The story has changed, but not the economy

Jon Muller fact-checks some assertions from the State of the Union. -promoted by desmoinesdem

The president bragged about the economy last night, suggesting the dawn of a new era of growth after decades of stagnation. It isn’t true. Well, it’s partly true. The economy is doing fairly well by most measures. But have we seen any appreciable change in trend?

This post will address four claims made by the president, related to manufacturing, wage growth, black unemployment, and coal production.

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Twelve depressing facts about racial disparities in Polk County

The Des Moines metro area has received top-ten rankings from dozens of national organizations or publications that evaluate the job climate, housing markets, or other factors affecting the quality of life.

Unfortunately, extensive research on the State of Black Polk County revealed “significant racial disparities in the traditional economic and financial indicators including banking, savings, employment, and housing.” The Directors Council and State Public Policy Group coordinated the yearlong project, producing the first-ever “snapshot of the financial stability and well-being of African Americans and Africans living in Polk County.” Iowa’s largest county is home to more than 31,000 black people, a little less than 30 percent of the estimated statewide African-American population.

I first learned of this study, now nearly six months old, when Teree Caldwell-Johnson presented key findings to congregants at Temple B’nai Jeshurun in Des Moines during a break between Yom Kippur services on September 30. The full report is after the jump. For each portion, I’ve highlighted the facts and figures that most struck me.

These numbers partially explain why analysts for 24/7 Wall Street ranked the Des Moines metro area the country’s ninth-worst city for black people in 2015 and the third-worst last year.

On a related note: The Fifth Annual Iowa Summit on Justice and Disparities, co-sponsored by the NAACP, is happening in Ankeny next Tuesday, October 10. More details are here and near the end of this post.

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Turning good economic news into bad news

Economist Dave Swenson explains why “a tight labor market is good for workers and good for families,” contrary to what you may have read in the newspaper. -promoted by desmoinesdem

Iowa’s enviously low unemployment rate of 3.1 percent is distressing many in the business community and, by proxy, business news. In recent months more and more people are declaring that Iowa is at full employment, and that, they say, is a problem.

It’s not. Iowa’s economy bumping up against full employment, if in fact that is happening, is a good thing. It is the stated goal of every politician’s overweening job creation rhetoric. It is what we hope for as our economy moves through the wrenching disruptions to firms and households caused by recessions. It is precisely what we want to happen: as many people are working as our economy can support.

Unless it creates discomfort in the business community. Then low unemployment is a problem. Let me explain.

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Expect more downward revisions in Iowa revenue estimates

Jon Muller examines factors contributing to Iowa’s budget crunch. What do you want first: the bad news or the “quite disturbing” news? -promoted by desmoinesdem

The Iowa Revenue Estimating Conference (REC) reduced its FY 2017 estimate for General Fund Revenues by $106 million. That’s on top of the $96 million downward revision in December 2016. Since the original estimate used for FY 2017 appropriations (December 2015), cumulative downward revisions total $243 million on a $7.3 billion budget.

This has led to all the gnashing of teeth that comes every time revenues begin to slow. The REC has never been particularly prescient when it comes to predicting the turn in receipts, either on the way down or the way up. I have some insight into this phenomenon because I used to be a revenue estimator for the Iowa General Assembly, and wasn’t any better than they are now. Indeed, economic models in general are not very good at predicting turns in the business cycle until after they happen. They are very good at generating consensus forecasts that tend to magically predict the next year will look a lot like the current year, at least during stable periods.

What’s new this time around is, according to policy makers expressing concern about the downgrade, is the reduction in revenues during what is considered a reasonably healthy economy. In my view, the stress on the General Fund is actually due to two primary factors. The economy is perhaps not quite as robust as consensus opinion suggests. Secondly, it appears the cost of House File 2433 passed during the 2016 legislative session, a bill providing a sales tax exemption for items consumed in manufacturing processes, was dramatically understated.

I suspect those looking to blame the sluggishness on a downturn in the farm sector will be disappointed as farm income growth begins to turn positive. Those who believed hundreds of millions of dollars of tax cuts and credits would spur state revenue growth should be equally disappointed. It’s just not happening.

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Trump's bait and switch on manufacturing jobs

Thanks to Democratic activist Paul Deaton, “a low wage worker, husband, father and gardener trying to sustain a life in a turbulent world,” for cross-posting this opinion column that first appeared in the Cedar Rapids Gazette. -promoted by desmoinesdem

Since the general election I’ve been laying low, listening to people talk — in person — about the new administration and what President Donald J. Trump means to them.

It was about jobs.

Most supporters found a lot of what the president said and stands for to be objectionable, yet voted for him because of the hope for jobs — a central campaign theme. Manufacturing jobs specifically.

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