http://www.aljazeera.com/news/americas/2013/04/201342614326535652.html
This article talks about the US economy growth in the terms of GDP. The economists had estimated a three percent growth in the quarter, but the GDP had growth of only about two percent. This lack of expected growth is partly due to the slow performance of farming industry, which had a decline in output due to droughts throughout the United States, and partly because households cut back on saving to fund their purchases after incomes dropped at a 5.3 percent rate in the first quarter. The drop in income was the largest since the third quarter of 2009. The saving rate fell to 2.6 percent, the lowest since the fourth quarter of 2007, from 4.7 percent in the fourth quarter of 2012. The news will encourage the Federal Reserve to maintain its monetary stimulus. The US central bank, which meets next week, is widely expected to keep purchasing bonds at a pace of $85bn a month.Although government spending, which fell to a 4.1 percent annual rate, tax increases and federal budget cuts could slow growth later this year. Consumers managed to step up their spending despite the return of a two percent payroll tax and higher petrol prices. Despite the spike in petrol prices, inflation pressures were benign in the first three months of the year. An inflation gauge in the government's GDP report rose at a 0.9 percent rate, the smallest increase since the second quarter of 2012. The personal consumption expenditure index had increased at a 1.6 percent pace in the fourth quarter. Business spending on equipment and software slowed sharply, growing at an only three percent rate after a brisk 11.8 percent pace in the fourth quarter.
Sunday, April 28, 2013
Wealth Gap Among Races Widened Since Recession
http://www.nytimes.com/2013/04/29/business/racial-wealth-gap-widened-during-recession.html?hp&_r=0
Because of the recession, millions of Americans have felt the negative affects. However, this article states that for black and hispanic families, the affects have been much worse. Prior to the recession there was already a substancial wealth gap between these minority groups and whites. Since the recession it has only gotten worse. Also, the gap is projected to increase with the recent stock market rebound and the dynamics of the housing market. As of now the average wealth for white families is $632,000 while it is only $98,000 for black families and $110,000 for Hispanic families. Hopefully this situation gets better before it gets any worse.
Because of the recession, millions of Americans have felt the negative affects. However, this article states that for black and hispanic families, the affects have been much worse. Prior to the recession there was already a substancial wealth gap between these minority groups and whites. Since the recession it has only gotten worse. Also, the gap is projected to increase with the recent stock market rebound and the dynamics of the housing market. As of now the average wealth for white families is $632,000 while it is only $98,000 for black families and $110,000 for Hispanic families. Hopefully this situation gets better before it gets any worse.
Ethiopian Airlines resumes Dreamliner flights
http://www.aljazeera.com/business/2013/04/20134275137702387.html
This article talks about the Boeing Dreamliner and resuming flights with it after grounding the planes due to lithium Ion battery problems. The title of the article is about Ethiopian airline being the first to resume the flights, but the key points in it are the fact that Japanese and American officials have allowed flights of the 787 to be resumed. The grounding of the plane for months was due to the battery packs catching fire or smoking during flights. Boeing Co. said on Saturday that it is ready to build seven 787 Dreamliners a month from mid-year and is still on course for 10 per month by the end of the year. Ray Connor, chief executive of Boeing Commercial Airplanes, and Shinichoro Ito, chief executive of ANA Group, will be on board test flights to make sure the battery problems have been solved. In addition to the battery fix approved by US authorities, Japan's Civil Aviation Bureau has requested airlines meet the country's own safety standards when flying the 787, which include monitoring the battery current while the jet is in the air and checking used batteries.Teams of Boeing engineers began installing reinforced batteries on Dreamliners owned by ANA on Monday. The airline hopes to complete retrofitting its entire fleet by mid-May. The problems with the Dreamliner were a heavy blow to the company who has fierce competition with the french rival Airbus.
This article talks about the Boeing Dreamliner and resuming flights with it after grounding the planes due to lithium Ion battery problems. The title of the article is about Ethiopian airline being the first to resume the flights, but the key points in it are the fact that Japanese and American officials have allowed flights of the 787 to be resumed. The grounding of the plane for months was due to the battery packs catching fire or smoking during flights. Boeing Co. said on Saturday that it is ready to build seven 787 Dreamliners a month from mid-year and is still on course for 10 per month by the end of the year. Ray Connor, chief executive of Boeing Commercial Airplanes, and Shinichoro Ito, chief executive of ANA Group, will be on board test flights to make sure the battery problems have been solved. In addition to the battery fix approved by US authorities, Japan's Civil Aviation Bureau has requested airlines meet the country's own safety standards when flying the 787, which include monitoring the battery current while the jet is in the air and checking used batteries.Teams of Boeing engineers began installing reinforced batteries on Dreamliners owned by ANA on Monday. The airline hopes to complete retrofitting its entire fleet by mid-May. The problems with the Dreamliner were a heavy blow to the company who has fierce competition with the french rival Airbus.
Unemployment Is Ravaging Young Generations
In this article, the author illustrates how the younger generations are much more likely to be jobless than few years ago. The number of young people currently unemployed are 30% higher than in 2007. The two main reasons for this are the slowdown in the west has reduced labor demand greatly and the fact that countries with idle labor markets are also more likely to have high population growth. The article also explains how hard it is to reignite growth in reality to reduce this high level of unemployment amongst younger population. And last but not least is the concern about how even graduated students are finding themselves sitting idle at home rather than getting a decent job after graduation. Some countries are trying to fix this issue by encouraging technical education, while numerous firms revamp their training and recruiting policies.
In my opinion, at the current state, going for technical education seems to be the way to go. Graduating from liberal arts univeristies seems not to be a guarantee for a stable future anymore, but it is still better than cut off from school because of the very stagnant labor market. Unless we have the economy shows good signs of growth, this trend will likely to continue for quite a while.
http://www.economist.com/news/leaders/21576663-number-young-people-out-work-globally-nearly-big-population-united
In my opinion, at the current state, going for technical education seems to be the way to go. Graduating from liberal arts univeristies seems not to be a guarantee for a stable future anymore, but it is still better than cut off from school because of the very stagnant labor market. Unless we have the economy shows good signs of growth, this trend will likely to continue for quite a while.
http://www.economist.com/news/leaders/21576663-number-young-people-out-work-globally-nearly-big-population-united
Evil Google?
Evil Google?
This is an interesting article from the New York Times about Google.
"Basically, if the monopolist tries to charge a price corresponding to the value intense users place on the good, it won’t attract enough low-intensity users to cover its fixed costs; if it charges a low price to bring in the low-intensity user, it fails to capture enough of the surplus of high-intensity users, and again can’t cover its fixed costs."
The article is saying Google provides an important infrastructure to our society, but perhaps is not worried enough about maintaining that infrastructure. Interesting spin on a site used almost daily by us college students and an interesting read as well.
This is an interesting article from the New York Times about Google.
"Basically, if the monopolist tries to charge a price corresponding to the value intense users place on the good, it won’t attract enough low-intensity users to cover its fixed costs; if it charges a low price to bring in the low-intensity user, it fails to capture enough of the surplus of high-intensity users, and again can’t cover its fixed costs."
The article is saying Google provides an important infrastructure to our society, but perhaps is not worried enough about maintaining that infrastructure. Interesting spin on a site used almost daily by us college students and an interesting read as well.
Sequester Cuts
Sequester Cuts
This is a very touchy situation. Our debt is so immense that it is incredibly high on the importance list, but is it more important than food safety or scientific research? Each option has its ups and its downs, but all are important. I'm not sure what the right thing to do is, maybe just cut the deficit then worry about everything else or don't focus as much on the deficit. Either way this deficit is a huge inconvenience and we need to find a way to take care of it.
This is a very touchy situation. Our debt is so immense that it is incredibly high on the importance list, but is it more important than food safety or scientific research? Each option has its ups and its downs, but all are important. I'm not sure what the right thing to do is, maybe just cut the deficit then worry about everything else or don't focus as much on the deficit. Either way this deficit is a huge inconvenience and we need to find a way to take care of it.
French unemployment at new high
This article talks about an increase of unemployment levels in France. A report released by the labor ministry has said that people searching for a job have gone up by 11.5% from last year. The current unemployment level is at 10.2% which is really high but has not beaten the record for the highest unemployment level France saw in 1997. The French president as assured that unemployment levels would be brought down by the end of the year.
This article clearly shows the difficulty and the impact that the recent economic crisis had on the euro zone economies .
http://www.bbc.co.uk/news/business-22301063
This article clearly shows the difficulty and the impact that the recent economic crisis had on the euro zone economies .
http://www.bbc.co.uk/news/business-22301063
The calculation and influence of GDP estimates.
http://www.thedailybeast.com/articles/2013/04/27/the-misuse-and-meaning-of-gdp-the-main-gauge-of-economic-growth.html
On Friday, the Bureau of Economic Analysis released their estimates for the first quarter of 2013 and it seems that the US has outperformed previous estimates and is growing at an annualized rate of 2.5% which is much higher than previous periods.
This is relevant given the findings of a graduate researcher who recently disproved the results of research carried out by two renowned economists Carmen Reinhardt and Kenneth Rogoff. The renowned economists proved through their research that economies with debt exceeding 90% of their GDP experienced slower growth than their peers. This research was disproved when research done by a graduate student as homework showed that their methods were flawed with missing data and inaccurate results.
The article above also goes on to mention discussions carried on by the Bureau of Economic Analysis to expand the definition of investment spending. The expanded definition would include money spent on research and development and other things formerly accounted for as business expenditures. This prediction would expand US gdp estimates and would in some ways improve the accuracy of such calculations.
The ideas from this article go to show that GDP is an important estimate that can be used an misused. However, it is just an estimate and is usually not a very accurate measure of real economic activity (it does not include underground/ illegal business activities that might be a huge sector of the economy) but is the best estimate we have.
On Friday, the Bureau of Economic Analysis released their estimates for the first quarter of 2013 and it seems that the US has outperformed previous estimates and is growing at an annualized rate of 2.5% which is much higher than previous periods.
This is relevant given the findings of a graduate researcher who recently disproved the results of research carried out by two renowned economists Carmen Reinhardt and Kenneth Rogoff. The renowned economists proved through their research that economies with debt exceeding 90% of their GDP experienced slower growth than their peers. This research was disproved when research done by a graduate student as homework showed that their methods were flawed with missing data and inaccurate results.
The article above also goes on to mention discussions carried on by the Bureau of Economic Analysis to expand the definition of investment spending. The expanded definition would include money spent on research and development and other things formerly accounted for as business expenditures. This prediction would expand US gdp estimates and would in some ways improve the accuracy of such calculations.
The ideas from this article go to show that GDP is an important estimate that can be used an misused. However, it is just an estimate and is usually not a very accurate measure of real economic activity (it does not include underground/ illegal business activities that might be a huge sector of the economy) but is the best estimate we have.
Through a glass, darkly
http://www.economist.com/news/finance-and-economics/21576666-outlook-even-grimmer-it-was-time-bail-out-through
The situation in Cyprus is still very uncertain with bank accounts still restricted and capital controls in place, which leads to people saving most of their money. Lack of a trade credit puts pressure on business and the longer capital controls remain in place the more damage will be done to the economy. Private debt of firms and households is close to 300% of GDP and unemployment rate currently at 14% continues to rise. European Commission changed its prediction of GDP drop to 8.7% in 2013 and 1.3% in 2014 but economists believe that those numbers might be too optimistic. European Commission is known for underestimating their predicted numbers in order to possibly keep some level of confidence. Therefore, it is difficult to foresee the near future but European authorities state that they are working on different solutions that will be least painful for the public.
The situation in Cyprus is still very uncertain with bank accounts still restricted and capital controls in place, which leads to people saving most of their money. Lack of a trade credit puts pressure on business and the longer capital controls remain in place the more damage will be done to the economy. Private debt of firms and households is close to 300% of GDP and unemployment rate currently at 14% continues to rise. European Commission changed its prediction of GDP drop to 8.7% in 2013 and 1.3% in 2014 but economists believe that those numbers might be too optimistic. European Commission is known for underestimating their predicted numbers in order to possibly keep some level of confidence. Therefore, it is difficult to foresee the near future but European authorities state that they are working on different solutions that will be least painful for the public.
Zimbabwe after hyperinflation
The article "In dollars they trust" shows economic situations in Zimbabwe after hyperinflation. For example, the OK Mart store in suburb of Harare, owned by OK Zimbabwe, the country's largest retail chain, is doing business well. However, the industrial district farther south of the city centre looks rather less prosperous.
This lopsided economy is a legacy of the collapse of Zimbabwe’s currency. Inflation reached an absurd 231,000,000% in 2008, making American dollar Zimbabwe's main currency. Now the American banknotes the economy relies on have to be begged, borrowed or earned; this helps to keep inflation in the low single digit.
A big question was where the dollars needed to oil Zimbabwe’s banking system would come from. Happily, the dollars came back to Zimbabwe from New York or London. Banking system is still not normal. The risk of a run means depositors flock to the five biggest banks. I think that Zimbabwe needs to create more connections with other governments to help decrease the threats. Zimbabwe has to attract more dollars to fill the trade deficit. Fortunately, consumers are in sunnier mood. They are willingly to borrow even at higher interest rates.
Still, a problem for all retailers is shortage of small change. Yet for all the printing of electronic dollars by the Fed, the greenback is a hard currency in Zimbabwe. In my opinion, Zimbabwe needs more firms which are able to invest so they do not need to borrow too many dollars.
http://www.economist.com/news/finance-and-economics/21576665-grubby-greenbacks-dear-credit-full-shops-and-empty-factories-dollars-they
This lopsided economy is a legacy of the collapse of Zimbabwe’s currency. Inflation reached an absurd 231,000,000% in 2008, making American dollar Zimbabwe's main currency. Now the American banknotes the economy relies on have to be begged, borrowed or earned; this helps to keep inflation in the low single digit.
A big question was where the dollars needed to oil Zimbabwe’s banking system would come from. Happily, the dollars came back to Zimbabwe from New York or London. Banking system is still not normal. The risk of a run means depositors flock to the five biggest banks. I think that Zimbabwe needs to create more connections with other governments to help decrease the threats. Zimbabwe has to attract more dollars to fill the trade deficit. Fortunately, consumers are in sunnier mood. They are willingly to borrow even at higher interest rates.
Still, a problem for all retailers is shortage of small change. Yet for all the printing of electronic dollars by the Fed, the greenback is a hard currency in Zimbabwe. In my opinion, Zimbabwe needs more firms which are able to invest so they do not need to borrow too many dollars.
http://www.economist.com/news/finance-and-economics/21576665-grubby-greenbacks-dear-credit-full-shops-and-empty-factories-dollars-they
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