News
Market Watch | June Empire State index plunges to negative figure
Manufacturing activity deteriorated sharply in the New York region in June, raising concern that the slowdown seen in the factory sector that started in May could have marked the start of a contraction rather than a temporary soft patch.
NYT | States Want More in Pension Contributions
First came the pay freezes and unpaid furloughs. Then came the higher contributions for health insurance. Now, in the most definitive sign yet that the era of generous compensation for public-sector employees is ending, workers in more than half the states face the prospect of paying more of their salary toward their pensions.
Market Watch | May housing starts rise 3.5% after rough April
Ground-breaking on new U.S. housing units recovered a bit in May after a sharp drop in April, but remained well below levels that would provide any boost to the economy.
Market Watch | 30-year fixed-rate mortgage inches to 4.5%
Mortgage rates changed little this week, with the 30-year fixed-rate mortgage inching up to 4.5% from last week’s 4.49% average rate, according to Freddie Mac’s weekly survey of conforming mortgage rates, released Thursday.
Bloomberg | Consumer Expectations in U.S. Drop
e Bloomberg gauge of economic expectations dropped to minus 31 this month, the lowest level since March 2009, from minus 16 in May. The Consumer Comfort Index, issued weekly, improved to minus 44 in the period to June 12, the highest level since mid April, from minus 45.9 as fuel prices kept falling.
Fox News | Recovery Summer? Mission Accomplished
May saw the fastest increase in U.S. consumer prices since 2006. That’s cause for real concern because rising prices can either be a symptom of economic growth or da drag on a weak economy, and this sure ain't the former.
Econ Comments
Barron's | Derivatives Disaster Deferred -- For Now
Do benefits exceed costs of Dodd-Frank? Delay provides more time to determine.
Politico | The case for sensible patent reform
The latest unemployment report should serve as a wake-up call to both political parties. Economically and politically speaking, the nation needs sustainable job growth — and fast.
RCM | Mark Zandi: Always Quoted, Often Wrong, Never In Doubt
It's accepted wisdom in certain quarters that we should never believe what we read. With journalists pressed to report on all manner of subjects about which they often lack knowledge, it's inevitable that their news reporting will be slanted in ways that misinform the reader.
Politico | The answer isn't taxes but growth
Contrary to all expectations, congressional negotiators working with the administration and Vice President Joe Biden are reportedly making progress in finding some common ground on a package of measure to cut the deficit as part of a plan to potentially raise the debt ceiling.
Blogs
WSJ: Real Time Economics | Business Lobby Tells Fed Big-Bank Rules Can Hurt Economy
The largest business lobby in the U.S. complained to the Federal Reserve that rules requiring big banks to hold more money to protect against potential losses could hurt the wider economy, though Fed Chairman Ben Bernanke has indicated he doesn’t agree.
Cato Institute | Bailouts Beget More Bailouts
The objection to the auto bailout was not that the federal government wouldn't be able to marshal adequate resources to help GM and Chrysler. The most serious concerns were about the consequences of that intervention — the undermining of the rule of law, the property confiscations, the politically driven decisions and the distortion of market signals.
WSJ: Real Time Economics | Shiller Sees ‘Substantial’ Probability of Recession
Noted economist Robert Shiller said Wednesday there was a “substantial” probability the U.S. could lurch again into recession.
Noting weak global data — including a stubbornly depressed U.S. housing market — were flashing warning signs, the Yale University economist said the economy right now faced a “tipping point.”
Forbes | Addressing The Fallacious Views Of Contemptuous Keynesians
It doesn’t seem to occur to Progressives that the reason that Americans “…don’t buy Keynesian economics” might just be because Keynesian economics doesn’t work.
Calculated Risk | May Update: 2012 Social Security Cost-Of-Living Adjustment
The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) increased 4.1 percent over the last 12 months to an index level of 222.954 (1982-84=100). For the month, the index rose 0.5 percent ..."
Thursday, June 16, 2011
Health Care
News
National Journal | MedPac Report Has Something to Irritate Everyone
The independent board assigned to advise Congress on the Medicare program released proposed changes to the politically popular entitlement program that will likely attract the ire of hospital, doctor, and specialty groups alike.
National Journal | Docs Demand Permanent Medicare Pay Fix In Debt Talks
Physician groups are circulating a strongly worded letter demanding Congress address the perennial problem of how much doctors are paid under Medicare in ongoing negotiations over raising the government’s debt ceiling.
WSJ | Negotiators Consider Medicaid Cutbacks
The Medicaid program for the poor is facing significant cuts in an emerging bipartisan budget deal as Republicans seek to shrink entitlements and Democrats protect other priorities.
Econ Comments
WSJ | The ObamaCare Bad News Continues
Projected costs escalate and tens of millions will lose their current coverage.
Minyanville | Why Cost Containment in Health Care Is Impossible
The government can't get cost control without goring the oxes of patients, physicians, pharmaceutical companies, insurers, device manufacturers and hospitals.
Blogs
Cato @ Liberty | ObamaCare’s Main Coverage Vehicle Makes Kids Wait for Care
Half of ObamaCare‘s projected coverage gains (16 million out of 32 million U.S. residents) comes from expanding the Medicaid program.
Heritage Foundation | Ezra Klein’s F on Medicare Part D
At the time of its enactment in 2003, the Medicare drug benefit—known as Medicare Part D—had many critics. Some said the program, which is built on consumer choice and vigorous competition among private plan options, wouldn’t work because private plans would decline to participate.
Atlantic: Megan Mcardle | Most Illinois Specialists Won't Take Medicaid Patients
Proponents of health care reform are gnashing their teeth, while opponents grimly say "I told you so", at the news of a study from Illinois showing that children in Medicaid/SCHIP have difficulty getting specialists to treat them:
National Journal | MedPac Report Has Something to Irritate Everyone
The independent board assigned to advise Congress on the Medicare program released proposed changes to the politically popular entitlement program that will likely attract the ire of hospital, doctor, and specialty groups alike.
National Journal | Docs Demand Permanent Medicare Pay Fix In Debt Talks
Physician groups are circulating a strongly worded letter demanding Congress address the perennial problem of how much doctors are paid under Medicare in ongoing negotiations over raising the government’s debt ceiling.
WSJ | Negotiators Consider Medicaid Cutbacks
The Medicaid program for the poor is facing significant cuts in an emerging bipartisan budget deal as Republicans seek to shrink entitlements and Democrats protect other priorities.
Econ Comments
WSJ | The ObamaCare Bad News Continues
Projected costs escalate and tens of millions will lose their current coverage.
Minyanville | Why Cost Containment in Health Care Is Impossible
The government can't get cost control without goring the oxes of patients, physicians, pharmaceutical companies, insurers, device manufacturers and hospitals.
Blogs
Cato @ Liberty | ObamaCare’s Main Coverage Vehicle Makes Kids Wait for Care
Half of ObamaCare‘s projected coverage gains (16 million out of 32 million U.S. residents) comes from expanding the Medicaid program.
Heritage Foundation | Ezra Klein’s F on Medicare Part D
At the time of its enactment in 2003, the Medicare drug benefit—known as Medicare Part D—had many critics. Some said the program, which is built on consumer choice and vigorous competition among private plan options, wouldn’t work because private plans would decline to participate.
Atlantic: Megan Mcardle | Most Illinois Specialists Won't Take Medicaid Patients
Proponents of health care reform are gnashing their teeth, while opponents grimly say "I told you so", at the news of a study from Illinois showing that children in Medicaid/SCHIP have difficulty getting specialists to treat them:
Monetary
News
Bloomberg | Euro Pares Drop Against Dollar as EU Officials Work on Greece Debt Crisis
The euro pared its decline against the dollar after reaching a three-week low amid speculation an agreement between the European Union and the International Monetary Fund may allow Greece to avoid a debt default.
CNN: Money | Fed could soon set inflation target
This should not be a big surprise. Recent comments by Fed members suggest policymakers are getting closer to the setting the kind of explicit inflation target used by many other central banks around the world. Fed Chairman Ben Bernanke is a long-time advocate of such a measure.
Market Watch | U.S. consumer prices climb 0.2% in May
The price of consumer goods rose in May as the cost of food, clothing, autos and housing all accelerated, offsetting the first drop in energy prices in 11 months.
Econ Comments
Market Watch | Fed boxed in as U.S. slouches toward stagflation
With the economy softening in the past few months and inflation accelerating, you hear a lot of talk about stagflation — that ugly combination of low growth and high inflation that plagued the economy for much of the 1970s and early 1980s.
Blogs
WSJ | Worry About Growth or Inflation, Not Both
The underlying inflation rate has moved substantially higher in recent months, but worries about its direction in coming months should be based on a consistent economic story.
Reports
RCM: Wells Fargo | CPI: Core Inflation Strengthens in May
While the drop in gasoline prices restrained the headline’s 0.2 percent gain, core CPI increased a stronger-than-expected 0.3 percent in May. Inflation continues to eat into consumers’ purchasing power.
Bloomberg | Euro Pares Drop Against Dollar as EU Officials Work on Greece Debt Crisis
The euro pared its decline against the dollar after reaching a three-week low amid speculation an agreement between the European Union and the International Monetary Fund may allow Greece to avoid a debt default.
CNN: Money | Fed could soon set inflation target
This should not be a big surprise. Recent comments by Fed members suggest policymakers are getting closer to the setting the kind of explicit inflation target used by many other central banks around the world. Fed Chairman Ben Bernanke is a long-time advocate of such a measure.
Market Watch | U.S. consumer prices climb 0.2% in May
The price of consumer goods rose in May as the cost of food, clothing, autos and housing all accelerated, offsetting the first drop in energy prices in 11 months.
Econ Comments
Market Watch | Fed boxed in as U.S. slouches toward stagflation
With the economy softening in the past few months and inflation accelerating, you hear a lot of talk about stagflation — that ugly combination of low growth and high inflation that plagued the economy for much of the 1970s and early 1980s.
Blogs
WSJ | Worry About Growth or Inflation, Not Both
The underlying inflation rate has moved substantially higher in recent months, but worries about its direction in coming months should be based on a consistent economic story.
Reports
RCM: Wells Fargo | CPI: Core Inflation Strengthens in May
While the drop in gasoline prices restrained the headline’s 0.2 percent gain, core CPI increased a stronger-than-expected 0.3 percent in May. Inflation continues to eat into consumers’ purchasing power.
Employment
News
Market Watch | Applications for jobless benefits fall 16,000
The number of U.S. workers who filed new applications for unemployment benefits continued to drift downward after spiking in late April, according to the latest government data.
Econ Comments
Daily Caller | Killing jobs: Obama holds FTAs hostage
As scholars at The Heritage Foundation note, TAA provides overly generous benefits for just a small fraction of laid-off workers.
Blogs
EconLog | Policies for Structural Unemployment
If the government has $50,000 to spend creating jobs, it would be better to pay a subsidy of $10,000 per job for five private-sector jobs than to create a single $50,000 job.
Reports
Heritage Foundation | Same Worker, Higher Wage: A Study of Workers Who Switch from Private to Federal Employment
The 1999 Handbook of Labor Economics provides a good overview of the relevant studies, which have usually found a federal wage premium of 10 percent to 20 percent.
Market Watch | Applications for jobless benefits fall 16,000
The number of U.S. workers who filed new applications for unemployment benefits continued to drift downward after spiking in late April, according to the latest government data.
Econ Comments
Daily Caller | Killing jobs: Obama holds FTAs hostage
As scholars at The Heritage Foundation note, TAA provides overly generous benefits for just a small fraction of laid-off workers.
Blogs
EconLog | Policies for Structural Unemployment
If the government has $50,000 to spend creating jobs, it would be better to pay a subsidy of $10,000 per job for five private-sector jobs than to create a single $50,000 job.
Reports
Heritage Foundation | Same Worker, Higher Wage: A Study of Workers Who Switch from Private to Federal Employment
The 1999 Handbook of Labor Economics provides a good overview of the relevant studies, which have usually found a federal wage premium of 10 percent to 20 percent.
Budget
Econ Comments
Washington Times | BIRNBAUM: Time for work, not crazy talk
But there is an alternative: putting in place a new process that will force changes in law if deficit targets are not met over the next decade.
Cato Institute | The Real Budget Problem
According to the CBO, the federal government is on track to consume 42 percent of GDP by 2050.
Washington Times | BIRNBAUM: Time for work, not crazy talk
But there is an alternative: putting in place a new process that will force changes in law if deficit targets are not met over the next decade.
Cato Institute | The Real Budget Problem
According to the CBO, the federal government is on track to consume 42 percent of GDP by 2050.
Wednesday, June 15, 2011
General Economics
News
Washington Times | Boeing urges judge to toss NLRB case
South Carolina aircraft plant at issue in lawsuit.
Bloomberg | U.S. Industrial Production Rose Just 0.1% in May
Output at factories, mines and utilities rose 0.1 percent after no change the prior month, figures from the Federal Reserve showed today. Economists projected a 0.2 percent gain, according to the median estimate in a Bloomberg News survey. Factory production climbed 0.4 percent, led by the biggest gain in business equipment output in four months.
Washington Times | CBO: ‘Great deal of the pain’ of downturn still to come
Congress’ official scorekeeper said Tuesday that the United States will continue to see slow economic growth for the next several years as job openings and a lack of demand for goods and services continue to block a speedier rebound.
Fiscal Times | Hidden Costs of College Raise Total to Extreme Levels
Numbers don’t lie, but they can cheat. Experts say the average cost of tuition, room and board, and general fees is $16,140 for a public four-year university and $36,993 at a private school. Meanwhile, the average student debt graduates with $24,000 — if they make it through four years. Those numbers may sound big, but as any parent with a child (or two) in college can tell you, they represent only a small part of the overall tab.
Bloomberg | Crude Oil Futures Rise After Bigger-Than-Forecast Decline in U.S. Supplies
Supplies fell 3.41 million barrels to 365.6 million last week, according to the department’s weekly report. Inventories were estimated to decrease by 1.8 million barrels, according to a Bloomberg News survey. Demand for distillate fuel, a category that includes diesel and heating oil, tumbled 5.2 percent to 3.6 million barrels a day, the lowest level since January.
Market Watch | June home builder index falls to nine-month low
Home builder confidence deteriorated in June, hurt both by the glut of cheaper existing homes on the market as well as rising building material prices, a trade association said Wednesday.
Econ Comments
WSJ | A Welfare State or a Start-Up Nation?
After one generation, a one percentage point difference in growth rate becomes a 25% difference in per capita income.
Financial Times | How China could yet fail like Japan
Until 1990, Japan was the most successful large economy in the world. Almost nobody predicted what would happen to it in the succeeding decades. Today, people are yet more in awe of the achievements of China. Is it conceivable that this colossus could learn that spectacular success is a precusor of surprising failure? The answer is: yes.
Politico | The real costs of U.S. energy
But the dirty little secret behind America’s energy policy is that the real price we pay for gas or electricity is far larger than what we see at the pump or on our utility bills. The less obvious costs of our energy choices affect our health, the environment and national security.
Washington Times | RYUN: Republican energy crisis
Genuine conservatives shouldn’t use taxpayer dollars to subsidize natural gas.
Politico | Repeal withholding of small-business payments
Imagine you own a business that puts a new roof on the local high school. After you do the work, the school pays only 97 percent of what it owes you. Why? On the off chance you may not pay your federal taxes.
Minyanville | Why Leading Indicators Are Lagging: Economy to Accelerate in Second Half 2011
Leading indicator models are misinterpreting the recent "soft patch" because such indicators are essentially blind to the factors that have actually caused it.
Blogs
Café Hayek | This Was the Heart of What Hayek Warned Against in his ‘Road to Serfdom’
Challenging George Will’s case against trade-adjustment assistance, Eric Salonen analogizes such assistance to compensation that government pays to people whose properties are taken by the building of a hydroelectric dam. This analogy is faulty. Unlike with land, almost no one has a property right to a job – for to have a property right to a job would be to have a property right to the manner in which other people spend their money.
Washington Times | Boeing urges judge to toss NLRB case
South Carolina aircraft plant at issue in lawsuit.
Bloomberg | U.S. Industrial Production Rose Just 0.1% in May
Output at factories, mines and utilities rose 0.1 percent after no change the prior month, figures from the Federal Reserve showed today. Economists projected a 0.2 percent gain, according to the median estimate in a Bloomberg News survey. Factory production climbed 0.4 percent, led by the biggest gain in business equipment output in four months.
Washington Times | CBO: ‘Great deal of the pain’ of downturn still to come
Congress’ official scorekeeper said Tuesday that the United States will continue to see slow economic growth for the next several years as job openings and a lack of demand for goods and services continue to block a speedier rebound.
Fiscal Times | Hidden Costs of College Raise Total to Extreme Levels
Numbers don’t lie, but they can cheat. Experts say the average cost of tuition, room and board, and general fees is $16,140 for a public four-year university and $36,993 at a private school. Meanwhile, the average student debt graduates with $24,000 — if they make it through four years. Those numbers may sound big, but as any parent with a child (or two) in college can tell you, they represent only a small part of the overall tab.
Bloomberg | Crude Oil Futures Rise After Bigger-Than-Forecast Decline in U.S. Supplies
Supplies fell 3.41 million barrels to 365.6 million last week, according to the department’s weekly report. Inventories were estimated to decrease by 1.8 million barrels, according to a Bloomberg News survey. Demand for distillate fuel, a category that includes diesel and heating oil, tumbled 5.2 percent to 3.6 million barrels a day, the lowest level since January.
Market Watch | June home builder index falls to nine-month low
Home builder confidence deteriorated in June, hurt both by the glut of cheaper existing homes on the market as well as rising building material prices, a trade association said Wednesday.
Econ Comments
WSJ | A Welfare State or a Start-Up Nation?
After one generation, a one percentage point difference in growth rate becomes a 25% difference in per capita income.
Financial Times | How China could yet fail like Japan
Until 1990, Japan was the most successful large economy in the world. Almost nobody predicted what would happen to it in the succeeding decades. Today, people are yet more in awe of the achievements of China. Is it conceivable that this colossus could learn that spectacular success is a precusor of surprising failure? The answer is: yes.
Politico | The real costs of U.S. energy
But the dirty little secret behind America’s energy policy is that the real price we pay for gas or electricity is far larger than what we see at the pump or on our utility bills. The less obvious costs of our energy choices affect our health, the environment and national security.
Washington Times | RYUN: Republican energy crisis
Genuine conservatives shouldn’t use taxpayer dollars to subsidize natural gas.
Politico | Repeal withholding of small-business payments
Imagine you own a business that puts a new roof on the local high school. After you do the work, the school pays only 97 percent of what it owes you. Why? On the off chance you may not pay your federal taxes.
Minyanville | Why Leading Indicators Are Lagging: Economy to Accelerate in Second Half 2011
Leading indicator models are misinterpreting the recent "soft patch" because such indicators are essentially blind to the factors that have actually caused it.
Blogs
Café Hayek | This Was the Heart of What Hayek Warned Against in his ‘Road to Serfdom’
Challenging George Will’s case against trade-adjustment assistance, Eric Salonen analogizes such assistance to compensation that government pays to people whose properties are taken by the building of a hydroelectric dam. This analogy is faulty. Unlike with land, almost no one has a property right to a job – for to have a property right to a job would be to have a property right to the manner in which other people spend their money.
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