The Most Important Economic Stories of 2013—in 44 Graphs

Why does this chart belong in a list of "economic" charts? Because it illustrates the constraints facing economic policymakers right now, particularly the president. Even though certain kinds of government activism under Obama may have helped the economy—such as the stimulus and the extension of unemployment benefits—this shift in public opinion makes it harder for the government to do more to address the economic problems that remain.

The Year in Health Care: Slow and Steady...

Adrianna McIntyre, The Incidental Economist: With or without website glitches, we would have expected early enrollment at HealthCare.gov to skew disproportionately older and sicker. This is evident from trends in Massachusetts, where enrollment of young and healthy individuals spiked just as the mandate kicked in. The last day to sign up for health insurance in the exchanges before the mandate kicks in is March 31, 2014.

Eddy Elfenbein, Crossing Wall Street: Here's the Medicals Costs portion of the CPI divided by the Core CPI. This trend has been rising for decades, but it's slowed down recently. It's still too early to call is a trend. But obviously, if healthcare inflation soon becomes like regular inflation, then it's a game changer.

The Year in Inflation: Growth and Expectations

 

Scott Sumner, Money Illusion blogger and professor at Bentley University: The US and the Eurozone did roughly equal amounts of austerity. But the US had some unconventional monetary stimulus whereas the eurozone raised rates several times in 2011 to slow inflation. You can see the results of this natural experiment.

Noah SmithThe Atlantic, Noahpinion, & professor at Stony Brook: No one is still quite sure why the Republican party shut down the government, or decided to play chicken once again with the debt ceiling. But this much is certain: The world believed the GOP was serious. Spiking Treasury yields on October 7th and 8th mean that the investing public thought there was a real chance that the Republicans would force the U.S. into a technical sovereign default. For the first time in living memory, U.S. debt carried a substantial risk premium. And here's the really scary thing: If the GOP did this kind of thing in 2011 and again in 2013, what's to stop them from doing it again, and again, and again?

Mike Konczal, Roosevelt Institute: Throughout 2013 projections and estimates for growth were written down. Though a series of slow writedowns in response to a series of unnecessary austerity imposed too quickly, viewed together it shows a wasted year in terms of getting us back to full employment. As the sequestration became clearer, any potential upside from a recovering housing market was more than netted out by the self-inflicted rule.

Most disturbing was the collapse in inflation after the overhaul of policy introduced by the Federal Reserve in late 2012 to hit its inflation target. Instead of a period of above average inflation, which many had expected and hoped for in response to the very rapid adoption of the Evans Rule as Federal Reserve policy, we have record low inflation. All in all, a year that could have been, and should have been, done differently.

David Beckworth, Macro and Other Market Musings, Professor at Western Kentucky University: Despite the stated intentions of the Federal Reserve, the QE programs have coincided with rising treasury yields. QE2 and QE3 have also coincided with growth in privately-produced safe assets. Some have attributed the rising yields under QE3 to the Fed’s taper talk. But real yields started rising before the taper talk and were going up in other countries too. If anything, the taper talk was the Fed acknowledging the improving fundamentals that were driving up yields during that time. Though modest, these developments attest to the Fed’s potential to spur economic growth through large scale asset purchases if done properly.

Claudia Sahm, Senior Economist at the Federal Reserve: Households views about their income prospects, for example, as measured in the Michigan Survey of Consumers, worsened sharply in the recession and remain depressed. While income expectations have gradually improved over the past two years, the remaining pessimism among households may be a phenomenon that continues to weigh against a recovery in consumer spending.

The Year in Energy: A Revolution

Mark Perry, Carpe Diem blog, AEI scholar, professor at the University of Michigan-Flint: This chart illustrates the significance of The Great American Energy Boom. It shows oil production in the nation’s three largest oil fields over the last 7 years, and the meteoric rise in two of them over the last several years. In 2013, two of those oil fields—the Eagle Ford Shale in Texas and the Bakken formation in North Dakota—hit a major oil production milestone of crude oil output exceeding one million barrels per day (bpd). According to estimates from the Energy Information Administration (EIA), oil production in the Eagle Ford Shale surpassed one million bpd in May and the EIA projects production in the Bakken formation will exceed one million bpd this month (December).

Those two oil fields will join a third US super-giant oil field—the Permian Basin in Texas, which surpassed one million bpd back in 2011—and become part of an elite group of only ten oil fields globally to ever produce at the one million bpd level. “Saudi America’s” three super-giant oil fields are making a major contribution towards America’s record-setting increase in crude oil output this year, which is on track to be the largest annual increase in oil production since the beginning of U.S. commercial crude oil production in 1859.

The Year in Chinese Pollution: A Killer

Michael Greenstone, 3M Professor of Environmental Economics, MIT: The Chinese government has provided highly subsidized coal for heating north of the Huai River, which delineates North and South China, since the 1950s. The policy dramatically increased total suspended particulate (TSP) air pollution in the north of China (see above, where the circles are proportional to population at each degree latitude north and south of the Huai River boundary). The higher air pollution concentrations increased the cardiorespiratory (e.g., strokes, lung cancers, and heart attacks) mortality rates, reducing life expectancies in the North by 5.5 years, relative to the South. Ultimately, this policy is causing the 500 million residents of Northern China to lose more than 2.5 billion years in life expectancy. [Source: Y. Chen, A. Ebenstein, M. Greenstone, H. Li, Evidence on the impact of sustained exposure to air pollution on life expectancy from China’s Huai River policy. Proceedings of the National Academy of Sciences110, 12936-12941 (2013).]

 

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Matthew O'Brien

Matthew O'Brien is a former senior associate editor at The Atlantic.

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