less mobile and more willing to sit for long periods of work in textiles and other industries. 

The fat tech dragon: baseline trends in China's innovation drive 
CSIS 5/24/2017 (Video)

Following a presentation of the report’s key findings, the panelists discuss the report as well as the broader issues regarding China’s innovation drive.

EconVue Research 

Is China's One Belt One Road a Dangerous Idea  

EconVue experts Marsha Vande Berg, Saul Eslake and Karim Pakravan respond to commentary by Australian defense expert Paul Dibb. You can register and join the discussion here.
 
Data Round-Up: Durable Orders Stumble But Equipment Spending on Track for Decent 17Q2 
Michael Lewis (Subscriber content) 

Durable goods orders were lackluster in April. Core shipments were not great but are on track for a moderate gain in 17Q2, which suggests another decent gain for equipment spending. With a boost from the now slightly better inventory-to-sales mix in 17Q1 GDP, FMI continues to expect real GDP growth to post a solid rebound, +3% or so, this quarter.
 
Ecuador Under President Moreno: Rethinking the U.S. Relationship with Latin America's Left 
R. Evan Ellis  

There are many within the Ecuadoran left who will use the election of President Moreno to continue their work against the influence of the U.S. and western institutions. In that complex struggle, there are no guarantees about where the Moreno government will end up. Yet it is in the strategic interest of the U.S. to bet on the intellect and decency of President Moreno to actively seek a new path with Ecuador and the Latin American left.

How to Raise Incomes and Delay the Next Recession 
Rob Shapiro  

For President Trump, this plan has three simple parts consistent with his positions: Increase public infrastructure investments, lower the cost of business investments, and make Wall Street pay more of its fair share. If he can cut this deal, nearly everybody will win – but if he can’t, no one will lose more than he will.