C’è del marcio nel Mercato del Lavoro in Italia?

Eurostat ha recentemente rilasciato nuove statistiche sui flussi trimestrali relativi all’entrata e uscita dalla disoccupazione nell’Unione Europea. Quante persone disoccupate hanno trovato lavoro nel secondo trimestre del 2015? Quante sono rimaste disaccupate e quante hanno smesso di cercare lavoro?

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Figura 1 – Flussi mercato del lavoro, dati europei aggregati, dal III al II trimestre 2015.

I nuovi dati per paese mostrano che i recenti sviluppi nel mercato del lavoro italiano sono in controtendenza rispetto all’Europa. Nella Tabella 1, l’Italia appare subito come un outlier in termini di abbandono del mercato del lavoro. La quarta colonna mostra la percentuale dei disoccupati che in quel trimestre ha deciso di smettere di cercare lavoro ed uscire perciò dalla forza lavoro. È il 41.6%, dato ben superiore agli altri paesi, compresa la Spagna e la Grecia. L’Eurostat ci dice anche che questo è un trend in aumento, cioè che il flusso di persone che diventano inattive risulta in aumento del +3.3% rispetto al secondo trimestre del 2015.

L’Italia ha anche un basso tasso di successo nel trovar lavoro e solo il 14.3% dei disoccupati ne ha trovato uno, dato più basso di molti altri paesi. Questo flusso di persone “fortunate” risulta in lieve flessione del -0.3%.

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Tabella 1 – Flussi nel mercato del lavoro, per paese, III trimestre 2015

Questi dati non sono corretti per gli effetti stagionali ed il confronto fra paesi ha senso se queste componenti cicliche sono simili tra paesi. In ogni caso, questi dati devo essere analizzati in un contesto più ampio ed è bene sapere quale sia stato il trend negli anni precedenti. I grafici qui sotto mettono a paragone l’Italia con la Spagna (Figura 2a). A differenza degli Stati Uniti (Figura 2b) dove il tasso di partecipazione è in caduta libera dall’inizio della crisi finanziaria e della Grande Recessione, in Italia e Spagna il livello di partecipazione nel mercato del lavoro è rimasto pressochè stabile, se non in aumento. Ciò vuol dire che il tasso di disoccupazione in paesi come l’Italia e la Spagna tenda a rimanere alto perchè molte persone rimangono disoccupate ma non smettono di cercare lavoro, a differenza degli Stati Uniti dove il declino di partecipazione ha contribuito a “snellire” il dato sulla disoccupazione.

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Figura 2a – Tasso di partecipazione nel mercato del lavoro, Italia e Spagna, 2006-2016
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Figura 2b – Tasso di partecipazione nel mercato del lavoro, Stati Uniti, 2006-2016
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Figura 3 – Tasso di disoccupazione, Italia e Spagna, 2006-2016

È chiaro perciò che non basta leggere le ultime statistiche trimestrali per farsi un’opinione, ma i nuovi dati devono essere confrontati con i trend degli ultimi anni. In ogni caso emerge che in Italia il processo di riassorbimento della forza lavoro disoccupata è ancora troppo lento.

What about GDP per capita?

While reading the latest Voxeu article by Lucrezia Reichlin and coauthors, “The Eurozone has been infected by the US slowdown“, one of the graphs in the article made me reflect – again – on the dominance of Gross Domestic Product in discussions on the state of an economy.

Most of the time commentators refer to the total GDP, whereas GDP per capita is very often ignored or, even worse, implicitly considered a synonym of the other term. In the graph below, Reichlin and coauthors aim at showing the level of correlation in business cycles between the US and the Euro area.

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My intention here is to convince you that the graph should not be interpreted as a divergence in living standards across the two sides of the Atlantic (again, that’s not what Reichlin et al. claim). Ah, the ill-fated creation of the currency union! I already feel someone is having this though right now. As the picture below shows, using a comparable measure of per capita GDP – unfortunately only available for a short time series – we do not observe a dramatic divergence in the growth rate of GDP per capita in the last 25 years. The first graph was indeed showing a divergence.

Where is most of the divergence in total GDP coming from? Population trends, as you can see below. Both statistics are important: the larger is the economy, the larger are markets for European firms and this is beneficial for their growth. Also in terms of diplomatic relationships, power increases with the size of the economy. On the other hand GDP per capita is much more suitable to measure the living standard of the average individual in a country. Lets keep it in mind next time we discuss GDP data.

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GDP per capita at Purchase Power Parity (source: Tradingeconomics)
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Population trends

And Now for Something Completely Different?

Welcome to Crudedatalash. Let me briefly explain you the idea behind this blog. There are a lot of very good economics and finance blogs out there, so I was hesitant to start this new project. Tough competition calls for specialization and I must have something special to offer for you to keep reading my blog. Will this blog give you something completely different?

These are my interests and expertises:

  • I am an economist specialised on macroeconomics and my research so far has been mostly about the impact of economic policies on productivity and economic growth. My interests are broader, as you’ll see from this blog. I worship Bloomberg Surveillance almost every day.

This is what I am planning to write here:

  • The main idea of this blog is to brief you on the most interesting economic and financial reports that are newly released by major think tanks, as OECD and IMF for instance, as well as academic economic articles (that are not on Voxeu…). I have to read them for work and you might not have the time for it, so demand meets supply.
  • The name crudedatalash comes from the idea of (manually) crawling economic and financial statistics for new exciting pieces of evidence. There are lots of new data released every week and even all other bloggers together cannot spot all interesting economic and financial facts.
  • I will give my read on current affairs, blending the opinion piece with a summary of the most interesting opinions I find out there.
  • Give forecasts. Yes, I am getting excited by reading Superforecasting: the Art of Science and Prediction by by Philip E. Tetlock and Dan Gardner and sometimes I will have fun making my own forecasts on something specific.
  • Some articles will be written in Italian for the Italian audience. The objective is to build another bridge between the Italian public opinion, usually very provincial with few exceptions, and the most important English-written news and opinion sources.

Is that it? Well I also want to write about cooking, but I don’t promise it at this stage.

The adventure just started. Add crudedatalash to your feedly account!

Economic Melancholy

The Organization for Economic Cooperation and Development (OECD) just revised worldwide growth projections for 2016 and 2017 downwards to 3% and 3.3%. Global growth is called “elusive” and the OECD advocates for prompt policy intervention. Not from central banks, but from governments. According to the Interim Economic Outlook, current fiscal policies are contractionary in all mayor OECD countries and the economic think-tank recommends to undertake government-led large-scale investment plans to relaunch demand and, surprise!, to reduce the debt burden. Apparently the investment multiplier is so large that the increase in the level of public debt would be eclipsed by GDP growth, that reduces the famous debt to GDP ratio. The OECD criticises the Juncker’s investment plan as to have an insufficient scale and to be implemented too slowly.

Even if their predictions on benefits from higher public investment seems to me an upper bound on hopes, the OECD indicates the right direction. I am not convinced by the anecdotal evidence of Robert Gordon on the case for a technological crisis, which would make such investment plans ineffective. I am more on the side of those that see a chronic laggard demand, not able to catch up with faster technological progress. Don’t be fooled by TFP and other wannabe productivity growth measures: they track both demand and supply factors, even if many commentators pass off them as evidence for dismal technological progress. Gordon’s book is coming out soon, I will talk about this influential thesis again.

Is Inflation really Low?

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All-items (red) and core inflation (blue) rate in the United States (from tradingfloor.com)

The real interest rate on safe assets drives the returns on investments in all other asset classes. The current low inflation rate, that together with the nominal interest rate determines the real rate,  has been forcing central banks worldwide to keep interest rates at rock bottom levels. Inflation is not cooperating with central bankers, who are desperately trying to reach the equilibrium real interest rate below zero.

Generally central banks face a lower bound at zero in setting nominal interest rates, the rest of the job is done by inflation. Going below zero means entering a new phase of capitalism where you make no money by lending (hey, I am talking about nominal rates, real ones have been negative many times before). A new world where credit institutions have squeezed margins (they will lend more, theory suggests) and savers seek the riskiest investments to have the hope of building for their retirement.

The graph above clearly shows that the current disinflationary environment appears so because of the fall of commodity prices. If we exclude food and energy goods from the calculation of the price index (the core rate of inflation), the situation looks very different. Commodity prices drop because of past over-investment and strong dollar and interest rates are affected through the inflation rate. Even if low commodity prices were to give a boost to global demand, it is unlikely that this effect alone would create inflationary pressures – just draw the classic supply and demand graph.

Moving towards an equilibrium does not mean that we will move back to the old one right afterwards. Even if central banks manage to reach the much wanted “equilibrium interest rate”, we are going to see an improvement in the general economic conditions, on employment and income, but we might get stuck there until something else radically changes. Commodity prices will rise only if miners and oil producers take radical action in lowering supply, that is not to be taken for granted (for instance, have a look here).

Stagnation and Recession of Measurement

We are living an era of frustration. Despite the broad set of measures undertaken by central banks and governments around the word and the daily effort of firms and workers to innovate, we are seeing now recession risks to join the top list of most debated topics together with secular stagnation and Eurozone crisis. With a world Gross Domestic Product growing at 3.1% in 2015 – the lowest level since 2009 – these concerns get reinforced.

There no unique cause that can explain the widespread arise of lackluster data. One piece of the puzzle is definitely the issue related to the widening conflict between the measurement of national income and the expansion of the service sector. In a recent column on Voxeu, Diane Coyle in a piece with title “Digitally Disrupted GDP” reminds us of the serious problem GDP data have in capturing fully productivity growth coming from information technology-based services like on-line retailers as well as digital products. Prof. Coyle correctly notices that measurement problems have always troubled judgements based on GDP statistics because, for instance, homework is not accounted as contribution to the national income. Whereas housewives got a job over the years, the problem this time is that the economic activities ignored by GDP statistics – as zero-priced digital products and blogging – are getting a more and more important role in modern economies.

Statistical agencies constantly work to improve the measurement of the national account data through revisions of accounting methodologies, like the recent one that recalculated R&D expenditures as investment. The measurement problem will be fixed, but I worry that the current inaccurate GDP data will motivate misguided policy responses and induce unmotivated pessimism in financial markets.

Stocks: Back to Square One

What was the story that markets had already priced in the Fed’s interest rate hike? After the Federal Reserve took the decision last December to take the first step up on the interest rate ladder, the market sentiment definitely turned into bearish. For the whole year 2015, global markets flirted with the idea of a major correction and since the new year started the trend seems finally reversed.

Hard to argue that the Fed’s action has caused the recent market turmoil. There are so many factors at play, the sentiment just reversed. Corrections in the valuation of energy companies put a strong downward pressure on global indexes, but the fall in prices has involved a broader set of sectors. The S&P 500 has a YTD decline of almost 10%, back to the beginning of 2014. In Europe, the eternal “undervalued” market, has seen larger reductions in stock indexes with a meltdown in the banking sector.

My take is that the level of uncertainty, from inflation to growth prospects in emerging markets, passing through the oil price and a potential new Euro crisis, has convinced investors to take a break and make money with short selling. Just think that a hedge fund is shorting luxury homes in London. The stock market will go back on its feet once we will finally have new signs of inflation, in goods or asset prices. That sounds like more stimulus is desperately needed in the short term.

Hello World

Nobody is probably going to read this post, so let’s be brief. This blog is about money. No investing tips, no trading tricks. I will write about the real world out there, everything that has a price tag and affects our daily lives. Growth prospects, financial markets, oil, monetary policy, knowledge economy, with a pinch of geopolitics and environmental issues. Stay tuned.