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Big Picture Economics: How to Navigate the New Global Economy

ISBN: 978-0-470-64181-1
256 pages
April 2014
Big Picture Economics: How to Navigate the New Global Economy (0470641819) cover image

Navigate the economy with this insightful new book

The world is awash with economic information. Governments release reports. Pundits give their interpretation on television. And the stock market may go its own way, confusing everyone. How can you better understand what it means for you?

Big Picture Economics, a new book by award-winning columnist and futurist Joel Naroff and veteran journalist Ron Scherer, says the thread that ties everything together is "context."

The authors show how consumers, business, the Federal Reserve, and government take into account what's going on around them to make critical decisions like buying new products, building new factories, changing interest rates, or setting budget goals. The book provides a clear roadmap to understanding the whole story behind the global economy.

Big Picture Economics helps readers understand how context impacts decisions and decision makers.

- The Federal Reserve and Congress in formulating economic policy
- Consumers in a shopper nation and what makes us buy or not buy
- Corporations making decisions on whether to build new factories and buy other companies
- The federal budget that must deal with complex issues, including the reduction of health care spending
- A simple test for tax cuts or increases: will they help the economy grow?
- Where to produce and where to sell in a global economy that is more like a Mobius strip than a flat world
- International events that can ripple through the economy and ultimately affect workers in the Midwest
- Technology, such as intelligent drones to wearable computers, are changing the future

Experts laud the book for its perceptive insights:

"It all sounds like common sense, but it is actually based on a close, expert reading of economic history and what that history implies for the future. Read this book to become a more educated judge of economic policy."
—Robert Moffitt, Krieger-Eisenhower Professor of Economics at Johns Hopkins University

"Naroff and Scherer show how seemingly unrelated things like an upgrade of the Panama Canal, a Tex-Mex restaurant's menu change, or how many Americans are overweight turn out to be intricately linked to our daily experiences. What brings the book to life is the authors' focus on these hidden interconnections."
—Brendan Conway, blogger and columnist, Barron's

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Preface ix

Acknowledgments xiii

Chapter 1: Introduction to the Economics of Context 1

Chapter 2: The Federal Reserve, Congress, and the Use of Context in Economic Policy 15

Chapter 3: We Are All Economists and Don’t Know It 35

Chapter 4: How a Perfect World Would Work 57

Chapter 5: Shopper Nation: Why We Buy or Don’t Buy 79

Chapter 6: How Is a Can of Tuna Like a Smartphone? Yes, Context! 101

Chapter 7: When to Spend, When to Cut, and When to Scratch Your Head Over the Federal Budget 123

Chapter 8: Tax Policy: Does Cutting Taxes Cure All Ills? 149

Chapter 9: Monetary Policy: Money, or Maybe the Federal Reserve, Makes the World Go ’Round 169

Chapter 10: The Panama Canal Widens and the Middle Class Grows in China—How Does That Affect Indiana? 187

Chapter 11: What Do We Do Now? 207

About the Authors 227

Index 229

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JOEL L. NAROFF is a nationally recognized expert and recipient of the Lawrence Klein Award for Blue Chip forecasting excellence and the National Association of Business Economists Outlook Award. Named the Bloomberg Business News 2008 top economic forecaster, Naroff was also named top economic forecaster by MSNBC in 2006. Data compiled by Bloomberg shows Naroff as the top forecaster of the U.S. economy during a period that included the start of the global credit crisis.

RON SCHERER is a veteran journalist who has worked for UPI, U.S. News & World Report, and for The Christian Science Monitor, a prize-winning publication. In his 37 years at the Monitor, he covered Wall Street, economic policy during the Reagan administration, and many of the important news and economic events of the day.

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“Readers fearful (and rightly so) that a book about economics is probably dry and impenetrable can relax. Naroff and Scherer have delivered their ideas in richly readable stories, such as the tales of a trucker and a Tex-Mex restaurant that enliven the first chapter.”
—Kevin Post, Business Editor, Press of Atlantic City, April 26, 2014

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April 16, 2014
Big Picture Economics: How to Navigate the New Global Economy

At times, the economy seems like aTimes Squarebillboard with news headlines flashing in random patterns. Consider the disparate messages we hear regularly: Consumer spending is up. The value of the Chinese currency is artificially high. The stock market is down. The Federal Reserve is lowering interest rates. Congress is cutting spending.Panamais expanding the canal. It’s hard to know what all of it means. And it definitely makes you wonder: What is the thread tying all of these factors together?

Context is the answer, sayeconomist Joel Naroff and journalist Ron Scherer. In their new book, Big Picture Economics: How to Navigate the New Global Economy (Wiley, 2014, ISBN: 978-0-470-64181-1, $34.95),the authors show how understanding economic context—your own personal roadmap—is important to everyone from truck drivers and mayors to the presidents of universities and entrepreneurs.

“Every sector of the economy—the consumer, business, the Federal Reserve, international trade, and government—needs to look at what’s going on around them when they make critical decisions like buying new products, building new factories, hiking or lowering interest rates, or setting budget goals,” says Naroff. “Decoding the mysteries of a tumultuous economy is not easy, but our book can help people put the pieces together and form frameworks for future decision-making.”

            With unique insight, a candid approach, and the expertise to back it up, the authors examine such diverse and seemingly unrelated events as the expansion of the Panama Canal, a Tex-Mex restaurant’s menu change, and Americans cutting back on their healthcare spending, and show how they are linked to the changes coursing through the economy. Big Picture Economics illustrates how context impacts decisions and decision-makers.

• The Federal Reserve and Congress in formulating economic policy

• Consumers in a shopper nation and what makes us buy or not buy

• Corporations making decisions on whether to build new factories and buy other companies

• The federal budget that must deal with complex issues, including the reduction of healthcare spending

• A simple test for tax cuts or increases: Will they help the economy grow?

• Where to produce and where to sell in a global economy that is more like a Mobius strip than a flat world

• International events that can ripple through the economy and ultimately affect workers in theMidwest

• Technology, such as intelligent drones and wearable computers, that is changing the future

            “We think of the book as not only a readable way to better understand the global economy, but also a guide to how to use this information to make financial decisions and plan for the future,” says Scherer. “Wealthy individuals, global corporations, and governments have been using the insights and advice you’ll find in our book for years, and now you can apply that same knowledge to take control of your destiny.”

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