Two Americans, Dr. Paul R. Milgrom and Dr. Robert B. Wilson of Stanford University, received this year's Nobel Prize in Economics "for improvements to auction theory and inventions of new auction formats." Each year, the Royal Swedish Academy of Sciences awards the Prize in recognition of ideas and research that increase our understanding of important issues in economics and related areas. This year's winners have studied auctions and how they work.
The US economy continues to generate new jobs, with the latest (September) report showing a modest gain of 661,000. The unemployment rate has decreased from 14.7% in April to 7.9% last month. Though the situation is improving, the total increase over the past few months is well below the 22.2 million lost during March and April. Additionally, the recovery has been decidedly uneven. The "rising tide" that was improving the lot of people from all socioeconomic groups prior to the pandemic has unfortunately turned.
The state of the economy is inevitably a central issue in presidential campaigns, debates, and elections. This year will likely be even more intense than usual, with the fallout from the pandemic causing millions of Americans to lose their jobs, their savings, and, in many instances, their businesses. The best candidate to deal with the situation will be the subject of strong opinions and disagreements. During elections, economics becomes "electionomics," with rhetoric often far overshadowing reality.
The more than ten years of sustained economic expansion that preceded the pandemic, the longest period of growth in US history, brought notable progress across a broad spectrum. The latest income and poverty data from the US Census Bureau (through 2019) illustrate this point, indicating how the sustained strength benefitted individuals and families across the nation. Real (inflation-adjusted) median household income increased an impressive 6.8% between 2018 and 2019 to reach $68,703. It was the highest level since the series began (1967). It's an impressive increase from just five years prior in 2014, when median household income was $58,001, which was lower than five years prior to that in 2009 ($59,458). Keep in mind that the median is the level at which half are above and half are below; it's not just some huge gains at the top end driving the increases (although there has been some widening of the gap).
Prior to COVID-19, the US was in the midst of a 10+ year expansion. While not perfect, the basic structure of the economy was basically sound. If this structure is kept intact, the recovery can be both robust and rapid. If it is allowed to deteriorate, things will inevitably be much worse.
According to a new report from the non-partisan Congressional Budget Office (CBO), the amount of federal debt held by the public is projected to exceed gross domestic product (GDP) for the first time next year. This assessment is consistent with current and projected patterns and, thus, likely to occur.
A shift in Federal Reserve (Fed) policy was recently announced. This newsflash could easily be missed in the midst of a pandemic, significant economic dislocations, and social unrest. I wrote my dissertation on Fed policy in the mid-1970s (as well as numerous academic articles and my first book). As part of that ordeal, I read the meeting minutes dating back to the 1950s. Thus, I am likely the only person who has perused the notes from every meeting for the past 70 years (comments regarding my social life are discouraged). All of that to say, believe me, this one is a big deal.
The COVID-19 pandemic and resulting restrictions needed to slow the spread of the virus have caused substantial harm to the economy. Even in the face of significant job losses and output declines, however, the underlying structure is generally sound and long-term prospects remain positive (though the next couple of years will be quite different than what we were expecting before the coronavirus). Looking beyond the immediate horizon, our latest long-term forecasts for job growth in the state's metropolitan areas are on the whole encouraging. Let's take a quick trip around the state.
Texas has been one of the strongest performing states in the US for a number of years, attracting more major corporate locations and expansions than any other and regularly topping lists of the best places to do business. As examples, the state has won the "Governor's Cup" for the most major projects for the past eight consecutive years and was recently named the "State of the Decade" by Site Selection magazine.
Accurate Census counts are far more than just a matter of interest. They are vital to ensuring adequate federal funding for various programs, appropriate representation in Congress, and an understanding of demographic trends to plan for the future. Over 300 federal programs rely on Census data to allocate funds geographically, as do numerous state and local initiatives. For example, many resources and dollars for hospitals and health clinics are distributed according to Census data. Important aspects of the social safety net, such as Medicaid and CHIP, SNAP, and housing vouchers, also depend on Census estimates, programs that will only become more vital as the economy continues to experience disruptions from the pandemic.