General Economic News Jan. 3 - 7

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News
FRIDAY
Portugal's debt worries worsen as bond yield rises
Portugal's bond yields rose to euro-era record highs on Friday, driven by market fears about the debt-laden country's economic health and wider concerns about the eurozone's financial stability.
Obama to name Sperling to top economic post
President Obama will name Gene Sperling as director of the National Economic Council on Friday, a move that will place a veteran policy and political player in the White House to work with a divided Congress.
European Economy Expanded Less Than Initially Estimated in Third Quarter
Europe’s economy expanded less than initially estimated in the third quarter as companies trimmed spending to weather the region’s worsening debt crisis.
China's Economy Expanded at About 10% Pace in 2010, Vice Premier Li Says
China’s economy expanded at about 10 percent in 2010, according to an estimate by Vice Premier Li Keqiang reported by the official Xinhua news agency, a pace forecast to slow as policy makers seek to stem inflation
Trichet Says ECB No Substitute for Government Irresponsibility
European Central Bank President Jean- Claude Trichet warned governments not to rely on the ECB to get Europe out of its debt crisis and urged them to step up efforts to tighten fiscal rules.
Gold Set for the Longest Losing Run Since 2009 on U.S. Recovery
Gold dropped for a fourth day in New York, falling to a five-week low, as signs the U.S. economy is recovering and a stronger dollar curbed investment demand. Other precious metals declined.

THURSDAY
2010 Online Holiday Shopping Season Was Biggest Ever
The 2010 U.S. online holiday shopping season fared remarkably well. Black Friday online retail sales soared and Cyber Monday made history when consumer spending exceeded $1 billion for the first time in a single day. When all was said and done, the November to December holiday season brought in $32.6 billion in retail e-commerce spending.
Census: Number of poor may be millions higher
The number of poor people in the U.S. is millions higher than previously known, with 1 in 6 Americans — many of them 65 and older — struggling in poverty due to rising medical care and other costs, according to preliminary census figures released Wednesday.
Holiday store sales chilled
Holiday sales lost speed in December after a strong surge in the prior month, with many store chains reporting softer-than-expected monthly results Thursday.
Rate on 30-year fixed mortgage dips to 4.77 pct.
Rates on fixed mortgages dipped this week after rising steadily over the last two months.
11 New Airline Fees We Might See in 2011
Airlines Make More than $700 Million a Month in Fees
$33 Million in Unclaimed Money for Veterans Dating Back to World War I
Veterans' Advocacy Groups Urge Families to Check Government Records
Congress unlikely to extend hand to ailing states
Cut spending, raise taxes and fees, and accept billions of dollars from Congress. That's been the formula for states trying to survive the worst economy since the 1930s.
Dogfight Erupts in Plane Ticket Sales
A battle to reshape the way airline tickets are sold escalated Wednesday, in what could become an industry-wide showdown between carriers and middlemen.

WEDNESDAY
World Food Prices Rise to Record on Sugar, Meat Costs
World food prices rose to a record in December on higher sugar, grain and oilseed costs, the United Nations said, exceeding levels reached in 2008 that sparked deadly riots from Haiti to Egypt.
December auto sales raise hopes for 2011
Most automakers ended a challenging 2010 with a strong sales month, raising hopes that the industry could be carrying some momentum into the new year.
Portugal pays steep price to borrow
It is so ugly that Portugal drew polite applause Wednesday for completing the euro zone's first sale of government debt in the New Year – even though it had to pay six times the going rate at this time last year.
Want a new car in Beijing? Sorry, there's just too much traffic.
China banned all car sales in Beijing from Dec. 24 until its new lottery system comes up with the names of the 20,000 applicants who will have the right to buy license plates this month.
China lends a hand as Spain climbs from economic doldrums
Chinese Vice Premier Li Keqiang arrived in Spain today for a visit that could add an economic boost as the country sees unemployment fall and appears on target to reduce its deficit.
Food Prices Hit Record High in December
Global food prices rose in December, with the FAO Food Price Index at a record high, the U.N Food and Agriculture Organization said on Wednesday, past 2008 highs when rising food prices sparked riots in a number of countries.
Non-Manufacturing Sector Expands
The U.S. non-manufacturing sector grew in December at its fastest pace in more than 4 years, according to an industry report released Wednesday.
The House Republican majority has said it will require members to cite the specific authority for any bill they introduce.
The House Republican majority has said it will require members to cite the specific authority for any bill they introduce.
Growth in bankruptcies slows in 2010
Some states report a decline in filings for haven.

TUESDAY
Detroit Public Schools: 40,000 kids to get laptops from stimulus funds
Detroit Public Schools will spend $49 million in federal money to push technology in the dstrict, including distributing 40,000 new laptop computers to students in grades 6-12 for use in class, as well as more than 5,000 new desktop computers.
Bankruptcies top 1.5 million in 2010
The number of Americans filing for bankruptcy in 2010 ticked up 9% over the previous year to more than 1.53 million, industry groups said Monday.
BofA settlement with Fannie, Freddie "clears air"
Bank of America Corp. reached a $2.8 billion settlement with Fannie Mae and Freddie Mac over claims that one of its businesses sold bad mortgages. The payment is far lower than analysts expected and removes some uncertainty that has hovered over the bank.
Factory Orders Rebound in November
New orders received by U.S. factories unexpectedly rose in November, and orders excluding transportation recorded their largest gain in eight months, according to a government report on Tuesday that pointed to underlying strength in manufacturing.
Sales at U.S. Retailers Increased 3.6% Last Week
Sales at U.S. retailers rose 3.6 percent last week from a year earlier, as some shoppers returned to stores to take advantage of post-Christmas discounts, dodging a snowstorm that assailed the East Coast.
Companies stash more cash as profits increase
Companies are doing everything they can do to get rid of cash — short of hiring people — but the moola just keeps mounting.

MONDAY
China backs Spain to emerge from crisis: Beijing
China is confident Spain will recover from its economic crisis and Beijing will buy Spanish public debt despite market fears of an Irish-style bailout, a top Chinese official said Monday.
Big Firms Poised to Spend Again
Big U.S. companies have cleaned up their balance sheets and, flush with cash, appear open to using it in 2011 on factories, stores and even hiring.
Looking Ahead to Economic Reports This Week
Data will include the Institute for Supply Management manufacturing index for December and construction spending for November (Monday); factory orders for November (Tuesday); the Institute for Supply Management service index for December and ADP’s employment figures for December (Wednesday); weekly jobless claims (Thursday); and unemployment for December and consumer credit for November (Friday).
For U.S. Economy, Slow and Steady Will Do
The Year of the Rabbit, which technically kicks off in February, looks set for a brisk start. The trick will be keeping up the pace.
Housing Prices Continue Decline in October
'No good news' in latest S&P/Case-Shiller Home Price report.
Manufacturing activity rises to 7-month high
Manufacturing activity expanded for a 17th month in a row in December, rising to the highest level in seven months, a purchasing managers' group said Monday.
Home price is down, so why not insurance?
The cost of your home, and the cost to rebuild it, are two different things

Economist Comments
FRIDAY
Republicans And Democrats Both Offer Promising Ideas For Economy
Good economic policy isn't necessarily an ''R'' or ''D'' concept.
America, it's time to start taking risks again
After bidding farewell to 2010, many Americans are suffering from a hangover -- but it isn't from excessive partying. Quite the opposite: The unemployment rate in November climbed to 9.8%, and public confidence about the nation's future has fallen to historic lows.
Bernanke: Recovery finally taking hold
The U.S. economic recovery is finally getting stronger, Federal Reserve Chairman Ben Bernanke said Friday morning.
Republicans and Democrats Both Offer Promising Ideas for Economy
Recessions are nasty things, but they have their uses. Downturns force companies to make tough decisions they otherwise wouldn't, which in turn help them get leaner and improve efficiency. Recessions can also force policymakers to think hard about what can unlock economic potential. So it is today. If you look in the right places, something good is percolating in Washington that might actually help the economy.

THURSDAY
Constitutional Power Hour
Congress will need to cite a higher authority.
Supply-side Obama? Trust but verify
Last year's biggest winner was the Tea Party, which shellacked President Obama in the election. Obama becomes the biggest loser. And the economy and stock market will be the beneficiaries. The elections were the first major step toward restoring free-market capitalism and rolling back big-government controls, planning and spending. This is a money-politics issue.
Future Is Brighter in 2011, but Problems Linger
After years of gloom, the clouds could lift a little for small businesses in 2011.

WEDNESDAY
Economic Literacy Goes Global
It is hard to make sense of the world without adequate information and the words to explain fundamental concepts. Some good news for the new decade is that the level of economic literacy is rising, thanks in part to tools being developed at free-market think tanks around the world.
A Golden Decade Of Government Failure
The real question, pertinent to American freedom and prosperity, is not whether policies are Republican or Democratic, but whether they are pro-capitalist or not. Sadly, American political leadership today, Republican and Democrat alike, remains mired in an anti-capitalist mode.
Go north, young man, go north
Canada is quietly surpassing the U.S. as the land of opportunity

TUESDAY
Celebrating superwealth
Ten Reasons to Ignore “The Gap” and be thankful for America’s rich. 
The Inequality That Matters
Is the overall picture a shame? Yes. Is it distorting resource distribution and productivity in the meantime? Yes. Will it again bring our economy to its knees? Probably. Maybe that’s simply the price of modern society. Income inequality will likely continue to rise and we will search in vain for the appropriate political remedies for our underlying problems.
Dodd-Frank and the Return of the Loan Shark
In the name of consumer protection, Congress has pushed more Americans outside the traditional banking system.
US Economy in Its Own Catch-22
For example, the economy needs to improve in order to generate jobs, but the economy can only improve if people have jobs.

MONDAY
'Fair Trade'? Free Trade Is Fair Trade
It's always American producers and their unions who do the complaining. That ought to tell us something.
How to Break Bread With the Republicans
In a matter of days, Republicans will control the House of Representatives and have a larger voting bloc in the Senate. If economic policy is to make any progress over the next two years, you really will have to be bipartisan. To do so, you’ll need to get inside the heads of the opposition.
How Videogames Are Changing the Economy
From Silicon Valley to China to media, they are leading the next productivity revolution. So hug a geek today.
How I Missed the `Housing Recovery' of 2010: Caroline Baum
When I saw the headline last week, “Housing Recovery Stalls,” my first reaction was to kick myself for having missed yet another milestone in the U.S. economy’s long rehabilitation process.
Economics By Cartoon
The best commentary on Fed policy currently out there is a do-it-yourself animated short called Quantitative Easing Explained.

Blogs
FRIDAY
Businesses Don’t Like Competition
Here is a good Reason TV video that illustrates perfectly this unhealthy union. The LAPD has been hassling food carts recently. Why? Because they are competition to restaurants and those guys don’t like it.
Alternate Measure Says Poverty Didn’t Rise in 2009
An alternate measure of poverty that takes into account several of the government’s most effective antipoverty programs shows the 2009 poverty rate was lower than the government’s official measure, underscoring the breadth of the government’s antipoverty efforts during the recession but also adding fuel to the long-running debate about how best to gauge who is poor and if their lives have gotten better or worse.
Hope and Dismay about Haiti’s Future
Nicholas Kristof provides “a useful reminder of the limitations of charity and foreign aid” in his New York Times op-ed about Haiti today. “Nearly a year after the earthquake in Haiti,” he notes, “more than one million people are still living in tents and reconstruction has barely begun.”
Africa's impressive growth
Africa is now one of the world’s fastest-growing regions
Is the Vampire Squid Wrapped Around Facebook?
Goldman Sachs has been trying to wrestle free of its reputation for sucking money out of every market it can. The new Facebook deal won't help.

THURSDAY
Five Lessons from Ireland
The news is going from bad to worse for Ireland. The Irish Independent is reporting that the Swiss Central Bank no longer will accept Irish government bonds as collateral. The story also notes that one of the world’s largest bond firms, PIMCO, is no longer purchasing debt issued by the Irish government.
Falkenstein vs. Sumner
As the economy becomes more complex, the process of organizing production and distribution becomes more challenging.
Do Inflation Expectations Drive Consumption?
After proponents of the Federal Reserve’s second round of quantitative easing (QE2) abandoned the argument that QE2 would spur growth by bringing down interest rates (only after rates increased), the new defense became “we intended for rates to go up all along, as a result of increased inflation expectations.”  Since few would argue for increased inflation, or expectations of such, as an end in itself, the claim was that increases in inflation expectations would drive households to consume more, which would in turn causes businesses to hire more, bringing down the unemployment rate.  But does this chain of reasoning withstand empirical scrutiny?
Africa's impressive growth
Africa is now one of the world’s fastest-growing regions.
The Decline of the Appropriators?
More signs the incoming House Republican leadership gets it. Even before the new Congress took power today, the power of congressional appropriators had been circumscribed, as Republicans forced the committee to surrender its power to place special interest earmarks into the 12 annual spending bills under its purview.
So Long, Cheap Money
Globalism — the free flow of money, people and goods — has made the world a heck of a lot richer over the past several decades. But it's always been subject to some threat or other.
Horse Sense: Dept. of Unintended Consequences Alert
Less than four years after the last equine slaughterhouses in the U.S. closed down, an unlikely coalition of ranchers, horse owners and animal-welfare groups is trying to bring them back.
What is economics good for?
Just because economics isn’t like physics doesn’t mean it’s useless.
Be Very Afraid
It’s an auction conducted at the airport terminal.  In this auction you are a seller and you are bidding to sell your ticket back to the airline.
Bankruptcy Update
The sunbelt states: California, Florida, Arizona, Nevada with their housing boom are easy to understand. Even the mountain states which attracted a lot of people: Colorado, Idaho, and Utah. Oregon had its own boomlet (mainly around Portland). One place you don’t see: New England. Hmmm.

WEDNESDAY
European nations begin seizing private pensions
Hungary, Poland, and three other nations take over citizens' pension money to make up government budget shortfalls.
How much do immigrants cost?
Anti-immigrant rhetoric talks about the costs of legal and illegal immigrants, but what does that really add up to?
Secondary Sources: 2011 Optimism, Crisis and Reform, Fed Mandate
A roundup of economic news from around the Web.
A Year of Regulatory Abuse: The 10 Worst New Rules of 2010
The year 2010 will stand as a watershed in regulation. In all likelihood, government at every level imposed more dictates on more facets of citizens’ lives than ever before, from the timing of stock trades to the proper size of showerheads. Lawmakers and regulators construct complex cost–benefit calculations to justify the rules, but they never account for the erosion of liberty inherent in each and every one. Some regulations are far worse than others, of course, exacting disproportionate costs—fiscal and otherwise.

TUESDAY
Personal Bankruptcies in 2010, by State
Personal bankruptcies rose 9% to 1,530,078 in 2010 from a year earlier, reaching their highest level since a revamp of the bankruptcy law took effect in 2005, according to the American Bankruptcy Institute, an association of attorneys and other bankruptcy professionals, and the National Bankruptcy Research Center.
The Test
Suppose the economy does well this year–growth is robust and unemployment falls. What is the reason for the improvement?
Bank Deregulation and Income Inequality
Since the financial crisis, “deregulation” has become a catch-all phrase for everything that went wrong in our financial markets.  Unfortunately said deregulation is rarely ever explained, but is rather asserted.
World-Wide Factory Activity, by Country
Global manufacturing ended the year on a strong note, according a global purchasing managers’ index released by J.P. Morgan Chase and Markit.
Imperfect, but true
A few years ago, a journalist I respected asked me if NAFTA had been good for the United States, on net. I told him the question could not be answered empirically.
Five Possible Dark Clouds Over Brightening Skies
As 2011 kicks off, the U.S. economy looks the healthiest it has in years, but that doesn’t mean the recovery won’t face strong headwinds.
Three Things We Should Worry about in 2011
Here are three possible bad policies for 2011, most of which the Obama White House can implement by using executive power.
Secondary Sources: Krugman on 2011, U.S. Default, Bank Reform, Debtris
A roundup of economic news from around the Web.
The New Year and Financial Crises
The New Year is likely to bring renewal of financial problems in the European Union. In Greece, the crisis was fiscal in origin and spread to Greek banks and banks in other countries that had lent to Greek banks and the Greek government. In Ireland, the crisis began with problem real-estate loans at Irish banks. That spread to European banks, mainly British, that had lent to Irish banks.
Countries with the fastest and slowest growth forecasts
According to the Economist Intelligence Unit, a sister company of The Economist, Ireland’s and Greece’s GDP will decline by 0.9% and 3.6% respectively. The PIIGS (Portugal, Ireland, Italy, Greece and Spain), find themselves among the slowest growers this year.
Consumer Bankruptcy Filings increase 9% in 2010
From the American Bankruptcy Institute: Consumer Bankruptcy Filings increase 9 percent in 2010
Is A Strong Central Government Necessary for Economic Growth?
As the U.S. economy fell into the so-called Great Recession, U.S. policy policymakers and many economists argued that a strong central government response was essential to bolster economic growth. We've discussed the merits of industrial policy and the stimulus numerous times on this blog, but the idea of adopting a strong national industrial policy remains strong.
Free Trade Increases Living Standards, Creates and “Spreads the Wealth” Better Than Government Can
Michael Barone has an interesting piece today highlighting a recent article by George Mason University economist Tyler Cowen in The American Interest that explains how rising U.S. living standards across the board have “spread the wealth” far more efficiently than any statist program the Obama Administration can dream up.
Overpopulation?
There’s a great (if somewhat geeky) dissection of the overpopulation myth on the Simply Shrug blog. Showing all his calculations, the editor demonstrates that the entire world population could live in the state of Texas, at the population density of New York, fulfill all freshwater needs with half the flow of the Columbia River, and feed the entire world population with America’s farmland alone
Public Sector Union Reform in the States
The late 20th century rise of the public sector union is one of the most profound and until recently, largely overlooked, changes that occured in American government. As Rutgers economist Leo Troy has noted the rise of public sector unionism represented a “structural break” from the Old (private sector and industrial) Unionism. However, many labor economists continued to treat the two as similar a major misstep in understanding the nature, goals, and implications of government unions.

MONDAY
Why Have Economists Been So Bad at Predicting the Impact of the Stimulus?
Almost two years after the adoption of the stimulus bill, the data shows that the funds didn’t stimulate GDP much, and didn’t stimulate employment either. One reason is that the package failed to prop up government purchases, or consumption purchases in general. For instance, as  was the case with previous stimulus bills, it looks like most of the loan, grant, and contract money in the bill went to pay down state and local governments’ debt rather than buy stuff.
What will 2011 bring?
The year that was 2010 was a shaky one for the global economy, but it was also clearly the best of the last three. Growth returned or strengthened across most of the world, employment rose, and markets had a good year—the Dow was up around 10% for 2010. There were downsides, of course. Europe's crisis threw a shadow over much of the year, and threatened to tip several major economies back into recession over the summer. Unemployment remains very high in much of the developed world, including America. And doubts about the sustainability of emerging market recoveries have risen in recent months.
Your Paycheck in 2011
Compared to how January 2011 might have played out, where every taxpayer in the United States would have received a smaller paycheck if the 111th U.S. Congress hadn't acted to extend the 2001 and 2003 tax cuts, the Congress' late action to extend those tax rates for another two years, while also throwing in a 2.0% payroll tax cut, might seem like a great deal.
Unofficial Problem Bank list increases to 935 Institutions
Here is the unofficial problem bank list for Dec 31, 2010.
The FCC Net Neutrality Order
The regulations break down into 4 categories: transparency, no blocking, no unreasonable discrimination, and reasonable network management. Transparency is what it sounds like: providers are required to maintain and make available data on how they are managing their networks. The blocking and discrimination rules are the most important and the ones I will focus on.
Schedule for Week of January 2, 2011
The key report for this week will be the December employment report to be released on Friday, Jan 7th. Other key reports include the ISM manufacturing index on Monday, vehicle sales on Tuesday, and the ISM non-manufacturing (service) index on Wednesday.
The Problem of Measurement
After a lot of years of fighting, we're finally seeing some fledgling efforts to measure teacher performance using tests scores and other metrics.
Summary for Week ending January 1st
Below is a summary of the previous week, mostly in graphs.
Incentives vs. the TSA
Some of the nation's biggest airports are responding to recent public outrage over security screening by weighing whether they should hire private firms such as Covenant to replace the Transportation Security Administration. Sixteen airports, including San Francisco and Kansas City International Airport, have made the switch since 2002.
Problem Banks: Stress by State
With the banking crisis ending its third year, it may prove useful to identify which states have experienced the most stress.
Holiday Spending Was Up–So What
The Christmas holiday shopping reports through December 25 were up for the season as compared to last year. So what. Does that mean economic recovery? I think not.
Over 4.3 million loans 90+ days or in foreclosure
LPS Applied Analytics released their November Mortgage Performance data. According to LPS:
EPA’s Texas Takeover
As Gabriel Nelson of Greenwire reports, the Environmental Protection Agency (EPA) has taken one step closer to stripping the state of Texas of the right to determine how it wants to control air pollution. The EPA has given Texas final warning that if they do not implement new requirements for the regulation of greenhouse gases (which several states have challenged in court), the EPA will take over the authority to grant operating permits to industry in Texas itself.
In the long run, it's all microeconomics
Macroeconomics failed Japan. It's microeconomics – the supply side – that can revive developed economies.
Obama’s Offshore Ban Already Cutting Domestic Energy Supply
Americans should demand an energy policy that is rooted in the free market, builds on private property rights, and relies on the initiative and entrepreneurial spirit of the private sector. This will not only promote economic growth, but also help Americans to achieve their environmental objectives.

Reports
FRIDAY
Obama’s Foreign Aid Strategy: Hire More Federal Workers, Spend More Taxpayer Money
The Obama Administration’s long-awaited and inaugural Quadrennial Diplomacy and Development Review (QDDR), subtitled “Leading Through Civilian Power,” was finally released on December 15, almost a year after it was initially promised. The goal of the QDDR is to provide the same kind of robust justification to back up President Barack Obama’s pledge to double the U.S. development assistance budget by bringing a new level of “granularity” to USAID’s budget presentations to Congress. However, the QDDR before us fails at achieving this goal.

THURSDAY
ISM Non-Manufacturing: Highest Reading in Over Four Years
The ISM non-manufacturing survey rose sharply in December to 57.1, the highest reading since May 2006. The increase was driven by improvement in business activity and new orders. Price pressures persist.

WEDNESDAY
“Educate to Innovate”: How the Obama Plan for STEM Education Falls Short
The United States must not allow itself to continue to be outcompeted in science, technology, engineering, and mathematics. While the Administration’s Educate to Innovate initiative is intended to raise the U.S. “from the middle to the top of the pack in science and math,” this one-size-fits-all, federal approach fails to remedy the underlying problems of academic performance and does not plug the leaky pipeline in the American education system.

TUESDAY
The Wage Effects of Immigration and Emigration
In this paper, we simulate the long-run effects of migrant flows on wages of high-skilled and low-skilled non-migrants in a set of countries using an aggregate model of national economies.