Author: WSJ.com: Real Time Economics

The following is the full text from the National Bureau of Economic Research’s Business Cycle Dating Committee, which is viewed as the unofficial arbiter of the beginning and end dates of recessions.

The Business Cycle Dating Committee of the National Bureau of Economic Research met at the organization’s headquarters in Cambridge, Massachusetts, on April 8, 2010. The committee reviewed the most recent data for all indicators relevant to the determination of a possible date of the trough in economic activity marking the end of the recession that began in December 2007. The trough date would identify the end of contraction and the beginning of expansion. Although most indicators have turned up, the committee decided that the determination of the trough date on the basis of current data would be premature. Many indicators are quite preliminary at this time and will be revised in coming months. The committee acts only on the basis of actual indicators and does not rely on forecasts in making its determination of the dates of peaks and troughs in economic activity. The committee did review data relating to the date of the peak, previously determined to have occurred in December 2007, marking the onset of the recent recession. The committee reaffirmed that peak date.

More college students are on the five-year plan.

For high school students who graduated in 1972 and who eventually received a college baccalaureate, 58% got their degree within four years, according to data analyzed by economists John Bound at the University of Michigan, Michael Lovenheim at Cornell University and Sarah Turner. In contrast, just 44% of eventual BA recipients who graduated from high school in 1992 finished their college degree “on time.”

But why? One explanation could be that students were less prepared for college than in the past. But math test scores and parent education levels suggest that college-bound high school graduates were actually more prepared for college in 1992 than twenty years earlier.

Instead, the economists find evidence that the increase in time to graduate is a matter of resources.

Much of the increase in time-to-degree happened at public schools that weren’t in the top tier (such as community colleges or whatever public university the public university you went to played against). Those are schools that couldn’t ration how many students attended them, and so saw student-faculty ratios rise as enrollment increased and budgets got strained.

Meantime, student budgets got strained by rising tuition costs, forcing more of them to spend more time working, and less time studying. Between 1972 and 1992, the average amount of time college students aged 18 to 21 spent working went from 9.5 to 12.4 hours a week. (As of 2005, that figure had risen to 13.5 hours.)

“[O]ur analysis also indicates that reducing students’ financial burdens while enrolled in college would help to reduce time to degree,” write the economists. That matters because the less time students spend getting a college degree, the quicker they’re using that degree in the workforce.

European Central Bank President Jean-Claude Trichet says some countries in the euro zone might have to accept a period of deflation to restore long-term economic growth prospects.

“Some countries, to regain competitiveness, will have to keep inflation below the EU average,” Mr. Trichet told the Italian paper Il Sole 24 in an interview published Friday.

Asked by the paper whether this means “even accepting a period of deflation, with all the possible social consequences this might have?” Mr. Trichet replied: “Yes.”

“It is normal that some regions, after growing above the EMU average for some time, and after having accumulated high national inflation, experience a correction and therefore a period of negative inflation, as it is currently happening in Ireland,” Mr. Trichet said.

The ECB contends that it has avoided deflation for the euro zone as a whole, which is supported by recent data showing annual inflation in the region at about 1.5% in March, though that was probably pushed higher by energy and food prices.

Yet consumer prices are still falling on an annual basis in Ireland, and economists say other struggling peripheral countries like Portugal, Spain and, to a lesser extent, Greece either face the risk of deflation or at least a lengthy period of very low inflation.

Mr. Trichet was largely confirming what economists have been saying for months about deflation in some parts of Europe, though as ING Bank economist Carsten Brzeski notes: “he has never been so outspoken in the past.”

Whatever benefits in the long run in terms of restoring lost competitiveness, deflation (or negative inflation) can be poison for government finances in the short term: A mix of economic growth and modest inflation, or nominal GDP, brings in needed tax revenues and shrinks the debt-to-GDP ratio.

Without nominal GDP, Greece and others will have trouble bringing debt ratios down without still more painful spending cuts and tax hikes.

As Paul Krugman put it in a New York Times column today: “Deflation is a painful process, which invariably takes a toll on growth and employment. So Greece won’t grow its way out of debt. On the contrary, it will have to deal with its debt in the face of an economy that’s stagnant at best. So the only way Greece could tame its debt problem would be with savage spending cuts and tax increases, measures that would themselves worsen the unemployment rate.”

Coal mining has become safer in recent years, but miners still have a fatality rate six times higher than the average for all private industry.

In light of the mining disaster this week in West Virginia, the Labor Department pulled together its fatality, injury and illness statistics on coal mining.

“Coal mining is a relatively dangerous industry,” the Labor Department’s report states. “Employees in coal mining are more likely to be killed or to incur a non-fatal injury or illness, and their injuries are more likely to be severe than workers in private industry as a whole.”

The rate of fatal work injuries for the coal mining industry was 24.8 per 100,000 fulltime equivalent workers in 2007, according to the Labor Department. Meanwhile, for all private industry, the rate of occupational fatalities was 4.3 cases per 100,000 full-time equivalent workers.

Even so, the rate of coal mining fatalities in 2007 was 57% lower than the 58.1 fatalities per 100,000 fulltime workers that occurred the prior year.

A total of 28 people died coal mining in 2007, down from roughly 31 miners who died per year from 2003 to 2006.

Coal miners are also more likely to be injured or fall ill on the job. The rate for nonfatal injuries and illnesses was 4.4 cases per 100 full-time workers in 2008 — 13% higher than for all private industry.

Those injuries were more often considered serious and required time away from work to recover when compared to private industry as a whole. Serious injuries among coal miners — 19% of which were fractures, which take longer to heal — resulted in a median of 31 days away from work compared to a median of 8 days for all private industry.

A roundup of economic news from around the Web.

Taxes: Diane Lim Rogers makes the case for why the Bush tax cuts should be allowed to expire. “I’m going to step out of character and sound like a supply-sider for a minute here, and argue that despite having this very steeply progressive distributional pattern, the “Obama dual promise” tax policy would not necessarily be a “good deal” for even the vast majority of households not in the top 1 to 5 percent–because of that 77 percent top marginal tax rate. Having that pattern of marginal tax rates that rises so steeply at the top (go back to Table 3, bottom panel, last column on the right)–with rates of 10, 15, 25, 28, 72.4 and 76.8 percent–would create huge disincentive effects on labor supply and saving. See, all economists are “supply siders” in a sense, because we all believe that marginal tax rates affect economic decisions at the margin. Not all economists, however, are radical, right-wing, “Laffer-esque” supply-siders who believe that increasing tax rates lead to decreases in revenue. But that is because for most of U.S. history, we haven’t had marginal income tax rates high enough to worry about the Laffer curve theory. Some empirical work on this (done decades ago by my dissertation advisor, Don Fullerton, in fact), has indicated that the revenue-maximizing tax rate is far above our current highest rates of 30-40 percent–in fact, in the…70-80 percent range. Hmmm.”

Strong Recovery: Floyd Norris looks at the politcal implications amid a case for a stronger-than-expected recovery. “The American economy appears to be in a cyclical recovery that is gaining strength. Firms have begun to hire and consumer spending seems to be accelerating. That is what usually happens after particularly sharp recessions, so it is surprising that many commentators, whether economists or politicians, seem to doubt that such a thing could possibly be happening.”

Housing Troubles: Barbara Kiviat looks at more potential trouble in the housing market. “There’s long been a worry that after last year’s various foreclosure moratoria lifted, we’d see a fresh surge of trouble in the housing market. The latest figures on distressed sales, from First American CoreLogic, lend some weight to that argument. As you can see in the chart above, distressed sales — which include sales of bank-owned properties and short sales — are again on the rise. In January, such sales accounted for 29% of all existing homes sold. That’s the highest level since April 2009. The peak came in January 2009, when distressed sales accounted for 32% of all existing homes sold. Now, there is a sliver of good news in these numbers. Short sales—in which a lender agrees to take less than it is owed—are on the rise.”

Compiled by Phil Izzo

Wondering where to go to get a job? The latest data from the Labor Department suggest you pack suntan lotion: Of metropolitan areas with labor forces larger than 200,000, Honolulu has the country’s lowest unemployment rate.

Judging from the locations of the ten large areas with the least unemployment — Wal-Mart’s Arkansas headquarters and Washington, D.C. stand out — it might help to have a bit of experience in retail management or government service if you’re planning to move for work. On the other end of the spectrum, the areas with the highest unemployment rates are mainly in California. So if you’re looking for work, there’s a decent chance you’ve been involved in building, selling or financing houses.

Here’s a list of the ten best and ten worst (note: data are for February and are not seasonally adjusted):

Lowest unemployment rates
1. Honolulu, Hawaii 5.6%
2. Omaha-Council Bluffs, Neb. 5.9%
3. Baton Rouge, La. 6.4%
4. New Orleans-Metairie-Kenner, La. 6.5%
5. Madison, Wis. 6.7%
6. Oklahoma City, Okla. 6.7%
7. Washington, D.C.-Arlington-Alexandria, Va. 6.9%
8. Fayetteville-Springdale-Rogers, Ark. 7%
9. Des Moines-West Des Moines, Iowa 7.1%
10. Austin-Round Rock-San Marcos, Texas 7.3%

Highest unemployment rates
1. Modesto, Calif. 19.1%
2. Visalia-Porterville, Calif. 18.7%
3. Fresno, Calif. 18.5%
4. Stockton, Calif. 18.4%
5. Salinas, Calif. 17.7%
6. Bakersfield-Delano, Calif. 17.4%
7. Detroit-Warren-Livonia, Mich. 15.3%
8. San Juan-Caguas-Guaynabo, Puerto Rico 15%
9. Riverside-San Bernardino-Ontario, Calif. 14.7%
10. Cape Coral-Fort Myers, Fla. 13.9%

Macroeconomic Advisers‘ annual ranking of Federal Reserve officials who most moved markets in 2009 has unsurprisingly pegged Chairman Ben Bernanke’s comments as most influential.

But in what could be a bit of surprise, Philadelphia Fed President Charles Plosser came in a “distant second” to the chairman — even as the report said markets reacted “especially aggressively” to his comments. Dallas Fed President Richard Fisher came in third as market mover, followed by San Francisco Fed President Janet Yellen, who may soon be elevated to Fed vice chairman with the coming retirement of Donald Kohn.

The report was issued by the well-known economic forecasting firm Thursday and was written by Laurence Meyer, a former Fed governor, and Antulio Bomfim. It acknowledged some Fed officials are uncomfortable with being ranked on their ability to move the bond market.

Rankings were based on the influence a given Fed official’s remarks had on the two year Treasury yield — it’s particularly responsive to monetary policy-related issues — over a 2 1/4 hour window. Speeches that occurred at the same time as major economic releases or coincided with speeches by other central bankers weren’t counted. The twice-annual congressional monetary policy testimonies presented by the Fed chairman were also exempt from the rankings. (See a cheat sheet for recent speeches by Fed officials.)

“We find it interesting that Presidents Plosser and Yellen have become so influential,” the report said. “One possible reason for their increased sway on financial markets is the information they provide with respect to the distribution of views on the [Federal Open Market Committee],” as they “occupy hawkish and dovish sides of the spectrum, respectively.”

The report also evaluated the direction of yield moves as signals of the individual official’s monetary policy disposition. Yellen, who is widely believed to be very supportive of keeping policy low, or a dove in other terms, actually served to push yields higher on balance rather than lower, as one might expect. She did so by a slightly greater margin that Plosser, who has been consistently hawkish in his comments on the monetary policy outlook.

The report noted that in gauging impact, “what matters for the market response is not just whether the member is perceived as a hawk or a dove, but whether his or her speech surprised the markets.”

Fed officials who had minimal impact on the bond market were Fed governor Elizabeth Duke, Cleveland Fed President Sandra Pianalto, now-retired Minneapolis Fed President Gary Stern, and Boston Fed President Eric Rosengren, who is deemed the most market neutral of central bankers, according to the report.

The Macroeconomic Advisers report also notes Fed speeches were in 2009 by far the most influential vehicle for the central bank to influence the bond market. Policy statements released by the institution at the close of FOMC meetings came in a distant second.

What 2010 holds for the rankings will be particularly interesting. Most Fed officials have argued strongly in favor of keeping interest rates low as they try to ensure the economy recovers in an environment of minimal inflation pressures. But Kansas City Fed President Thomas Hoenig has been a vocal and frequent critic of this policy, believing rates need to rise soon lest this monetary policy creates new financial market imbalances.

Plosser has also been in the mix, advocating for the Fed to start selling mortgage assets sooner rather than later, in a bid to reduce the swollen size of the Fed’s balance sheet.

The latest side effect of the poor labor market for new college grads: Lower salaries.

Those who are graduating in the spring and land a job will see average starting salary offers fall 1.7% from last year to $47,673, according to the National Association of Colleges and Employers’ spring salary survey. The survey is based on data from college and university career services offices for students graduating with bachelors degrees.

To be sure, that average salary doesn’t apply to all types of graduates. Depending on their career path, some are much better — and much worse — off than others.

Those with computer-related degrees are expected to see one of the largest increases in offers — rising to $58,746, on average, 5.8%, higher than a year earlier. For computer-science majors, offers are 4.7% higher for an average salary of $60,426.

Engineering graduates are also better off than last year, led by salary increases for electrical, chemical and civil engineers.

Meanwhile, as Wall Street continues to gain strength, starting salaries rose for finance majors to $50,546, up 1.6% from last year. Offers for accounting majors are up slightly as well.

Those with liberal arts degrees are among the worst off. Their average salaries have fallen 8.9% from last year to $33,540. But graduates with business administration and management and marketing degrees are in a tough spot too. Salary offers for business administration and management grads are down 8% to $42,094. And offers for marketing graduates fell 2.1% to $42,710.

A roundup of economic news from around the Web.

Congress and Deficits: Stan Collender looks at the problem facing Congress in trying to reduce the deficit. “Take a deep cleansing breath before looking at this just-released poll from the Economist/YouGov and ask yourself what you would do if you were a member of Congress facing this situation. In question 23, almost two-thirds — 62 pecent — of those responding said that they wanted to cut spending to reduce the budget deficit rather than raise taxes. But just three questions later, the only area of federal spending that a majority — 71 percent — was willing to cut was foreign aid. More than 70 percent were against cutting every other of the areas mentioned and more than 80 percent were against cutting 9 of them. Reductions in the 2 programs where cuts could have the largest impact on the federal government’s bottom line — Social Security and Medicare — were only supported by 7 percent of those responding and, therefore, were opposed by 93 percent.”

Housing and Inflation: Mike Bryan on the Atlanta Fed’s macroblog posts a chart looking at housing’s effect on inflation. “The diffusion index below is the 12-month diffusion index for the CPI. Specifically, it shows the proportion of the CPI market basket that rose more (+) or less (–) during the past 12 months than during the prior 12 months. So diffusion index values below zero indicate that the majority of the CPI is rising less rapidly than a year ago while values above zero indicate the opposite. On both a weighted and unweighted basis, the CPI 12-month diffusion index is below zero—and has been since last April. Conclusion? It’s not just the housing sector that is driving the recent disinflation trend.”

Financial Constraints: Yuriy Gorodnichenko and Monika Schnitzer write on voxeu look at why poor countries don’t catch up. “How can poor countries stop playing catch up? The question continues to puzzle economists. This column argues that the innovative and productive activities of domestic firms in emerging markets are inhibited by financial frictions. Financial reform policies will be most effective if they target the vulnerable small and young domestic firms, and those in the service sector.”

Compiled by Phil Izzo

Many large retailers reported their March sales numbers this week, with most of them coming out the morning of Thursday, April 8. Following an announcement last May, Wal-Mart and its units no longer publish monthly sales figures. Updates to come as more retailers report sales. (Last updated April 8, 2010)

Sort the chart below by company name, category, change in total or same-store sales, and total sales. Also, see February’s chart.

Things aren’t as bad as they seem, says economist Mike Mussa, who predicts a far stronger global recovery than most prognosticators.

The one-time chief economist of the International Monetary Fund who now works at the Peterson Institute for International Economics will unveil his projections later today — as usual two weeks ahead of the IMF, which drives his former employer nuts — and he expects the world economy to expand 4.5% this year and 4.6% in 2011.

Mr. Mussa can argue GDP components and currency misalignments with the best of macroeconomist. But his argument basically comes down to one golden rule — “Deep recessions are usually followed by steep recoveries is a very broad historical regularity,” he says, according to his prepared remarks. Actually that’s the “Zarnowitz rule,” he says, named after economist Victor Zarnowitz, an expert on the business cycle, who died last year at age 89.

Using the basic insight of what-goes-down-should-go-up, he expects the U.S. to grow 4% this year and 4.1% in 2011; perpetually stagnant Japan to grow 2.7% in 2010 followed by 3% next year; and the suffering euro zone to expand 2% this year and 2.7% next year. All those predictions are more optimistic than the conventional wisdom.

He also expects very rapid growth in China — 10% in 2010 and 9% in 2011 — but so do a lot of forecasters.

Mostly, though, Mr. Mussa is a contrarian. “The V-shaped recovery [which he] forecast a year ago at the depths of the great global recession of 2008-2009 is now clearly under way,” he plans to say.

Treasury Department Deputy Secretary Neal Wolin said Wednesday the administration would move to block any effort to exempt auto dealers from having to comply with new consumer protection rules. He said the administration has reiterated it would not allow consumer protection rules moving through Congress to be weakened and “a carveout for auto dealers would be a paradigmatic example of such a weakening move.”

The House passed a bill in December that would exempt auto dealers from new consumer protection rules, but White House officials have said they would work to strip that provision out as the bill moves through the Senate.

The Federal Reserve could increase key rates toward 1% from near zero as a ward against inflation and possible bubbles in financial markets without hurting the nascent economic recovery, a Fed official said Wednesday.

The lone dissenter on the rate-setting Federal Open Markets Committee said 1% rates, which the Fed could move toward “sometime soon,” would still represent “highly accommodative” monetary policy.

“This would require initiating a reversal of policy earlier in the recovery, while the data are still mixed but generally positive,” said Thomas Hoenig, the president of the Reserve Bank of Kansas City.

Current Fed policy, which states that key rates will remain ultralow for an “extended period” is no longer needed, Hoenig spoke at a luncheon in Santa Fe, N.M., delivering a speech from a prepared text entitled, “What About Zero?”

“By itself, the current state of the economy warrants an accommodative monetary policy,” Hoenig said. “However, as the economy continues to improve, risks emerge around the act of holding rates low for an extended period.”

Hoenig dissented from the “extended period” language at the past two FOMC meetings because of concern that artificially low rates can create fiscal imbalances, leading investors to invest cheap money based on the expectations of the key Federal Funds rate being held near zero.

The market, Hoenig said, interprets “extended period” to mean at least six months.

Interest rates set near zero for too long could lead to a new bubble and an inevitable bust, or even financial collapse, he said.

While Hoenig said he could not “reliably identify” or “prick” an economic bubble in a timely fashion, holding rates at ultralow levels for an extended period “encourages bubbles because it encourages debt over equity and consumption over savings.”

With the U.S. economy likely to grow around 3% for 2010, and with the weak labor market seen as stabilizing, the Fed could initiate an increase in key rates to 1%, ending the “borrowing subsidy” more quickly, and moderating credit conditions, he said.

Raising key rates also would lessen the chance of inflation, though Hoenig said inflation would likely remain low for the next year or two.

“Under this policy course, the FOMC would initiate some time soon the process of raising the federal funds rate target toward 1%,” Hoenig said. “I would view a move to 1% as simply a continuation of our strategy to remove measures that were originally implemented in response to the intensification of the financial crisis.”

This morning Jon Hilsenrath noted the Fed Chairman Ben Bernanke was likely to highlight the importance of deficit reduction in a series of speeches. The following is an excerpt on the issue from the chairman’s remarks in Dallas today:

The economist John Maynard Keynes said that in the long run, we are all dead. If he were around today he might say that, in the long run, we are all on Social Security and Medicare. That brings me to two interrelated economic challenges our nation faces: meeting the economic needs of an aging population and regaining fiscal sustainability. The U.S. population will change significantly in coming decades with the combined effect of the decline in fertility rates following the baby boom and increasing longevity. As our population ages, the ratio of working-age Americans to older Americans will fall, which could hold back the longrun prospects for living standards in our country. The aging of the population also will have a major impact on the federal budget, most dramatically on the Social Security and Medicare programs, particularly if the cost of health care continues to rise at its historical rate. Thus, we must begin now to prepare for this coming demographic transition.

The economist Herb Stein once famously said, “If something cannot go on forever, it will stop.” That adage certainly applies to our nation’s fiscal situation. Inevitably, addressing the fiscal challenges posed by an aging population will require a willingness to make difficult choices. The arithmetic is, unfortunately, quite clear. To avoid large and unsustainable budget deficits, the nation will ultimately have to choose among higher taxes, modifications to entitlement programs such as Social Security and Medicare, less spending on everything else from education to defense, or some combination of the above. These choices are difficult, and it always seems easier to put them off–until the day they cannot be put off any more. But unless we as a nation demonstrate a strong commitment to fiscal responsibility, in the longer run we will have neither financial stability nor healthy economic growth.

Today the economy continues to operate well below its potential, which implies that a sharp near-term reduction in our fiscal deficit is probably neither practical nor advisable. However, nothing prevents us from beginning now to develop a credible plan for meeting our long-run fiscal challenges. Indeed, a credible plan that demonstrated a commitment to achieving long-run fiscal sustainability could lead to lower interest rates and more rapid growth in the near term.

Our economic challenges, both near term and longer term, are daunting indeed. Nonetheless, I remain optimistic that they can be met. History has demonstrated time and again the inherent resilience and recuperative powers of the American economy. Our country’s competitive, market-based system, its flexible capital and labor markets, its tradition of entrepreneurship, and its knack for innovation have ensured that the nation’s economy has surmounted difficult challenges in the past. I do not doubt that we can do so once again.

Federal Reserve Bank of New York President William Dudley said Wednesday the damage caused by financial market bubbles should bring about a sea change in the way the central bank acts, with the Fed needing to move toward active efforts to reign in financial market excess.

“There is little doubt that asset bubbles exist and they occur fairly frequently,” and when they burst the economy frequently suffers, Dudley said. And while it can frequently be difficult to discern the existence of a financial market bubble, the problems these imbalances create means “uncertainty is not grounds for inaction” on the part of central bankers.

Dudley’s view on asset bubbles comes as part of a broader re-evaluation of financial market bubbles by central bank officials. The shift in thinking is directly tied to events of recent years, where a huge run up in housing prices defended by most in markets ruptured, leading to the worst financial crisis and economic downturn since The Great Depression. The Fed, along with the Treasury, was forced into a broad and unprecedented range of actions to keep the nation afloat.

Since then, central bankers have been studying ways to ensure what happened does not happen again. It’s upended traditional arguments, favored by the likes of former Fed Chairman Alan Greenspan, that bubbles are hard to spot, policy makers are ill-suited to second guess investors, and Fed policy is too broad-based to deal with bubbles.

Dudley’s comments came from the text of a speech he was to deliver before the Economic Club of New York. In addition to leading the New York Fed, the central bank’s key interface with financial markets, Dudley is also the vice chairman of the interest-rate setting Federal Open Market Committee.

He spoke a day after the release of the minutes from the FOMC’s March 16 policy meeting. The minutes showed most policy makers decidedly reluctant to raise interest rates any time soon, fearing that acting too soon could bring to an early end a still uncertain economic recovery. Dudley did not comment on monetary policy in his formal remarks.

The New York Fed president devoted his remarks to exploring what can cause bubbles, how they can be identified, and what policy makers should do when they spot trouble.

The official indicated interest rate policy is not the best tool to moderate a market that’s running wild.

Because every bubble is its own beast, “a rules-based approach to bubbles is likely to be ineffective,” Dudley warned. Instead, talking and regulation appear best suited to the task at hand. “Use of the bully pulpit and macro-prudential tools, such as rules limiting loan-to-value ratios or leverage, are likely to prove superior to monetary policy,” Dudley said.

The policy maker explained bubbles often arise in an area where there has been some sort of technological advancement that upends traditional understandings of a given sector. At the same time, the market in which the bubble is occurring offers few easy opportunities for investors to take the opposite side of the trade, stripping away a moderating influence.

Dudley explained central bankers will find it challenging to discover whether they have a bubble on their hands, and that it will also be difficult to discern what tool is the right one for the job. Central bankers should also be prepared for the fact they may well make “mistakes” and misjudge a market, he added.

Dudley noted credit market bubbles are by their nature the bigger threat to the overall financial system, given the extent to which leverage features in those markets.

The central banker also reiterated that hiking rates to lean into a bubble is not the best way to roll, as such a move would have a “too broad” impact. He warned tighter policy than otherwise called for by economic conditions may not address the financial market excess and may come at too high a price for the economy. Such an action might also be politically challenging.

If Ben Bernanke drops newspapers from a helicopter, will it save the beleaguered publishing industry?

Probably not. But the plucky Hong Kong newspaper The Standard is using a cartoon drawing of such a fantastical occurrence to brag about the paper’s circulation, now above 200,000.

In a so-called house ad (called that because the house, the newspaper, couldn’t sell the page to a paying advertiser), Chairman Bernanke tosses copies of the Standard from a red helicopter over Hong Kong’s skyline. The headline on the paper “WORST LIKELY OVER.”

For all you non-econ wonks, the helicopter reference is to economist Milton Friedman’s idea that in the face of deflation, all a central bank has to do to jumpstart spending is to drop money from a helicopter. People of course would go mad with all that free cash and go buy stuff.

As a Fed governor, Mr. Bernanke evoked the helicopter drop in a 2002 speech entitled “Deflation: Making Sure “It” Doesn’t Happen Here.” Some see that speech as a roadmap for what became the Fed’s response to the financial crisis.

Bernanke foes, most prominently followers of Texas congressman Ron Paul, have nicknamed Mr. Bernanke “Helicopter Ben,” because when the crisis hit, he led the effort to do the equivalent of dropping cash from the sky through the Fed’s quantitative easing program. Mr. Paul and others fear the helicopter drop will cause ruinous inflation.

As for The Standard, it doesn’t have to worry whether its paper will lose value from oversupply. It’s already free.

State regulators are urging the Federal Deposit Insurance Corp. to extend its unlimited deposit insurance program for low-interest business accounts. The Transaction Account Guarantee Program was created during the financial crisis as a way to stop a flight of depositors from community banks. The program is set to expire June 30, but the FDIC’s board is meeting on Tuesday to discuss whether to extend it.

The Conference of State Bank Supervisors said in an April 6 letter the program should be extended until Dec. 31, 2012.

“While the worst of the crisis appears to be behind us, this program is still needed to provide assurance to consumers and small businesses and ensure a stable source of funds for community and regional banks,” said the letter. “Any recovery in the economy is occurring slowly and is not being realized in all areas of the country. In addition, the steady pace of bank failures still has many communities on edge.”

If it’s extended, the program could be one of just a few government officials decide to extend and not wind down. The TAGP allows banks to pay the FDIC for unlimited deposit insurance on certain business accounts as opposed to the customary $250,000 limit per account. This was intended to keep businesses from pulling their multi-million dollar accounts at community and regional banks and putting the money into institutions many believed were too big to fail.

In March, FDIC Chairman Sheila Bair said the program was used by more than 6,900 of the roughly 8,000 U.S. banks. “It has been highly effective in offering an extra margin of protection to small businesses and other holders of payment-processing accounts at small and mid-sized institutions,” she said in a Florida speech to community bankers.

Ms. Bair has not said what the FDIC might do, but many observers have interpreted her recent comments to suggest she could support temporarily extending the program.

“There is still a threat that the credit challenges facing community banks could lead to renewed liquidity problems if uninsured deposits once again flow to the largest banking organizations,” she said in March. “This in turn could trigger liquidity failures, imposing additional costs on the deposit insurance fund. As part of our analysis, we’ll consider whether an extension of the TAG program may be needed to maintain stability in the industry’s funding base given the ongoing credit challenges brought on by the financial crisis, as well as protect us against unnecessary losses.”

Almost three out of four chief executives expect their sales to rise in the next six months, according to the Business Roundtable’s first-quarter survey. But few expect much hiring in the coming months.

About 29% of CEOs said they expect employment at their companies to increase in the next six months, up from 19% expecting an increase over that horizon when they were surveyed in the fourth quarter. About 21% of CEOs said they expect their firm’s employment to decline in the next six months, better than the 31% in the prior quarter. Half expect no change in employment, the same share as in the prior quarter.

“Most people are kind of steady, which I think is good news in this regard,” Ivan Seidenberg, chairman of the Business Roundtable and CEO of Verizon Communications, told reporters on a conference call. He said some areas, such as the retail sector, are adding more than others. “I would read this as a good thing, but I don’t think it’s across the board.” Employment gains are expected to lag behind sales as they generally do in business cycles, he said.

The survey by the Business Roundtable, an association of CEOs from major corporations, included responses from 105 executives in the second half of March.

John Castellani, the group’s president, said the latest report marks the first time since the first quarter of 2008 when more employers are projecting higher employment than lower employment over the next six months. In the first quarter of 2009, 71% of CEOs said they expected lower employment over the following six months, while just 7% expected employment to rise.

In the latest survey, the 73% of CEOs expecting higher sales over the next six months marked an improvement from 68% in the fourth quarter. Only 5% expect a decrease, far better than the 17% expecting declining sales in the fourth-quarter survey.

About 47% of CEOs expect capital spending to increase in the next six months, up from 40% in the fourth-quarter survey. Roughly 7% expect a decrease, down from 16% in the fourth quarter.

In a separate survey by the Conference Board, 30% of CEOs said they anticipate an increase in employment in their industry, up from 3% a year ago. The proportion expecting a decrease in hiring fell to 22% from 86% a year ago. Executives listed as their top obstacles to hiring new workers: regulation/litigation, health care costs and then wage/salary costs.

In that survey, collected by the business research group between mid-February and mid-March, about 71% of CEOs said current economic conditions have improved compared to six months ago, down from 75% last quarter. In assessing their own industries, however, 59% said conditions are now better, compared with 54% last quarter.

Looking ahead, about 52% of CEOs said they expect overall economic conditions to improve in the next six months, down from 58% last quarter. For their own industries, 42% of CEOs expect improvement in the coming months, down from 45% last quarter.

Fewer babies were born in 2008 than the prior year, and it appears to be linked to the recession, a new study shows.

The number of births in 25 states where data was collected fell to 2.29 million in 2008, down from 2.33 million a year earlier, according to the Pew Research Center.

The birth rate — the share of women between ages 15 and 44 who gave birth – also fell in 20 of the 25 states. The overall birth rate dropped 1.6% to 68.8 births per 1,000 women of childbearing age.

The researchers relied on state level data to help parse the relationship between births and economic trends in the region. The 25 states surveyed account for 54% of all women of childbearing age in the U.S. and the same percentage of babies born annually.

“The analysis suggests that the falloff in fertility coincides with deteriorating economic conditions,” the report says. “There is a strong association between the magnitude of fertility change in 2008 across states and key economic indicators including changes in per capita income, housing prices and share of the working-age population that is employed across states.”

Arizona, for example, experienced the largest decline in birth rate: a 4.6% drop in 2008. Of the 25 states, it had the second largest decline in per capita income in 2007 and was listed sixth in terms of change in home prices.

In contrast, North Dakota was one of the few states where the fertility rate rose. Its per capita income also grew the most and its foreclosure rate was the second lowest of the 25 states in 2007.

The correlation, however, didn’t extend to fertility rates and state-level employment and unemployment rates.

It’s not unusual for birth rates to dip during economic downturns and previous studies have shown that Americans have postponed having children because of this recession. “Over the past decade, birth rate trends roughly mirrored the nation’s economic ups and downs,” the report states. “Birth rates dipped slightly in 2001 and 2002, then began growing again in 2003 before peaking in 2007.”

Nationally, the 2007 birth rate was the highest in nearly two decades. It began declining in 2008 and preliminary data for the first six months of 2009 indicates the trend continued last year as well.

A roundup of economic news from around the Web.

Yuan Revaluation: Martin Wolf of the Financial Times looks at yuan manipulation. “I conclude that the renminbi is undervalued, that this is dangerous for the durability of global recovery and that China’s actions have not, so far, provided a durable solution. I conclude, too, that rebalancing is a necessary condition for sustainable recovery, changes in competitiveness are a necessary condition for rebalancing, real renminbi appreciation is necessary for changes in competitiveness, and a rise in the currency is necessary for real appreciation, given the Chinese desire to curb inflation. The U.S. was right to give talking a chance. But talk must lead to action.”

Confidence in Banks: Gallup has a poll that looks at Americans’ confidence in banks. “As the Senate considers financial reform legislation, a new Gallup poll shows that Americans’ confidence in banks has not returned on Main Street as it has on Wall Street. The percentage of Americans saying they have a “great deal” or “quite a lot” of confidence in U.S. banks is now 20% — not much different from the 18% of a year ago or the 22% of last summer. Four in 10 Americans currently say they have “very little” confidence in U.S. financial institutions.”

Housing: Felix Salmon looks at Fannie Mae’s National Housing Survey and finds Americans’ attitudes toward housing hasn’t changed much. “I think what we’re seeing here is a mindset utterly conditioned by the massive, decades-long bull market in housing. Never mind that that bull market has come to an end; the syllogism is simple. House prices always go up; housing is a bargain right now because prices have ticked downwards; therefore now must be a great time to buy. I see this mindset in New Yorkers who genuinely believe that $1 million is not a lot of money to pay for a 2-bedroom apartment, even when it comes with thousands of dollars a month in maintenance costs on top of that. Of course they never would have believed such a thing 10 years ago, but the anchoring effect of the housing bubble is astonishing to behold.”

Compiled by Phil Izzo