As it turns out, the Federal Reserve System has about 20 times the number of economists as the US Treasury.
Tim Geithner, Treasury secretary, noted the diminishing number of US treasury economists under the Bush administration in testimony to the House appropriations committee today.
The Treasury entered this economic crisis with its professional ranks seriously depleted. We entered the worst economic downturn in generations with, just as an example, only 25 economists in the Office of Economic Policy, which is a third fewer than in 2000…Just to give you by comparison, similar offices at the Departments of Housing and Urban Development and Agriculture have 140 and 330 economists, respectively. The Federal Reserve System has over 500 PhD economists.
Other than the call for economic reinforcements, no major surprises in Mr Geithner’s testimony. Read more
Virtually no one expects the unemployment rate to fall quickly, in part because a number of job seekers will need to retrain before getting another job. Perhaps no where is this more visible than Detroit, where automotive industry workers have been laid-off en masse.
Participants at the Automotive Communities and Work Force Adjustment conference looked into the problem and found, perhaps unsurprisingly, that those displaced workers who retrained in health care made more money than workers who retrained in other fields, according to the Chicago Fed Letter. Read more
Jean-Claude Trichet, president of the ECB, today praised the creation of the euro at the opening of museum exhibit opening in Germany.
Since the creation of the euro, it has become clear how important a role the single currency can play in the realisation of an ever closer union among the peoples of Europe…Also, on the international stage, people have confidence in the euro as a currency. And this confidence is crucial.
The US may be struggling to fill the vacant seats on the Federal Reserve’s board, but Canada is on the ball.
Today, the Bank of Canada announced that Jean Boivin would replace David Longworth as deputy governor and member of the governing council at the beginning of April. Separately, the Bank announced that another deputy governor, Pierre Duguay, will retire in July. Any bets on whether we’ll know who will fill that seat before any Fed governors are appointed?
Meanwhile, some background on Mr Boivin. Read more
The increasing cost of electricity helped push consumer prices up 3 per cent in Norway in the year to February, Statistics Norway said today. Core CPI rose 1.9 per cent over the same period. The increase from January to February was 1.3 per cent, more than half of which was due to increases in the price of electricity.
The strong headline reading may pressure Norway’s central bank to raise interest rates sooner rather than later, said Action Economics in a research note. Read more
Capital Economics said in a note today that the Fed’s extended period language may be debated in its meeting next week, but the FOMC will not drop it. But, the group says, that doesn’t mean the meeting will be uneventful. There is a possibility that the Fed will continue to increase the discount rate over the fed funds rate. (Its first move toward discount rate normalisation came last month, when it raised the spread by 25bp to 0.75 per cent).
But Capital Economics said a change in the extended period language – that is, the language the Fed uses to signify that it won’t raise the federal funds rate for at least six months – would be premature given inflation and credit trends and also that the Fed will not want to make another significant change as it ends its asset purchasing programme.
Among the points Capital Economics make: Read more
As feared, the coming election is already throwing up dodgy political claims about the economy well before it has already started. In a speech in the City this morning, Gordon Brown seemed to announce a new policy to freeze the pay of senior public sector workers, saving £3bn a year. This would be a worthwhile amount, showing Labour was serious about reducing the budget deficit if the policy and figure was true and fair. It was not. The prime minister said:
“Last week I said that the parliamentary and ministerial salaries of all paid government ministers would be frozen. We must take an equally disciplined approach to pay and benefits right across the public sector.
So today I can announce that after the reports of the review bodies we will also freeze the pay of senior staff in the civil service, senior staff in the military, the judiciary, senior managers in the health service and the pay of consultants, GPs and dentists.
These measures, along with the new controls on pay which I announced in December, will save money immediately and by 2013-14 save more than £3 billion.”
Silly me. I read the speech without wearing my deeply cynical hat, as did the BBC, the FT and Reuters among others. Read more