by Zachary Bleemer, Meta Brown, Donghoon Lee, and Wilbert van der Klaauw – Liberty Street Economics, Federal Reserve Bank of New York

Young Americans’ living arrangements have changed strikingly over the past fifteen years, with recent cohorts entering the housing market at much lower rates and lingering much longer in their parents’ households. The New York Times Magazine reported this past summer on the surge in college-educated young people who “boomerang” back to living with their parents after graduation. Joining that trend are the many other members of this cohort who have never left home, whether or not they attend college. Why might young people increasingly reside with their parents? They may be unable to find employment, they may be saving their income to pay down increasing levels of student debt, or they may be unable to afford the rent for an apartment in the face of lower income or higher housing prices.  Boomerang Generation

Katie Benner writes: Silicon Valley’s economy is booming, but according to one economic report there’s not a bubble in sight.  Silicon Valley Index

According to the think tank Joint Venture Silicon Valley, Silicon Valley’s job growth rate, at 4.1 percent, is the highest it’s been since 2000, adding nearly 58,000 jobs. Average annual incomes in Silicon Valley and San Francisco were $116,033 and $104,881, respectively, compared to $61,489 in the United States, the study shows.

On the investment side, Silicon Valley and San Francisco lured $20.2 billion in venture capital in 2014, according to the Silicon Valley Index, a report tallying economic indicators since 1995.

More than half the VC investments were in software, a figure that has grown steadily for five years, the report says. The share of U.S. investments shot up nearly 7 percentage points to 43 percent. The report says there were were 275 U.S. Initial Public Offerings in 2014, 23 of which were Silicon Valley companies, and five of which were San Francisco companies.

The report defines Silicon Valley as Santa Clara and San Mateo counties and adjacent parts of San Mateo, Alameda and Santa Cruz counties. San Francisco was factored into some data because of the city’s quickly expanding tech sector.

But not all the news was good. Thanks to a growing wage gap, nearly 30 percent of the region’s population does not make enough money to meet their basic needs without public assistance, the report finds. The median income for high-skilled workers in the region is $118,651, while the median wages for low-skilled workers is $28,847.

And the income gap between the sexes is worse in the region than nationwide, the report shows. For workers with bachelor’s degrees, median income for men was 61% higher than for women in Silicon Valley – for a difference of $34,233. That gap is growing, and compares with 48 percent in the United States as a whole.

Not everyone agrees with Hancock’s sunny outlook. Skeptics point to public valuation of internet companies such as Twitter, and private valuations such as Facebook’s $19 billion purchase of WhatsApp as evidence of a possible bubble.

“There are enormous amounts of money sloshing around,” says Stanford University business professor Jeffrey Pfeffer. “The valuations are high, that’s for sure.” Pfeffer also cited the income gap as a concern. “I don’t believe it’s a healthy economy when service workers can’t afford to live here.”

Yu Yongding and Domenic Lombardi write:  The world caught a break in 2009. The G-20, an assembly of the world’s largest developed and major emerging economieswas meeting in Pittsburgh to formulate a response to the global financial crisis. US President Barack Obama, having gotten the message that the G-7 could no longer oversee the global economy on its own, led a summit that made the G-20 the primary body for coordinating global economic policy. It was a highpoint for American leadership.

Next year, the world’s other economic superpower will assume the presidency of the G-20 and host its annual summit.  President Xi Jinping will undoubtedly make an impression of his own.

Elements of the current G-20 agenda align well with China’s domestic economic concerns, especially with regard to infrastructure. Last year, G-20 members agreed to pursue a global infrastructure initiative aimed at facilitating investment and boosting financing for infrastructure projects and, crucially, for small and medium-size enterprises.

Given that SMEs will play a key role in China’s new growth strategy, and already account for some 85% of new jobs in the country, this initiative suits China well. With Turkey having zeroed in on SMEs as a key vehicle for fostering more inclusive growth, this year’s summit could already produce progress on this front.

China has long sought to place Asia on par with North America and Western Europe in terms of connectivity. . If China uses its G-20 leadership to push vigorously for change, it would not only improve its own chances of gaining more authority in the IMF; it would also gain favor with other emerging economies, which have been similarly frustrated by US (and European) leaders’ treatment of the issue.

China might be able to assume a leadership role the global financial system. China, where the US dollar’s predominant role is often criticized for having subjected global finance to unnecessary volatility, could use its G-20 presidency to gain a position the world’s only international currency: the IMF’s Special Drawing Rights.

In this effort, it would be in China’s interest to add the renminbi to the basket of currencies that determine the SDR’s value.  At the same time, China might pursue a shift in the dynamic of international financial regulation. The G-7 economies have rarely hesitated to name and shame emerging economies for their failure to comply with global norms.

Though China’s domestic regulatory regime remains subject to severe constraints,

China may not be able to achieve all of its goals next year. But, if it plays its cards right, it could do much to increase its international influence, while enhancing global economic and financial stability.

Mark O’Byrne writes:  Recent official soundings from the UK and German governments saying that exposure to Greece is limited only underscores the depth of denial, ignorance and lack of consensus in hte Euro area.  A Greek exit from the euro would profoundly weaken the euro experiment and create a dangerous precedent for all future crises in the region.