T HE P ENNSYLVANIA S TATE U NIVERSITY E CONOMICS A SSOCIATION P RESENTS :

T HE O PTIMAL B UNDLE
S PRING 2014:
WEEK OF

A PRIL 10 TH

E DITOR : C OLE LENNON P RINT EDUCATION COORDINATOR C ONTRIBUTORS : L EAH G ALAMBA , J OE K EARNS , C OLE L ENNON , R YAN S OSNADER , E LEANOR T SAI

Upcoming Events: General Body Meeting: 4/10

Fed Balance Sheet Update: 4/10

Psuea.org EA Homepage Psuea.org/blog Education Blog

U3 IS UNSATISFACTORY
Economists worldwide often attempt to explain the quality of the labor market mainly through the U3 unemployment rate. It measures how many people are without work and have looked for employment in the past four weeks. News editor Patti Domm of CNBC fawns over U3 unemployment numbers, but she doesnt acknowledge the insufficiency of using U3 to measure the labor market. U3 unemployment fails to reflect underemployment, job satisfaction, and well-being, and this must change to improve economic discourse in the world. U3 unemployments first failing is not capturing underemployment. The U6 unemployment rate that reports underemployment reports a rate of 12.7% unemployment, while U3 only reports a 6.7% rate. Federal Reserve Chair Janet Yellen refers to underemployment when pointing out the additional slack in labor markets that U3 unemployment does not capture. U3 unemployment also fails to measure job satisfaction. A survey of around 1,000 workers in the finance and tech industries revealed that only 45% of bank employees are satisfied, along with 48% of tech workers. U3 fails to account for the fact that despite being employed, many employees may wish to switch jobs. Lastly, the U3 unemployment rate does not calculate economic well-being. The most recent poverty rate in the U.S is 15%, and with U3 unemployment at 6.7%, it suggests that many Americans are employed but not economically well-off. Economist Zachary Karabell confirms that reporting on well-being would provide a better picture of the labor market, given employment status. Instead of just using U3, countries like France and England are also implementing new measures into their economic data such as quality of life and GWB or general well -being based off of surveys of their citizens. These governments and more should continue employing these indicators to provide much-needed context to the U3 unemployment rate we already use. The U3 unemployment rate provides valuable information on the labor market. It is insufficient, however, for measuring other important aspects of employment. These aspects are underemployment, job satisfaction, and economic well-being. Other countries aims to better consider other factors that measure the labor market besides U3 are admirable. Relying too heavily on U3 ultimately deprives us of a more comprehensive view of labor markets around the world.LG
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; BIT . LY /1 FSS CMP ; 1. USA . GOV /

IL3 PY 4 ; BIT . LY /O T V0S5

O N THE R OAD TO R ECOVERY

A report from the Commerce Department last Thursday indicated that the U.S. trade deficit increased to 7.7% of GDP in February. Exports fell 1.1% of GDP while imports rose 0.4% of GDP. This followed a 0.6% increase in exports in January, suggesting that the increase in overseas sales that boosted the economy late last year was unsustainable due to a fragile global economy. The increased trade deficit caused many economists to downgrade their projections for U.S. first quarter GDP, as trade deficits enter the GDP equation as a negative. The U.S. economy did show signs of strength in March, so this increased trade deficit is just a speed bump on the road to full economic recovery.RS
Check out the article: on.wsj.com/1k38xPt

We might need to export a lot more of these.

I T S H ARDER T ODAY TO P AY Y OUR W AY

Working to pay for college while enrolled is a big challenge, a fact that Michigan State graduate student Randy Olsons research confirms. He reveals that students today would need to work drastically more hours at the minimum wage to afford a year of public university tuition compared to students 35 years ago. Students in 1979 could work 182 hours to pay for a year of tuition, while students today would need to work 991 hours. This measure only covers tuition; costs dramatically increase when adding in room and board. Higher wages and lower tuition are needed to reduce these economic anxieties faced by millions of college students today.CL
Check out the Article: bit.ly/1dKgma8

991 hours, or about a half-year full-time, covers one year.

N IGERIA T AKES THE L EAD

In 2012, the World Bank estimated the size of the Nigerian economy at $263 billion. However, Sundays GDP revisions by the Nigerian government could change this number to $424 billion, meaning Nigeria would replace South Africa as the largest economy on the continent. This would improve foreign perception of Nigeria and encourage companies to invest in its populous domestic market. Still, analysts point out Nigeria must first address significant problems. These include infrastructure bottlenecks, corruption, weak governance, and most notably, poverty. In a country where a majority of citizens live on less than two dollars a day, substantial economic progress is needed to attract investment.ET
Nigeria is in first, so to speak.
Check out the Articles: bloom.bg/1ef5oUK ; reut.rs/1iniORa