From CNBC:
Businesses aren’t investing in the United States because of a lack of consumer demand, International Paper CEO John Faraci said Friday.
“I think this was all about consumer spending and demand. You know, the problem we have is there’s inadequate demand to create jobs. We know how to respond when there is demand,” he said on CNBC’s “The Kudlow Report.”...
Consumer spending has been damped partly because the nationwide housing market has yet to recover, he said.
“Until it does, we’re not going to see the kind of consumer spending you would expect coming out of a recovery,” he said...
--
Don Peebles, CEO of Peebles Corp., a real estate developer, said that housing remains a drag on the economy.
A strong market, cheap money and high leverage fueled growth before the financial crisis, he said.
“What’s happening now is the housing market is not able to carry the economy,” he said. “Americans’ wealth has been decimated as a result of the lost value in their homes.” ....
--
Mort Zuckerman, founder of real estate investment trust Boston Properties and publisher of the New York Daily News and U.S. News & World Report, took aim at the slow growth.
Zuckerman blamed the housing-market collapse, as well as health-care costs and what he called an “inadequate, badly structured stimulus program.”
“Clearly, you should’ve had a GDP growth now of somewhere between 6 and 8 percent, with the degree of monetary and fiscal stimulus,” he said.
--------------
Link: http://www.cnbc.com/id/47212263
Saturday, April 28, 2012
Economy in U.S. Grew Less Than Forecast in First Quarter
From Bloomberg.com:
The U.S. economy expanded less than forecast in the first quarter as a smaller contribution from inventories overshadowed the biggest gain in consumer spending in more than a year.
Gross domestic product, the value of all goods and services produced in the U.S., rose at a 2.2 percent annual rate after a 3 percent pace, Commerce Department figures showed yesterday in Washington. The median projection of economists surveyed by Bloomberg News called for a 2.5 percent gain....
--
“People have been spending -- whether they continue to spend is a function of what happens with the labor market,” said Joseph Lavorgna, chief economist at Deutsche Bank Securities Inc. in New York.
Americans dipped into savings as they increased their purchases, yesterday’s data showed. Disposable income after inflation rose 0.4 percent in the first quarter following a 1.7 percent gain. The saving rate from January through March eased to 3.9 percent from 4.5 percent.
The drop “raises the question, ‘How long can we continue to consume by saving less?’” said Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., the world’s biggest manager of bond funds.
---------
Link: http://www.bloomberg.com/news/2012-04-27/economy-in-u-s-expands-at-2-2-annual-rate-less-than-forecast.html
The U.S. economy expanded less than forecast in the first quarter as a smaller contribution from inventories overshadowed the biggest gain in consumer spending in more than a year.
Gross domestic product, the value of all goods and services produced in the U.S., rose at a 2.2 percent annual rate after a 3 percent pace, Commerce Department figures showed yesterday in Washington. The median projection of economists surveyed by Bloomberg News called for a 2.5 percent gain....
--
“People have been spending -- whether they continue to spend is a function of what happens with the labor market,” said Joseph Lavorgna, chief economist at Deutsche Bank Securities Inc. in New York.
Americans dipped into savings as they increased their purchases, yesterday’s data showed. Disposable income after inflation rose 0.4 percent in the first quarter following a 1.7 percent gain. The saving rate from January through March eased to 3.9 percent from 4.5 percent.
The drop “raises the question, ‘How long can we continue to consume by saving less?’” said Mohamed El-Erian, chief executive officer of Pacific Investment Management Co., the world’s biggest manager of bond funds.
---------
Link: http://www.bloomberg.com/news/2012-04-27/economy-in-u-s-expands-at-2-2-annual-rate-less-than-forecast.html
Sunday, April 22, 2012
A flowchart for changing a habit
From Charles Duhigg, author of "How to Change a Habit":
Have you ever been sitting at work, wondering to yourself, “is there a flowchart that can tell me how to change a habit?”
Now there is! Copy and paste this address:
http://duhigg-site.s3.amazonaws.com/wp-content/uploads/2012/04/How-to-Change-a-Habit.jpg
Have you ever been sitting at work, wondering to yourself, “is there a flowchart that can tell me how to change a habit?”
Now there is! Copy and paste this address:
http://duhigg-site.s3.amazonaws.com/wp-content/uploads/2012/04/How-to-Change-a-Habit.jpg
Friday, April 20, 2012
Surrounded by "hypocritical lying weasels"
From Walter Russell Mead at his blog:
"...the college admission process is hard. It’s particularly hard on a lot of young Americans because the college admissions process is the event that demonstrates how much they are surrounded by hypocritical lying weasels.
I am, of course, referring to teachers and parents. Ever since American kids can remember, they’ve been surrounded by a doting chorus of adults telling them how special, how wonderful, how talented they are. Life, they keep hearing, isn’t about competition. It is about sharing.
Then comes the college admissions derby, when many kids (especially those from the upper middle class families and schools where the self-esteem religion is most fervently practiced) discover that their parents and teachers don’t believe a word of all that tripe they’ve been dishing out all these years.
Life, these lying weasels now tell their kids, is incredibly competitive, and you’ve got to run faster and smarter than the other kids or you will end up humiliated, scorned and relegated to Podunk State Community College while your classmates go on to the Ivy League. And if you go to a bad college, you will end up in some lousy job living in a tiny house and your parents and teachers all think that is a terrible idea.
Grade inflation and self esteem chitchat fuzz the harsh edges of the real world, but then come SAT scores and the competition for college admissions and scholarships. It turns out that you don’t live in Lake Wobegone: a lot of kids are below average, and you just might be one of them...."
-----------
Link: http://blogs.the-american-interest.com/wrm/2012/04/18/college-letters-fat-and-thin/
"...the college admission process is hard. It’s particularly hard on a lot of young Americans because the college admissions process is the event that demonstrates how much they are surrounded by hypocritical lying weasels.
I am, of course, referring to teachers and parents. Ever since American kids can remember, they’ve been surrounded by a doting chorus of adults telling them how special, how wonderful, how talented they are. Life, they keep hearing, isn’t about competition. It is about sharing.
Then comes the college admissions derby, when many kids (especially those from the upper middle class families and schools where the self-esteem religion is most fervently practiced) discover that their parents and teachers don’t believe a word of all that tripe they’ve been dishing out all these years.
Life, these lying weasels now tell their kids, is incredibly competitive, and you’ve got to run faster and smarter than the other kids or you will end up humiliated, scorned and relegated to Podunk State Community College while your classmates go on to the Ivy League. And if you go to a bad college, you will end up in some lousy job living in a tiny house and your parents and teachers all think that is a terrible idea.
Grade inflation and self esteem chitchat fuzz the harsh edges of the real world, but then come SAT scores and the competition for college admissions and scholarships. It turns out that you don’t live in Lake Wobegone: a lot of kids are below average, and you just might be one of them...."
-----------
Link: http://blogs.the-american-interest.com/wrm/2012/04/18/college-letters-fat-and-thin/
Tuesday, April 17, 2012
California: more taxes anyone?
From Art Laffer writing at Investors.com:
...According to a new report from the Golden State's Franchise Tax Board, the top 1% of earners paid $25.7 billion in state income taxes in 2007. Two years later, the most recent for which data are available, that figure dropped by half — to $12.3 billion.
Researchers note that the economic downturn contributed to this drop. But that's not the only cause. A huge number of high-income taxpayers have simply left the state....
The average adjusted gross income for people leaving the state over that period was $44,700. Meanwhile, the average person moving into California posted income of just $38,600....
For many people, moving out of California is equivalent to getting a big raise — because their tax rates plummet. Of the top nine states Californians are flocking to, the average top personal income tax rate is 3.44%. California's is nearly triple that, at 10.3%.
Also, among those nine states, the corporate tax rate averages 4.59% vs. California's 8.84%. And their combined state and local tax burden is 9%, versus California's 11%.
But what about the people coming into California? Surely they must see some hidden benefit in the Golden State's economy.
The nine states losing the most taxpayers to California are New York, Illinois, New Jersey, Massachusetts, Michigan, Ohio, Pennsylvania, Connecticut, and Maryland. All of those states are economic basket cases. California is right with them in the league of losers — it just has better weather.
The mass migration of top earners has seriously damaged the Golden State's tax revenues. Ratcheting up rates might provide an influx of cash in the short term. But over time it will drive out payers and shrink the tax base.
Indeed, California lost a stunning $44 billion in tax revenue from the 869,000 taxpayers that left the state between 1992 and 2008. And that figure is probably too small. It only counts earnings for one year — the difference between paying state taxes one year and not paying them the next year, after the payer moved.
But someone who's left California hasn't deprived the state government of just one year of taxes — she's deprived it of revenue in future years as well. A tax filer that fled California in, say, 2008 didn't just take away tax revenue for 2009 — she also didn't pay taxes to California in 2010, 2011, 2012 and beyond.
Given this cumulative effect of foregone income taxes, this exodus of taxpayers may have actually cost California $500 billion between 1992 and 2008.
The "tax-first" strategy for balancing budgets and paying down debt has backfired in California. If federal lawmakers insist on adopting that strategy, it will backfire on the national level, too. Top earners will flee to other countries, leaving the United States with lower tax revenues, a smaller tax base, even more debt and a stagnant economy.
• Laffer is chairman of Laffer Associates and author of the new book "Eureka! How to Fix California."
----------------
Link: http://news.investors.com/article/607901/201204161652/california-blazes-wrong-trail-on-tax-hikes-for-rich.htm
...According to a new report from the Golden State's Franchise Tax Board, the top 1% of earners paid $25.7 billion in state income taxes in 2007. Two years later, the most recent for which data are available, that figure dropped by half — to $12.3 billion.
Researchers note that the economic downturn contributed to this drop. But that's not the only cause. A huge number of high-income taxpayers have simply left the state....
The average adjusted gross income for people leaving the state over that period was $44,700. Meanwhile, the average person moving into California posted income of just $38,600....
For many people, moving out of California is equivalent to getting a big raise — because their tax rates plummet. Of the top nine states Californians are flocking to, the average top personal income tax rate is 3.44%. California's is nearly triple that, at 10.3%.
Also, among those nine states, the corporate tax rate averages 4.59% vs. California's 8.84%. And their combined state and local tax burden is 9%, versus California's 11%.
But what about the people coming into California? Surely they must see some hidden benefit in the Golden State's economy.
The nine states losing the most taxpayers to California are New York, Illinois, New Jersey, Massachusetts, Michigan, Ohio, Pennsylvania, Connecticut, and Maryland. All of those states are economic basket cases. California is right with them in the league of losers — it just has better weather.
The mass migration of top earners has seriously damaged the Golden State's tax revenues. Ratcheting up rates might provide an influx of cash in the short term. But over time it will drive out payers and shrink the tax base.
Indeed, California lost a stunning $44 billion in tax revenue from the 869,000 taxpayers that left the state between 1992 and 2008. And that figure is probably too small. It only counts earnings for one year — the difference between paying state taxes one year and not paying them the next year, after the payer moved.
But someone who's left California hasn't deprived the state government of just one year of taxes — she's deprived it of revenue in future years as well. A tax filer that fled California in, say, 2008 didn't just take away tax revenue for 2009 — she also didn't pay taxes to California in 2010, 2011, 2012 and beyond.
Given this cumulative effect of foregone income taxes, this exodus of taxpayers may have actually cost California $500 billion between 1992 and 2008.
The "tax-first" strategy for balancing budgets and paying down debt has backfired in California. If federal lawmakers insist on adopting that strategy, it will backfire on the national level, too. Top earners will flee to other countries, leaving the United States with lower tax revenues, a smaller tax base, even more debt and a stagnant economy.
• Laffer is chairman of Laffer Associates and author of the new book "Eureka! How to Fix California."
----------------
Link: http://news.investors.com/article/607901/201204161652/california-blazes-wrong-trail-on-tax-hikes-for-rich.htm
Monday, April 16, 2012
How Paul Krugman Would Ruin Steve Jobs’ Apple
From blogger Paul Roderick Gregory at Forbes online:
The Left considers Steve Jobs, the charismatic PC pioneer, a self-centered individualist, who did not to conform to elite etiquette. As Warren Buffet and Bill Gates gave away money with great fanfare, Jobs quietly devoted himself to creating value in Apple. He was conspicuously silent as Buffet recruited the super rich to argue for higher taxes. He told President Obama unwelcome truths (“Apple jobs are not coming back to America”). He advocated school vouchers and the emphasized the importance of the family. He did not dash to DC to testify on the latest fad or navigate the elite cocktail party circuit. He had more important things to do.
Although Steve Jobs was a major donor to Democrat causes, his errant behavior did not sit well with the “progressive” political class. Now six months after his death at age 56, the attack on his legacy is in full swing, fueled by Apple Computer’s new status as the world’s richest corporation.
The Left’s standard bearer, [New York Times' columnist] Paul Krugman snidely labels Steve Jobs the “heroic entrepreneur, the John Galt, I mean Steve Jobs-type ‘job creator’ Republicans love.” Krugman rates Jobs’ achievements as inconsequential relative to Obama’s Detroit bailout – “the single most successful policy initiative of recent years.” Per Krugman, real heroes preserve vital “economic ecology and industrial clusters,” even if it takes taxpayer money. The heroes are not rugged individualists but union-industry-government partners, who, according to Obama’s State of the Union address, “work as a team” and “get each other’s backs.”....
The Left’s disregard for Steve Jobs has deep roots that transcend specific personalities. A “heroic entrepreneur,” who creates and brings to market life-transforming products at affordable prices, challenges the Left’s familiar narrative of evil capitalists earning obscene profits by exploiting downtrodden workers. By their narrative, the common man’s only protection is a benevolent interventionist state, which keeps the rich in check and makes them pay “their fair share.”
The Jobs narrative turns the Left’s argument on its head: We are all the beneficiaries of the wealth and consumer surpluses created by the Steve Jobs, who take for themselves only a small portion of the wealth they create. At the time of Jobs’ death Apple insiders owned only one percent of Apple stock, leaving $500 billion for outsiders. Of even greater value are the new and innovative products (IPads, IPhones. Google, Beta blockers, endoscopic surgery, etc) they create, which improve the quality of lives and raise living standards....
----------
Link: http://www.forbes.com/sites/paulroderickgregory/2012/04/15/how-krugman-would-ruin-steve-jobs-apple/
The Left considers Steve Jobs, the charismatic PC pioneer, a self-centered individualist, who did not to conform to elite etiquette. As Warren Buffet and Bill Gates gave away money with great fanfare, Jobs quietly devoted himself to creating value in Apple. He was conspicuously silent as Buffet recruited the super rich to argue for higher taxes. He told President Obama unwelcome truths (“Apple jobs are not coming back to America”). He advocated school vouchers and the emphasized the importance of the family. He did not dash to DC to testify on the latest fad or navigate the elite cocktail party circuit. He had more important things to do.
Although Steve Jobs was a major donor to Democrat causes, his errant behavior did not sit well with the “progressive” political class. Now six months after his death at age 56, the attack on his legacy is in full swing, fueled by Apple Computer’s new status as the world’s richest corporation.
The Left’s standard bearer, [New York Times' columnist] Paul Krugman snidely labels Steve Jobs the “heroic entrepreneur, the John Galt, I mean Steve Jobs-type ‘job creator’ Republicans love.” Krugman rates Jobs’ achievements as inconsequential relative to Obama’s Detroit bailout – “the single most successful policy initiative of recent years.” Per Krugman, real heroes preserve vital “economic ecology and industrial clusters,” even if it takes taxpayer money. The heroes are not rugged individualists but union-industry-government partners, who, according to Obama’s State of the Union address, “work as a team” and “get each other’s backs.”....
The Left’s disregard for Steve Jobs has deep roots that transcend specific personalities. A “heroic entrepreneur,” who creates and brings to market life-transforming products at affordable prices, challenges the Left’s familiar narrative of evil capitalists earning obscene profits by exploiting downtrodden workers. By their narrative, the common man’s only protection is a benevolent interventionist state, which keeps the rich in check and makes them pay “their fair share.”
The Jobs narrative turns the Left’s argument on its head: We are all the beneficiaries of the wealth and consumer surpluses created by the Steve Jobs, who take for themselves only a small portion of the wealth they create. At the time of Jobs’ death Apple insiders owned only one percent of Apple stock, leaving $500 billion for outsiders. Of even greater value are the new and innovative products (IPads, IPhones. Google, Beta blockers, endoscopic surgery, etc) they create, which improve the quality of lives and raise living standards....
----------
Link: http://www.forbes.com/sites/paulroderickgregory/2012/04/15/how-krugman-would-ruin-steve-jobs-apple/
Friday, April 13, 2012
Inflation Lurks as Stealth Tax
From Carolyn Baum at Bloomberg.com:
Inflation is sometimes referred to as a hidden tax. Unlike other taxes, it doesn’t require legislation by Congress or the states. It doesn’t merit a line item on the 1040 federal income-tax form many Americans will file this week. And it doesn’t appear on the bottom of sales’ receipts as a percentage markup on the things we buy.
Yet, like a tax, it takes resources out of the economy and redirects them to less productive uses. It distorts price signals and leads to a misallocation of capital. It’s a silent way for the government and central bank to devalue the currency, raise prices, help borrowers and punish savers.
And it’s exactly the wrong prescription for the U.S.
The official push for higher inflation as a cure for a sluggish U.S. recovery began about two years ago with a paper by International Monetary Fund economists, including Chief Economist Olivier Blanchard, titled “Rethinking Macroeconomic Policy.”
Other notables jumped on board, including Harvard’s Ken Rogoff (does he think this time is different?) and Greg Mankiw, an economic adviser to President George W. Bush. In their view, higher inflation would accelerate the deleveraging process by allowing debtors -- including the U.S. government -- to pay back their loans in devalued dollars. (Score: borrowers 1, savers 0.)
More Is Better?
Princeton University’s Paul Krugman, another advocate of higher inflation, argued in his April 5 New York Times column that 3 percent or 4 percent inflation would “almost surely help the economy.” It would do this by eroding the real value of debt and discouraging businesses and consumers from sitting on cash.
If 3 to 4 percent inflation can do all that, just think what 6 to 8 percent could do!
And that’s one of the problems with targeting a little more inflation: You may end up with a lot....
---------------------
Link: http://www.bloomberg.com/news/2012-04-11/inflation-lurks-as-stealth-tax-on-top-of-form-1040.html
Inflation is sometimes referred to as a hidden tax. Unlike other taxes, it doesn’t require legislation by Congress or the states. It doesn’t merit a line item on the 1040 federal income-tax form many Americans will file this week. And it doesn’t appear on the bottom of sales’ receipts as a percentage markup on the things we buy.
Yet, like a tax, it takes resources out of the economy and redirects them to less productive uses. It distorts price signals and leads to a misallocation of capital. It’s a silent way for the government and central bank to devalue the currency, raise prices, help borrowers and punish savers.
And it’s exactly the wrong prescription for the U.S.
The official push for higher inflation as a cure for a sluggish U.S. recovery began about two years ago with a paper by International Monetary Fund economists, including Chief Economist Olivier Blanchard, titled “Rethinking Macroeconomic Policy.”
Other notables jumped on board, including Harvard’s Ken Rogoff (does he think this time is different?) and Greg Mankiw, an economic adviser to President George W. Bush. In their view, higher inflation would accelerate the deleveraging process by allowing debtors -- including the U.S. government -- to pay back their loans in devalued dollars. (Score: borrowers 1, savers 0.)
More Is Better?
Princeton University’s Paul Krugman, another advocate of higher inflation, argued in his April 5 New York Times column that 3 percent or 4 percent inflation would “almost surely help the economy.” It would do this by eroding the real value of debt and discouraging businesses and consumers from sitting on cash.
If 3 to 4 percent inflation can do all that, just think what 6 to 8 percent could do!
And that’s one of the problems with targeting a little more inflation: You may end up with a lot....
---------------------
Link: http://www.bloomberg.com/news/2012-04-11/inflation-lurks-as-stealth-tax-on-top-of-form-1040.html
Thursday, April 12, 2012
Jobless Claims Jump
Wall Street Journal online:
New applications for jobless benefits rose sharply last week, another sign the labor market has appeared to lose momentum.
Separately, the U.S. trade deficit registered its biggest contraction in nearly three years in February, assisted by record exports and a slump in imports of oil and Chinese goods. Meanwhile, U.S. wholesale prices held steady in March, as gasoline costs declined after a sharp increase the prior month.
Initial jobless claims increased by 13,000 to a seasonally adjusted 380,000 in the week ended April 7, the Labor Department said Thursday.....
------------------------
CNBC:
The number of Americans filing for jobless aid rose last week to the highest level since January, a development that could raise fears the labor market recovery was stalling after job creation slowed in March.
Initial claims for state unemployment benefits increased 13,000 to a seasonally adjusted 380,000, the Labor Department said on Thursday, defying economists' expectations for a drop to 355,000....
-------------------------
CNN Money:
The number of people filing for unemployment benefits rose to 380,000 last week, another hiccup for the labor market following last week's disappointing monthly jobs report.
Thursday's total marked an increase of 13,000 versus figures from the week prior that were revised upward, and was the highest since late January. Analysts surveyed by Briefing.com had predicted that a total of 355,000 initial jobless claims were filed.
"Sort of a disappointing cringe right off the bat -- not only do we have an increase, but we have an upward revision," said Tim Quinlan, an economist at Wells Fargo. "We certainly would've liked to see numbers in the 350,000's or so."
New applications for jobless benefits rose sharply last week, another sign the labor market has appeared to lose momentum.
Separately, the U.S. trade deficit registered its biggest contraction in nearly three years in February, assisted by record exports and a slump in imports of oil and Chinese goods. Meanwhile, U.S. wholesale prices held steady in March, as gasoline costs declined after a sharp increase the prior month.
Initial jobless claims increased by 13,000 to a seasonally adjusted 380,000 in the week ended April 7, the Labor Department said Thursday.....
------------------------
CNBC:
The number of Americans filing for jobless aid rose last week to the highest level since January, a development that could raise fears the labor market recovery was stalling after job creation slowed in March.
Initial claims for state unemployment benefits increased 13,000 to a seasonally adjusted 380,000, the Labor Department said on Thursday, defying economists' expectations for a drop to 355,000....
-------------------------
CNN Money:
The number of people filing for unemployment benefits rose to 380,000 last week, another hiccup for the labor market following last week's disappointing monthly jobs report.
Thursday's total marked an increase of 13,000 versus figures from the week prior that were revised upward, and was the highest since late January. Analysts surveyed by Briefing.com had predicted that a total of 355,000 initial jobless claims were filed.
"Sort of a disappointing cringe right off the bat -- not only do we have an increase, but we have an upward revision," said Tim Quinlan, an economist at Wells Fargo. "We certainly would've liked to see numbers in the 350,000's or so."
Sunday, April 8, 2012
WSJ: Large Corporations Emerge from Recession Leaner, Stronger—and Hiring Overseas
From the Wall Street Journal online:
Big U.S. companies have emerged from the deepest recession since World War II more productive and more profitable, but the performance hasn't translated into significant gains in U.S. employment....
-----------
Link: http://online.wsj.com/article/SB10001424052702303815404577331660464739018.html
Big U.S. companies have emerged from the deepest recession since World War II more productive and more profitable, but the performance hasn't translated into significant gains in U.S. employment....
-----------
Link: http://online.wsj.com/article/SB10001424052702303815404577331660464739018.html
Saturday, April 7, 2012
Stimulus Promise: unemployment should be 5.8%
From James Pethokoukis at the Enterprise Blog:
Recall that back in 2009, White House economists Jared Bernstein and Christina Romer used their old-fashioned Keynesian model to predict how the $800 billion stimulus would affect employment.
According to their model ... unemployment should be around 5.8% today.
But the true measure of U.S. unemployment is far worse:
1. If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.8% today down from last month—the U-3 unemployment rate would be 10.9%.
2. But what if you take into the account the aging of the Baby Boomers, which means the labor force participation (LFP) rate should be trending lower. Indeed, it has been doing just that since 2000. Before the Great Recession, the Congressional Budget Office predicted what the LFP would be in 2012, assuming such demographic changes. Using that number, the real unemployment rate would be 10.5%.
3. Of course, the LFP rate usually falls during recessions. Yet even if you discount for that and the aging issue, the real unemployment rate would be 9.4%.
4. Then there’s the broader, U-6 measure of unemployment which includes the discouraged plus part-timers who wish they had full time work. That unemployment rate, perhaps the truest measure of the labor market’s health, is still a sky-high 14.5%.
5. The employment-population ratio dipped to 58.5% vs. 61% in December 2008. An historically low level of the U.S. population is actually working.
Bottom line: The economy is adding jobs but not very quickly, which is to be expected given GDP growth of around 2% or so. A Great Recovery after the Great Recession? More like the Great Stagnation …
-------------
Link: http://blog.american.com/2012/04/the-big-march-jobs-miss-and-why-the-real-unemployment-sure-aint-8-2/
Recall that back in 2009, White House economists Jared Bernstein and Christina Romer used their old-fashioned Keynesian model to predict how the $800 billion stimulus would affect employment.
According to their model ... unemployment should be around 5.8% today.
But the true measure of U.S. unemployment is far worse:
1. If the size of the U.S. labor force as a share of the total population was the same as it was when Barack Obama took office—65.7% then vs. 63.8% today down from last month—the U-3 unemployment rate would be 10.9%.
2. But what if you take into the account the aging of the Baby Boomers, which means the labor force participation (LFP) rate should be trending lower. Indeed, it has been doing just that since 2000. Before the Great Recession, the Congressional Budget Office predicted what the LFP would be in 2012, assuming such demographic changes. Using that number, the real unemployment rate would be 10.5%.
3. Of course, the LFP rate usually falls during recessions. Yet even if you discount for that and the aging issue, the real unemployment rate would be 9.4%.
4. Then there’s the broader, U-6 measure of unemployment which includes the discouraged plus part-timers who wish they had full time work. That unemployment rate, perhaps the truest measure of the labor market’s health, is still a sky-high 14.5%.
5. The employment-population ratio dipped to 58.5% vs. 61% in December 2008. An historically low level of the U.S. population is actually working.
Bottom line: The economy is adding jobs but not very quickly, which is to be expected given GDP growth of around 2% or so. A Great Recovery after the Great Recession? More like the Great Stagnation …
-------------
Link: http://blog.american.com/2012/04/the-big-march-jobs-miss-and-why-the-real-unemployment-sure-aint-8-2/
Friday, April 6, 2012
The Beginning of a Disappointing Trend?
From Yahoo Finance:
It's a good thing the stock market isn't open Friday. If it were, the disappointing March employment report, a rare piece of negative economic news this spring, would likely have caused stocks to nosedive. As it was, U.S. stock futures (which were open) slipped, the dollar is falling and Treasury prices are spiking on the report.
The Bureau of Labor Statistics said the U.S. economy added only 120,000 payroll jobs in March, a sharp decline from recent jobs growth. The unemployment rate slipped to 8.2 percent from 8.3 percent in February, but that's largely because the workforce declined. In short, this is the type of report that is more typical of an economy beginning to emerge from recession than one that has been growing for nearly three years....
The unemployment rate continued its decline, falling from 8.3 percent in February to 8.2 percent in March. But that's not necessarily good news... in March, the labor force actually shrank by 164,000. The labor force participation rate fell from 63.9 percent in February to 63.8 percent in March. That's why the unemployment rate fell.
-----------------
Link: http://finance.yahoo.com/blogs/daniel-gross/jobs-report-beginning-disappointing-trend-135516049.html
It's a good thing the stock market isn't open Friday. If it were, the disappointing March employment report, a rare piece of negative economic news this spring, would likely have caused stocks to nosedive. As it was, U.S. stock futures (which were open) slipped, the dollar is falling and Treasury prices are spiking on the report.
The Bureau of Labor Statistics said the U.S. economy added only 120,000 payroll jobs in March, a sharp decline from recent jobs growth. The unemployment rate slipped to 8.2 percent from 8.3 percent in February, but that's largely because the workforce declined. In short, this is the type of report that is more typical of an economy beginning to emerge from recession than one that has been growing for nearly three years....
The unemployment rate continued its decline, falling from 8.3 percent in February to 8.2 percent in March. But that's not necessarily good news... in March, the labor force actually shrank by 164,000. The labor force participation rate fell from 63.9 percent in February to 63.8 percent in March. That's why the unemployment rate fell.
-----------------
Link: http://finance.yahoo.com/blogs/daniel-gross/jobs-report-beginning-disappointing-trend-135516049.html
The painfully slow recovery in the labor market
From CNBC:
U.S. payrolls rose far less than expected in March, keeping the door open for further monetary policy support from the Federal Reserve, even as the unemployment rate fell to a three-year low of 8.2 percent.
Employers added 120,000 jobs last month, the Labor Department said on Friday, the smallest increase since October....
The drop in the unemployment rate, to the lowest level since January 2009, reflected a drop in the labor force....
The painfully slow recovery in the labor market is a concern for Fed Chairman Ben Bernanke, who is keeping open the option of further monetary policy support for the economy if the unemployment rate remains stubbornly high.
____________
Link: http://www.cnbc.com/id/46975031
U.S. payrolls rose far less than expected in March, keeping the door open for further monetary policy support from the Federal Reserve, even as the unemployment rate fell to a three-year low of 8.2 percent.
Employers added 120,000 jobs last month, the Labor Department said on Friday, the smallest increase since October....
The drop in the unemployment rate, to the lowest level since January 2009, reflected a drop in the labor force....
The painfully slow recovery in the labor market is a concern for Fed Chairman Ben Bernanke, who is keeping open the option of further monetary policy support for the economy if the unemployment rate remains stubbornly high.
____________
Link: http://www.cnbc.com/id/46975031
Thursday, April 5, 2012
Americans brace for next foreclosure wave
"The subprime stuff is long gone," said Michael Redman, founder of 4closurefraud.org. "Now the folks being affected are hardworking, everyday Americans struggling because of the economy."
From Reuters:
Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end...
But a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.
"We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010," said Mark Seifert, executive director of Empowering & Strengthening Ohio's People.
"Last year was an anomaly, and not in a good way," he said....
Housing experts say localized warning signs of a new wave of foreclosure are likely to be replicated across much of the United States.
Online foreclosure marketplace RealtyTrac estimated that while foreclosures dropped slightly nationwide in February from January and from February 2011, they rose in 21 states and jumped sharply in cities like Tampa (64 percent), Chicago (43 percent) and Miami (53 percent).
RealtyTrac CEO Brandon Moore said the "numbers point to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed."
One big difference to the early years of the housing crisis, which was dominated by Americans saddled with the most toxic subprime products -- with high interest rates where banks asked for no money down or no proof of income -- is that today it's mostly Americans with ordinary mortgages whose ability to meet payment have been hit by the hard economic times.
"The subprime stuff is long gone," said Michael Redman, founder of 4closurefraud.org. "Now the folks being affected are hardworking, everyday Americans struggling because of the economy."
-------------
Link: http://www.reuters.com/article/2012/04/04/us-foreclosure-idUSBRE83319E20120404
From Reuters:
Half a decade into the deepest U.S. housing crisis since the 1930s, many Americans are hoping the crisis is finally nearing its end...
But a painful part two of the slump looks set to unfold: Many more U.S. homeowners face the prospect of losing their homes this year as banks pick up the pace of foreclosures.
"We are right back where we were two years ago. I would put money on 2012 being a bigger year for foreclosures than 2010," said Mark Seifert, executive director of Empowering & Strengthening Ohio's People.
"Last year was an anomaly, and not in a good way," he said....
Housing experts say localized warning signs of a new wave of foreclosure are likely to be replicated across much of the United States.
Online foreclosure marketplace RealtyTrac estimated that while foreclosures dropped slightly nationwide in February from January and from February 2011, they rose in 21 states and jumped sharply in cities like Tampa (64 percent), Chicago (43 percent) and Miami (53 percent).
RealtyTrac CEO Brandon Moore said the "numbers point to a gradually rising foreclosure tide as some of the barriers that have been holding back foreclosures are removed."
One big difference to the early years of the housing crisis, which was dominated by Americans saddled with the most toxic subprime products -- with high interest rates where banks asked for no money down or no proof of income -- is that today it's mostly Americans with ordinary mortgages whose ability to meet payment have been hit by the hard economic times.
"The subprime stuff is long gone," said Michael Redman, founder of 4closurefraud.org. "Now the folks being affected are hardworking, everyday Americans struggling because of the economy."
-------------
Link: http://www.reuters.com/article/2012/04/04/us-foreclosure-idUSBRE83319E20120404
Tuesday, April 3, 2012
The Worst Economic Recovery in History
From WSJ.com, analysis from Edward Lazear, chairman of the President's Council of Economic Advisers from 2006-2009, a professor at Stanford University's Graduate School of Business and a Hoover Institution fellow:
How many times have we heard that this was the worst recession since the Great Depression? That may be true—although the double-dip recession of the early 1980s was about comparable. Less publicized is that our current recovery pales in comparison with most other recoveries, including the one following the Great Depression.
The Great Depression started with major economic contractions in 1930, '31, '32 and '33. In the three following years, the economy rebounded strongly with growth rates of 11%, 9% and 13%, respectively.
The current recovery began in the second half of 2009, but economic growth has been weak. Growth in 2010 was 3% and in 2011 it was 1.7%. Who knows what 2012 will bring, but the current growth rate looks to be about 2%, according to the consensus of economists recently polled by Blue Chip Economic Indicators.
Sadly, we have never really recovered from the recession. The economy has not even returned to its long-term growth rate and is certainly not making up for lost ground. No doubt, there are favorable economic numbers to be found, but overall we continue to struggle....
-------------------
Link: http://online.wsj.com/article/SB10001424052702303816504577311470997904292.html
How many times have we heard that this was the worst recession since the Great Depression? That may be true—although the double-dip recession of the early 1980s was about comparable. Less publicized is that our current recovery pales in comparison with most other recoveries, including the one following the Great Depression.
The Great Depression started with major economic contractions in 1930, '31, '32 and '33. In the three following years, the economy rebounded strongly with growth rates of 11%, 9% and 13%, respectively.
The current recovery began in the second half of 2009, but economic growth has been weak. Growth in 2010 was 3% and in 2011 it was 1.7%. Who knows what 2012 will bring, but the current growth rate looks to be about 2%, according to the consensus of economists recently polled by Blue Chip Economic Indicators.
Sadly, we have never really recovered from the recession. The economy has not even returned to its long-term growth rate and is certainly not making up for lost ground. No doubt, there are favorable economic numbers to be found, but overall we continue to struggle....
-------------------
Link: http://online.wsj.com/article/SB10001424052702303816504577311470997904292.html
"We will have a massive wealth destruction"
From CNBC's interview with Marc Faber:
Runaway government debts have triggered uncontrolled money printing that in turn will lead to inflation that will decimate portfolios, according to the latest forecast from "Dr. Doom" Marc Faber.
Investors, particularly those in the "well-to-do" category, could lose about half their total wealth in the next few years as the consequences pile up from global government debt problems, Faber, the author of the Gloom Boom & Doom Report, said on CNBC.
Efforts to stem the debt problems have seen the Federal Reserve expand its balance sheet to nearly $3 trillion and other central banks implement aggressive liquidity programs as well, which Faber sees producing devastating inflation as well as other consequences.
"Somewhere down the line we will have a massive wealth destruction that usually happens either through very high inflation or through social unrest or through war or credit market collapse," he said. "Maybe all of it will happen, but at different times."
Noted for his pessimistic forecasts and gold advocacy, Faber nonetheless lately has been telling investors that stocks are a good choice as central bank policies pump up asset prices.
He reiterated both his commitment to stocks and gold, but said investors also can find value in other hard assets, particularly in distressed properties in the U.S. South.
"In Georgia, in Arizona, in Florida their property values will not collapse much more and will stabilize, so I think to own some land and some property, not necessarily in the financial centers but in the secondary cities, these are desirable investments relatively speaking," Faber said.
As for stocks, Faber said Fed Chairman Ben Bernanke's policies will be friendly toward equity investors, at least for now.
The stock market is in the middle of an aggressive bull run that has seen the major indexes rise more than 25 percent from their October lows.
"I think that people should own some gold and I think that people should own some equities, because before the collapse will happen, with Mr. Bernanke at the Fed, they're going to print money and print and print and print," he said. "So what you can get is a bad economy with rising equity prices."
--------------
Link: http://www.cnbc.com/id/46923999
Runaway government debts have triggered uncontrolled money printing that in turn will lead to inflation that will decimate portfolios, according to the latest forecast from "Dr. Doom" Marc Faber.
Investors, particularly those in the "well-to-do" category, could lose about half their total wealth in the next few years as the consequences pile up from global government debt problems, Faber, the author of the Gloom Boom & Doom Report, said on CNBC.
Efforts to stem the debt problems have seen the Federal Reserve expand its balance sheet to nearly $3 trillion and other central banks implement aggressive liquidity programs as well, which Faber sees producing devastating inflation as well as other consequences.
"Somewhere down the line we will have a massive wealth destruction that usually happens either through very high inflation or through social unrest or through war or credit market collapse," he said. "Maybe all of it will happen, but at different times."
Noted for his pessimistic forecasts and gold advocacy, Faber nonetheless lately has been telling investors that stocks are a good choice as central bank policies pump up asset prices.
He reiterated both his commitment to stocks and gold, but said investors also can find value in other hard assets, particularly in distressed properties in the U.S. South.
"In Georgia, in Arizona, in Florida their property values will not collapse much more and will stabilize, so I think to own some land and some property, not necessarily in the financial centers but in the secondary cities, these are desirable investments relatively speaking," Faber said.
As for stocks, Faber said Fed Chairman Ben Bernanke's policies will be friendly toward equity investors, at least for now.
The stock market is in the middle of an aggressive bull run that has seen the major indexes rise more than 25 percent from their October lows.
"I think that people should own some gold and I think that people should own some equities, because before the collapse will happen, with Mr. Bernanke at the Fed, they're going to print money and print and print and print," he said. "So what you can get is a bad economy with rising equity prices."
--------------
Link: http://www.cnbc.com/id/46923999
Sunday, April 1, 2012
NYT: How to Prevent a Financial Overdose
From Gretchen Morgenson writing at the NY TIMES online:
'THE Food and Drug Administration vets new drugs before they reach the market. But imagine if there were a Wall Street version of the F.D.A. — an agency that examined new financial instruments and ensured that they were safe and benefited society, not just bankers.
How different our economy might look today, given the damage done by complex instruments during the financial crisis....
two professors at the University of Chicago have raised an intriguing idea. In a paper published in February, Eric A. Posner, a law professor, and E. Glen Weyl, an assistant professor in economics, argue that regulators should approach financial products the way the F.D.A. approaches new drugs.
The potential dangers of financial instruments, they argue, “seem at least as extreme as the dangers of medicines.”
They contend that new instruments should be approved by a “financial products agency” that would test them for social utility. Ideally, products deemed too costly to society over all — those that serve only to increase speculation, for example — would be rejected, the two professors say.'
------------------
Link to NY Times article: http://www.nytimes.com/2012/04/01/business/how-a-financial-products-agency-could-protect-investors.html
----------------------
----------------------
"FDA" for financial instruments? No.
Sounds like Obamacare for retirement planning. Large bureaucratic overseers - a powerful group of people who assume they are smarter than you - decide what is best for you.
A better, cheaper and simpler remedy already exists:
Buy a handful of the lowest cost ETFs. Keep them for life.
The Life Keepers remedy stops the financial advice and financial product industries from skimming your wealth with high, hidden costs.
When investors need advice, they can pay for it separately. There is no need for a financial FDA. There is also no need for all the marketing enticements or the vast media that exists to hype all the products and endless opinions.
Investors today already have a free choice to get rid of the worst risk no one examines: costs from ongoing fees buried in products and services
The Life Keepers approach means more wealth for you. How? It is simple: keep more of your money for the rest of your life. The cost savings can result in large, life changing amounts of money. But no one wants to tell you because you keep the money you no longer have to pay them!
Patrick Broderick
'THE Food and Drug Administration vets new drugs before they reach the market. But imagine if there were a Wall Street version of the F.D.A. — an agency that examined new financial instruments and ensured that they were safe and benefited society, not just bankers.
How different our economy might look today, given the damage done by complex instruments during the financial crisis....
two professors at the University of Chicago have raised an intriguing idea. In a paper published in February, Eric A. Posner, a law professor, and E. Glen Weyl, an assistant professor in economics, argue that regulators should approach financial products the way the F.D.A. approaches new drugs.
The potential dangers of financial instruments, they argue, “seem at least as extreme as the dangers of medicines.”
They contend that new instruments should be approved by a “financial products agency” that would test them for social utility. Ideally, products deemed too costly to society over all — those that serve only to increase speculation, for example — would be rejected, the two professors say.'
------------------
Link to NY Times article: http://www.nytimes.com/2012/04/01/business/how-a-financial-products-agency-could-protect-investors.html
----------------------
----------------------
"FDA" for financial instruments? No.
Sounds like Obamacare for retirement planning. Large bureaucratic overseers - a powerful group of people who assume they are smarter than you - decide what is best for you.
A better, cheaper and simpler remedy already exists:
Buy a handful of the lowest cost ETFs. Keep them for life.
The Life Keepers remedy stops the financial advice and financial product industries from skimming your wealth with high, hidden costs.
When investors need advice, they can pay for it separately. There is no need for a financial FDA. There is also no need for all the marketing enticements or the vast media that exists to hype all the products and endless opinions.
Investors today already have a free choice to get rid of the worst risk no one examines: costs from ongoing fees buried in products and services
The Life Keepers approach means more wealth for you. How? It is simple: keep more of your money for the rest of your life. The cost savings can result in large, life changing amounts of money. But no one wants to tell you because you keep the money you no longer have to pay them!
Patrick Broderick
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