The Fed is rethinking one thing too many

OFFICIALS at the Federal Reserve, a few of them anyway, seem to be rethinking their views of the economy in some dramatic ways. In a new blog post, however, Ben Bernanke suggests that Fed watchers shouldn't overstate the radicalism of the intellectual evolution within the Fed. Top policy-makers still have confidence in their mental model of the economy; they have just been tweaking a few of the parameters within that model, he says. In particular, the Fed's long-run projections for GDP growth, the unemployment rate and their benchmark interest rate have all been revised down (see table).

As Mr Bernanke notes, these revisions change the outlook for rate rises in slightly different ways....Continue reading

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The effects of surfers on local economies

BRONZED travellers gaze out over their cocktails as surfers carve up the left-hand breaks on offer in Máncora, Peru. Decades ago Máncora was little more than a somnolent fishing village surrounded by desert. Today, it is a staple of the surfer circuit with a recent swell of luxury retreats. Máncora’s transformation, everyone agrees, owes much to its wave patterns.

Just how much waves are worth has long interested surfers. Valuing waves can help fight developments like sea walls that threaten to mess up the waves. Surfonomics, pioneered by Chad Nelsen of the Surfrider Foundation, normally estimates a wave’s worth by surveying how much surfers splash out on food, drink and lodgings at a particular beach. But global and national valuations of waves have proven more elusive.

A new paper by a pair of salt-sprayed economists, Thomas McGregor and Samuel Wills of Oxford University, takes a different approach. They study data on wave quality, crowdsourced from picky surfers, and satellite images of night-time light intensity, a handy proxy for economic activity. Areas around beaches with high-quality waves have over time grown brighter and...Continue reading

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Computer problems at Delta leave passengers stranded

A COMPUTER system outage grounded all Delta flights worldwide on Monday morning, leaving hundreds of thousands of passengers stranded. Planes have since started taking off again, but not before wreaking havoc on travel plans around the globe. The world’s third-largest airline blamed a power failure in its home city of Atlanta, Georgia, for the problems.

Delta tweeted that although flights have resumed, passengers should still expect widespread delays and cancellations. Flight monitors in airports and on the carrier’s website and app may also be inaccurate, it warned. Customers who have suffered significant disruption are eligible for a refund. As of 10am local time, the airline reported that 300 flights had been cancelled, with more likely to follow.

Delta’s woes come on the heels of a call for the ouster of the top two executives at Southwest, a rival airline, following...Continue reading

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