As I prepare for a season of pumpkin pie, pumpkin bread (made with cornmeal and pecans), pumpkin soup (especially nice wish a decent champagne) and perhaps a pumpkin ice cream pie (graham cracker crust, of course), I have been mulling over why the area around Peoria, Illinois, so dominates the production of processed pumpkin.
Rising bond yields may already have tempered economic growth. Global stocks are in a corrective phase but not a bear-market. With oil prices under pressure, inflation expectations have moderated.
Mushrooms are a relatively small US agricultural crop, with total production of about $1.2 billion in the 2017-2018 growing year. But they do illustrate some economic lessons, including how a local area that develops a specialization in a certain product can be hard to dislodge, and how the rise of China is reshaping global production in so many ways.
Eurozone banks have fallen dramatically in the stock market despite the results of the stress tests carried out by the ECB, and the EU Banks Index is down 25% on the year despite year-long bullish recommendations from almost every broker. This should not surprise anyone because we have seen in the past that these tests are only a theoretical exercise. Moreover, stress tests’ results are widely challenged, and rightly so, because the exercise starts with the most ridiculous premise in economics: Ceteris Paribus, or “all else remaining equal”, which never happens. Every asset manager knows that risk builds slowly and happens fast.
Fifty years ago in 1968, Milton Friedman's Presidential Address to the American Economic Association set the stage for battles in macroeconomics that have continued ever since. The legacy of the talk has been important enough that in the Winter 2018 issue of the Journal of Economic Perspectives, where I work as Managing Editor, we published a three-paper symposium on "Friedman's Natural Rate Hypothesis After 50 Years."
The agreement announced between the British government and the European Union has been received in the United Kingdom with criticism from all sides. The defenders of staying in the European Union consider it very negative, of course. However, and this is the most important part, it is unlikely that the conservative party itself will support this agreement in parliament. Jacob Rees-Mogg has called the agreement “a failure of the negotiators and a failure to deliver Brexit.” Boris Johnson has said that it turns the United Kingdom into a “vassal state” and Nigel Farage has described it as “the worst agreement in history”.
Imagine two people who have seemingly equal skills and background. They go to work for two different companies. However, one "superstar" company grows much faster, so that wages and opportunities in that company also grow much faster. Or they go to work in two different cities. One "superstar" urban economy grows much faster, so that wages and opportunities in that city also grow faster.