Interest Rates: The Long and the Short of It.

This little article is of interest as it draws attention to one issue which is often underplayed: the Federal Reserve (or the ECB for that matter) only controls short-term rates. Longer term rates, which are also pretty important for the economy, are not so easy to influence (although of course, as Bernanke has often indicated, the Fed has the authority to intervene all along the yield curve).

Rates on 30-year mortgages fell for a fifth consecutive week even as the Federal Reserve was boosting short-term rates. Mortgage giant Freddie Mac reported Thursday in its weekly survey that rates on 30-year, fixed-rate mortgages averaged 5.75 percent this week, down from 5.78 percent last week.

The decline pushed the 30-year rate down by more than a quarter-point from the 6.04 percent high for this year reached at the end of March.

Analysts attributed this week's drop to further evidence that the economy slowed significantly in March, a slowdown that is expected to keep the Federal Reserve from abandoning its gradual approach to raising interest rates. The Fed on Tuesday boosted a key short-term rate for the eighth time since last June, raising its target for the federal funds rate by a quarter-point to 3 percent.
Source: Associated Press

US Productivity Holds Its End Up

US productivity rose at an annual rate of 2.6 percent in the first three months of the year. This was the best showing in nine months but still way below the rapid clip so typical of recent years. This slowdown has long been expected by many economists as the US economy moved up to full capacity. The big question is how much productivity enhancing technological change is there in the pipeline. Knowing this would enable us to determine the 'cruising speed' for the US economy.

Federal Reserve Chairman Alan Greenspan, speaking by satellite to a conference in Chicago, said he believed there was still a "significant amount" of technological innovation that can be tapped to yield productivity gains.

"We know there is going to be increased innovation and increased productivity," he said, but the Fed chairman also said that forecasting exactly when it will occur is difficult.

With the solid increase in productivity — the amount of output per hour of work — unit labor costs rose by a moderate 2.2 percent in the first three months of the year. That was up slightly from a 1.7 percent rise in unit labor costs in the fourth quarter but far below the 4 percent surge in the third quarter of 2004.

But Steve Stanley, chief economist at RBS Greenwich Capital, said that over the past year, unit labor costs have stopped declining as they did in 2002 and 2003, and are now edging higher. He called this "another reason for the building concern among central bankers about inflation risks."
Source: Associated Press

Children in Japan at Historic Low

OK, I'm starting back slowly. Various news sources today pick up on info (which I can't find original source back-up for) about Japan's diminishing child population:

More proof that the birthrate is dropping steadily: There were 150,000 fewer children under 15 on April 1 in Japan than there were last April 1, marking the 24th consecutive annual drop in the figure, according to the internal affairs ministry.

The statistics, announced just before today-Children's Day-show there were 17.65 million children under age 15 on April 1. Of them, 9.04 million were boys and 8.6 million were girls.

As a segment of the total population, Japan's 13.8 percent for the 0-14 age bracket is among the lowest in the world.

That figure, on the decline now for 31 consecutive years, is 0.1 percentage point lower than last year in Japan. By prefecture, Tokyo had the smallest population ratio in the 0-14 age bracket, at 12 percent; Okinawa had the highest, at 18.6 percent. (Those figures were as of Oct. 1, 2004.)

Among other countries, the percentage for the 0-14 age bracket was: 21.5 percent in China; 20.7 percent in the United States; 20.3 percent in South Korea; 16.4 percent in Russia; and 14.7 percent in Germany.
Source:Asahi.com

OK I'm Back

This site has moved back!!!!

After a leave of absence and period of wandering around various potential formats, I'm please to announce that Bonobo is back.

Some of the remnants of what I have been up to in my absence can still be found over here

Also some recent posts of mine can be found over at A Fistful of Euros (Afoe), where I started blogging again at the end of last week.