Tuesday, February 26, 2013

General Economics

CNN Money | American consumers upbeat in February
Consumers are feeling more upbeat about the U.S. economy in February than they have been in the last two months, as fiscal cliff worries have finally subsided.
Bloomberg | New-Home Sales in U.S. Surge to Highest Level Since 2008
Purchases of new U.S. homes jumped in January to the highest level since July 2008, showing the industry will keep adding to growth in the economy.

Econ Comments & Analysis                                                                                            
Forbes | In Asking About Income Inequality, Obama Begins With The Wrong Question
When Obama and his supporters refer to income inequality, they are taking a complex set of economic and social issues and boiling them down to a single data point:  how large is the difference between the annual incomes of top earners compared with those on the bottom of the income scale.  While that is one interesting question—though even as it is there are problems with it—having it stand alone as the driving force for change is a gross oversimplification that will lead to bad outcomes. 

Economist | The 1974 trap
Do countries often get trapped betwixt poverty and prosperity? The concept of a middle-income trap was popular long before it was thoroughly tested, or even very clearly defined.

Health Care

FOX Business | Why Health-Care Costs Are So Out of Control
To put it in another way, we spend more on health care than the next 10 big spenders combined: Japan, Germany, France, China, the U.K., Italy, Canada, Brazil, Spain and Australia. U.S. health care spending will probably total $2.8 trillion this year alone.


Bloomberg | Fed Faces Explaining Billion-Dollar Losses in QE Exit Stress
Federal Reserve Chairman Ben S. Bernanke’s efforts to rescue the economy could result in more than a half trillion dollars of paper losses on the central bank’s books if interest rates rise abruptly from recent levels.
National Journal | Could Bernanke's Testimony Signal an Early End to Easy Money?
Folks from Wall Street to Washington are hoping for a better sense this week of when the central bank’s latest unemployment-fighting program, an open-ended round of bond-buying known as QE3, will come to an end. 
Market Watch | Fed's Lockhart backs QE at least into second half
The Federal Reserve should stick with its current $85 billion per month bond-buying program, at least into the second half of the year, said Dennis Lockhart, the president of the Atlanta Federal Reserve Bank, on Monday.


Politico | Opposition to online sales tax wanes
The push for a federal online sales tax bill previously pitched the young Internet industry against the old retail sector.

Econ Comments & Analysis                                                                                            
Politico | Setting the stage for tax reform
In his State of the Union address, President Barack Obama said that achieving tax reform “won’t be easy” and that “the politics will be hard for both sides.” This may be true, but we agree with the president that now is our best chance to achieve it. In fact, there are a number of factors that suggest tax reform is not only possible but that the environment for its passage is particularly encouraging.
Washington Times | Ending the corporate tax
Can you name the worst tax? In recent weeks, there have been a slew of articles in major publications about how many multinational corporations have found legal ways to reduce their tax burdens by running some of their operations through low-tax jurisdictions. Many who love high taxes and big government demand that corporations pay more.


CNN Money | Workers over 50 are the new 'unemployables'
Unemployed workers in their fifties are increasingly finding themselves stuck in limbo. On one hand, they're too young to retire. They may also be too old to get re-hired.
Washington Times | Gun maker Beretta threatens to leave Maryland, take hundreds of jobs
The multimillion dollar, centuries-old manufacturer provides hundreds of jobs in the state, the Blaze reports. It was considering an expansion to its existing Prince George County plant — until Maryland lawmakers introduced a bill to ban so-called assault weapons.

Econ Comments & Analysis                                                                                            
WSJ | Why Unions Want a Higher Minimum Wage
Organized labor's instantaneous support for President Obama's recent proposal to hike the minimum wage doesn't make much sense at first glance. The average private-sector union member—at least one who still has a job—earns $22 an hour according to the Bureau of Labor Statistics. That's a far cry from the current $7.25 per hour federal minimum wage, or the $9 per hour the president has proposed. Altruistic solidarity with lower-paid workers isn't the reason for organized labor's cheerleading, either.


Roll Call | 15 Things You Need to Know About the Sequester
Nearly two years in the making, the first $85 billion of automatic budget cuts known as the sequester are about to hit starting Friday, but on Monday, there were no real talks under way to prevent it.

Econ Comments & Analysis                                                                                            
Washington Times | The sky won’t fall
There is very little agreement in Washington on how to avoid the across-the-board spending reductions scheduled for Friday. Republicans are less than thrilled to see half the sequestration hitting defense, and Democrats are in a meltdown over the prospects of their welfare-state handouts getting a nip and tuck.
WSJ | China Has Its Own Debt Bomb
Six years ago, Chinese Premier Wen Jiabao cautioned that China's economy is "unstable, unbalanced, uncoordinated and unsustainable." China has since doubled down on the economic model that prompted his concern.
Investors | Obama's Sequester Cuts Are A Mere 1% Of Budget
President Obama is almost breathless predicting "devastating" consequences if the sequester trigger is pulled. He warns the cuts "will hurt our economy ... add hundreds of thousands of Americans to the unemployment rolls. ... The unemployment rate might tick up again."
CBO | Testimony on the Budget and Economic Outlook: Fiscal Years 2013 to 2023
Economic growth will remain slow this year, CBO anticipates, as gradual improvement in many of the forces that drive the economy is offset by the effects of budgetary changes that are scheduled to occur under current law. After this year, economic growth will speed up, CBO projects, causing the unemployment rate to decline and inflation and interest rates to eventually rise from their current low levels.
CATO | America in Denial as Fiscal Tsunami Approaches
It’s hard to hear yourself think over all the caterwauling on Capitol Hill about the looming sequestration “crisis.” For opponents of the spending cuts — at $85 billion, 2.3 percent of the $3.6 trillion federal budget — the rallying cry is half Lord Keynes, half St. Augustine: “Grant me chastity and continence — but not yet.”

CATO | Sequestration Cuts in Perspective
According to the Congressional Budget Office, the $85 billion in sequestration spending cuts translates into $44 billion reduction in actual federal outlays for 2013.
Economist | On predicting fiscal doomsday
It sure seems like high public debt levels ought to represent a looming economic problem. Why, then, is it so difficult to demonstrate, conclusively, that they are? It could be due to the econometric challenges posed by any macroeconomic issue: sample sizes are small and the possibility of any number of statistical biases throwing things off is large. Or it could be that debt levels simply aren't, in many cases, as bad as everyone seems to think.