News
Unusual uncertainty clouds Fed meeting
Federal Reserve officials started their meeting today amid unusual uncertainty about what steps they might take in response to the downshift in economic growth over the past two months.
Incomes Fall in Most Metro Areas
Personal incomes fell across the U.S. last year except in areas with a high concentration of federal government and military jobs, the Commerce Department said Monday. They declined most in places with a lot of housing and finance jobs.
Gold Prices Follow Euro Down
Spot gold edged lower in Europe Tuesday as the euro weakened against the dollar ahead of the U.S. Federal Reserve meeting later in the day.
Russia Heat Wave May Kill 15,000, Shave $15 Billion of GDP
Russia’s record heat wave has already cost the economy $15 billion, or 1 percent of gross domestic product, as fires and drought ravage the country.
Worker Productivity in U.S. Unexpectedly Declined
The productivity of U.S. workers unexpectedly fell in the second quarter, indicating companies may redouble efforts to contain costs as the recovery unfolds.
Wholesale Inventories Rise Less-Than-Estimated 0.1%; Sales Fall 0.7%
Inventories at U.S. wholesalers rose less than forecast in June as companies kept stockpiles in line with slowing demand.
U.K. Housing Gauge Shows First Price Drop in a Year
A U.K. housing-market gauge signaled the first decline in prices for a year in July as demand for homes fell.
Pentagon Plans Steps to Reduce Budget and Jobs
Defense Secretary Robert M. Gates said Monday that he would close a military command, restrict the use of outside contractors and reduce the number of generals and admirals across the armed forces as part of a broad effort to rein in Pentagon spending.
14th Amendment causes GOP split
The push by congressional Republicans to deny automatic citizenship to the children of illegal immigrants has opened up a split in the GOP, with several former Bush administration officials warning that the party could lose its claim to one of its proudest legacies: the 14th Amendment.
Fannie and Freddie May Need Another Taxpayer Bailout
Some would like the government to scale back its support for Fannie and Freddie to give the private sector a chance to compete. But others say ending it is unrealistic because it would make the 30-year fixed rate mortgage less available or more expensive.
Crossroads poll: Dem Senate in peril
A new poll suggests the possibility that the balance of power in the Senate might be up for grabs in November.
House Returns to Empty Stage
The House has a rare moment in the spotlight today as it reconvenes to clear a 26 billion state aid package.
Census Bureau returns $1.6B of its operational budget
The U.S. Census Bureau is giving back almost a quarter of the money it received to do its job this year.
'Breaking The Buck' Was Close For Many
At least 36 of the 100 largest U.S. prime money-market funds had to be propped up in order to survive the financial crisis, according to a report from Moody's Investors Service.
Raise taxes now -- the elders of the economy say so
Extending the tax cuts for everyone would cost the government $3.7 trillion over 10 years. Taxing the high-earners would get back about $700 billion of that.
Wells Fargo: New Financial Rules to Cost $530 Million
Amendments to overdraft rules, as well as the bank's own voluntary policy changes, will reduce the bank's after-tax revenue by $225 million in the third quarter and $275 million in the fourth quarter, the San Francisco bank said in a quarterly filing with the Securities and Exchange Commission.
FinReg: More questions than answers
So many words ... so little clarity. That may be the best summation of the financial regulatory reform bill.
Useless: The Social Security trust fund
This year's cash deficit, the first since the early 1980s and the biggest ever, means the Treasury will have to borrow money to redeem some of the trust fund's Treasury securities.
Unions Spending Big to Influence House Vote
Top union brass are shuttling back to Washington D.C. today to make last minute pleas with undecided House Members.
Republicans Push Disapproval Measure Aimed at Gay Marriage Ruling
A group of House Republicans introduced a resolution of disapproval Tuesday regarding a California judge’s recent decision to reverse the state’s ban on gay marriage.
Five ideas to stimulate the economy
Fortune lists five stimulus plans - some bold, some borrowed, some borderline wacky, but all worth considering
McDonald's liquid profits
McDonald's performance over the past couple of years is often characterized as a classic recession success story, that's only part of the story, and a relatively small part at that.
Blogs
Statehood for Guam, American Samoa and the U.S. Virgin Islands
This is not the first time your tax dollars have been used to push for statehood of a U.S. Territory or Commonwealth.
‘Even in Recess, Congress Can’t Help Spending Billions for Bailouts
Not satisfied by the billions in federal bailouts already passed, House Speaker Nancy Pelosi recently announced that she intendeds to bring the House back from the August recess to pass yet another multi-billion-dollar federal bailout.
Under Obamanomics, Government Workers Win, You Lose
The effect of President Obama’s policies is becoming clear. The Wall Street Journal reports that personal incomes fell across the U.S. last year except in areas with a high concentration of federal government jobs.
Lame Duck Cap and Trade?
In other words, let’s tax the cheap, dependable energy sources and give subsidies to the expensive, unreliable sources. Let’s build a protectionist policy around renewable energy sources so we can produce them domestically—even if it causes our economy to operate less efficiently.
Will Ben Bernanke Scream "Bon Voyage"?
All eyes on the Street turn to the QE2.
Why Smart Money Is Focusing on Inflation
Warren Buffett is betting on inflation as Fed concludes meeting on monetary policy, Quantitative Easing 2.
European Corporate Bonds to Support Stocks
As the ECB isn't in a hurry to withdraw the stimulus, the eurozone will have to find somewhere for the money to go. That "somewhere" is more likely to be in stocks than in corporate bonds given the skinny yields available.
Where "Unusual Uncertainty" Has the Dow, Gold, and Oil
"Unusual Uncertainty" has the yield on the 10-Year below annual pivot and testing annual risky level. Plus, a look at the economy on the road.
Secondary Sources: Deflation, Authoritarian Growth, Manufacturing
A roundup of economic news from around the Web.
Rural Broadband Subsidies: Another Iraq?
In a 3-2 vote, the Federal Communications Commission recently decided to jack up its official definition of “broadband” from 200 kbps download to the 4 mbps dpwnload/1 mbps upload used as a benchmark in Our Big Fat National Broadband Plan.
San Francisco Fed Paper Warns Odds of Recession Rising
Over the shorter run, the paper, written by Travis Berge and Oscar Jorda, argues the odds of falling into recession are relatively low. But over the next two years it appears the odds are only slightly better than even that an already-tepid recovery will continue.
How Much Will a Carbon Tax Spur Innovation?
If Jim Manzi is right about the limited innovative effects of a carbon tax, then moving our houses around, slapping in some light rail, and maybe making the houses a little smaller, will be rearranging those deck chairs on our proverbial environmental titanic.
“Never Let a Crisis Go to Waste”
The opportunity is here. At first, interest groups will prevent attempts to cut either “discretionary” or “entitlement” spending. And then the system will begin to crack with public pension defaults perhaps leading the way, followed by Medicare and Social Security. Soon all will benefit from cuts more than they lose.
Fed Unlikely to Unveil Major Action
Market speculation that the Federal Reserve will act to boost the economy at its meeting today has grown recently, but most analysts caution the U.S. central bank is unlikely to take any major steps.
CR Index
Consumer survey reveals unsteady economic progress.
CEOs Less Confident in Recovery
The overall index slipped to 57.5 in July, from 61 in April. Any reading over 50 indicates optimism. The survey showed companies remain extremely reluctant to hire workers: nearly 62% said they didn’t expect their headcounts to have changed a year from now, while nearly 8.5% expected to cut more than 10% of their workers in that time.
“Creating a New Job Carries a Punishing Price”
...these added costs increase his firm’s vulnerability to government decisions — and not just those made in Washington, D.C. While not all of the non-salary costs are due to government policy — Bogen could offer less generous benefits — many are, and this means firms like Bogen “have lost control of a big chunk of our cost structure,” and this makes Bogen reluctant to hire more.
Student-Loan Debt Surpasses Credit Cards
Americans owe some $826.5 billion in revolving credit, according to June 2010 figures from the Federal Reserve. (Most of revolving credit is credit-card debt.) Student loans outstanding today — both federal and private — total some $829.785 billion, according to Mark Kantrowitz, publisher of FinAid.org and FastWeb.com.
Wastewater Treatment
The EPA itself estimates that 25% of the nation’s sewer pipes were in poor or very poor condition. They also estimate that this share will rise to 50% by 2020.
U.S. Incomes Tumbled in 2009
Income declined in 223 metro areas last year, increased in 134 and was unchanged in nine regions.
College: Easy Money
According to Philip Babcock and Mindy Marks, college students' weekly study time fell by 40% between 1961 and 2003.
CR: Travelers pay up to 144 percent more in taxes, study finds
A recent survey of government-imposed travel taxes in the nation's top 50 travel destinations has found that levies for car rentals, hotels, and meals can raise consumers' tax burden—what they would otherwise pay in general sales tax—by more than half.
Should We Raise Tax Rates on the Rich?
James Surowiecki today has a piece on why we need more tax brackets for the super-rich. After all, is it fair that a professional making $375,000 pays the same as LeBron James?
Where Americans Are Spending More...
Since the recession started in the fourth quarter of 2007, the common theme has been about Americans cutting back on their spending. But the latest numbers from the BEA show aggregate personal consumption expenditures are up 2.9%, or $285 billion.
Competition Breeds Success II
This morning, I got an e-mail that provides another example of how private schools tend to beat the government-union monopoly.
A Snapshot of "Recovery Summer"
...monthly analysis of the employment situation in the United States on how well the President's 2009 economic stimulus package, which provided the funding for these projects, is doing in creating or saving American jobs.
The Myth of Authoritarian Growth
"Don’t be surprised if Brazil leaves Turkey in the dust, South Africa eventually surpasses Russia, and India outdoes China."
Research, Reports & Studies
The Kampala Aftermath: The U.S. Should Remain Wary of the ICC
Overall, the U.S. effort at the International Criminal Court Review Conference in Kampala was a qualified success. The outcome could have been much worse.
Critical Lessons from the Federal Response to the Gulf Oil Spill By learning from both the mistakes and successes of the current Gulf spill, the federal government will dramatically increase the effectiveness of its future responses to Spills of National Significance.
Cronyism: Undermining Economic Freedom and Prosperity Around the World
In a true capitalist system success is determined by the market, the best mechanism ever discovered to set the value of goods and services—through the collective buying and selling decisions of all participants in the economy
CH4: The New Deal and Institutional Economics
In his first inaugural address Franklin D. Roosevelt declared that the federal government must treat the depression “as we would treat the emergency of war.” He was not speaking abstractly.
BLS: Productivity and Costs Q2 2010
Nonfarm business sector labor productivity decreased at a 0.9 percent annual rate during the second quarter of 2010, the U.S. Bureau of Labor Statistics reported today, with output and hours rising 2.6 percent and 3.6 percent, respectively.
U.S. Flying on One Engine
...in July, the diffusion index for manufacturing payrolls (an indicator of how widespread the payroll gains are across industries) continued to fall down, reaching neutral territory.
Economists’ Comments & Opinions
Unemployment: What Would Reagan Do?
Friday's grim labor report is the latest confirmation that our economy is not recovering.
What's Holding Back the Hiring?
President Obama claims that he's concerned about "jobs, jobs, jobs," but he has signed laws, issued executive orders and approved regulations that create incentives for private-sector employers to lay off people or delay hiring people. It's no wonder high unemployment persists.
Black Budget in the Red
This tale of government bloat...it sounds like a recipe for a conservative crusade.
Real 'Hope and Change' in the United Kingdom
Hope has been hard to come by for small-government types in the age of Obama.
‘Made in America’ is not the way out
By promoting manufacturing of all kinds (as can be expected as the sector’s lobbies get down to work) at the expense of more innovative and dynamic service sectors, precisely when America is faltering in its recovery from the crisis, this unhelpful fascination promises to inflict gratuitous damage on an economy that can ill afford new wounds.
Still Oblivious To Meltdown's Cause
One of the tragic ironies of the financial meltdown is that it was caused by well-meaning politicians who didn't know what they were doing — and ended up hurting the very people they intended to help.
The Golden State’s War on Itself
How politicians turned the California Dream into a nightmare.
Business Keeps Getting Squeezed
More damaging than the cost is the message sent to young people like Julie that voluntary, mutually beneficial trade between two willing parties, even around something as simple as a glass of lemonade, requires a direct government sanction… and an accompanying tax payment.
Lousy Lawmakers, Not Low Taxes, Created Our Woes: Amity Shlaes
You can have low taxes, or you can have an economic recovery, but you can’t have both. That’s the message the administration is hammering this summer.
For the Economy's Sake, No Quantitative Easing
The obvious problem there is that the Fed can push all the money it wants into banks, but so long as businesses are fearful of an economic outlook that government intervention, a weak dollar, looming tax increases and more regulations are making worse, there will be no demand for the reserves on bank balance sheets.
The Pension Bell Tolls
Want $600,000 a year in retirement? Work for the government.
RAHN: An inconvenient economic history
Record shows recovery results from tax cuts, not government spending.
Of CEOs and Congressmen
Private vs. public accountability.
BLANKLEY: 'We socialists' vs. 'we the people'
Americans are readying to reclaim their birthright of liberty.
The False Fed Savior
Monetary policy can't make up for failed fiscal and regulatory policy.
Graph of the Day
Mercatus: Jobs Loss and Creation Since the Recovery Act
See: Federal Employees Continue to Prosper
See Also: Estimated Impact of an Exogenous Tax Increase of 1% of GDP
Book Excerpts
"Interventionism is guided by the idea that interfering with property rights does not affect the size of production. The most naïve manifestation of this fallacy is presented by confiscatory interventionism. The yield of production activities is considered a given magnitude independent of the merely accidental arrangements of society's social order. The task of the government is seen as the "fair" distribution of this national income among the various members of society." –Ludwig von Mises, Human Action: A Treatise on Economics (1949)
Did You Know
The Social Security program turns 75 this Saturday. In June 2010, 53.4 million people, or about one in every six U.S. residents, collected Social Security benefits. While three-quarters of them received benefits from the programs for retirees and elderly widow(er)s, another 10.0 million received disability insurance benefits, and 2.3 million received benefits as young survivors of deceased workers. The risk of disability or premature death is greater than many people realize.
