Economic News

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News
FRIDAY
Where's the stimulus?
A bill to jump start the economy. That was the main idea behind the American Recovery and Reinvestment Act, better known as the "stimulus bill," which became law two years ago today.
Officials Question Debit Card Fee Limits
Top U.S. regulators said Thursday that small banks could be hurt by new limits on debit-card fees, comments that could fuel efforts to delay or change a provision in the Dodd-Frank financial-overhaul law.
China is richer, but most Chinese are still poor
Now that China has surpassed Japan to become the world's second-largest economy, economists predict it's on track to replace the US as the world's biggest by 2025. But what does the higher rank really mean for the average Chinese citizen?
Union Fight Heats Up
Absent Teachers March; Wisconsin Democrats Flee to Halt Vote

THURSDAY
Fed raises growth forecast for 2011
Minutes from the most recent meeting of the Federal Reserve released Wednesday show that policymakers anticipate a bigger bump in economic growth for 2011 than they thought just a few months ago.
Consumer Prices in U.S. Climb More Than Forecast
The cost of living in the U.S. climbed more than forecast in January, led by higher prices for food and fuel that may be starting to filter through to other goods and services.
Who got high speed rail money
The federal government already has more than $10 billion in stimulus and other money set aside for high speed rail projects. To date, it has made commitments to spend $4.5 billion of that.
NRF: Retail Sales to Rise 4% in 2011
The National Retail Federation said it expects U.S. retail sales to rise 4% in 2011, continuing a trend of improving consumer spending last year that intensified over the holidays.
Index of Leading Economic Indicators Climbed 0.1%
The index of U.S. leading indicators rose in January for the seventh straight month, signaling the expansion will extend into this year.

WEDNESDAY
Americans Climbing out of Debt and Saving More
The recession that just rocked the U.S. economy happened in part because Americans were borrowing and spending more than they could afford. Now, three years after the downturn began, families are moving faster than many analysts had expected to put their finances in order by paying down debt and boosting their savings.
Home construction rises in January
New home construction rose in January, but permits for future building declined during the month, the government reported Wednesday.
Industrial Production Falls 0.1%
U.S. industrial output unexpectedly fell in January as a return to normal winter temperatures caused a sharp fall in utility output, while production from mines also fell, a Federal Reserve report showed on Wednesday.
Food spike puts 44 million in poverty
The rise in food prices since last June has shoved 44 million people into dire poverty, the World Bank says in its latest report on the global food crisis.
How the middle class became the underclass
Incomes for 90% of Americans have been stuck in neutral, and it's not just because of the Great Recession. Middle-class incomes have been stagnant for at least a generation, while the wealthiest tier has surged ahead at lighting speed.
Producer prices index hints at inflation pressures
Core reading of wholesale inflation up by most since October 2008
Factory output grows for 5th straight month in Jan
Factories produced more goods for the fifth straight month in January as strong auto sales spurred demand for new cars and trucks. But overall industrial production fell for the first time in 19 months.
Housing starts surge, beating expectations
Builders begin work on more apartments, condos
Borders Files for Ch. 11 Bankruptcy Protection
Borders to close 30 percent of stores, files for Ch. 11 bankruptcy protection
Banks Push Home Buyers to Put Down More Cash
The down payments demanded by banks to buy homes have ballooned since the housing bust, forcing many people to rethink what they can afford and potentially shrinking the pool of eligible buyers.

TUESDAY
Store sales slow in January
Retailers logged slight increases in store sales last month as consumers primarily focused on paying for grocery and gasoline purchases, the government reported Tuesday.
Don't sweat rising mortgage rates
Will rising interest rates slam the door on a fragile housing recovery?
Homebuilder Sentiment Unchanged in February
U.S. home-builder sentiment was unchanged in February, stuck at a low level for the fourth month in a row as the housing market struggles to recover from its collapse, a survey released Tuesday showed.
Stock market in London and Toronto to merge
Stock market merger between London Stock Exchange and TMX Group will create one of the largest stock exchanges in the world.

MONDAY
Japan Economy Shrinks Less-Than-Estimated 1.1%, Surpassed by China in 2010
Japan’s gross domestic product fell less than estimated in the fourth quarter in a pullback that may prove temporary as overseas demand revives production after the nation fell behind China as the world’s second-largest economy.
Housing Crash Is Hitting Cities Once Thought to Be Stable
Few believed the housing market here would ever collapse. Now they wonder if it will ever stop slumping.
Banks slashed small business lending by $43 billion
The numbers back up what small business owners have been saying for two years: Main Street suffered a brutal credit crunch.
Clothing Prices to Rise 10% Starting in Spring
The era of falling clothing prices is ending. Clothing prices have dropped for a decade as tame inflation and cheap overseas labor helped hold down costs.
Egypt Plans Stimulus to Revive `Sudden Stop' Economy
Now with Mubarak gone, the plight of Abdel-Wanis and the 40 percent of his countrymen near the poverty line is prompting Finance Minister Samir Radwan to develop a stimulus plan aimed at creating the jobs needed to avoid further social unrest.
Economic Reports for the Week
Scheduled for this week are retail sales and import prices for January, and business inventories for December (Monday); producer price index, housing starts and industrial production for January (Wednesday); weekly jobless claims, consumer price index and leading economic indicators for January, and the Philadelphia Fed manufacturing index for February (Thursday).

Economist Comments
FRIDAY
Dupes of False Innovation
Is there real innovation in banking and finance, or just endless, cyclical repetition of credit enthusiasms and mistakes?
Athens in Mad Town
A seminal showdown between public unions and taxpayers.
Immortal Fannie, Immortal Freddie
Are Fannie and Freddie ever going away?
Facing Down the Unions
Tackling the public-employee unions may no longer be a political kamikaze mission.

THURSDAY
Profit: The Right Standard for Business
Business ethicists and advocates for corporate social responsibility are playing a dangerous game.
Independently Incompetent
Regulators may drive derivatives markets out of the U.S.
Abolishing Fannie and Freddie Isn't Enough
The news that the Obama administration seeks to "wind down" both Fannie Mae and Freddie Mac has generated positive - albeit cautious - praise from right-of-center thinkers not known for their support of much of the Obama economic agenda. If the Administration is actually serious - which is a fair question - then this is a nice development.
Happy stimulus day
How’s that working out for you?
Nightmare for Elderly May Not Be Unavoidable: Chris Farrell
Republicans and Democrats are starting to battle in earnest over how to cut federal discretionary spending. Eventually the ominous arithmetic of entitlements and tax revenue will require the focus to turn to the Social Security benefit formula (as well as Medicare).
Pruning Farm Subsidies
In times of massive deficits, why are we borrowing millions to subsidize profitable agribusiness? Lots of presidents have asked that question. George H. W. Bush tried to cut farm subsidies. Bill Clinton did, too. George W. Bush wanted them ended as well. All failed.

WEDNESDAY
Productivity and Growth: The Enduring Connection
It is simply untrue that there is a trade-off between efficiency and jobs in a dynamic economy.
Education Waste: We Have Only Ourselves to Blame
There's a curious line in the summary of President Barack Obama's proposed fiscal 2012 Department of Education budget. "Now more than ever," it reads, "we cannot waste taxpayer dollars on programs that do not work." It's curious because no federal education programs appear to work, yet the Obama administration is proposing to increase Education Department spending from $64 billion to $77 billion. It's a bankrupting contradiction, but don't get angry at Obama: We only have ourselves to blame.
State Plans Anger Unions
Proposed Curbs on Bargaining Rights Threaten Membership, Labor Leaders Say
BURR & COBURN: Caution kills
FDA’s go-slow approval approach shortens lives
Stop Public Financing of Campaigns
Every few years, as new contenders ready their campaigns, we have to watch the depressing spectacle. Why should we be forced to pay for it?
Another Dodd-Frank Triumph
Did we mention its new source of systemic risk?
GROVER: Dismantling overbearing financial reforms
Repeal is unlikely, but they can be taken down brick by brick

TUESDAY
Do we want house prices to rise?
If President Barack Obama could ask for one gift from the economy — one statistic that turns unexpectedly rosy, what would it be? If Americans in general could choose one change in their financial situation, what would they choose?
The Future of Consumption and Economic Growth, Part 1
Minyanville contributors Professor Pinch and Conor Sen dissect and discuss a paper by the World Economic Forum.
Geithner Unveils 7-Year Plan for Fannie and Freddie
Pillars of reform include reducing the government's footprint in the housing market, adjusting the role of the banks, and putting more emphasis on renters.

MONDAY
The End of Fannie Mae
Treasury wants the company phased out but punts on how to do it.
Emerging Markets as Partners, Not Rivals
In his State of the Union address last month, President Obama set the stage for a coming policy debate and his re-election bid with a catch phrase. Six times, he called on Americans to “win the future.” And he used the variant “winning the future” three other times. But is this really a good way to frame the economic challenges we face?
Honduras's Experiment With Free-Market Cities
A poor country considers a new way to stimulate private investment.
Gold Won't Repeat 2010's Climb
The precious metal rose slightly on the turmoil in Egypt, but it is unlikely to continue rising at the growth rates it reached—near 30%—last year.
High-Speed Pork
Faster trains will produce almost no new mobility.
Homebuyer, Be Warned
Mortgage rates figure to rise under the administration’s housing proposals, with good reason.
Mr. Lincoln’s Economics Primer
Abraham Lincoln’s greatest love was politics, but his intellectual passion was for what the 19th century called “political economy” — the way economics and politics intersected in society and government.

Blogs
FRIDAY
Testimony on video
If you keep listening, you’ll get to see Elijah Cummings run roughshod over the three witnesses. We do our best but he can’t be stopped. And you’ll get to see Dennis Kucinich wonder who invited me because he and I agree on Wall Street and the government.
MBA: Loans in Foreclosure Tie All-Time Record, fewer Short-term Delinquencies
The MBA reports that 12.85 percent of mortgage loans were either one payment delinquent or in the foreclosure process in Q4 2010 (seasonally adjusted). This is down from 13.52 percent in Q3 2010.
Cap-and-Trade Is Not Dead
For our economy to flourish, we need abundant and affordable energy. A clean energy standard would guarantee us less abundant, more expensive energy—it’s a profoundly bad idea dressed up in pretty, deceptive language.
Do pensions affect state borrowing costs?
The Center for Retirement Research at Boston College has published a new brief that looks at the relationship between pension funding and the cost of government borrowing. Recently Moody’s announced it would look at states’ unfunded pension liabilities along with outstanding debt in its evaluations. (When they did so, Moody’s found Connecticut, Hawaii, Illinois, Kentucky, Massachusetts, Mississippi, New Jersey, and Rhode Island topped the list of state indebtedness).
The Blinders of Behavioral Economics
To put things in the words of the ancient philosophical question: If you know the better, will you do the worse?  
The Pendulum Swings Again on Government Regulation
Yesterday, CBS News released a new poll that shows Americans are worried about excessive regulation. In the poll, 45 percent of respondents said there was too much federal regulation of business. Twenty-seven percent said there was too little.
So much stimulus, so little to show for it
Sure, the recession is technically over. But after such a massive stimulus, shouldn't there be bigger results?
Fitch warns of state downgrades
Fitch Ratings has warned that a new method it uses to assess state and municipal obligations may prompt ratings downgrades because of governments' growing pension obligations.

THURSDAY
Food, Famine, and Globalization
How does climate change change the fact that regions suffering crop failures are especially in need of food imports – and will get them if prices are free to rise and if trade is free?
House Financial Services Committee Hearing on Durbin Amendment
The House Financial Services Committee is holding a hearing tomorrow on the Durbin Amendment price controls on debit card interchange fees.
Randy Barnett on the Mandate
In his congressional testimony, he illustrates the difference between regulating activity and inactivity
Congressional Testimony on the Stimulus
Text of my opening remarks before the Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending of the House Committee on Oversight and Government Reform, February 16, 2011.
Shaking The Nations
The good news is that 117 countries have increased their economic freedom in the past year. The bad news is that none of those countries is called United States of America. 
Government is raising the value of a life
What the Chinese have done is to neglect health care investments (until very recently) and basically maximize gdp growth.  They wanted to have fewer people anyway, so why spend money to keep ailing people around?  We find this horrible when presented in such explicit terms, and yet we admire their achievement of the end of growth maximization.
No Substitute For Saving
Of course, this was easier to do, because other people were also consuming less stuff; living on less than you make when everyone else is leveraged to the hilt makes you feel poor.  But it's the only way to make sure you survive retirement.
Durbin and Digital Payments
Among the reasons why I’ve argued that price controls on payment card interchange fees are not necessary is because of the potential for competition among different payment systems.  So its not just that Visa and MasterCard compete in debit cards (of course, AmEx, Discover, and store-brand cards compete on credit cards and there are a bunch of debit card networks), but they also compete against credit cards, PayPal, cash, checks, ACH, Revolution Money, prepaid cards, and probably others that I’m not even aware of.
China and Japan, moving apart
NOTHING stays the same forever. This week, fresh economic data confirmed what everyone has known since last summer: China surpassed Japan to be the world's second-largest economy sometime in 2010.
The State of State Subsidies
Like countless other individuals and interest groups, state and local government officials have become addicted to federal taxpayer money. This addiction has encouraged irresponsibility and profligacy at all levels of government. It has also prevented citizens from appreciating the true cost of the services they demand from state and local governments.
Homeownership Before the New Deal
The latest canard offered for keeping taxpayers on the hook for mortgage risk is that, without such, homeownership would limited to the wealthy.  Sarah Rosen Wartell of the Center for American Progress stated before the House Subcommittee on Capital Markets, "The high cost, limited availability, and high volatility of pre-New Deal mortgage finance meant that homeownership was effectively limited to the wealthy."  Congressman Al Green repeated the point.  As I've generally found Sarah to be one of the more reasonable CAP employees, and that this is fundamentally an empirical question, I would have expected her to offer some evidence to support such a claim.  Alas, she did not.  So I will.
Happy Anniversary, Stimulus. Look What You’ve Done in Two Years.
Today is the two-year anniversary of the stimulus bill becoming law, and the National Republican Senatorial Committee has a one-minute web ad spotlighting the claims of the senators who voted for it and how their states are doing. It’s quite well done

WEDNESDAY
3.6, 4.4, 4.3, 3.8
Remember those numbers because they are the 2012-2015 growth rates Obama needs the US economy to hit for the following graph to look this pretty:
Rising food prices feed US economy
The US is a net exporter of agricultural products, so it's cashing in on rising food costs.
Administration Playing Both Sides on Fannie Mae
On Friday the Obama Administration released its report on "reforming America's Housing Finance Market."  The report claimed that the Administration would work toward "winding down Fannie Mae and Freddie Mac on a responsible timeline." 
The Failure of Keynesian Politics
What are the alternatives to Keynesian politics?
Eternal Vigilance Needed on Trade Carve-Outs
A bill that would have set a troubling precedent indeed was killed in the Senate last week. I've written previously about the Trade Adjustment Assistance program, and its fate has been tied up with the Generalized System of Preferences, a scheme by which certain developing countries gain duty-free access to the U.S. market for many of their goods. Congress was trying -- and failed -- to pass an extension of the programs together, along with the Andean Trade Preference Act.
New York Stock Exchange and German Rival Merge
So the rumor about the merger between the New York Stock Exchange and Germany's largest stock exchange turned out to be true.

TUESDAY
A Leg Up: World's Largest Cities No Longer Homes of Upward Mobility
Throughout much of history, cities have served as incubators for upward mobility. A great city, wrote René Descartes in the 17th century, was “an inventory of the possible,” a place where people could lift their families out of poverty and create new futures. In his time, Amsterdam was that city, not just for ambitious Dutch peasants and artisans but for people from all over Europe. Today, many of the world’s largest cities, in both the developed and the developing world, are failing to serve this aspirational function.
EWOT Paraphrase of the Weekend
The quote of the weekend, as far as I'm concerned, came from the excellent George Selgin in reference to the following graph:
A better future for housing finance?
The Treasury has come up with some good ideas about reforming housing finance.
5,100 More IRS Agents
The White House plan to close the mythical "tax gap."

MONDAY
What is Economic Activity?
What is economic activity? In standard macroeconomics, economic activity consists of spending. Certainly that is how we measure economic activity, using national income accounts. However, I propose looking at economic activity as patterns of sustainable specialization and trade (PSST).
Where and What Is U.S. Trading Internationally?
The Commerce Department reported today that U.S. trade rebounded strongly in 2010. The following charts detail who we’re trading with, and what we’re trading.
Austrian Economics in the News
The financial crisis of 2008 led to a lot of unfortunate Keynesian and corporatist policymaking, but also to a renewed interest in Austrian economics and particularly to the Austrian theory of the business cycle and the role of the Federal Reserve in creating bubbles and busts.
Unofficial Problem Bank list at 944 Institutions
Here is the unofficial problem bank list for Feb 11, 2011.
The Author of the Administration's Housing Finance Report
As reporters ask me about the report, I in turn ask them where the real report is. I mean, I cannot believe that such a sketchy, half-baked proposal was given an official seal (two of them, one each from HUD and Treasury). My first reaction was that this was like a bad term paper from a public policy grad student.
Debunking the Myth of Oil Dependence
An article in today's Boston Globe might help to debunk one of the more pervasive myths that distorts U.S. foreign policy: the belief that access to oil from the Middle East is a vital national security issue for the United States.
The "Right" Amount of Manufacturing
Free-trade critic Ian Fletcher argues that the United States has too little manufacturing. Even if manufacturing output is at an all-time high, he argues, it's still too low. So clearly he has in mind some amount of manufacturing that is right or, at least, some criterion by which we can judge whether the amount of manufacturing is the right amount.
Schedule for Week of February 13th
The key releases this week will be retail sales on Tuesday, industrial production on Wednesday, and the consumer price index on Thursday. For housing, the NHAB housing market index will be released on Tuesday, and housing starts on Wednesday.
The Obama Administration on Housing Finance
Nobody seems to want to step back and ask fundamental questions about housing policy.
Treasury Mortgage 'Reform' Report Fails To Fix The Biggest Problem (The FHA)
Treasury and HUD on Friday released their report to Congress titled "Reforming America's Housing Finance Market."  
US-China Trade Numbers Reveal Political Risk
Our trade deficit with China rose 20 percent to a record $273 billion last year, according to figures just released by the Commerce Department. For political reasons, this is a depressing, dangerous result.
Good pension policy requires transparency
In 2010, alarm bells started going off around the country about the huge costs and liabilities associated with public employee pensions. Lawmakers in 18 states enacted pension reforms intended to cut costs, with more considering the issue in 2011.

Reports
FRIDAY
The Stimulus Two Years Later
Testimony Before the House Committee on Government Oversight and Reform, Subcommittee on Regulatory Affairs, Stimulus Oversight and Government Spending
Erase Artificial Barriers: Focus On Entrepreneurship
Testimony Before the California Senate Governance and Finance Committee

THURSDAY
Regulatory Analysis: Understanding Regulation's Effects
Testimony Before the Committee on Oversight and Government Reform United States House of Representatives Hearing on “Regulatory Impediments to Job Creation”
The Stimulus: Two Years Later
Statement before the House Committee on Oversight and Government Reform Subcommittee on Regulatory Affairs, Stimulus Oversight and Government spending.

TUESDAY
Trade Agreement Would Promote U.S. Exports and Colombian Civil Society
The purpose of this bulletin will be to examine the Colombia agreement in light of the president's call to boost U.S. exports, and to examine whether violence in Colombia against union members poses a legitimate obstacle to trade liberalization.
Can America Double Its Exports in Five Years?
One year ago, President Obama set a goal for the United States to double its exports over the course of five years. With the recent release of annual trade data for 2010, we have the opportunity to assess how the country is doing in meeting the president’s goal.

MONDAY
Economics Group
Weekly Economic & Financial Commentary