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Wednesday, April 30, 2014

General Economics

News                                                                                                                             
Bloomberg | China Set to Overtake U.S. as Biggest Economy Using PPP Measure
China is poised to overtake the U.S. as the world’s biggest economy, while India has vaulted into third place, ahead of Japan, using calculations that take exchange rates into account.
Bloomberg | Growth Freezes Up as U.S. Business Investment Slumps
The harsh winter sent a chill through the U.S. economy in the first quarter as slumps in business investment and home construction stalled growth.
Bloomberg | Chicago-Area Manufacturing Grows at Fastest Pace Since October
Business activity in the Chicago area expanded in April at the fastest pace in six months, a sign manufacturing will keep supporting the world’s largest economy.
WSJ | Stress Tests Forecast $190 Billion in Losses at Fannie Mae, Freddie Mac in Severe Downturn
Fannie Mae and Freddie Mac could require another $190 billion in government support under a worst-case economic scenario, according to stress test results made public Wednesday by the firms' federal regulator.

Econ Comments & Analysis                                                                                            
WSJ | The Real Inequality Problem
Among the too numerous frustrations of the political process is that a lot of smart and talented people spend their time and energy fulminating about things that don't really matter. That diverts attention from our nation's real problems. There are few better examples than today's debate about economic inequality.
USA Today | As prices rise, housing recovery wobbles
A housing recovery that was expected to accelerate this year is instead sputtering. And no, you can't just blame the weather.
National Journal | America Needs Mortgage Finance Reform That Ends Decades of Discrimination
Mortgage finance is a $10 trillion market, and housing comprises one-fifth of the United States economy. Reforming the U.S. mortgage-finance system is the next—and perhaps final—step in an ongoing effort to create a safer, sustainable housing market. The Senate Banking Committee leadership has unveiled a reform plan and scheduled the measure for a committee vote as early as today.

Blogs                                                                                                                             
WSJ | China’s Economy Surpassing U.S.? Well, Yes and No
There are a number of reports around Wednesday that China’s economy, by one measure at least, is likely to surpass the U.S. in size sometime this year.
Market Watch | Housing cuts quarterly economic growth again in first back-to-back drop since 2009
Housing cut economic growth in the first quarter, following a drop at the end of last year, for the sector’s first back-to-back subtraction since the first half of 2009, according to government data released Wednesday.
WSJ | Share of Global Economic Output by Developed Economies Falling
The share of world economic output produced by developed economies is falling, but the incomes of people living in them continue to be well above the levels enjoyed by their counterparts in more rapidly-growing large developing economies, according to new figures produced by a grouping of statistics agencies around the world.
CATO | New Frontiers in Regulatory Overreach
In most cases, excessive regulation doesn’t surprise me all that much.  It usually focuses on familiar industries, such as automobiles.  So, for example, when the National Highway Traffic Safety Administration came up with a rule mandating that all cars and light trucks sold in the United States have rearview cameras, it wasn’t a great shock.
Heritage Foundation | New GDP Report Means America Still Stuck in Slow Growth Rut
The Bureau of Economic Analysis released its first report for GDP growth in the first quarter of 2014 today. It showed the economy grew at an anemic 0.1 percent from January to March. The more meaningful measure of growth, private-sector GDP, rose by a still meager 0.2 percent.

Health Care

News                                                                                                                             
National Journal | Is Another Obamacare Exemption on the Horizon?
The Affordable Care Act doesn't always easily translate to foreign markets, so the House voted 268-150 Tuesday to exempt health plans provided to expatriates who live abroad for more than six months from key requirements of the law.

Blogs                                                                                                                             
WSJ | Health Care, Heating Spending Save First-Quarter GDP From Contraction
“If health-care spending had been unchanged, the headline GDP growth number would have been -1.0%,” said Ian Shepherdson, chief economist at Pantheon Macroeconomics.
Heritage Foundation | Will Taxpayers Recoup the Estimated $305 Million Spent on Oregon’s Failed Obamacare Exchange?
Oregon’s exchange has experienced extreme technical difficulties, including never successfully enrolling one person from start to finish online during the 2014 enrollment period. The exchange board recommends switching to the federal exchange because the costs of fixing Cover Oregon would be too great.

Monetary

News                                                                                                                             
WSJ | Fed Board Holds Closed Meeting on Monetary Policy
The meeting coincided with a regular gathering of the larger Federal Open Market Committee, which comprises the board members and five regional bank residents and which makes monthly decisions on interest rates. The committee is expected to vote to cut its monthly bond purchases by another $10 billion to $45 billion and hold short-term interest rates steady near zero.

Econ Comments & Analysis                                                                                            
Real Clear Market | It Would Be a Shock If the Fed Were To Change Its Policy
It would be shocking if the Fed were to change monetary policy in any notable way at the FOMC meeting that concludes today. One reason is that the recent data have been consistent with the Fed's outlook for moderate growth with low inflation, and thus won't prompt a shift in either the ongoing taper of the Fed's asset purchases or its forward guidance for the federal funds rate. Another reason, however, is simply that Fed Chair Yellen does not have a press conference after this meeting.

Taxes

Econ Comments & Analysis                                                                                            
Fortune | Rep. Dave Camp's upstream battle for bipartisan tax reform
Everyone talks about wanting bipartisan reform of our hideous tax code. But look at the frustrations that have befallen Rep. Dave Camp (R-Mich.), who has thrown his heart and soul into trying to get it done. Camp, chairman of the House Ways and Means Committee, has spent four years pushing for tax reform in various forums.
CBO | Tax Technical Corrections Act of 2014
The Tax Technical Corrections Act of 2014 would make various clerical corrections, clarifications, and conforming and other technical changes to the Internal Revenue Code.

Employment

News                                                                                                                             
Bloomberg | ADP Says Companies in U.S. Add Most Workers in Five Months
Companies added more workers in April than at any time in the previous five months, signaling further progress in the labor market, a private payrolls report showed.
Politico | Senate GOP blocks wage hike
Senate Republicans rejected opening debate on a Democratic bill to gradually hike the minimum wage to $10.10 an hour on Wednesday, arguing the legislation would cost the nation jobs while it undergoes a tepid economic recovery.

Econ Comments & Analysis                                                                                            
Mercatus | The Best Way to Fight Poverty
Much of Washington’s ongoing economic policy debate focuses on reducing poverty, with many arguing to raise the minimum wage and expand government programs. But this focus ignores two simple truths.
AEI | Dangerous to ignore high unemployment rates
Sir, One has to be surprised at Niall Ferguson’s sanguine view of the tectonic changes taking place in European politics. Since, despite the recent dramatic change in the European political landscape, he only adds to the complacency in European policy circles by confidently asserting that despite the economic shocks it has experienced the European political centre will hold.

Budget

News                                                                                                                             
CNN Money | Five years later, TARP price tag hits $40 billion
Little more than five years later, the rescue of Wall Street and Main Street during the financial crisis has cost taxpayers about $40 billion, according to a watchdog agency report released Wednesday.
FOX Business | U.S. Government Says It Lost $11.2 Billion On GM Bailout
The U.S. government lost $11.2 billion on its bailout of General Motors Co, more than the $10.3 billion the Treasury Department estimated when it sold its remaining GM shares in December, according to a government report released on Wednesday.
CNN Money | This city's residents have the least debt
The average debt load for a person living in Detroit is $23,604. That's the lowest of any major city and is down 7.1% from four years ago, according to Experian, which looked at credit card, auto, personal and student loan debt in the 20 largest U.S. metropolitan areas.

Econ Comments & Analysis                                                                                            
Bloomberg | Treasury Trims Some Debt Auctions as U.S. Deficit Shrinks
The U.S. Treasury Department said it will trim the size of two- and three-year note auctions starting this quarter as a shrinking budget deficit gives the government scope to reduce borrowing.

Tuesday, April 29, 2014

General Economics

News                                                                                                                             
FOX Business | When Investing, Most of Us Set Ourselves Up for Losses, It's Time to Stop
While the Federal Reserve has indicated it will not be raising short-term interest rates any time soon, the Fed does not control long-term rates. “By reaching for yield out the maturity curve, investors are putting themselves at greater risk for price declines if interest rates move higher,” warns Davidson. “The catalyst,” he says, “will be a return to ‘normal.’”  
CNN Money | Home prices cool in February
Home prices cooled off in February, according to the S&P/Case-Shiller home price index. Prices were relatively unchanged compared to January. Compared to a year ago, prices rose 12.9%. That's down from an annual gain of 13.2% in January.
Bloomberg | Euro-Area April Economic Confidence Unexpectedly Declines
Euro-area economic confidence unexpectedly fell in April, increasing pressure on the European Central Bank as it considers unprecedented steps to avert the risk of deflation.
WSJ | GAO: U.S. Foreclosure Review Could Have Generated Higher Payments
A comprehensive review of major banks' foreclosure files could have delivered an additional $1.5 billion in cash to consumers if it wasn't halted last year, a federal watchdog has found.

Econ Comments & Analysis                                                                                            
Washington Times | Johnson-Crapo is Obamacare for homebuilders
Nationalizing health care, which represents one-sixth of the economy, has been nothing short of a disaster. Nearly everyone recognizes that, but Congress hasn’t noticed. The Senate will vote Tuesday to establish a permanent federal presence in housing, which represents another one-sixth of the economy. Government manipulation of the housing sector was one of the primary causes of the Great Recession, and an Obamacare-style takeover will make things worse.
Real Clear Markets | With the Keystone Delay, U.S. Is the Only Loser
President Obama chose Good Friday to announce another delay in the Keystone XL pipeline, which would bring crude oil from Canada to our refineries near the Gulf. If the pipeline is not approved, Alberta's oil will go to Asia-and the United States will be the big loser.
Politico | America’s Housing Market Is Broken
They say that the best time to fix a leaky roof is when the sun is shining. So now that we are out of the financial storm, this is the time to fix our broken housing finance system. If we don’t, we will be no better prepared for the damage that will rain down when the next tempest comes.
Heritage Foundation | How Social Security Works in 2014
Social Security touches the life of almost every worker in America, yet few know how the program works. In practice, Social Security uses complex benefit formulas and detailed rules that make it difficult for people to understand the program’s scope, its financing, how benefits are determined, and a number of other issues.

Health Care

News                                                                                                                             
National Journal | How Many People in Each State Are Missing Out on Medicaid Coverage?
Under the Affordable Care Act, states could qualify for expanded Medicaid funds from the federal government as of Jan. 1, 2014. The ACA provides that if a state opts to expand its Medicaid program, the federal government will cover all of the state's costs to cover newly eligible people for the first three years, and at least 90 percent of the costs after that. But in conservative states where opposition to the ACA is running high, many state governments have refused to accept the expansion funds, arguing that Medicaid is a fiscally untenable system.

Econ Comments & Analysis                                                                                            
NBER | How Do Providers Respond to Public Health Insurance Expansions? Evidence from Adult Medicaid Dental Benefits
A large and growing number of adults are covered by public insurance, and the Affordable Care Act is predicted to dramatically increase public coverage over the next several years. This study evaluates how such large increases in public coverage affect provider behavior and patient wait times by analyzing a common type of primary care: dental services.
Heritage Foundation | Four Years of Obamacare: Early Warnings Come True
Four years after Congress passed the misnamed Patient Protection and Affordable Care Act, known as Obamacare, speculation on its effects is largely over. High-profile presidential promises notwithstanding, millions of Americans must now pay higher insurance premium costs and deductibles and deal with the cancellation or disruption of their existing coverage.

Monetary

Econ Comments & Analysis                                                                                            
Forbes | Is James Rickards Right About A Coming Monetary Apocalypse?
James Rickards, bestselling author of Currency Wars, has a new New York Times bestseller out, about the possible imminent collapse of the dollar: The Death of Money: The Coming Collapse of the International Monetary System (Portfolio/Penguin). More interestingly, he writes about what could come next: a golden age.
Bloomberg | Yellen’s Dots Dash Effort for Greater Fed Clarity on Rate Rises
Janet Yellen’s effort to provide clarity on the outlook for the Federal Reserve’s main interest rate by publishing policy makers’ forecasts is instead creating confusion.

Blogs                                                                                                                             
WSJ | ECB Finds Inflation Expectations Better Anchored than in U.S.
European Central Bank officials have repeatedly expressed confidence that inflation expectations remain firmly anchored even though annual euro-zone inflation, at 0.5%, is far below the bank’s target of just under 2%.
Weekly Standard | Is the Federal Reserve Killing Growth?
Everybody seems to agree that the U.S. Federal Reserve's quantitative-easing program, which involves buying bonds to lower interest rates, plays a role in spurring economic growth. Folks differ on whether the contribution to growth outweighs the risk of inflation. 

Taxes

News                                                                                                                             
CNN Money | The biggest tax breaks in 2014
More than $1 trillion of the estimated $1.4 trillion in so-called tax expenditures this year will benefit individuals, according to a new analysis from the Tax Policy Center.

Econ Comments & Analysis                                                                                            
Mercatus | Business As Usual
The Senate will soon vote on the infamous $85 billion “tax extenders” bill (the EXPIRE Act), the 15th such renewal of a host of expiring “temporary” tax provisions. Tax economists generally agree that temporary tax policies are ineffective for economic growth, so why will these tax breaks likely be renewed yet again?

Employment

Econ Comments & Analysis                                                                                            
CNN Money | The low wage jobs explosion
The labor market has been recovering since the Great Recession ended, but many of the jobs created have been in low-wage industries, according to a new report by the National Employment Law Project, a left-leaning group.

Budget

Econ Comments & Analysis                                                                                            
Market Watch | U.S. to pay off $78 billion in April-June quarter
The U.S. Treasury expects to pay off $78 billion of debt in the third fiscal quarter, compared to an earlier projection, given in February, that it would pay off $40 billion, the government said Monday.

Monday, April 28, 2014

General Economics

News                                                                                                                             
CNN Money | Stocks: Get ready for the summer bummer
Over the past 50 years, the S&P 500 has gained just 1.3% on average in the May to October period, compared with an average gain of 7.1% in the other six months of a given year, according to Jeff Hirsch, editor of the Stock Trader's Almanac.
Bloomberg | Pending Sales of U.S. Existing Homes Rise Most Since 2011
Contracts to purchase previously owned U.S. homes climbed in March by the most in almost three years, showing residential real estate was starting to stabilize entering the spring selling season.
CNN Money | Bank of America's big math error
The Federal Reserve required BofA on Monday to ditch its plans to return cash to shareholders after the bank said it incorrectly reported capital ratios in recent stress tests.
Bloomberg | Fannie-Freddie Fate Hangs on Senate Action This Week
A U.S. Senate plan for Fannie Mae and Freddie Mac, the most thorough yet for winding down the two mortgage financiers, faces a first test this week with its authors making last-minute changes to gather more support.
Market Watch | Spring tide seen lifting economy, U.S. hiring
A flood of reports this week, led by job creation in April, is likely to show that U.S. growth is cresting higher. And the Federal Reserve is expected to affirm its own confidence in the health of the recovery by taking another step to scale down its easy-money strategy.

Econ Comments & Analysis                                                                                            
Real Clear Markets | Are We Under-Saving for Retirement?
Can America afford to retire? As millions of baby boomers pass their mid-60s, the specter of widespread under-saving has taken hold. Huge numbers of present and future retirees will exhaust their savings before they die. Mass hardship looms, even as the costs of an aging society already weigh on the young and middle-aged. It's a scary vision. But is it likely? Probably not.
Washington Times | In New York vs. Texas, it’s TKO by Texas
Every successful politician understands that you never start a fight you can’t win, and it’s an adage that Gov. Andrew Cuomo of New York has taken to heart. Rick Perry, the governor of Texas, flew to New York City the other day to round up entrepreneurs to take a few of them back home to the business-friendly Lone Star State. Before he left, Mr. Perry dared Mr. Cuomo to stand up for his state’s economic policies in a one-on-one debate.
Real Clear Markets | Government Shouldn't Block Our Chance to Own, and Grow Rich
Asset limits were created to reduce welfare fraud. The worry was that people who had the means to support themselves from assets (mainly bank savings) would collect government benefits instead when their incomes were low enough to qualify. It is unclear if this ever was a large scale problem, but it sends exactly the wrong message to people on the edge between poverty and self-sufficiency.
WSJ | Demand-Side Policy Gave Us the Big Economic Fizzle
Nearly five years since the recession ended in June 2009, economic policy discussions continue to focus on dubious short-term countercyclical measures to "stimulate demand." The Economic Report of the President for 2014 wastes an entire chapter rehashing the jobs supposedly "saved or created" by the 2009 fiscal stimulus and Federal Reserve easing.
Fortune | In Brooklyn, a grasp at giving 'big data' meaning
Big data will save the world, they say. It will change the way we do business, they say. It could tell us things we didn't know we didn't know, they say. Some of that might be true and some of it may not -- but the point is that the hype around the term "big data" is thick enough to require a chainsaw to cut through. The technology is promising; the semantics are another story.

Blogs                                                                                                                             
WSJ | Five Takeaways From New GDP-by-Industry Report
The Commerce Department on Friday presented a new quarterly breakdown of gross domestic product by 22 industries, a report that is meant to complement the department’s widely followed gauge of economic output by types of expenditure like personal consumption and business investment.
CATO | Supply-Side Economics from the Founder of the Brookings Institution
“Within limits, the system of progressive taxation is defensible and effective.  Beyond a certain point, however, it dulls incentives, and may destroy the principal source of funds for new enterprises involving exceptional risks.”–Harold G. Moulton
WSJ | How Much Will Mortgage Rates Rise In Fannie, Freddie Overhaul?
The Senate Banking Committee beginning Tuesday will take up a bipartisan bill that so far has attracted the most support from lawmakers from both parties. It would replace Fannie and Freddie with a new system by which private firms could issue mortgage-backed securities and purchase federal insurance. Private investors would be required to take initial losses before government guarantees would kick in.

Health Care

News                                                                                                                             
Politico | Behind the scenes, much of HealthCare.gov is still under construction
The Obamacare website may work for people buying insurance, but beneath the surface, HealthCare.gov is still missing massive, critical pieces — and the deadline for finishing them keeps slipping.

Monetary

News                                                                                                                             
CNN Money | Russia hikes rates as credit rating cut
Russia hiked interest rates for a second month running Friday in an effort to limit the economic damage of rising tensions over Ukraine.
CNBC | Wall Street looking for more hawkish Fed policy
The April CNBC Fed Survey shows respondents looking for a 1 percent Fed Funds rate on average to end 2015, up from 0.83 percent in March. The median is up a full quarter point. And half of the respondents now believe the Fed will reverse quantitative easing in 2015 and begin to reduce the size of its balance sheet. That's up from 39 percent in the March survey.

Econ Comments & Analysis                                                                                            
Forbes | Dreams of a Central Planner
The Federal Reserve has arrived at last.  Exhibit A: The tremendous number of people interested in who would be confirmed as the new Fed Chairman last January.
Market Watch | Why Draghi believes the FOMC way is the best way
Mario Draghi, the European Central Bank president, believes “less is more.” He’s a master of artfully constructive opacity, rarely saying too much when too little would suit him better.

Blogs                                                                                                                             
WSJ | Inflation Expectations Hold Steady—For Now
According to Friday’s consumer sentiment survey put out by Thomson-Reuters and the University of Michigan, consumers think inflation will be 3.2% a year from now, little changed from expectation readings so far this year.

Taxes

Econ Comments & Analysis                                                                                            
WSJ | Germany Debates Tax Cuts Amid Rapid Rise in Revenue
While most governments across Europe are looking for ways to cut their budget deficits, Germany faces a different dilemma: mounting tax revenue and what to do about it.
Mercatus | Capital Punishment: Why a Global Tax on Wealth Won't End Inequality
Every now and then, the field of economics produces an important book; this is one of them. Thomas Piketty’s tome will put capitalist wealth back at the center of public debate, resurrect interest in the subject of wealth distribution, and revolutionize how people view the history of income inequality. On top of that, although the book’s prose (translated from the original French) might not qualify as scintillating, any educated person will be able to understand it -- which sets the book apart from the vast majority of works by high-level economic theorists.
NBER | The “Amazon Tax”: Empirical Evidence from Amazon and Main Street Retailers
Several states have recently implemented laws requiring the collection of sales tax on online purchases. In practice, however, only Amazon.com has been affected. We find that households living in these states reduce Amazon expenditures by 9.5%, implying an elasticity of –1.3.

Employment

News                                                                                                                             
CNN Money | Minimum wage: Congress stalls, states act
Odds remain low that Congress will raise the $7.25 federal minimum wage anytime soon. But the issue will be revisited in coming days as the Senate takes up a bill to increase it to $10.10 an hour. And President Obama and congressional Democrats plan to push the issue on the campaign trail ahead of the November mid-term elections.

Econ Comments & Analysis                                                                                            
Fortune | How Corporate America can create better jobs
It's possible if you look at companies such as Southwest Airlines and Costco that provide great returns to shareholders and great jobs for employees. 

Blogs                                                                                                                             
WSJ | More Stay-At-Home Dads Finding Jobs
The number of married couples where a mother is employed but the father isn’t slipped to just over 1.45 million in 2013, the Labor Department said Friday, down from about 1.5 million the prior year and a peak of nearly 1.79 million in 2009.
WSJ | Fact Check: Does Private Equity Kill Jobs?
In 2013, private equity firms owned or otherwise backed more than 17,000 U.S. companies employing about 7.5 million people. Yet despite its reach—and the drubbing it received when former Bain Capital executive Mitt Romney ran for president in 2012—little research has been conducted to understand private equity’s effects on workers.

Budget

Econ Comments & Analysis                                                                                            
WSJ | Defining Delinquency Down
ObamaCare may get most of the press, but don't forget the growing mess that is the Obama Administration's student-loan program. We reported last week on the rising costs of the President's income-based repayment plans, but it seems we weren't alarmist enough.

Friday, April 25, 2014

General Economics

News                                                                                                                             
National Journal | How Moving to Another State Could Drastically Change Your Income
The value of a person's salary often depends on which state they're living in. For instance, a $40,000 income in Iowa—where the cost of living is lower—is worth more than a $40,000 income in Hawaii.
FOX Business | Consumer Sentiment Rises in April
U.S. consumer sentiment rose in April to a nine-month high as views on current and near-term conditions surged, a survey released on Friday showed.

Econ Comments & Analysis                                                                                            
Washington Times | A common-sense approach to coal
In June, the Environmental Protection Agency (EPA) will propose its long-awaited greenhouse-gas standard for the country’s fleet of existing power plants. Depending on how overzealous it is, the rule could be enormously costly to American consumers and profoundly devastating to the U.S. economy.
WSJ | The Moment Is Right for Housing Reform
In his State of the Union address President Obama called for Congress to send him legislation that would provide a solid foundation for housing finance in the future. Such legislation would protect homeowners, communities and taxpayers from another housing crisis. It would also enhance access to home loans for creditworthy borrowers and ensure the availability of consumer-friendly mortgages like the 30-year fixed-rate mortgage.
Investors | Spawn Of Fannie And Freddie
A bipartisan bill to "reform" Fannie Mae and Freddie Mac creates a multibillion-dollar affordable-housing slush fund for Acorn clones who exist to shake down lenders for risky loans.
The American | Have the Limits to Economic Growth Really Been Reached?
Robert Gordon has painted a dark picture of the world’s long-run economic growth prospects. But if the past is any guide, he will likely join the band of earlier distinguished economists who proved to be far too pessimistic about the human capacity to innovate.
CATO | State-Based Visas: A Federalist Approach to Reforming U.S. Immigration Policy
Michigan Governor Rick Snyder and Senator Rand Paul (R-KY) recently proposed a regional visa program that would allow immigrants to live and work exclusively in Detroit or other cities in the United States.

Blogs                                                                                                                             
WSJ | A Fresh Look at the Building Blocks of Economic Growth
The Commerce Department on Friday will unveil a new quarterly report to provide a new way of gauging the composition and growth of the U.S. economy.
Library of Economics | There's only one sensible way to measure economic inequality
Consumption is the bedrock upon which essentially all of economics is built. We assume that all economic activity is aimed at creating consumption (defined broadly to include the value of leisure time, and non-market factors such as clean air.) Of course one could raise objections to this view, but as we'll see if you don't at least start with consumption, you are likely to reach absurd conclusions.

Health Care

News                                                                                                                             
National Journal | The Number of Measles Cases This Year Is Already Troubling—and It's Only April
In the decade after measles was largely eradicated in the United States in 2000, the number of reported cases of the highly contagious disease hovered around 60 each year.
WSJ | Oregon May Give Up on Its Troubled Health-Insurance Exchange Site
The staff of Oregon's troubled health-insurance exchange on Thursday recommended the state switch to the federal government's system for next year's open enrollment.

Monetary

News                                                                                                                             
Bloomberg | Yellen Concerned Fed Model Fails to Predict Price Moves
Federal Reserve Chair Janet Yellen is concerned that the standard models central banks use to forecast inflation may be broken.
Bloomberg | Europe Banks Face Toughest Simulated Slump in Stress Test
European Union officials are preparing to pit the bloc’s banks against the toughest simulated recession that they have ever faced in a stress test, three people briefed on the matter said.

Econ Comments & Analysis                                                                                            
Real Clear Markets | Housing's State Rebukes Fatuous Monetary Assumptions
In the middle of last week, the Census Bureau estimated that permits to build new single-family homes declined on a year-over-year basis for the second consecutive month. That's the first time we have seen anything like that since the middle of 2011, just before this latest "surge" in housing began.
Fortune | The one reason why bond prices won't collapse
Throughout the economic recovery, there have been a number of economists and policy types worried about a "bond bubble" -- the idea that bonds are overpriced and could take a sudden tumble, giving financial markets and the economy the same sort of hits we saw from the collapse of the housing and stock bubbles.

Blogs                                                                                                                             
WSJ | China’s Central Bank Looks for Better Monetary-Measuring Tools
Three years after China’s central bank unveiled a new measure to calculate the amount of credit in the economy, it may be going back to the drawing board.
WSJ | Japan’s Tepid Victory Over Deflation
The good news: Economists increasingly are convinced that Japan has finally slain its deflation dragon. The bad news: The victory they envision doesn’t look like much to celebrate, with a future of slow growth and painful policy choices.

Taxes

News                                                                                                                             
CNN Money | Married with kids vs. singles: Who pays higher taxes?
There are many reasons it pays to have a family. Most of them are not financial. Except, that is, when it comes to federal income taxes.

Blogs                                                                                                                             
FOX Business | Your Tax Bracket vs Effective Tax Rate
News about presidential nominee Mitt Romney enjoying an effective tax rate of 13.9% and billionaire investor Warren Buffett paying a lower tax rate than his secretary, often leads to outcries of a broken tax system.  But did you know that your effective tax rate may be even lower?

Employment

Econ Comments & Analysis                                                                                            
Real Clear Markets | If We Love U.S. Jobs, We Must Love Tax Competition
It's not every day that a world leader asks you for something, let alone the Prime Minister of Great Britain. So in 2009, when Gordon Brown asked me what it would take to get Eli Lilly and Company to expand our research and manufacturing operations in the U.K., it left an impression: the British government valued the biopharmaceutical industry and was willing to compete for the jobs and research funding we bring.

Budget

Econ Comments & Analysis                                                                                            
Fortune | Fighting debt: How the U.S. is doing it better
GDP growth has been greater than average interest rates -- a big reason why America's economy has outperformed many of its industrialized neighbors.

Thursday, April 24, 2014

General Economics

News                                                                                                                             
Bloomberg | Consumer Comfort in U.S. Climbs to Highest Level in Eight Months
Consumer confidence rose last week to its highest level since August as Americans were more upbeat about being able to provide for their families than at any time in six years.
CNN Money | Obama fails to secure breakthrough in Japan trade talks
The unwieldy trade pact is a major priority for the Obama administration, but progress has stalled after 20 rounds of negotiations spread over a period of years have failed to produce a consensus.
Bloomberg | Orders for Durable Goods Poured Into U.S. Factories in March
Orders for durable goods poured into American factories in March, setting up manufacturing as one of the central drivers of a rebound in economic growth during the second quarter.
Market Watch | 30-year-mortgage rate rises to 4.33%
The average rate for a 30-year fixed-rate mortgage rose to 4.33% in the week that ended April 24 from 4.27% in the prior week, according to a Thursday report from federally controlled mortgage-buyer Freddie Mac

Econ Comments & Analysis                                                                                            
Washington Times | Protectionists blocking trade with Asia
The White House had hoped to use the president’s visit to Tokyo this week to announce a breakthrough in trade talks, as Mr. Obama embarks on a four-nation tour of Asia. Now it appears that won’t happen. “A stalemate continues,” said Japanese economics minister Akira Amari, according to Reuters.
WSJ | Telling Students to Earn Less
The federal student loan program is becoming so costly to taxpayers that even President Obama is pretending to fix it. Readers will recall Mr. Obama as the man who has spent much of his Presidency expanding this program, creating new ways for borrowers to avoid repayment, and then campaigning about these dubious achievements on campuses nationwide.
Investors | The Left's Advice Would Bring A Second Great Depression
One oddity of the current economic debate is that the more Barack Obama's incompetent income-redistribution policies have failed, the more the left calls for more government-intervention policies to correct for the deficiencies of the earlier rounds.
Mercatus | An Analysis of Global HFT Regulation: Motivations, Market Failures, and Alternative Outcomes
Recent market events like the “flash crash” of 2010, algorithmic failures at Knight Capital, and the release of Michael Lewis’s book Flash Boys (2014)—with his claims that markets are “rigged”—have heightened scrutiny of high-frequency trading (HFT) and increased demands for more aggressive regulation. However, HFT has several empirically demonstrated benefits, and the current, largely qualitative arguments against it call for careful scrutiny of proposed regulations.
AEI | A new housing bubble?
Even though the recent financial crisis is barely in the rearview mirror, risk is starting to build once again in both the U.S. mortgage and housing markets.

Blogs                                                                                                                             
WSJ | World Trade Weakens in Early 2014
Each month, the Netherlands Bureau for Economic Policy Analysis–also known as the CPB–aggregates measures of imports and exports for 96 countries around the world, plus sub-Saharan Africa. It provides the most up-to-date measure of trade flows available, which has a close correlation with global economic growth.
Library of Economics | There's only one sensible way to measure economic inequality
Consumption is the bedrock upon which essentially all of economics is built. We assume that all economic activity is aimed at creating consumption (defined broadly to include the value of leisure time, and non-market factors such as clean air.) Of course one could raise objections to this view, but as we'll see if you don't at least start with consumption, you are likely to reach absurd conclusions.

Health Care

Econ Comments & Analysis                                                                                            
WSJ | The ObamaCare Jobless
A new survey demonstrates the Affordable Care Act's negative impact on employment. According to the Journal, "nearly half of small-business owners with at least five employees, or 45% of those polled, said they had had to curb their hiring plans because of the health law, and almost a third—29%—said they had been forced to make staff cuts, according to a U.S. Bancorp survey of 3,173 owners with less than $10 million in annual revenue that will be released Thursday."

Monetary

Econ Comments & Analysis                                                                                            
Bloomberg View | The Economic Monster Called Deflation
Why is deflation so troubling to central bankers? First, with chronic deflation, debts rise in real terms. Their nominal value remains fixed, yet nominal incomes and profits -- the wherewithal to service those debts -- tend to fall. So bankruptcies leap, and lending, the driver of much economic growth, atrophies.

Blogs                                                                                                                             
WSJ | Fed Reverse Repos Again See Demand Surge As Treasury Navigates Tax Time
A shortage of Treasury securities is driving very strong demand for a tool the Federal Reserve is testing in hopes that it may one day give the central bank better control over short-term interest rates.

Taxes

Blogs                                                                                                                             
Heritage Foundation | More Than 2,800 IRS Workers With Conduct Issues Received Performance Awards
As the Internal Revenue Service grapples with budget cuts, a newly reported audit reveals the federal tax collection agency doled out bonuses and other rewards to more than 2,800 workers who had conduct and tax-evasion issues.

Employment

News                                                                                                                             
National Journal | Want to Find a Job Online? Here’s Where to Look.
Of the 3.7 million jobs that open each month, 2.7 million of them are posted online, according to the study. If you have a bachelor's degree, 80 percent of the job openings for your level are posted online. For people with a lower education level, fewer than 50 percent of those job listings are online.
Bloomberg | Jobless Claims Rise More Than Forecast in U.S. Holiday Week
More Americans than forecast filed applications for unemployment benefits last week as the Easter holiday period made it more difficult to adjust the data for seasonal variations.

Econ Comments & Analysis                                                                                            
Management Today | Wealthy, educated and working all hours: the rise of the 'super' working class
Keynes once predicted that the 21st century working week would consist of just 15 hours, as rising wages and living standards would allow people to work fewer hours and enjoy more leisure time.
Washington Times | The federal job-training boondoggle
No problem is so insurmountable that it can’t be solved with a government program. If the program doesn’t work, the government has a remedy for that, too — another government program. This strikes the average American as bunk, but it’s how this White House sees the world.

Budget

Econ Comments & Analysis                                                                                            
Forbes | What The Ryan/Republican Budget Teaches Us
When House Budget Chairman Paul Ryan unveiled his latest budget proposal earlier this month, political commentator/consultant Dick Morris warned Republicans against it, arguing that passing it would cause them to lose control of the House of Representatives to Nancy Pelosi and the Democrats in this November’s elections.

Wednesday, April 23, 2014

General Economics

News                                                                                                                             
Bloomberg | WTI Gains as Cushing Inventories Slip to Four-Year Low
West Texas Intermediate crude gained as supplies dwindled at Cushing, Oklahoma, even as U.S. total inventories reached the highest level in more than 80 years. Brent slipped.
Market Watch | U.S. flash Markit PMI slips to 55.4 in April
The initial or "flash" Markit PMI for the United States fell slightly to 55.4 in April from 55.5 in March.
Bloomberg | Housing Rebound in U.S. Losing Steam as Prices Rise
Sales dropped a surprising 14.5 percent to a 384,000 annualized pace, lower than any forecast of economists surveyed by Bloomberg and the weakest since July, Commerce Department data showed today in Washington. Three of the four regions saw setbacks, with demand in the West slumping to the lowest level in more than two years.

Econ Comments & Analysis                                                                                            
Washington Times | The high cost of liberalism, open spaces and affordable housing
Liberals advocate many wonderful things. In fact, I suspect that most conservatives would prefer to live in the kind of world envisioned by liberals, rather than in the kind of world envisioned by conservatives.
WSJ | At Last, a Better Economic Measure
Starting April 25, the Bureau of Economic Analysis will release a new way to measure the economy each quarter. It's called gross output, and it's the first significant macroeconomic tool to come into regular use since gross domestic product was developed in the 1940s.
Fortune | Is capitalism driving itself out of business?
In his latest book, Jeremy Rifkin argues that the private market's drive for productivity has brought us closer to a world in which the marginal cost to produce just about everything will inch closer and closer to zero.
Real Clear Markets | A Bad Report Card For a Security-Righteous SEC
Last week, the Government Accountability Office issued a report on information security lapses at the Securities and Exchange Commission. The report, an elaboration on problems identified in GAO's December 2013 audit report, warned that these problems created risks to "the confidentiality, integrity, and availability of a key financial system" at the SEC.

Blogs                                                                                                                             
WSJ | Why Credit Is Key for the Housing Recovery
An analysis from economists at Goldman Sachs shows how the degree to which mortgage lending standards ease over the next few years could make for a big difference in home sales volumes.
CATO | Gas Prices Are Pinching Again, and You Can Thank U.S. Trade Policy For Some of the Pain
The summer driving season is still weeks away, but rising U.S. gas prices are already back in the news.  Last week, the average price for regular gasoline at U.S. gas stations hit $3.6918 a gallon – the highest since March 22, 2013 and up 43 cents this year.  Much of this price depends on global supply and demand, but certainly not all of it.  In fact, two archaic, little-known U.S. policies – vigorously defended by the well-connected interest groups who benefit from them – restrict free trade in petroleum products and, as a result, force American consumers to pay considerably more at the pump.

Health Care

News                                                                                                                             
National Journal | Seven in 10 Favor Mandated Contraception Coverage
While the justices of the Supreme Court have not yet decided whether businesses have to provide contraception coverage to employees, the American people have—and they are for it.

Econ Comments & Analysis                                                                                            
NBER | Health Care in a Multipayer System: The Effects of Health Care Service Demand among Adults under 65 on Utilization and Outcomes in Medicare
Doctors and hospitals in the United States serve patients covered by many types of insurance. This overlap in the supply of health care services means that changes in the prices paid or the volume of services demanded by one group of patients may affect other patient groups.