Sluggish Economy Drives Surge in Apartment Construction

http://www.nytimes.com/2014/10/18/business/economy/sluggish-economy-drives-surge-in-apartment-construction.html?ref=economy


This article talks about the effects the sluggish economy has on the demand for homes vs apartments. Its no surprise that more people are renting instead of owning homes. Even though permits for building homes has increased, its still evident that real estate sales haven't really improved in recent months. Even though prices are dropping, experts aren't seeing matching improvement in home building or buying. The article suggests that home values is to blame for this. Despite the dramatic drop in mortgage rates, it is still uncertain that the demand for homes will be greater. Economists say that even with this reduction in mortgage rate some improvement will be seen in the next year or so but even that, it wont be an exciting increase in the purchasing of homes.

What baffles me is the inability for the reduction of rates and prices to influence buyers. Does that mean wages are relatively low?

"U.S. Debt Held by Foreigners Hits Record $6.07 Trillion"

Foreign holding of U.S. Treasury securities hit a record high $6.07 trillion in August, which is up $70 billion from July. This means the U.S. showed signs of gaining steam. China, Japan, and Belgium were some of the top three lenders to the United States. According to the U.S. Treasury bought around $135 billion in foreign currencies to keep the value of the yuan down. Foreign holding are expiated to continue to grow as seen by the steady strengthening of the dollar and plummeting yield bonds. As the U.S. economy is gaining steam, the value of the dollar is increasing. 

what do you guys think the strength of the  U.S. dollar will look like by the end of the year?

http://blogs.wsj.com/economics/2014/10/17/u-s-debt-held-by-foreigners-hits-record-6-07-trillion/

Extent of inequality in US 'greatly concerns me': Fed Chair Yellen

http://www.cnbc.com/id/102096839

      This article states that, although unemployment is decreasing, income inequality is rising. Yellen expresses concerns over "both the growing burden of student debt and the decline in new business formation." Basically, while more and more people have higher costs of education, and thus debt because of it, fewer of the jobs becoming available have wages high enough for them to pay off this debt. 
     Yellen also discusses housing prices and how they have effected this inequality; she does concede that "rebounding home prices have restored some of the lost housing wealth." However, she expresses that while this helps ease "those at the bottom," it does not help much with the fact that the top 5 percent control two thirds of the nations assets. 
     The article goes on to discuss the effects that the Fed has had on this inequality, positive or negative (with critics and supporters arguing each side). All in all, while the economy appears to be getting better, and for the nation as a whole probably is, this may or may not help individuals who aren't in the top 5 percent. 

Rental America: Why the poor pay $4,150 for a $1,500 sofa

Though the economy has been recovering for about five years, the poor working class is still struggling with the consequences of the recession. Businesses have been cropping up to cater to lower income individuals, working with "customers who don't have money upfront, instead offering a widening spectrum of payment plans that ultimately cost far more and add to the burdens of life on the economy's fringes." One such store, Buddy's Home Furnishings, has been opening a new store every week. These are rent-to-own stores that allow paying in installments, but sometimes at an "effective annual interest rates of more than 100 percent." These stores avoid state laws by labeling transactions as leases. 

This is clearly not a good option, but for some it is the only option. Many Americans in this lower income tier cannot get loans approved and cannot always gather enough cash to pay for things on sites such as eBay. America's bottom 40 percent is a "group increasingly likely to string together paychecks by holding multiple part-time jobs with variable hours." Not long ago, jobs were more secure and income was higher so more people had access to affordable credit. According to Michael Barr, a Michigan law professor, "the market pulled back from all low-income borrowers instead of trying to figure out how to serve them."

When costumers go to stores like Buddy's, they are taking a risk that they can pay the weekly or monthly payments. Some persist but many end up returning their purchases. In Cullman, Alabama, approximately 75 percent of items from the store "are returned or repossessed within weeks of the transaction."Buddy's and other such store face criticism for being "predatory" but they claim they offer a service to their customer base. If a customer cannot make their payments, they aren't penalized. Since they are renters "they don't face debts or credit damage if they make a return."Yet Buddy's expanded rapidly because of the economic crisis. To me it seems they are taking advantage of the less fortunate, which I guess some businesses have always done. I wonder what a better solution would be, so that people were not taken advantage of by the only retailers they can buy from.

Source: http://www.washingtonpost.com/news/storyline/wp/2014/10/16/she-bought-a-sofa-on-installment-payments-now-its-straining-her-life/

Calculating the Grim Economic Costs of Ebola Outbreak

http://dealbook.nytimes.com/2014/10/13/calculating-the-grim-costs-of-ebola/?_php=true&_type=blogs&_r=0

This article discusses the economic impact of the Ebola virus.  According to a recent study by the World Bank, financial analysts and others estimate "a potential economic drain of as much as $32.6 billion by the end of 2015 if the epidemic spreads to neighboring countries beyond Liberia, Guinea, and Sierra Leone".  The estimate reflects the potential cost of 200,000 Ebola cases outside of Liberia, Guinea, and Sierra Leone.  It does not account for any costs beyond 18 months nor assume a global pandemic.

Many are also foreseeing a large decrease in GDP growth rates due to a potential decrease in airline flights, vacations, and foreign business in affected countries.  One analyst specifically states that "if the Ebola epidemic were to spread domestically, it would have a significant impact on the airline and entire hospitality sector".

The article states that the greatest economic danger is the economic isolation of countries.

I found this article interesting due to the recent hysteria and confusion surrounding Ebola.  I think the Ebola crisis is a perfect example of the impact that human emotions can have on stock and investment.  I also believe that we will continue to see a negative impact on the airline sector until we receive clear information about Ebola and consumers feel safe to travel again.

Why lower oil prices is costly to the economy

Source

Recently, oil prices have costed less than they have in the past four years. Although this may seem like a good thing for consumers, it could damage the economy in the long run. Normally, a drop in oil prices is usually because of a weaker global economy, or the currency getting stronger. Both of these factors could hurt the economy by causing unemployment, less spending and reduced exports. These consequences could outweigh the benefits of cheaper oil.
The U.S. has seen a boom oil production since drilling started in places such as North Dakota and Texas, and if the prices continue to lower, production would have to slow down in order to keep profit. If this happened, there would be less supply, and more demand due to low prices.
Furthermore, because oil is priced in dollars, if the dollar gets stronger, it makes oil more expensive and demand is reduced. Instead of prices being low, they will be too high in the future.In this case, there would be an abundance of supply, but not enough demand.If the dollar gets stronger, U.S. goods will be more expensive, and a reduction in exports and a rise in imports will be seen, this can negatively impact economic activity and halt job growth.
Though lower oil prices may seem like a benefit, it can damage the economy in the future.

It’s the momentum of the economic data that’s worrisome

Source: http://www.marketwatch.com/story/its-the-momentum-of-the-economic-data-thats-worrisome-2014-10-15
Here is some sad news to our country. US retail sales fell 0.3%, producer prices dropped last month, Empire State manufacturing index saw a big tumble.
The author claims that it was the downward sloping in gasonline price, European and Latin American weak consumption towards our goods, our weak domestic consumption are the victims which slowered US economic recovery.
Though, it is a miracle that unemployment rate is below 6%. He suggests that the continued job growth should lead to wage growth, which will lead to more consumption. Therefore, it cures a lot of our problems.
His suggestion is not really that correct. When we increase more jobs, it will decrease MPL. MPL is considered wage. So wage should go down when increasing employment. However, in the long run, because there are so many labor, they will decrease labor employment. Therefore, employers will increase the wage. Then, with better wage, people will try to consume more.

Wearable Technology That Feels Like Skin

    Everyone already knows the direction the next generation of technology is heading; wearable technology. What we don't know is what that will look like, where they will be, and how they will be worn. Some companies have already taken a crack at it. Apple and Samsung have the wrists covered with smart watches and Google has moved in on the head territory with their products. Others believe clothing will become technological. But the more interesting idea is that computers will, one day, be worn on the skin. They will be extremely thin and flexible, made to look like stick on tattoos or to blend in with skin tone. While there are the obvious concerns about privacy, there are also many benefits to these little devices. "... you can collect all sorts of biometric data tied to your motion” said Scott Pomerantz, the chief executive of MC10. These devices would help with many decisions, from tracking your perspiration patters to help determine which deodorant is best for you, to monitoring a baby's breathing, all the way to many health applications. A more user-friendly function being worked on is to add LED lighting and turn the e-skin into a "functional flat screen that sits on the skin."

    What an interesting turn in technology. If engineers can make this do all the things they hope to, there will be so many economic benefits such as many new jobs, much more investment, and if the US can command e-skin market by make it a "Made in the USA" product, we could greatly increase our exports. This will definitely be something to watch in the coming year.  


Link:http://www.nytimes.com/2014/10/09/fashion/wearable-technology-that-feels-like-skin.html?_r=1

Ask a North Korean: How fashion works in North Korea

http://www.nknews.org/2014/10/ask-a-north-korean-how-fashion-works-in-north-korea/

I find this article interesting mostly cause I like fashion, but this article also has economic influence.

In North Korea the economy is controlled by the government, when they produce clothing it is usually low quality, low quantity, and in drab colors. This caused a black market of secondhand Chinese and Japanese clothing to become a status symbol. In this article a girl tells the story of how when she was in school in the 1990s government control and fashion influenced her life.