Monday, October 29, 2012

General Economics

Market Watch | Judging recovery time from the Great Recession
Getting a handle on how long it’ll take to recover from the Great Recession is more art than science, but a few economists think there are lessons from the past that might prove useful for those seeking a light at the end of the tunnel.
Bloomberg | UBS Cutting Investment Bank Seen Freeing Investors Cash
UBS AG (UBSN)’s decision to cut as many as 10,000 jobs and retreat from capital-intensive trading businesses will help position Switzerland’s largest bank to return more funds to shareholders.
Market Watch | U.S. consumer spending climbs 0.8% in September
Consumer spending in the U.S. rose a seasonally adjusted 0.8% in September, the Commerce Department said Monday. Spending for August was unchanged at a 0.5% increase.
WSJ | Economy Grows at 2% Pace
Consumers, Government Spending Powered Third-Quarter Gains but Growth Likely to Slow Down.
Fox News | Gauge of consumer sentiment hits 82.6 in October, highest reading since September 2007
The University of Michigan's final index of October consumer sentiment rose to 82.6 from 78.3 in September. That's the highest since September 2007 — three months before the Great Recession began.
USA Today | Business spending tightens as fiscal cliff nears
The median forecast of 48 economists surveyed by USA TODAY before Friday's report predicted the economy will grow 1.9% this quarter and next, strengthening in the middle of the year and reaching a 2.8% growth rate late next year.

Econ Comments & Analysis                                                                                            
Washington Times | EDITORIAL: The ongoing slump
Uncle Sam’s current path guarantees economic stagnation.
WSJ | Chronic Fatigue Economy
We borrowed $5 trillion and all we got was this lousy 1.7% growth.
Bloomberg | Why More Immigration, Not Less, Is Key to U.S. Economic Growth
Beyond the huge importance of immigrants to the U.S. economy today, three forces are making immigration reform more urgent:
RCM | Calling All Economists: How Many Steaks Can a Rich Man Eat?
If income inequality is the class warrior's casus belli, the Gini coefficient, a measure of statistical wealth or income dispersion, is his battle cry. "Unfair!" barks the champion of equal outcomes, advocating equality neglectful of its impact on prosperity.
MSN Money | The economy is weaker than it looks
The third-quarter GDP number continues a streak of misleading economic data.
Washington Times | EDITORIAL: Worst economic recovery, ever
The Obama administration is hailing the latest economic growth figures as evidence things are getting better. They’re not. As with recent unemployment data, these numbers don’t pass the smell test. In your guts you know they’re nuts.

AEI: The American | The Financial Stability Oversight Council’s Fatal Flaw
Can the FSOC point out that its own members are creating potential instability and systemic risk? If it cannot, it is constitutionally incapable of carrying out its statutory assignment.
"Calculated Risk | Unofficial Problem Bank list declines to 864 Institutions"
There were five removals and four additions leaving the Unofficial Problem Bank List with 864 institutions with assets of $330.4 billion. A year ago, the list had 985 institutions with assets of $406.6 billion.
Heritage Foundation | Major Benefits of Free Trade
Nations that embrace international trade enjoy significantly stronger economies, achieve lower rates of hunger, and maintain a better stewardship of the environment, according to new data published by Heritage for the forthcoming Index of Economic Freedom.
AEI | Weak GDP report shows no end in sight for the Long Recession
The anemic growth rate means the current recovery remains extraordinarily fragile. Research from the Fed which finds that since 1947 when two-quarter annualized real GDP growth falls below 2%, recession follows within a year 48% of the time.
Calculated Risk | Schedule for Week of Oct 28th
The key report this week is the October employment report to be released on Friday. Other key reports include the August Case-Shiller house price index on Tuesday, October auto sales on Thursday, and the October ISM manufacturing index, also on Thursday.
AEI | Think food is more expensive today than in the past? It’s not, it’s now cheaper than ever before
When you adjust food prices for inflation, you might be surprised to learn that your dollars go further today compared to 30 years ago — for most products at least. Don’t believe it? See for yourself with an interactive grocery shopping simulator that reveals how much your grocery bill varies over the past three decades.”

Health Care

Heritage Foundation | Why Medicare Must Be Reformed
Medicare spending has reached unsustainable levels and is contributing to our budget deficits more quickly than any other program. Further, over the long term, Medicare has made $37 trillion worth of benefit promises to future seniors that are simply not funded. The hospital insurance trust fund is projected to be insolvent by 2024.
Cato@Liberty | ‘Mediscare’ and the Pennsylvania Senate Race
As Republicans tell it, they want to “protect” and “strengthen” Medicare, whereas President Obama wants to “cut” and “weaken” it.


Economics One | A Monetary Historian's Delight
A fascinating and useful new e-book, The Bretton Woods Transcripts, has just been published by the Center for Financial Stability (CFS). It is the first publication of the transcripts of the famous international meeting that took place nearly 70 years ago in Bretton Woods, New Hampshire and founded the International Monetary Fund and the World Bank.


National Journal | White House: Report of New Tax Cut Proposal 'Not Correct'
The White House described as inaccurate a Washington Post report that it is considering a proposal for a new tax cut that could replace the expiring payroll tax cut.
USA TODAY | States with the highest and lowest taxes
Which 10 states tax their residents most, and which least? 24/7 Wall St. looks at the figures and the reasons behind the differences.

Greg Mankiw's Blog | Tax Expenditure Fact of the Day
If instead we lowered the size of the mortgage eligible for this deduction from the current $1 million to, say, $250,000, the base broadening would have an even smaller effect on middle-income housholds.


WSJ | More People Opt Not to Work Anymore
On Friday, the government will release its monthly estimate of how many Americans are working and how many are looking for work. But another number in the report may have greater long-term significance: the declining share of the population that is doing either one.

Economics One | Disappointing Labor Markets in the Nation and in Key States
Were it not for the unusual labor force decline (that is, the decline beyond what is due to the aging of the baby boomers and the downturn in the business cycle), the unemployment rate would be “about 1¼ percentage points higher than the actual rate” according to the CBO. This means that the current 7.8 percent is actually 9.1 percent.
WSJ | Real Time Economics | Number of the Week: States’ Broader Unemployment Rates
15.3%: The rate of underemployment in Idaho, under the Labor Department’s broader definition.
AEIdeas | Explaining the weak U.S. labor market: More unemployment benefits means more unemployment
There have been numerous studies linking increases in unemployment benefits to increases in unemployment. One, from the San Francisco Fed, estimates that absent the extended UI benefits in 2009, the unemployment rate would have peaked at 9.6% rather than 10%.


WSJ | Cost of Bailing Out Fannie and Freddie Expected to Fall Sharply
The Federal Housing Finance Agency, the companies' federal regulator, released a report on Friday that estimated they will pay between $32 billion and $78 billion to the U.S. Treasury through 2015. The baseline forecast assumes that the companies would end up costing taxpayers $76 billion by the end of 2015, down from the current tab of $142 billion.
WSJ | Greek, European Officials Dispute Budget Reprieve
Greece said Wednesday that a loan agreement it is negotiating with its creditors would give the country an additional two years to meet its budget targets in exchange for deep budget cuts and other measures.

Econ Comments & Analysis                                                                                            
WSJ | The Lame Duck Congress's Fiscal Duty
The fiscal cliff that is looming on Jan. 2—a $500 billion combination of rising tax rates and expiring preferential tax policies—is a historic and completely obvious threat to our economy. In 2008, no one knew that the financial system was about to face cardiac arrest. But every American knows that unless Congress acts quickly, we will be hit with economy-crushing tax increases at the start of the New Year.
Bloomberg | How Congress Prevented the ‘Fiscal Cliff’ of the 1840s
The U.S. is quickly approaching a “fiscal cliff,” a combination of scheduled tax increases and automatic spending cuts that could seriously disrupt the economy. It’s a grim situation, but not an unprecedented one.
WSJ | How to Cut Spending at the Grass Roots
Pooling services among municipalities, cross-training public employees, using cooperative purchasing networks: The list is long and the savings substantial.
SIEPR | A Note On the Effects of the Higher National Debt On Economic Growth
The financial crisis, deep recession and anemic recovery have been accompanied by massive policy interventions. Their overall short-run impact on the economy remains controversial: Some claim these policies prevented a much worse recession, others that they delayed recovery.

Economics One | Exploding Debt Still Threatens America
Back in May 2009 I wrote “Exploding Debt Threatens America” in the Financial Times. Unfortunately the federal debt is still exploding, but fortunately we are learning more about the threat thanks to research reported and carefully explained in a new piece by my colleague Michael Boskin.