Thursday, May 29, 2014

General Economics

CNN Money | GM made $22.6 billion. We lost $10.6 billion
GM has earned a stunning $22.6 billion since the dark days of the financial crisis, when the automaker was bailed out by the U.S. government. Taxpayers didn't fare nearly as well. They'd lost $10.6 billion by the time the U.S. Treasury department closed the books on the $49.5 billion bailout in December.
Bloomberg | Consumer Comfort in U.S. Falls to Lowest Level Since November
Consumer confidence declined last week to the lowest level since November as Americans’ views of their finances and the buying climate weakened.
CNN Money | U.S. economy shrinks, but it's not a big deal
Revised numbers released Thursday show the economy shrank in the first quarter, marking the first downturn since early 2011. Gross domestic product, the broadest measure of economic growth, fell at a 1% annual pace, according to the Bureau of Economic Analysis.
Bloomberg | Pending Sales of U.S. Existing Homes Increased 0.4% in April
Contracts to purchase previously owned homes rose for a second month in April, a sign the residential real estate market is stabilizing after a weak start to the year.
CNN Money | America's growing housing affordability gap
For the typical American household earning the median income, 65.5% of homes were affordable during the first quarter, according to a survey by the National Association of Home Builders (NAHB) and Wells Fargo Bank's Housing Affordability Index.

Econ Comments & Analysis                                                                                            
Barrons | Is the Stock Market Behaving Like It's 2007?
It's May 2014. And according to some interesting analysis by Pension Partners, a New York-based investment advisor, the market conditions are eerily similar to May 2007, five months before the end of the last long-running bull market.
WSJ | Book Review: 'House of Debt' by Atif Mian and Amir Sufi
Success has many parents, it is said, but failure is an orphan. Not so the crash of 2008. Trade imbalances, low interest rates, reckless banks, lax regulation, pliable bond-rating agencies, the government's encouragement of borrowing and home buying—all played a role in the financial crisis and the recession that followed.
Politico | On Energy, ‘All of the Above’ Is Working
It may come as a surprise, but the world leader in combined oil and natural gas production last year was not Saudi Arabia, despite its vast reserves. Nor was it Russia with its natural gas giant Gazprom. Rather, for the third year in a row, these countries were surpassed by the United States.
WSJ | European Markets at Risk from 'Fickle' Capital Inflows, ECB Says
The European Central Bank warned that the main risk for European financial markets is a reversal of potentially "fickle" capital inflows into the euro zone, a factor that has benefited banks and governments in recent months by lowering borrowing costs.
Mercatus | Evaluating Regulatory Reforms: Lessons for Future Reforms
Whether they think that agencies regulate too much or not enough, critics from widely differing perspectives agree that rulemaking is all too often hijacked by special interests. Some critics claim that federal agencies are influenced too much by calls for new regulation from various activist groups. Others argue that powerful industry lobbies often derail necessary regulation and leave people exposed to environmental harms and unsafe products.

WSJ | Contracting GDP Is Rare Outside of Recessions
The U.S. economy contracted at a 1% seasonally adjusted annual pace in the first three months of the year, the Commerce Department said Thursday, marking only the second time since the recession that output declined during a quarter.
WSJ | Gas Prices and Global Consumption
Cheap gas makes people use too much of it — that’s the takeaway from a study in this month’s American Economic Review. In “The Economic Cost of Global Fuel Subsidies,” Lucas Davis, a associate professor at Berkeley’s Haas Business School, uses World Bank data to show that countries with consumer fuel subsides have higher fuel consumption.

Health Care

National Journal | Is an $84,000 Hepatitis Drug Too Expensive?
An $84,000 hepatitis drug called Sovaldi is at the center of a new battle between pharmaceutical companies and insurers—but the fight is about much more than one drug.
WSJ | Study Finds Nearly 30% of World Population Is Overweight or Obese
The obesity epidemic is global: 2.1 billion people, or about 29% of the world's population, were either overweight or obese in 2013, and nearly two out of three of the obese live in developing countries, according to a study released Thursday.

Econ Comments & Analysis                                                                                            
Politico | Steve Scalise to push GOP leaders on Obamacare alternative
Rep. Steve Scalise is gearing up to put new pressure on Speaker John Boehner and other top Republican leaders to repeal Obamacare in favor of a conservative-backed health care package.

Heritage Foundation | Nevada Gives Up on $91 Million Obamacare Exchange
Nevada became the third state-based exchange to make such a decision, joining Massachusetts, which is joining the federal exchange temporarily while it works to fix its state-based exchange, and Oregon, which has ditched its exchange entirely—making a total of 39 states dependent on the federal exchange for, at a minimum, enrollment in 2015.


FOX Business | Fischer Sworn in to Fed Policy Board
Former Bank of Israel Governor Stanley Fischer was sworn in as a member of the Federal Reserve's board on Wednesday, buttressing the U.S. central bank's depleted policymaking ranks as officials map out plans to exit from their extraordinary stimulus.

Econ Comments & Analysis                                                                                            
Real Clear Markets | Janet Yellen's 'Labor Market Slack' Fixation Has Nothing To Do With Inflation
When manufacture of Boeing's 787 Dreamliner began in 2007, one not-so-notable aspect of the efficient plane's creation was that it was taking place around the world, in seven different countries. Even something as prosaic as the pencil is the result of cooperation globally, so it's no surprise that a cutting-edge airplane would require specialized ‘hands' from around the world.

Library of Economics | Inflation targeting: It's even worse than you thought
Back in the 1990s inflation targeting was all the rage. I was a sceptic. I recall asking a senior central banker at the time what he would do if faced with stagflation - high inflation, low growth. Would he raise interest rates and force the economy into recession just to meet the target? He said the situation would never arise.


Washington Times | D.C. Council approves biggest tax cut in 15 years
The D.C. Council on Wednesday gave its blessing to the first significant package of tax cuts in the District since 1999, providing relief to residents of a city whose coffers have swelled in recent years along with its cost of living.

Econ Comments & Analysis                                                                                            
Bloomberg View | Dave Camp's Good Tax Policy Is Good Politics, Too
In this election year, it’s no surprise that House Ways and Means Committee Chairman Dave Camp’s effort to reform the federal tax code has met significant resistance both on Wall Street and in Washington. Although the Michigan Republican remains committed to a fundamental revision of the system, he is now pursuing a different course: making permanent some of the temporary, but pro-growth, elements of the existing code.

WSJ | Japan Retail Sales Show Sales Tax Beginning to Bite
Japan’s higher sales tax began taking a bite out of consumption in April, as retail sales dived 13.7% on-month, the biggest fall under the current data series that began in 2002.
CATO | Corporate Taxes: Less Is More
Why does the Canadian federal government collect 1.9 percent of GDP in revenues with a 15 percent corporate tax rate, while the U.S. federal government only collects about the same (2.0 percent) with a 35 percent corporate tax rate?


Market Watch | Jobless claims near post-recession low
The number of people applying for U.S. unemployment benefits sank last week to the second-lowest level since the recession ended in mid-2009, suggesting continued improvement in a labor market that’s perked up in the early spring.

WSJ | Labor Market Improving Across U.S. Cities — Except in Alabama
The labor market improved over the last year in most of the nation’s largest cities, following the national trend. But 11 metropolitan areas experienced increases in their jobless rates — and almost all of them, it turns out, were in Alabama.
WSJ | For Job Security, Abstract and Manual Skills are Best
Building off of work done by other labor economists, two researchers at the Federal Reserve of Cleveland, Murat Tasci and Jessica Ice, looked at how jobs with different skill sets performed during the Great Recession and weak recovery. The bottom line: jobs with routinized skills were hit hardest during the downturn and have been the slowest to recover.
WSJ | 7 Million People Earn America’s Other Minimum Wage: $23,660
The U.S. has a minimum wage of $7.25 an hour for most types of work. Another, lesser known minimum-wage threshold is $23,660 a year. That’s the minimum an employer can pay workers and avoid requirements to pay them overtime.


Econ Comments & Analysis                                                                                            
USA Today | Bond yields plunge to 2014 lows
Pushed down by fears of a slowing economy, the yield on the bellwether 10-year Treasury note fell to 2.44% Wednesday, its lowest since June 2013.
NBER | Small Victories: Creating Intrinsic Motivation in Savings and Debt Reduction
Saving when faced with the immediate option to spend is an unpleasant but not conceptually difficult task. One popular approach contradicts traditional economic theory by suggesting that people in debt should pay off their debts from smallest size to largest regardless of interest rate, to realize quick motivational gains from eliminating debts.