Wednesday, May 21, 2014

General Economics

FOX News | 18.8 percent of US mortgage holders owe more than their homes are worth, research finds
Nearly 10 million Americans remain financially trapped by homes worth less than their mortgage debts — an enduring drag on the U.S. economy almost seven years after the housing bust triggered the Great Recession.
CNN Money | The 1% is spending: Luxury stocks soar
The notion that the free spending rich are back in full force has gotten investors giddy. Shares of Nordstrom have popped more than 8% since the company released better-than-expected results last week.
Bloomberg | Japan Trade Deficit Shrinks as Tax Increase Crimps Imports
Japan’s trade deficit shrank in April as imports rose the least in 16 months after the first sales-tax increase in 17 years crimped consumer spending.

Econ Comments & Analysis                                                                                            
Washington Times | The academic recession: Big bucks, little knowledge
College commencement season used to be the time for young men and women to step confidently into the world on their own. A new survey by the employment website AfterCollege finds that 83 percent of this season’s new graduates have no jobs lined up, despite their expensive diplomas in hand.
Forbes | Middle Class Earnings Are Stagnant! (Because Retirees Have No Earnings)
The latest National Review features my full critique of current It-Book Capital in the Twenty-First Century, by Celebrity Economist Thomas Piketty. The review combines the discussion from my two earlier columns of his income concentration estimates with an assessment of his argument that rising inequality is a threat to social stability. I view the book as a landmark work of data collection and presentation, but one marred by its sketchy theorizing about the fate of capitalism.
Fortune | China, Russia reach major natural gas deal
Agreement reached after a decade of negotiations; deal will supply quarter of what China consumes in a year.
NBER | The Common Factor in Idiosyncratic Volatility: Quantitative Asset Pricing Implications
We show that firms’ idiosyncratic volatility obeys a strong factor structure and that shocks to the common factor in idiosyncratic volatility (CIV) are priced.

Market Watch | Fannie Mae cuts sales outlook for new and existing homes
Federally controlled mortgage-finance giant Fannie Mae cuts its outlook for home sales this year, as well as in 2015, after markets for existing and new homes posted a weak first quarter.
WSJ | Housing Makeover Downsizes GDP Growth Outlook
The housing bust and weak recovery have created a medium-run move away from single-family home ownership and toward rental apartments. The shift means home construction will add less oomph to gross domestic product growth. But the trend to smaller dwellings also lessens housing’s spillover impact on consumer spending.

Health Care

Politico | Nevada latest state to scrap its Obamacare exchange
The Silver State, which had seemed to start strong last October before smashing into a wall of technical problems, is the only state with a Republican governor that ran its own health insurance exchange in 2014. Gov. Brian Sandoval had argued that it was important for his state to steer its own exchange, even though he opposed Obamacare.
WSJ | ER Visits Rise Despite Law
Early evidence suggests that emergency rooms have become busier since the Affordable Care Act expanded insurance coverage this year, despite the law's goal of reducing unnecessary care in ERs.

CATO | More Competition Would Lower Health Insurance Premiums
With much of the focus on Obamacare now on how much individual premiums could increase next year, a new analysis suggests there’s one way to keep them in check — more competition. That’s the conclusion of a new report from economists Leemore Dafny, Christopher Ody and Obamacare architect Jonathan Gruber.
Heritage Foundation | 3 Things Obamacare Is Doing to Workplace Health Coverage
The vast majority of Americans have health coverage through their employers. Thus, during the health reform debate and after Obamacare’s passage, President Obama repeatedly asserted that those with employer coverage wouldn’t be affected at all.


Econ Comments & Analysis                                                                                            
Real Clear Markets | Unbridled Regulation Sets Stage For Another 2008
Want more accountability of Wall Street? Start with their regulators. Financial regulators are rewriting the rules of finance with little to no consideration about how their actions will impact the economy. The result is unnecessary and potentially serious costs on consumers, investors, and economic growth.
Fortune | The case to get rid of paper money
Debt hawk Kenneth Rogoff says eliminating dollar bills might lower inflation and boost taxes, as long as it doesn't tank the economy.
Market Watch | Yellen should really say this to college graduates
“Your professors have told you that you can grow the economy by pumping out dollars and stimulating demand. At the Fed, we’ve been trying it for five years now. We’re still trying, actually. We have one of the slowest recoveries in history, and GPD growth last quarter was only one-tenth of 1%. Still, we believe in perseverance — just as all of you should — and we are going to continue to try until it works.
CNN Money | 3 reasons interest rates will stay low for years
In a speech Tuesday, Federal Reserve Bank of New York President William Dudley laid out three key reasons why the Fed may keep its short-term interest rate -- the federal funds rate -- below historic averages for the long haul. That rate is important, because it impacts rates for mortgages and loans.


Econ Comments & Analysis                                                                                            
Real Clear Policy | When States Compete to Attract Businesses
Free-market fans often hold romantic notions about "competitive federalism": the idea that states and localities will cut taxes and trim regulations to attract businesses, reducing the size of government and expanding freedom for all. But as a new Mercatus Center working paper from Christopher J. Coyne and Lotta Moberg shows, the reality of luring companies to a jurisdiction is often much more cynical.


WSJ | Workers Try a New Tactic in Minimum-Wage Fight
Fast-food workers have held rallies asking for hourly pay starting at $15. President Barack Obama is publicly praising companies—from retailer Gap Inc. to Punch Neapolitan Pizza, a tiny Minnesota pizza joint—that committed to paying workers more than the federal minimum wage of $7.25 an hour.

WSJ | Fed’s Dudley: Notable Part of Labor Force Drop Due to Discouraged Workers
Federal Reserve Bank of New York President William Dudley said Wednesday that around “a couple of percentage points” of the nation’s decline in the labor force participation rate is tied to discouraged workers exiting the workforce.
WSJ | Government Jobs: Slow Hiring + More Retirements = Tepid Recovery
A new survey of human resource managers sheds some light on why state and local government employment five years after the recession continues to mostly miss the rebound. The Center for State & Local Government Excellence surveyed 300 managers mostly in charge of hiring for non-education positions, finding two-thirds hired new employees in 2013 and more than half said they hired more people last year than in 2012.
CATO | Is There a STEM Worker “Shortage”?
The Center for Immigration Studies (CIS) released a new report claiming that there is no STEM worker “shortage”* after looking at the small wage gains in STEM occupations since 2000.  CIS has a history of using poor methodology and data in their reports, but assuming that they did everything correctly this time, their results don’t tell us much for two reasons.


WSJ | Debt Rises in Leveraged Buyouts Despite Warnings
Wall Street banks are financing more private-equity takeovers with high levels of debt, despite warnings by regulators to reduce the amount of risky loans they make.

Econ Comments & Analysis                                                                                            
WSJ | Taking New York Back to the Bad Old Days
Who should worry the most about New York Mayor Bill de Blasio's inaugural budget? Liberals and progressives. Mr. de Blasio is the first New York mayor in two decades to hail from the left, which makes him the face of a new progressivism in America. If the public sees that the mayor's new $73.9 billion budget for fiscal 2015, which starts in July, is not only imprudent but improper from an accounting perspective, voters' fears about unbridled liberalism will be ratified.

Library of Economics | Walter Oi on Government Budgeting
In response to my recent pieces on Walter Oi (see here, for example), Walter's widow, Marjorie, sent me an unpublished 26-page, single-spaced reminiscence that Walter wrote circa 1995 about his time as a child in Franklin D. Roosevelt's internment camps. It's fascinating. I will probably have more to post in and might even try to get an article out of it.