Thursday, November 15, 2012

General Economics

News                                                                                                                             
Washington Times | Agencies warn politicians: 
Credit ratings on the line
Wall Street ratings agencies are skeptical of the resolve of political leaders to tame the nation’s debts, and are raising the likelihood that at least one of the three top agencies will add to the turmoil in financial markets at the end of the year by further downgrading the U.S. credit rating.
Bloomberg | Manufacturing in New York Region Shrinks for Fourth Month
Manufacturing in the New York region contracted for a fourth straight month in November as superstorm Sandy knocked out electrical power and limited activity.
Market Watch | U.S. retail sales retreat in October
Retail sales in the U.S. fell in October by the sharpest amount since June, hurt by the effects of Hurricane Sandy, but data released Wednesday also showed weak consumer demand in a number of areas.
CNN Money | Eurozone slips back into recession
The eurozone has slipped into recession for a second time in four years, as the sharp fall in activity in debt-ridden southern Europe economies weighed on output across the region.
Bloomberg | Philadelphia Fed Manufacturing Index Falls to -10.7 From 5.7
The Federal Reserve Bank of Philadelphia’s general economic index decreased to minus 10.7 in November from 5.7 a month earlier. A reading of zero is the dividing line between expansion and contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware.

Econ Comments & Analysis                                                                                            
Real Clear Markets | What Small Business Wants From the Federal Government
With the 2012 election behind us, and American voters retaining an electoral status quo in Washington, the weak U.S. economy remains the primary concern of the electorate. For American small business owners, the policy issues that are most important to them are resolutely clear.
WSJ | Escape From Basel
While taxpayers wonder if Washington is going to throw them off a cliff of scheduled tax hikes, another potential economic calamity has been postponed. On Friday, bank regulators announced that they will not impose complicated new rules on New Year's Day. Let's hope they don't impose them on any other days.
Politico | Wield entrepreneurship as key foreign policy tool
In this post-election week — which happens to coincide with Global Entrepreneurship Week — it is a good time to look at what more the United States could and should be doing to raise the profile of entrepreneurship promotion as a key element of our foreign policy in an increasingly troubled and fragile world.
WSJ | The Suburban Education Gap
Parents nationwide are familiar with the wide academic achievement gaps separating American students of different races, family incomes and ZIP Codes. But a second crucial achievement gap receives far less attention. It is the disparity between children in America's top suburban schools and their peers in the highest-performing school systems elsewhere in the world.

Blogs                                                                                                                             
Keith Hennessey | Reactions to the President’s press conference
I have three quick reactions to today’s Presidential press conference.
Library of Economics | Which hurts more in the short run, tax hikes or spending cuts?
The surprising thing is this is an IMF study that usually gets cited to show that spending cuts don't grow the economy---that "expansionary austerity" is a mere theorist's dream.  But this same research also provides evidence that tax hikes cause more trouble than spending cuts in the short run.  
Calculated Risk | Zillow: 1.3 million fewer U.S. homeowners were in negative equity in Q3
Negative equity fell in the third quarter, with 28.2 percent of all homeowners with mortgages underwater, down from 30.9 percent in the second quarter, according to the third quarter Zillow® Negative Equity Report.

Health Care

News                                                                                                                             
NY Times | Health Law Has States Feeling Tense Over Deadline
The days since President Obama won re-election have been marked by tension and angst in Republican-led states like Iowa, where Gov. Terry Branstad has waited until the last minute to decide whether to create a crucial tool for people to get medical coverage under Mr. Obama’s health care law.
CNN Money | Health insurance premiums see smallest increase in 15 years
The cost of providing health care benefits to employees rose by just 4.1% this year, the smallest increase in 15 years, according to a survey by human resources consultant Mercer.

Econ Comments & Analysis                                                                                            
Politico | Medical device tax would thwart innovation
Every day, America’s medical technology community gets up and goes to work, focused on improving the lives of patients throughout the world. Whether manufacturing pacemakers, CT scanners or catheters, our passion for innovation and ingenuity is why this proud American industry continues to lead the world in these challenging times.

Monetary

News                                                                                                                             
Market Watch | Fed should be standing pat now, Lacker says
The Federal Reserve should not be purchasing more assets in the market as bank reserves are already large enough to support a strengthening recovery, said Jeffrey Lacker, the president of the Richmond Federal Reserve Bank, on Thursday.
CNN Money | Inflation remains tame in October
Inflation remained tame in October, as gas prices fell during the month.

Econ Comments & Analysis                                                                                            
Market Watch | Fed debates future asset purchases
Federal Reserve officials faced off in October about whether the central bank needed to buy more assets once its “Operation Twist” program finishes at the end of the year, according to minutes released Wednesday.

Blogs                                                                                                                             
Bloomberg | Philadelphia Fed Manufacturing Index Falls to -10.7 From 5.7
The Federal Reserve Bank of Philadelphia’s general economic index decreased to minus 10.7 in November from 5.7 a month earlier. A reading of zero is the dividing line between expansion and contraction in the area covering eastern Pennsylvania, southern New Jersey and Delaware.

Taxes

News                                                                                                                             
WSJ | Obama Presses For Higher Taxes, But Adds Caveats
President Barack Obama said Wednesday he will push for a deal to resolve the year-end fiscal crisis by raising tax rates on upper-income Americans, while leaving enough wiggle room to suggest to Republicans that the two sides could still compromise.
FOX News | Florida restaurateur to impose 5 percent surcharge for Obamacare
A Florida restaurateur who operates roughly 40 Denny's locations and five Hurricane Grill & Wings franchises throughout the state intends to add a 5 percent surcharge to customers' bill to offset costs for Obamacare in January 2014 when the Affordable Care Act is fully implemented.
WSJ | Obama: 'Open to Ideas' on Taxes, But Few Alternatives to Hikes
President Barack Obama said he is open to "new ideas" to raise tax dollars from upper-income Americans beyond simply returning to higher tax rates, showing some flexibility as he enters negotiations with Republicans. But he said it will be difficult to find an alternate way.

Econ Comments & Analysis                                                                                            
WSJ | The Other California Tax Grab
Amid so much other good news—13.3% tax rate, liberal supermajority—Californians will also be overjoyed to know that this week the state's new cap-and-trade tax gets underway. Liberals are counting on this to raise billions in new revenue, as if it won't drive more jobs out of the state.
Investors | Obama Tax Hikes On Rich Would Shrink Economy, Jobs
President Obama's proposed tax hike on the top 2% of incomes will do next to nothing to close our chronic budget deficits, now running more than $1 trillion a year.
WSJ | The President's Tax Math
'You know, the math tends not to work," declared President Obama at his Wednesday press conference, as part of his explanation for why closing tax loopholes for the wealthy wouldn't provide enough revenue for a budget deal. Ergo, he says, tax rates must go up immediately for those making more than $250,000 a year, even if this means sending the economy over the January 2013 tax cliff.
Washington Times | Obama’s massive tax hike
Now that he never has to run for election again, President Obama can show his true colors. Mr. Obama made it clear Wednesday he wants to whack Americans with $1.6 trillion in tax increases so that an obese Uncle Sam won’t have to go on a diet. The only thing that can slow down his sharp turn to the left is the House GOP.
Heritage Foundation | The Lurking Dangers in the Hubbard Tax Hike Compromise
Glenn Hubbard, dean of the Columbia Business School and until recently the top economist in the Romney campaign, opined in the Financial Times on November 13 that Congress and President Obama should seek to raise taxes on the well-to-do by means other than raising tax rates. Hubbard suggested scaling back the deductions available to upper-income taxpayers.

Blogs                                                                                                                             
Tax Foundation | President's $1.6 Trillion Tax Bid Lowers GDP, Wages, Living Standards
In short, the model results indicate that the President’s plan would not only lower GDP and capital formation, but it would reduce after-tax incomes for every household – not just families hit by the higher taxes.  

Employment

News                                                                                                                             
CNN Money | Texas Instruments to lay off 1,700
Chipmaker Texas Instruments said Wednesday that it will lay off 1,700 workers in an effort to shift focus away from its struggling mobile business.
CNN Money | Jobless claims shoot up after Sandy
The number of people filing for first time unemployment benefits soared 78,000 last week to the highest level in more than a year and a-half, as the effects of Hurricane Sandy the previous week were reflected in government data.

Blogs                                                                                                                             
Coordination Problem | Austrians and Lazear & Speltzer on Structural Unemployment
I think the language of “structural” unemployment is often unhelpful when Austrian types are in the conversation.  The idea of skills not matching needs presumes that we know what those needs are and know that workers don’t have the skills to meet them.  For Austrians, the problem is deeper. 

Budget

News                                                                                                                             
WSJ | President's Deficit Plan Casts a Wide Net for Revenue
President Barack Obama's proposal to reduce the deficit by $1.561 trillion over the next decade includes more than 70 changes in the tax code that would affect everyone from high-income Americans to options traders, as well as oil and gas companies, and even some golf courses.

Econ Comments & Analysis                                                                                            
Bloomberg | My Name Is Uncle Sam, and I’m a Debt-aholic
Fix the debt. It’s a lot harder than it sounds. Earlier this year, a group of longtime deficit hawks came together to try to accomplish what has eluded their predecessors for so long.

Blogs                                                                                                                             
National Review | A Few Reminders About the President’s ‘Balanced Approach’
There are a few problems with the president’s approach. First, it is true that he has been reelected to the White House, but I think he would be wrong to assume that last week’s elections was a referendum on his budget ideas and his balanced approach. 
Coordination Problem | We Will Not Fall Off the Fiscal Cliff, But Perhaps We Should!
The probability that tough fiscal decisions will be made this time around is very low.  Instead, politics as the art of compromise will prevail and the "fiscal granade" will simply be kicked down the road.