Weekly Economic Update: January 22 – January 26, 2018

JEC CONGRATULATES CHAIRMAN PAULSEN

JEC Release

Chairman Erik Paulsen upon his election:

“It is truly an honor to lead the Joint Economic Committee and continue its tradition of serving as Congress’s sounding board for fiscal policy proposals that drive economic growth. Americans deserve more opportunities to advance their careers and increase their salaries, so I look forward to working with my colleagues to foster ideas that support more rapid growth, increased trade, dynamic innovation, and entrepreneurship.”

Office of the Speaker

Speaker Ryan Appoints Rep Erik Paulsen as Chairman of the Joint Economic Committee

CHART OF THE WEEK

Reserve Army of Prime-Age Workers

After the 2008-09 recession, the prime-age (25 to 54) labor force participation rate fell drastically. Had it fully recovered, 1.4 million more people would be in the workforce today. Normally, the current headline unemployment rate of 4.1% would indicate little labor market slack. However, if the labor force statistics included this “reserve army” of workers the headline unemployment rate would rise nearly one percentage point to 4.9%.

LAST WEEK

News & Commentary Weekly Highlights

MPRnews: Rep. Paulsen says government shutdown is irresponsible

Forbes: Senate Vote To End Shutdown Would Stop Medical Device Tax Once Again

Wall Street Journal: Apple to Pay $38 Billion in Taxes on Cash Overseas, Build New U.S. Campus

CNBC: Lazear [former Council of Economic Advisers Chair] on the labor market

Hoover: The Labor Market Resurgence

This Week

Upcoming Economic Data and Events

Monday

Chicago Fed National Activity Index (8:30am)

Tuesday

Richmond Fed Survey (10:00am)

Wednesday

FHFA House Price Index (9:00am)

PMI Composite Flash (9:45am)

Existing Home Sales (10:00am)

Thursday

Jobless Claims (8:30am)

Advance Economic Indicators (8:30am)

New Residential Sales (10:00am)

Kansas City Fed Manufacturing Index (11:00am)

Friday

Gross Domestic Product (Advance Estimate) (8:30am)

Advance Durable Goods (8:30am)

Top Economic Indicator Highlights

Industrial Production and Capacity Utilization (December 2017)

The Fed’s industrial production index covers nearly everything tangible produced in the United States.

Category	Dec	Nov	Oct
Industrial production (year-over-year percentage change)	3.6%	3.5%	3.3%
Capacity utilization (percent of capacity in active use)	77.9%	77.2%	77.4%

Noteworthy: After temporarily slowing in August and September due to Hurricanes Harvey and Irma, industrial production growth resumed its upward trend. In December and November 2017, industrial production grew at its fastest rates since November 2014. Capacity utilization is the highest since February 2015.

Job Openings and Labor Turnover Summary (JOLTS) (November 2017)

Category(seasonally adjusted levels)	Nov	Oct	Sep
Job Openings (thousands)	5,897	5,925	6,177
Hires (thousands)	5,488	5,592	5,320
Separations (thousands)	5,202	5,251	5,244

Noteworthy: There were 5.5 million hires and 5.9 million openings in November. Until late 2014, the number of hires had always exceeded the number of job openings. JEC held a hearing in July last year on the unusually large number of job vacancies.

Consumer Price Index (November 2017)

Category (percentage change from same month last year)	Dec	Nov	Oct
Headline CPI	2.12%	2.23%	2.05%
Core CPI (excludes food and energy)	1.77%	1.71%	1.77%

Noteworthy: Since reaching a high of 2.26% in January 2017, the core CPI trended downward and has now remained in the vicinity of 1.65% to 1.77% since May 2017.