Are We at Full Employment?

Are We at Full Employment?

Bella Dettlaff

We have reached Full Employment. As of 2018, the United States is arguably close to full employment for all citizens in America. When citizens and economists communicate on full employment, that doesn’t mean that you can cut unemployment to zero and that does not mean that everyone has a job. In that case, if unemployment falls too much then inflation will rise as employers will compete to hire workers and push up wages too fast. In other words, the real definition of full employment is that unemployment has fallen to the absolute lowest possible level that would not cause inflation. 

According to the The Bureau of Labor Statistics jobs report, it showed that for nearly about a full year straight, the unemployment rate has remained under 5%. That’s praiseworthy. This is considering the interesting fact that unemployment rate has exceeded 10% during the grand height of the recession. Now, in the recent days, some are saying the constant streak of low unemployment says that the country has reached a big post-recession goal: full employment, which many economists will define as the point where everyone who wants a job has one. This is then essentially, how economists ask whether this is as good as it gets for labor markets. But is America really there yet? 

I believe that yes. Yes, the United States is currently at full employment. I believe that they should declare that we are in full employment or that we are at the optimal position. This is because there are economic consequences to calling it too early or too late but I believe that it is the correct time to call it. In theory it would occur when unemployment is as low as it could go. Like stated, the labor market is employing everyone, all citizens who wants to work, but the supply-and-demand dynamics have not yet shifted in a way that causes wages and prices to rise. As teengaers, it’s time to search for that after school, weekend job. This is because employers are willing and wanting to hire all who are willing to work and do their job. Us as teenagers and even citizens older than young adults should be searching for that job as employers will be willing to hire you. So although there has not been a full declaration of the full employment, the United states is there! Teenagers and all who want a job and are willing to work and do what has to be done, should. It’s the time. 

Works Cited

Crook, Clive. “Full Employment.” Bloomberg.com, Bloomberg, 10 Apr. 2015, www.bloomberg.com/quicktake/full-employment.

Leubsdorf, Ben. “Economists Think the U.S. Economy Is At or Near Full Employment.” The Wall Street Journal, Dow Jones & Company, 11 Jan. 2018, blogs.wsj.com/economics/2018/01/11/economists-think-the-u-s-economy-is-at-or-near-full-employment/.

White, Gillian B. “Full Employment: Are We There Yet?” The Atlantic, Atlantic Media Company, 27 May 2017, www.theatlantic.com/business/archive/2017/05/full-employment/528339/.

An Olympic Expense

An Olympic Expense
Written by: Jaden D.


The world’s largest sporting event, the Olympics, boast millions of attendants and thousands of athletes every year.  With an event this large, there are fantastic opportunities for tourism, which provides a great incentive for countries to try and host the Olympics.  However, despite the glamour, hosting the Olympics is a financially monumental task and raises the question: is hosting the Olympics worth it?

 The 2016 summer games in Rio de Janeiro exemplified the downsides to hosting the Olympics.  With the games over, Rio struggles with huge debt associated with the initial cost of building Olympic facilities, and the additional cost of maintaining these facilities, even though they are no longer used.  On top of that, countries need to make sure that other public goods, such as transportation, are in prime condition to accommodate all the tourists and athletes.  The 2018 Olympics are likely to cost Korea roughly $12.9 billion, which is over double what South Korea expected to pay in 2011 when they agreed to host.  12.9 billion dollars isn’t even extraordinarily high: the Sochi Olympics costed an estimated $50 billion in infrastructure.

From a macroeconomic point of view, there are definitely benefits to hosting the Olympics.  Creating all of the infrastructure, stadiums, and public goods greatly increases the country’s GDP, which some may interpret as a sign of economic growth.  However, from a microeconomic point of view we can realize what’s really going on.  The government is being forced to shell out billions of dollars on public goods that will only see value for the short window that the country is hosting the Olympics.  When the government makes such a large spending decision, or in the case of Korea, ends up paying double the price they expected, it’s not just the government that is forced to shoulder the expenses, but the people.  Taxes will rise to pay off these huge bills, and in 1976 Montreal Olympics, taxpayers were left with 1.5 billion to shoulder over 3 decades. 

Korea has recognized these expenses, and they’re taking steps to avoid falling into the same pitfalls as countries before.  Instead of letting their Olympic stadiums gather dust after the 2018 Olympics, Korea will reservice these facilities as museums to the games.  However, it’s unlikely that this museum will draw in enough tourists to cover all the costs of hosting the Olympics, and the question still remains.  Is hosting the Olympics really worth it?




Works Cited
Elkins, Kathleen. “80% of Americans own an unbelievably small portion of the countrys wealth.” Business Insider, Business Insider, 15 June 2015, www.businessinsider.com/inequality-in-the-us-is-much-more-extreme-than-you-think-2015-6.
“The Economics of Hosting the Olympic Games.” Council on Foreign Relations, Council on Foreign Relations, www.cfr.org/backgrounder/economics-hosting-olympic-games.

Harley Davidson to Shut Down Kansas City Plant

Harley Davidson to Shut Down Kansas City Plant
Written by: Colin M.

While most other industries recovered from the last recession, the motorcycle industry is still in hard times. Motorcycle sales plummeted in 2008 and have continued to decrease ever since. Companies have released new models and new technology in an attempted to gain consumers, however, all have proved unsuccessful. This problem proved unsuccessful for all companies including the industries top manufacturer, Harley Davidson. According to MSN, “Harley made $8.3 million in the fourth quarter of 2017, compared with $47.18 million in the fourth quarter of 2016”(Shilling). With most of their consumers being the baby boomers, they are no longer able to ride as they get older. The hit that Harley is taking may be too big to come back from.

This years fourth quarter profits down over 80% compared to last years fourth quarter profits, and their sales have been steadily declining for years. Retail motorcycle sales for Harley-Davidson internationally, and in the U.S. fell by an average of over 6% in 2017 compared to 2016. Some of the information behind the hit in sales is linked with the lack of safety. With younger generations having safety concerns and the baby boomers, who are a large demographic of their consumers, are getting older. Overall this is leading to a large decrease in demand for Harley’s products.

Due to the struggle in the last few years, Harley-Davidson has made the decision to shut down their third largest United States facility. The Kansas City plant is to be closed in 2019, losing almost 15% of their employees. The workload the plant previously held will be transferred to their plant in York, PA. While this may seem like a big blow to the company, if they are able to keep production up by increasing efficiency, it should help increase revenue.

Additionally at their plant in York, is where their electric motorcycle will be produced starting 2019. The electric motorcycle is also part of their plan to acquire new riders and consumers. Since electric motorcycles don’t have a transmission, the rider doesn’t have to learn how to shift gears. Production of the electric motorcycle also internally benefits the company, as it will bring in 450 new jobs. Harley-Davidson is doing everything they can to keep relevant and succeed, only time will tell if it pays off.








Works Cited
An electric motorcycle. “An Electric Harley-Davidson Is Coming in 2019.” CNNMoney, Cable News
Network, 30 Jan. 2018,
money.cnn.com/2018/01/30/technology/harley-davidson-electric-motorcycle/index.html.

Shilling, Erik. “Harley-Davidson Is Sad And Getting Sadder.” Harley-Davidson Is Sad And Getting
Sadder, 31 Jan. 2018,
www.msn.com/en-us/autos/motorcycles/harley-davidson-is-sad-and-getting-sadder/ar-BBIu0

Bitcoin

Azia Riche

Bitcoin

With high hopes of a cryptocurrency trading floor, Bitcoin, its investors and traders forced shares up over 17,000% in the last three months of 2017; becoming more valuable than the New York Times, at over 11 billion. It was a boom in digital currency, making the world question if it was the future of currency. Ironically, in the first months of 2018 though, Bitcoin dropped lower than it had since November of 2017, valued at below $7,000. These drastic changes forced economists to question Bitcoin; is it really the future of currency?

First, as displayed in the two differing values between 2017 and 2018, Bitcoin has a high volatility. The value of Bitcoins is shown to be proportional to the square root of its daily users. Therefore, the value that each Bitcoin is directly dependent on the amount of people that use it, causing it to be at risk for prices increases and decreases. With a current vested interest in them, prices were on the rise. That was until, the decline in early 2018 thus far. This decline is largely attributed to the cryptocurrency exchange ban by the People’s Bank of China. With a such a large bank, like the People’s Bank of China banning the exchange of Bitcoin, the future prospect of Bitcoin being the future currency is slimming. For people who invested in such a fluctuating currency, where does that leave these owners who have invested so much money into the rising company?
Well, these Investors can sell their Bitcoin, and hopefully make a profit on what they purchased it for, or they can keep them, and hope that the volatile nature of the Bitcoin will bring their investment back to profitability. For some investors, the purchase of Bitcoin is not solely for investment and economic gain.
For example, in countries like Argentina, citizens use Bitcoin to prevent their money and savings from being taken by the government. While this does profit safety from their government and its taxes, the sum of their savings is not protected. With the high volatility of Bitcoin’s values, their savings are not safe from the fluctuating values of Bitcoin. Their money's value could increase or decrease at any time. Thus, the constant worry surrounding your money is always at the back of investors minds, for if Bitcoin faces a drop in value, your money that is reflected in Bitcoin would diminish by one setback. Meaning that Bitcoin may not be the future of currency due to its unreliable oscillations.
Additionally, most banks associate Bitcoin with suspicious and fraudulent activity, so most do not allow accounts to be opened with Bitcoin. Therefore, it is hard to get your money from your Bitcoin if you cannot place them in a bank account. There are ways around that though, because although numerous large retailers do not accept Bitcoin, buyers can use services like Shakepay to convert Bitcoin to US dollars for a fee. Also, with the addition of Bitcoin ATM’s, you can withdraw money from your Bitcoin, allowing Bitcoin to catch ground. Yet despite the existence of these ATM’s, it can be a hassle to purchase things with Bitcoin, and thus it is a burden for one to use Bitcoin, suggesting that it will not become a universal currency as you can not use it everywhere.
In conclusion, as of the current state of Bitcoin, it is not plausible to assume that Bitcoin is the future currency of the world. It does not have anything to sustain its value, and is very volatile. Also, Bitcoin does not house any incentives for its use, so most people would not be willing to risk their money in the chance that prices of Bitcoin could plummet.






Works Cited
“Bitcoin Dips Below $7k Amidst News of China's Full Ban of Cryptocurrency Exchanges.” Cointelegraph, Cointelegraph, 5 Feb. 2018, cointelegraph.com/news/bitcoin-dips-below-7k-amidst-news-of-chinas-full-ban-of-cryptocurrency-exchanges.
Blumberg, Jonathan. “Here's how you can-and can't-Spend bitcoin.” CNBC, CNBC, 7 Dec. 2017, www.cnbc.com/2017/12/07/heres-how-you-can-and-cant-spend-bitcoin.html.
Popper, Nathaniel. “As Bitcoin Bubble Loses Air, Frauds and Flaws Rise to Surface.” The New York Times, The New York Times, 5 Feb. 2018, www.nytimes.com/2018/02/05/technology/virtual-currency-regulation.html.

Misleading Conclusions

Misleading Conclusions
Greg Selfors

Economic data can be used in a variety of ways to prove a variety of standpoints; just like you might learn in a statistics class, data can be provided in different ways that seem to show opposite trends, leading to differing conclusions. This skewing of the presentation of data also relates to economics; it is very easy to through a statistic about a drop in unemployment and use that to justify predictions for growth. However, when people read these articles without having an understanding of macroeconomics, they won’t keep in mind the business cycle and how it will always shift.

The business cycle is a series of periods of economic increases and decreases; economies will naturally fluctuate as they expand and contract. After a long period of expansion, the economy will naturally flex back towards a contraction, and after a period of contraction, the economy will trend towards a recovery. This is important to keep in mind when analyzing economic trends; it is very intuitive to think that if economic growth in increasing then it will continue to increase, but there will always be contractions between periods of growth.

Economist Paul Krugman addresses this concept in his article “What the Economic Data Don’t Tell us” on the New York Times. His main argument is that the “wildly optimistic growth projections” made by the Trump administration are not consistent with this basic concept of macroeconomics, but rather are simply a means of boasting about the administration's success at helping the economy. In reality, the current expansion is just a continuation of the expansion that began in 2010. Additionally, Krugman emphasizes that “quarter-to-quarter and even year-to-year growth rates are very variable” with the following graph:


Link: https://static01.nyt.com/images/2018/01/28/opinion/012818krugman1/012818krugman1-master675.png

He explains that while the economy’s production possibilities curve expands at a fairly steady rate, the business cycle causes “recessions [that] leave some of that capacity idle, and the economy can temporarily grow fast as that capacity is put back to use.” This “idle capacity” can be described by Okun’s Law: a relationship between changes in unemployment and changes in GDP. The following is a graph of Okun’s Law for the United States economy from 2007 to 2017:


Link: https://static01.nyt.com/images/2018/01/28/opinion/012818krugman2/012818krugman2-jumbo.png

This graph predicts GDP growth based on the way unemployment is changing. This is possible because in the business cycle, whenever GDP decreases, unemployment increases, so there is a direct relationship that can be used to predict each other. Therefore, at the United States’ current unchanged unemployment rate, GDP should only be able to grow around 1.5%, not the 3% that the Trump administration claims.








Sources:
Krugman, Paul. “What the Economic Data Don't Tell Us.” Nytimes.com, The New York Times, 28 Jan. 2018, www.nytimes.com/2018/01/28/opinion/what-the-economic-data-dont-tell- us.html?rref=collection%2Fsectioncollection%2Fopinion-columnists.

GDP of the UAE

John Valla            1/30/18
                                 AP Econ

GDP of the UAE

In class we have been discussing traits, causes, and patterns related to a nation's Gross Domestic Product (GDP). During class we viewed the GDP per capita (GDP based on population) rankings of different countries, and I was surprised to see that the United Arab Emirates was not closer to the top
due to its high output of oil. In addition to the booming city of Dubai the nations hotspot for both population and economic growth. Dubai is a growing tourist destination filled with real-estate,
aviation, and financial services. Lets not forget the recourse factor that should throw the UAE to the top of the GDP per capita chart. The nation not only possesses extensive access to oil, but its shared border with the Persian gulf supplies the nation with means of immense exporting capabilities.

The truth is due to the concentration on oil, which accounts for more than 85% of the nations exports. The United Arab Emirates possesses very few manufacturing companies which causes less exports and more imports. As a result the nation does not have much economic diversity. Out of the 9.27 million people living in the UAE just 72,000 residents control 42% of the nation's wealth. This means that the rich get richer and the poor just don't.

Because 72,000 people in the UAE are so wealthy they are able to afford lavish goods. For this reason much of the wealth acquired in the United Arab Emirates is spent on goods outside of the UAE as a result of a lack in supply of manufactured goods and a high demand for these products.
As a result of the UAE’s focus on oil as a source of revenue the government plans to lessen the nation's dependence on oil by the year 2030. They plan to do this by investing in luxury hotels to increase tourism, as well as allowing property rights to non-citizens to both add wealth to the construction, real-estate, and tourism market. They also plan to further involvement in international finance.

In short the UAE is a nation full of wealth, but do to its limited outputs and high imports the GDP per capita of the UAE remains lower than some may think at first glance. 






Works Cited
“Economy of the United Arab Emirates.” Wikipedia, Wikimedia Foundation, 24 Jan. 2018, en.wikipedia.org/wiki/Economy_of_the_United_Arab_Emirates.
Reporter, Cleofe Maceda Senior Web. “Millionaires Control 42% of Wealth in UAE.” GulfNews, Gulfnews, 7 Sept. 2016, gulfnews.com/business/money/millionaires-control-42-of-wealth-in-uae-1.1892419.

“The United Arab Emirates.” Global Finance Magazine, www.gfmag.com/global-data/country-data/the-united-arab-emirates-gdp-country-report.

Hurricane Harvey Benefitted GDP?

Hurricane Harvey Benefitted GDP?

Jack Marks

Hurricane Harvey was a tragic event that left the city of Houston and its many residents in ruins. The hurricane took a toll on the people of Houston, as well as it left a monumental amount of property damages behind as well. Many people believe that all of these property damages would lead to a negative impact on the United States economy and more specifically regarding the GDP (Growth Domestic Product), but personally I think these damages will be much less severe than people believe.  (Video showing how the effects of Hurricane Harvey)

The Texas Gulf Coast plays a central role in American energy production. The Gulf Coast is the center for oil drilling, refining and chemicals manufacturing. This is why many people believe that Hurricane Harvey would have lead to a big hindrance in the supply and production of these goods. However oil prices have not spiked since the tragedy occured which leads me to believe that the damages that occurred, may not leave the drastic impact many people believed it would. (Irwin, Neil. “Markets Are Signaling That Hurricane Harvey Won't Crush the Economy.”)

The destruction of the hurricane left a need to rebuild and repair many buildings around the state of Texas. Ironically this could lead to a positive bump in economic output in the coming months as new buildings and companies would be transformed and rebuilt.  In result generating a higher GDP. Not many people would believe that you would be better off after your state gets bombarded by a hurricane, but ironically that is how the math works out!

Some data does show however that gas prices have spiked as much as 9 percent since the natural disaster(Irwin, Neil. “Markets Are Signaling That Hurricane Harvey Won't Crush the Economy.”)This can be credited to refining capacity being shut down during the storm. However this type of price swing is not abnormal and happens routinely. Also prices have not creeped any higher than what they were at during last July. Hurricane Harvey did leave a minor impact as gas prices have minorly increased, however this is routine and gas prices haven't sky-rocketed like many believed they were going to do.

The impact of Hurricane Harvey on the city of Houston and the people of Houston was undeniable. However contrary to what many people believe the hurricane only modestly impacted the economy and more specifically GDP.  After the Hurricane Harvey hit there was not a spike in oil prices, the price of gas moderately increased, and GDP in the state of Texas is destined to increase in the coming months. This is why I believe that Hurricane Harvey left a much larger effect on the people of Houston instead of the United States Economy.

Works Cited

Costa, Pedro Nicolaci . “There's a Reason Economic Measures Are No Good at Capturing the Likely Damage from Hurricane Harvey.” Business Insider, Business Insider, 28 Aug. 2017, www.businessinsider.com/hurricane-harvey-will-have-modest-gdp-effect-but-that-means-little-2017-8.

Irwin, Neil. “Markets Are Signaling That Hurricane Harvey Won't Crush the Economy.” The New York Times, The New York Times, 28 Aug. 2017, www.nytimes.com/2017/08/28/upshot/markets-are-signaling-that-hurricane-harvey-wont-crush-the-economy.html?rref=collection/timestopic/Gross Domestic Product (U.S.)&action=click&contentCollection=timestopics&region=stream&module=stream_unit&version=latest&contentPlacement=7&pgtype=collection.

Liesman, Steve. “Hurricanes Irma, Harvey Will Have a Significant Negative Impact on Third-Quarter GDP Growth.” CNBC, CNBC, 13 Sept. 2017, www.cnbc.com/2017/09/13/the-hurricanes-will-have-a-significant-negative-impact-on-third-quarter-gdp-growth.html.