Yes, the American Economy Is in a Funk — But Not for the Reasons You Think

http://freakonomics.com/podcast/american-growth/

The American economy in the past 5-10 years has been in funk. Most would assume that this funk is a result of things like our debt to China, NAFTA, big government, taxes, the trade deficit, and the large wealth gap. The thing is though, that our country is going though a bit of a slowing of innovation. Sure there have been incredible advancements in technology, these advancements cannot compare to the first two industrial revolutions that this country have experienced. The second industrial revolution which began in the mid-late 19th century was so great that the standard of living only took 30 years to double as opposed to 350 years in the 14th century. The third industrial revolution began in the 1960's with the invention of the computer and has continued until today. All the advancements since then have been great, but not great enough to really push the economy forward the way in which it has been in the past.

The Bull Is Still Running. So Why Are Investors Tiptoeing?

The current Bull market (going on seven years) in the United States continues to progress, in that prices are rising, but all while this is happening investors are being hesitant when it comes to where to invest.  The market has been trending to support emerging industries and small-company stocks as of late because prices across the board have been continuing to rise.  This is happening because a lot of emerging industries and small-company stocks benefit from the raise in prices due to not being involved with foreign buyers that would adversely effect their position.  This situation is causing investors to feel hesitant with buying stock in traditional big name, "blue-chip" stocks and encourages them to invest in riskier small-company stocks.  A lot of this macro-economic activity can be mapped to the importance of keeping interest rates low.  This current market position proves the overall importance and effect that interest rates can have on the economy as a whole.

I gained this insight from Paul J. Lim at the New York Times from his article titled "The Bull Is Still Running. So Why Are Investors Tiptoeing?"

http://www.nytimes.com/2016/09/11/your-money/the-bull-is-still-running-so-why-are-investors-tiptoeing.html?ref=business&_r=0

Why So Few Economists Are Prepared to Say Recession Risks Are Fading

Though the economy has been doing well over the past months, when asked to asses the odds of a recession in the next year, economists have placed the odds at about one in five.

The graph above shows the average probability of the U.S. economy entering recession in the coming year.

Why so high? Many are very unsure about how the upcoming election will affect the economy. Forecasters must assess the policies projected by the candidates, but also keep in mind the potential for a divided Congress that could stymie either candidate. Although this election in particular is concerning to economists, the issue is not limited to just this election.

There is an unusual tendency of recession to happen in close proximity to presidential elections. According to Kevin Hassett and Joseph Sullivan, the U.S. enters recessions about twice as frequently in the year after a presidential election compared with all other years. The National Bureau of Economic Research estimated that 41% of (or five of the last 11) recessions since 1854, have fallen in that time window. This is the cause of most of the uncertainty for the upcoming election.

The graph above shows the election risks, predicted by economists, on the economy for this upcoming election. 

Overall, no one really knows what is going to happen. History could repeat itself, or the economy could stay perfectly fine; however, the reason behind this elections uncertainty is reasonable.

To read more on the upcoming recession risks click here.

Payroll taxes becoming more expensive than income taxes

Payroll taxes, which fund Social Security and Medicare, is estimated to be more than income taxes in about 62.3% of households in America according to the Tax Policy Center.  According to them the less you make the more likely you are to be in this group, this is because a lot of upper and middle class people are getting tax breaks on households.  Therefore their income taxes are very low or even basically non existent, but with your pay checks from work both you and your employer are required to put money towards Social Security.  For example those who are in the middle class and make around $50,000 in income, will pay around $7,650 in taxes a year, and in this next year it is estimated that 44% of the country will end up with no household income tax, therefore their payroll tax being their only expense left

http://money.cnn.com/2016/09/06/pf/taxes/income-taxes-payroll-taxes/index.html?iid=SF_LN

Why the federal government should stop spending billions on private sports stadiums

It seems as though tax dollars have been used to build sports stadiums for ages, and indeed they have.  The first team to introduce the concept was the 1953 Boston Braves moved to Milwaukee in order to build a stadium that was not privately funded.  Since then, more and more stadiums have been build using tax dollars, but is it worth it?

The three authors of "Why the federal government should stop spending billions on private sports stadiums" certainly do not think that federal financing is a good idea.  Based on their statistics that found the overall federal subsidies given toward the stadiums as well as the total revenue lost on using tax exempt muninciple bonds for the building.  Their evidence shows that there is indeed little reason to federally fund stadiums.

In addition to finding the funding on the stadiums, the authors looked into the local economic effects in areas where stadiums were built.  They found little to no evidence showing that stadiums helped economic developement, income growth, or job creation.

https://www.brookings.edu/research/why-the-federal-government-should-stop-spending-billions-on-private-sports-stadiums/#revenue-loss

Thinking Aloud

U.S. Federal Reserve: birds of a feather

The Federal Reserve is the United States central bank. It has four fields of operations:

• "Conducting the nation's monetary policy by influencing money and credit conditions in the economy in pursuit of full employment and stable prices.
• Supervising and regulating banks and other important financial institutions to ensure the safety and soundness of the nation's banking and financial system and to protect the credit rights of consumers.
• Maintaining the stability of the financial system and containing systemic risk that may arise in financial markets.
• Providing certain financial services to the U.S. government, U.S. financial institutions, and foreign official institutions, and playing a major role in operating and overseeing the nation's payments systems." (The Fed) 

In Jackson Hole, Wyoming, Fed Chair Janet Yellen delivered a speech regarding Federal Reserve's Monetary Policy. In the speech she refers to the fact that the federal funds rate has strengthened in the recent months (1). Why does it matter if the federal funds rate is increased or decreased? The simple explanation is the Fed is trying to maintain a healthy economy. If the economy is stagnant the Fed might opt to lower interest rates in facilitating in making money more available to firms, home buyers, businesses and consumers. If the economy is augmenting then the Fed will elect to raise interest rates to slow the economy's progression. So the question is what does Janet Yellen's statement emphasize? The implications of her statement highlights whether the Fed will have the flexibility in the future in regards to their policy management. "While the published pace of economic growth has been pretty anemic so far this year, the labor market has remained healthy and job creation has averaged a respectable 190,000 in the past three months" (1). The Fed expects a moderate rise in the future ensure a strong labor market and a steady rise in inflation. This economic outlook means the Fed has a case for a rise in interest rates. The Fed knows that every economic cycle there are down turns, but a continuos nuetral rate of interest will render the Feds policy flexibility useless. The economy following the financial crisis has never fully recovered growing in a positive direction, sabotaging investment. So, it forces government investment. But the cautionary tale is the Fed must go about policy flexibility lightly so it can have options when it operates and keeping its mandates.

Article: U.S. Federal Reserve: birds of a feather_Thinking Aloud

Digging Into China’s Growing Mountain of Debt

There has been growing concerns from investors about China's growing debt. In the article, George Soros states that there seems to be resemblance to the conditions that lead up to the financial crisis in the US in 2008. According to him, " it's similarly fueled by credit growth and an eventually unsustainable extension of credit."

However , Jing Sun, the author of the article  suggests that there are some major differences between the conditions that the US faced and current conditions faced by China. One of the conditions is that the household debt in China is far below the levels that the US faced before the crisis.Also, the household savings in China are twice as large compared to the debt.
Another major different pointed out is that Chinese residential properties are usually purchased with significant down payments. China's high savings rate and low leverage makes it very unlikely for a financial crisis to be caused by households.

Moreover, Chinese banks get 70 percent of their money from deposits while the US in 2008 was dependent on short time money market funding. There is no denying to the fact that Chinese economy is facing many challenges including the slower growth rate and shadow banking but the chances of a financial crisis are low.

http://www.bloomberg.com/news/articles/2016-08-28/digging-into-china-s-growing-mountain-of-debt

Kenya will implement an interest rate cap on September 14

On September 14, a law in Kenya will cap commercial bank's interest rates at 14.5%, 4 points above the central bank's interest rate (10.5%).  This law will also enforce banks to pay depositors no less than 70% of the central-bank rate.  This means that the banks are being asked to lend to private businesses the same amount as lending to the government. 

How bad the economic impact is depends on how the businesses react.   Kenyan economist, Anzetse Were, thinks businesses will find other sources of credit.  A solution is for people to start tipping more.  The Chief Executive of Kenyan Bankers Association thinks that while most banks will have to fire employees, close branches, and lend less, some will try to increase their use of technology to cut their costs. 

This article explains that compared to economies without interest rate caps, African economies with caps have a lower ratio of credit to GDP.  A few consequences of interest-rate caps is that the credit will flow to more dependable borrowers instead of "needy but risky" businesses.  However, the cause of high interest rates is because the government is "splurging" money, not because of the banks' behaviors. So, the people who will benefit the most will be the people who passed this law.  (Campaigning in Kenya is expensive, so cheaper loans would mean cheaper campaigning.)
 

I think it is unfortunate that the law is restricting what the banks can do because of the faults in the government's spending.   It is especially unfortunate because this law will really only benefit the wealthiest people (the people who passed the law). 


http://www.economist.com/news/finance-and-economics/21706515-curbing-lending-rates-makes-good-politics-bad-economics-ceiling-whacks

Helicopter money: central banks' last resort

Central Banks have begun increasing talks about using the "helicopter money" concept as a last resort to promote economic growth. Senior figures such as Kathy Jones, chief fixed income strategist at Charles Schwab, have been talking about the approach being the last resort for desperate economies. With economic growth being described as "fragile" by the IMF, the old metaphor of helicopter money is gaining in popularity. The motivation behind the concept is simple: Americans will spend the money. Consumption makes up the vast majority of US economic activity and the spending will, as a consequence, give the economy a bump in the right direction.

These talks illustrate the desperation of Central Banks to promote economic growth. Most experts say Japan, who has been using negative interest rates to stimulate spending, will be the most likely to consider using helicopter money.

"Helicopter Ben" Bernanke certainly sees the merits of the approach. He debates that helicopter money from a central bank is a better option than Congress increasing spending or creating a tax cut- both of which increase the risk of driving up the national debt and making it harder to pay off that debt in the long run.

There are still hurdles which need to be overcome is helicopter money is actually ever to be used, though. Deciding how much money and how it's implemented are problematic topics.

http://money.cnn.com/2016/04/26/news/economy/central-banks-helicopter-money/?iid=EL

The FED is likely to keep the interest rate below 1% through 2020

The Fed has kept interest rates very low over the last 7 years. In this time period interest rates have not been higher than 0.18%. Private equity giant KKR believes nothing is changing any time soon, in fact they say that it will be multiple years before we see interest rates higher than 1%. Henry H. McVey, KKR's head of global macro and asset allocation reports that: "Not surprisingly, given all these types of remarks as well as sluggish growth, the fed funds rate is now below 1% and we think it could trend below 1% until at least 2020."

This contradicts statements that the Federal Open Market Committee have made. The Federal Open Market Committee estimated in June that the policy rate would be 2.4% in 2018, growing to 3% in the long run. Based on these values, it becomes increasingly difficult to achieve expected returns from the 60/40 equity/bond strategy that so many financial institutions use. Pension funds and domestic stocks will also struggle to meet expected return. Investors will need to look elsewhere. KKR recommends a five-pronged approach "yield and growth; avoiding investments tied to Chinese growth and focusing instead on its exports; focusing on large U.S. domestically focused companies; providing liquidity to nonbank lending operations; and increasing exposure to complex stories, including earnings misses, restructurings, and/or corporate repositionings."

http://www.cnbc.com/2016/09/08/private-equity-giant-kkr-says-the-fed-to-keep-funds-rate-below-1-percent-through-at-least-2020.html

This is a really good time to quit your job

This is a really good time to quit your job

 According to job openings and labor turnover summary (JOLTS) job openings have grown from the month of June to July. In June the job opening rate was at 5.62 million, while in July the job opening rate grew to 5.9 million. The rate of openings is higher then the early 2000's. Although, due to so many more job openings employers are having a harder time filling open positions, meaning they will more then likely have to pay more for their next hired employee to keep them.

Not only are there more job openings being created, the hiring rate is steadily growing since the mass amount of lay offs of the great recession. Before the recession the rate was at 4.0 percent and it has now reached 3.6 percent and is still on the rise.

Studies have also shown that people that have switched their jobs have also received higher pay on average then people that have stayed at their current job. "job switchers" have seen a pay bump of 4.2 percent while "job stayers" have only seen their pay checks rise only by 3.0 percent. Not every person that switches their job sees a pay raise that is just on average.

like said above, I think that due to job openings and a lot of people switching their jobs, employers are going to have to increase wages to secure their employees positions. I think this is better for the employees because they now have a higher income.


http://www.cnbc.com/2016/09/07/this-is-a-really-good-time-to-quit-your-job.html

Jobs number: What's the real unemployment rate

The unemployment rate is a huge part of the economy because it shows the percentage of unemployed workers in the economy. There are different metrics used to measure the unemployment rate and the one we are most familiar with is the U-3 rate which is 4.9%, the official unemployment rate. The problem with the U-3 rate is that it only measures for those who are unemployed and actively seeking employment. Another metric is the U-6 rate which is 9.7% and it measures those unemployed, underemployed and discouraged workers. If the unemployment rate is 4.9%, it is rather low and good for the economy because it is closer to achieving a full employment economy. On the other hand, if the unemployment rate is 9.7%, it is rather high and bad for the economy because it can lead to a recession.

In August, the unemployment rate is 4.9% which means the economy is increasing which lead the feds to increase interest rates. 180000 jobs were supposed to be added to the market by August but only 151000 jobs were added. Labour Force Participation rate remains 62.8%, shows that people are not looking for jobs. It is been falling since the recession. Wages are increasing and people are getting employed but for low-income jobs. All these information suggests that the official employment rate might be good but lacking a good amount of components that the U-6 rate portrays. If the economy crashes at this moment due to unemployment, people would question why it crashed even though the U.S. as a good unemployment rate and they would be referring to the U-3 rate while being unaware of the other metrics.

Link: http://www.cnbc.com/2016/09/02/jobs-number-whats-the-real-unemployment-rate.html

The Idle Army: America’s Unworking Men

In a speech last month, the Federal Reserve VC Stanley Fischer referred to the US economy having "returned to near-full employment". The article attempts to show how that claim can be misleading with the use of factual data relevant to American men. A parallel can be drawn between the work-rate in 2015 for American males (age 25-54) which was 84.4% and the work-rate at the end of the Great Depression in 1940 which was barely higher at 86.4%. Moreover, American men age 20 and older without paid work is a statistic that has risen from 19% to 32% over the past half century. Aside from generally being classified as employed or unemployed, it is stated that in the aftermath of the World War II rose a new category of working-age American males: 'unworking' working age men outside the labor force (neither working nor seeking work).

This is not completely surprising as one of the major reasons for the increase of men in this category is that jobs have been moving off shore in sectors that generally used to consist of men while female-dominant sectors have been seeing growth in jobs. A massive difference can be seen between health and education (74.6% females employees) and manufacturing (29.1% female employees). The article bemoans the nonconstructive activities of the 'unworking' men since only 10% of them comprise students putting in effort to improve their living standards. The majority is reportedly quite idle and lazy, exemplified by them taking out less time out to help with household work than even unemployed men, and focusing more on personal leisure.

While unemployment has gone down and the economic situation definitely seems to be improving on paper since 2009, the long-term increase in working-age men leaving the labor force altogether is, as Eberstadt states, "a quiet catastrophe".

Article link: http://www.wsj.com/articles/the-idle-army-americas-unworking-men-1472769641

Stocks plunge as investors fear interest rate hike

On Friday, September 9th, 2016, Wall Street had its biggest selloff since June because employees of the Fed commented that interest rates may have to rise to cool off the economy. Eric Rosengren, president of the Federal Reserve Bank of Boston stated, "A failure to continue on the path of gradual removal of accommodation could shorten, rather than lengthen, the duration of this recovery." He says that it is necessary to raise the interest rates if we want to ensure that unemployment remains low.

Anytime there is talk about any kind of rate increase is sure to have a negative effect on most people. In this case, the effect can be seen in the stock market. The Dow dropped 2.1 percent, nearly 400 points to 18,085. The S&P lost 2.5 percent, falling 53 points to 2128. The Nasdaq also plunged 2.5 percent, 133 points, to 5,126. Rising interest rates means the costs of borrowing goes up, which increases the cost of doing business. If the cost of doing business rises, companies may have to scale back on some operations and investors picked up on that. Investors' perception of Eric Rosengren was that he was cool to interest rate hikes, so when he advocated for interest rate hikes the market became spooked. Investors know this rate hike is coming, but are not sure if it will happen this fall or winter.

http://0-web.a.ebscohost.com.dewey2.library.denison.edu/ehost/detail/detail?sid=fc42319e-fe71-42f7-8e78-bfdb5b89a420%40sessionmgr4009&vid=7&hid=4106&bdata=JnNpdGU9ZWhvc3QtbGl2ZQ%3d%3d#AN=2W6980220485&db=nfh

Why the Fed won't hike interest rates

There are reasons to believe that the Fed's interest rate hike will not happen until 2017. First, the employment report for August was weaker than many anticipated. Wage growth was at its slowest increase since March and the average work weak was the lowest it has been since February of 2014. Overall, job growth did not improve as expected. 

Another factor influencing the Fed's decision is this upcoming election which can cause destabilization across markets. While the market is operating at prices assuming a Clinton victory, there is the potential for an election related disruption. In recent days, Trump has been leading Clinton among likely voters. The Fed might wait before making a decision until after the election. 

At the end of the article, the author criticizes the Fed for their actions. He believes that raising the interest is not only a difficult decision, but also an unpopular one. However, their unwillingness to make a decision is hurting our long term economic growth prospects. 

http://www.cnbc.com/2016/09/08/3-reasons-a-fed-rate-hike-is-off-the-table-till-2017-commentary.html 

How this country has gone 25 years without a recession

The last time Australia experienced a recession, the Soviet Union was still intact.
The country's economy has barely struggled, riding out the global financial crisis and other nasty shocks. "Australia's exceptional track record of 25 years of GDP growth without a recession has paralleled China's spectacular economic ascent," said Rajiv Biswas, chief Asia-Pacific economist at IHS Markit. But Australia can't rely on digging things out of the ground and shipping them off anymore. China's economy is now growing at its slowest pace in a quarter century, and commodity prices have collapsed from their peaks of a few years ago. Investment in Australia's huge mining sector has slumped, but other areas like housing construction and consumer spending have helped pick up some of the slack. The country's central bank has played its part, slashing interest rates to a record low. The plunge in the Australian dollar has helped make exports more competitive and attract tourists from overseas. The government has also lent a hand: In the latest quarter, growth was lifted by a sharp increase in public investment. Despite some warnings about rising debt levels, Australia's economy isn't generally expected to slip up anytime soon. "A recession in the next few years seems unlikely" unless there's a crash in China's economy or Australia's housing market, said Paul Dales, chief Australia and New Zealand economist at Capital Economics.


-- Matt Egan contributed reporting.
September 07 HONG KONG


http://money.cnn.com/2016/09/07/news/economy/australia-25-years-no-recession/index.html?category=economy

Apple tax case: Why is Ireland refusing billions?

There has been a big commotion as to why the Irish government is refusing take money owed to them through taxes from Apple. The European Commission states that the company owes the Irish Republic around 11 billion pounds (£11bn) or 13 billion Euros (€13bn). According to the article, this €13 billion could be beneficial for the country and is equivalent to all of Ireland's healthcare budget, 66% of its social welfare bill, 15 million iPhones, 27% of Apple's 2015 profit.

The article discusses possible reasons such as the country’s reluctance to compromise their reputation as an investment destination. Foreign direct investment from large multinational companies have played a major role in Ireland’s economy for years. The article states that these big shot companies, such as Apple, employ thousands of people in the country and the people seem to be happy with them.

The majority of the population disagrees with the notion that Apple owes the country the €13bn euros. The RTE poll found that 68% percent of respondents are in favor of appealing the European commission finding.  Also, another major reason discussed was the minority government that Ireland has. The main party has 50 of the 158 seats and their major opposition supports their policies on the national budget, so they also back an appeal. This appeal process could take years and years, and the £13bn euros has been put in a escrow account while the appeal process goes on.

http://www.bbc.com/news/world-europe-37299430 

Grocery Prices Falling

If you have gone grocery shopping lately then you may have noticed that food prices have fallen drastically.  If you are a consumer this is music to your ears, but to big super market chains like Kroger, Ralphs and Harris Teeter, it is not news that you want to hear.  The main reason for all of this is food deflation, mainly because of weak global demand and excess food supply because of technological advances that are producing food so fast the supply is outweighing the demand.  The price of some of the main commodities like cocoa and corn have fallen by more than 10%, wheat by around 20% and cattle has decreased the most at around 30%.  Overall for our consumers this decrease in food prices is a good thing but in the end will leave to manufactures stocks to fall and a lot of food will be wasted due to the excess supply.

http://money.cnn.com/2016/09/09/investing/kroger-food-prices-deflation-commodity-supermarkets/index.html?iid=SF_LN

Income and Spending Rises

Consumer spending has had some gains throughout the month of June due to Americans slow income gains. With the second quarters numbers in real personal consumption has climbed all three months of the second quarter and this is huge because this is said to be the single largest determinant of gross domestic product expansion in our consumer driven economy. Consumption expenditures increased 4.2 percent during this quarter seeing the largest gain in a year. This is nice news to hear since the economy has had stubborn improvement since the Great Recession. Chad Moutray, chief economist at the National Association of Manufacturers, wrote in a research note last week."This release reflects a rebound in consumer spending, but there were significant drags on activity from fixed investment and inventories." Many analysts the only promising part of the second quarters report was an increase in consumer spending.  Inventory and investment weakness in the second quarter are largely expected to abate as the year wears on, so the increasing number of Americans are going to start buying even more in the second half of the year."Reassuringly, consumers are still spending, and outlays are well supported by income growth," Gregory Daco, head of U.S. macroeconomics at Oxford Economics. 

In conclusion, real personal consumption expenditure rising is a good thing for the economy as a whole. If this continues to rise it can really cause a positive impact on our nations GDP. This provides some hope in fixing our weak economy. 

http://www.usnews.com/news/articles/2016-08-02/spending-income-gains-offer-hope-amid-weak-economy

Fed Sees Modest Economic Growth Amid 'slight' inflation

This article talks about how the United States economy grew at a modest pace during the months of July and August. Nevertheless, a strong labor market failed to put upward pressure on wages and prices (inflation). The job market 'remained tight' in most districts and little consumer spending had changed. The interest rates has remained steady this year following the sharp increase that took place in December.
Many reports stated that upward pressure on wages remained fairly modest and expect the average price to rise (inflation). Government report stated that the unemployment rate remains unchanged at 4.9%, with employers adding a net 151,000 jobs. Reports from the supply management show a declaration in business activity following the previous month.
'Employment expanded at a moderate pace', along with Boston having a large number of job openings. The main issue stated in the article regarding employment is the fact that companies in Boston had difficulty filling job vacancies for high skilled positions. This, in the long term could lead to structural unemployment where there is a mismatch between the skills the employers want and the skills workers have.
Therefore, in my opinion, there are positive signs of the long term economy growing, a strong labor market that prohibits increased wages and higher prices of goods and services. There is definitely economic uncertainty surrounding the November presidential election, but currently, unemployment is still at 4.9% and prices will increase modestly. But overall, employers must find the best match (employee) to fill in the job position, with the necessary skills. This would increase the rate of employment and overall output in the long run, which in turn increases per capita GDP.

http://www.bloomberg.com/news/articles/2016-09-07/fed-sees-modest-economic-growth-amid-slight-inflation

Fed Officials Divided as September Policy Meeting Nears

With the meeting that the Fed is going to have on September 21 getting closer, everyone is starting to talk about what might happen and which could be the results of this. One of the most important topics from this meeting is if the Fed is going to raise the interest rates. About 35 percent of the people think that the Fed is going to increase the rate in the meeting, but most of the people this change is not going to happen until December of this year. Some of the reasons for this is that for example some people say that for the rate to be increased the inflation has to be greater than it is now, according to the article the Fed's target is about 2 percent, which right now is very far from it since the last release form the US government in August showed a 0.8 percent. Also some comments from people involved with the Fed and specialist show that the possibility for the rates to increase in this meeting is higher than before and most of them say that it is going to change this year, but most of them say this change is going to happen on December. One quote from the article that shows this is "The Fed can afford to be patient and deliberate in its actions," said by Dallas Fed President Robert Kaplan. Which explains why the change is most likely to happen in December that in the meeting that they are having this month.

There have been a lot of opinion on whether the Fed should increase or not the interest rate, but the truth is that after September 21 when the meeting is taking place, there would be people supporting the decision and people criticizing it. The most possible outcome from this meeting is that they re not going to increase the rate taking into accounts the comment from the Fed, because they have been saying that they can wait and that they don't want to take decisions that will be very hard to fix later on, so they ask people for patience.

Oil prices surge as US burns through crude supply at record rate

Oil Prices have risen this past week because of an over supply of oil in the United States, this over supply is at the highest rate this year. Many people are saying this over supply has come from tropical storms and hurricane Herman. The industry used 14.5 million barrels in storage, mostly from the East coast, and the Gulf shores.

This also effected US imports of oil, as there was a sharp decline of 1.8 million barrels a day. With imports down, and oil drilling in the United States shutting down in the Gulf area we saw gasoline stocks drop by 4.2 billion barrels.

Andrew Lipow is the president of Lipow Oil Associates, and he is certain that in the next few weeks the oil inventory will recover to an extent, but the imports need to catch up. He also stated these storms are effecting the shipping of oil, but he does not believe that will affect OPEC from increasing their oil production.

Vladmir Putin and Saudi Deputy Crown Prince Mohammed bin Salman met durin the G-20 meeting, and issued a statement of cooperation, which contributed to the increasing oil prices.

The oil industry has a large effect on our economy as we import a lot of oil, but we also produce a lot of oil. No one thinks about storms affecting the distribution of oil, or affecting the production of oil in the United States, but these storms have had an affect on our oil industry, with the rising prices, and the decline in oil imports. From reading this article I do not believe this will have a large impact on our oil industry, but it does affect the production and distribution of oil for a short period of time.

http://www.msn.com/en-us/money/markets/oil-prices-surge-as-us-burns-through-crude-supply-at-record-rate/ar-AAiF08v

Sir Philip Green denies he tried to 'blackmail' Pensions Regulator

Philip Green is the former owner of BHS (originally British Home Stores), he is described as the “Britain’s Donald Trump” on the cover of the renowned US magazine regarding the latest issue of a lengthy feature about the billionaire tycoon.

The article in the magazine's headlined “How Sir Philip Green made an outrageous fortune and outraged an entire nation”. It describes the collapse of BHS has caused in the UK and examines Green’s background, quoting supporters of the tycoon in the US but also critics such as Labor MP Frank Field.

The coverage of the scandal in the US is significant because Green has expanded Topshop into large American cities and the US private equity firm Leonard Green owns 25% of the chain.

BHS collapsed into administration in April, with the last of its 164 shops closing last month. The demise of the retailer led to 11,000 job losses and left a £571 million pension deficit.

Green sold the department store chain for £1 to serial bankrupt Dominic Chappell 13 months before it collapsed. The tycoon, his family, and other BHS investors collected more than £580 million from the company during the 15 years he ran it.

The magazine likens Green to Trump because of his “flowing white curly locks, perma-tan, and unshakable brashness”. William D Cohan, the award-winning journalist who wrote the article, claims that Green called him while he was writing it to say: “You’re on trial. Let’s see how well behaved you are.”

However, Philip Green claimed that was "wholly untrue" that he had tried to pressurize the regulator.
he also attacked statements made by MP Frank Field, calling them "untrue, totally inaccurate and unhelpful". Sir Philip said: "I would like to apologize sincerely to all the BHS people involved in this sorry affair."


Sir Philip Green denies he tried to 'blackmail' Pensions Regulator

Transportation Industry Predicting Economic Decline

The transportation industry has historically been a strong indicator of an economic downturn. It has been proven that in an economic decline, one of the first industries to show this decline is transportation. More specifically speaking, the the plane, boat, and train industries are usually a prelude to economic growth/ decline as whole. The graph below shows the freight transportation index (FTI). It is interesting to note that the decline in the FTI at the beginning of 2008, is similar to the decline in 2016. A very large portion of freight usage comes from the transportation of raw materials to manufacturers. If manufacturers are not expecting growth, or even a decline, they are not going purchase and transport more raw and intermediate goods. This is really a self fulfilling prophecy. If the manufacturing companies are predicting an economic decline then they will not purchase, transport, and produce more goods which will in itself negatively effect the economy.

http://www.cnbc.com/2016/09/08/transportation-planes-trains-and-trucks-point-to-economic-downturn.html