Tuesday, May 13, 2014

General Economics

Market Watch | U.S. March business inventories up 0.4%
Inventories at U.S. businesses rose 0.4% in March, the Commerce Department said Tuesday.
National Journal | Our Fragile Economy Still Needs Time to Gather Its Strength
The best thing about long airline flights is the time they offer for delving into long reports, uninterrupted by phone calls and emails. This includes reports from economic departments of investment houses—economic consulting firms and groups that advise institutional investors—that give a texture to what is going on in the economy that can shape public opinion. One of my favorite lines about politics is from Yale political scientist and statistician Edward Tufte in his book Political Control of the Economy: "When you think economics, think elections; when you think elections, think economics."
Bloomberg | American Shoppers Take Breather After Retail Sales Surge
American consumers took a respite from going to malls and restaurants as retail sales climbed less than forecast in April after the strongest gain in four years.
Bloomberg | Company-Tax Boost May Be Best U.S. Highway Funding Option
Temporarily boosting U.S. taxes on companies’ overseas earnings is the most feasible way to provide the additional funding needed to rebuild aging highways and mass transit systems, Transportation Secretary Anthony Foxx said.
Market Watch | Fannie, Freddie’s regulator won’t cut loan limits
Mortgage-finance giants Fannie Mae and Freddie Mac won’t be directed to lower the limits for home loans that they back, the head of their federal regulator said Tuesday in a move aimed to avoid derailing the housing market’s recovery.

Econ Comments & Analysis                                                                                            
Washington Times | Economic freedom versus big government
Do you think there would be more jobs, less poverty and higher real incomes if government was 60 percent or 18 percent of gross domestic product? Fortunately, a global economic-growth experiment has been underway for more than a half-century. Some countries have opted for the big-government model, others for the small-government model. Based on the data, the small-government crowd wins.
WSJ | The Paradox of Financial Crises
During the terrifying autumn of 2008, when I was serving as president of the Federal Reserve Bank of New York, my team was on a conference call with Treasury Secretary Hank Paulson and Federal Reserve Chairman Ben Bernanke debating whether the administration should ask Congress for stronger weapons to confront the crisis. Meg McConnell, a colleague, pressed the mute button on the speakerphone and pleaded with me to tell them that if they didn't go to Congress now, "there will be shantytowns and soup lines across the country."
Real Clear Markets | Our Recovery May Well Be the Envy of the World
We are nearing the fifth anniversary of the economic recovery from the Great Recession. This already makes it the fourth longest expansion of the postwar period, and it is not over yet. The forecasting community widely expects a strong bounce back in second quarter GDP following the weather-driven stall of the first quarter.
Mercatus | Consumers Are the Best Regulators
My wife makes beer. Very good beer. Years ago, we talked about starting what we called a “picobrewery” – something smaller than a microbrewery, like a hobby with a positive cash flow. We figured that for a few thousand dollars, we could create a small business that would provide part-time employment for several people, generate a unique product, and maybe one day would grow into something more substantial.

WSJ | If Debt Caused the Last Crash, Boosting Risk for Lenders Might Soften the Next
For economists Amir Sufi and Atif Mian, the culprit is clear: too much borrowing, particularly by those least able to pay up when the economy started to crumble in 2007. To avoid another such meltdown, they argue, lenders should have some skin in the game, earning more when home values climb and sharing the pain if they fall.

Health Care

National Journal | Congress Plans Obamacare Exemption to Boost Veteran Employment
The Hire More Heroes Act of 2014 would allow employers to leave veterans out of the 50-count threshold for the employer-mandate requirement, as long as the veterans already have health insurance. Their coverage must either be through TRICARE—the federal veterans' health program—or through the Veterans Affairs Department.
National Journal | The States Where Obamacare Could Still Go Badly
Each state is its own insurance market, and they had wildly different experiences during Obamacare's first open-enrollment window. So although nationwide statistics are important for judging the law's political success, the substantive tests for the law's future mostly lie with the states—and some of them aren't looking so hot.

Econ Comments & Analysis                                                                                            
Politico | Will employer health plans become a casualty of Obamacare?
Welcome to the new conventional wisdom: Employer-sponsored health insurance, which developed by accident in World War II and subsequently became the main pillar of our health system, is in danger of disappearing. A new study by S&P Capital Research, a financial research firm, predicts that the employer-based system will most likely disappear by 2025. Even Ezekiel Emanuel, one of the architects of the president’s health care reforms and the brother of former White House chief of staff Rahm Emanuel, says in his new book that the bill’s health care exchanges will eventually supplant the existing system.
AEI | Another Obamacare failure: Health care spending on the rise
One of the central goals of the Affordable Care Act has always been to reduce medical spending. As President Barack Obama said in 2009: "You talk to every health care economist out there and they will tell you that whatever ideas are—whatever ideas exist in terms of bending the cost curve and starting to reduce costs for families, businesses, and government, those elements are in this bill."


Market Watch | Inflation is evident to everyone but the government
Recently, the complaint du jour among policy makers such as those at the Federal Reserve is that inflation is too low. To hear some of them, we are very close to following in Japan’s footsteps of the past 20 years, or the path of the U.S. itself during the 1930s.
Market Watch | U.S. import prices drop 0.4% in April
The prices paid for imported goods fell a seasonally adjusted 0.4% in April after a revised 0.4% gain in March, the U.S. Labor Department said Tuesday.

Econ Comments & Analysis                                                                                            
Real Clear Markets | Janet Yellen's Meddling Is Robbing Us of a Recovery
The statutory language enabling the Federal Reserve system and the Federal Reserve Board is found in 12 U.S.C. Chapter 3. The language is tedious but not surprising. For example, the phrases "household formation" and the word "household" are not to be found.
Bloomberg | Lockhart Says Fed Weighs Role of Funds Rate Amid Stimulus Exit
Federal Reserve Bank of Atlanta President Dennis Lockhart said the U.S. central bank is weighing the future role of its main interest rate as it unwinds an unprecedented stimulus program amid economic growth.
Fortune | Bond markets are finally taking the Fed at its word
After months trying to convince markets that tapering doesn't spell the end of the Fed's support of the economy, markets are getting the message.


WSJ | Oil Man George Kaiser Proposes Increase in Oklahoma Oil-and-Gas Tax
A higher tax on oil-and-gas production could help the state pay for education and much needed infrastructure improvements, he says in a prepared statement. Raising the production tax "doesn't move the needle in the decision to drill."


CNN Money | Vermont hikes minimum wage to $10.50
The state's lawmakers passed a bill Saturday that raises the minimum wage in phases from $8.73 to $10.50 by 2018.

Econ Comments & Analysis                                                                                            
Fortune | Pfizer admits to potential job losses in AstraZeneca takeover
Pfizer CEO Ian Read defended the company's takeover bid for AstraZeneca before U.K. lawmakers today, saying job cuts in the combined company would be necessary and hinting at a sweetened offer.

WSJ | Cloudy, With a Chance of Unemployment
That’s where meteorologists have something to teach the Census Bureau, the Bureau of Labor Statistics, the Bureau of Economic Analysis and others, Mr. Manski says. People are “totally comfortable with having a probability of rain,” he said. “The weather guy says there’s a 40% to 60% chance of rain…That’s much more informative than if he says it’s going to rain today or it’s not going to rain today.”


Bloomberg | U.S. Posts Smaller Budget Surplus in April Than Forecast
The U.S. posted a smaller budget surplus in April than economists projected, as spending increased at more than twice the pace of tax receipts.

Econ Comments & Analysis                                                                                            
WSJ | The Revenue Rolls In
Though the press corps isn't reporting it, this is turning out to be a boom year for Uncle Sam. Federal tax revenue is hitting new records, even with mediocre economic growth.
Heritage Foundation | Spending Season Is Back: How Congress Is Planning to Dish Out Your Tax Dollars in 2015
After the past two years of budgetary dysfunction, during which Congress relied on temporary agreements to fund the government, the appropriations committees are back in session with the charge to present all 12 spending bills for fiscal year (FY) 2015. These bills will divide the $1.014 trillion designated for discretionary spending in FY 2015 amongst the federal government’s myriad agencies and programs.

CATO | Cut Spending Because Government Hurting Nation
I have posted an updated plan to cut spending by one fifth and balance the federal budget. These cuts are not the only ones needed, but they are a mix of reasonable reforms spread broadly across the government.