The anti-retirement plan: Working 9-to-5 past 65

http://www.washingtonpost.com/news/get-there/wp/2014/10/03/the-anti-retirement-plan-working-9-to-5-past-65/

    This article, from the Washington Times, explores the relatively new phenomenon of working into and past retirement. A couple decades ago, once one hit retirement age, he or she would traditionally retire and receive a pension, allowing them to do all of the stereotypical retirement activities. Now, however, more and more adults of 65 and older are actually choosing to remain in the work force. This is the result of several changes, the first being increased life span. Today, one in four Americans will live to be 90 and one in ten will live to be 95. With the retirement age at 65, it makes sense that people would want to work a little longer to compensate for their longer lives. Another reason for this trend is the changing job climate. People can now work longer because their jobs are less physically demanding. Obviously, someone who has a profession can continue working longer than someone with a blue collar position. Because more and more Americans hold these intellectual jobs, more and more 65 and up individuals are working longer. Lastly, there has been a decline in the use of pensions. It is more traditional now to rely on social security and savings, whereas in previous decades a pension was the norm. It is economically beneficial to withhold drawing from social security, which many people are realizing and doing. Regardless of the many reasons one chooses to continue working, one thing is clear; it is becoming an increasingly popular alternative to retirement.

Unemployment rate falls below 6%

http://money.cnn.com/2014/10/03/news/economy/september-jobs-report-unemployment-below-6-percent/index.html?iid=HP_River

For the first time since 2008 the Unemployment rate has fallen below 6%. The September reports show a unemployment rate of 5.9% and go on to show that this decrease in rate is not due to people leaving the labor force, but rather a large increase in the number of jobs. According to the report employers added 248,000 jobs last month, leading to the decrease in the unemployment rate. This decrease in the unemployment rate is a good sign that our economy if finally recovering, and with me graduating college next year I am glad this is happening right now.

Jobs data may hurt democrats

While the job report was positive and showed an increase in job creation and a decrease in the unemployment rate, the report fails to convey the democratic party's message of "helping the little guy" rather than the "one percenters." The report showed the largest portion of jobs created coming in the professional field, rather than the manufacturing or low income professions. This growth could hurt the democrats in the upcoming elections as the areas of employment they have been adamant about improving have yet to rebound at the rate of others. This could be due to the America's distancing from manufacturing to a service and technology based economy.

Low interest rates can boost households' consumption

        This study discusses the announcement to "scale back on quantitative easing" and the effect this has had on businesses, the media, and individuals because of it. It uses falling interest rates and mortgage rates to show how households have "more money" available for consumption, thus also increasing the chances they will consume. It also supports the claim that low interest rates will increase consumption, noting that the trend even seems to increase over time.

        Finally, it discusses the "positive income shock" and provides a rough estimate of the "effect of monetary policy on country-level consumption" based on a geographic spread of the US showing adjustable-rate mortgages (the study actually includes a cool graph of this). All in all, this study sums up and goes much more in-depth on some of the things we have been discussing in class recently.

http://www.voxeu.org/article/low-interest-rates-can-boost-households-consumption

Latest GM recalls cover 57,000-plus vehicles

http://finance.yahoo.com/news/latest-gm-recalls-cover-57-175343690.html

This was just a quick article about the latest GM recall.  GM announced today that it was recalling more than 57,000 vehicles in the U.S. due to problems ranging from wiring in the steering column to inadvertent shutdown of the engine.  GM announced this the day after they also announced the recall of 524,834 vehicles worldwide.  It seems as though every time we see GM in the news it has to do with another recall.  The article said this is the 74th recall of this year alone which has affected about 30 million vehicles.  On the brighter side in the latest recall GM announced it is not aware of any crashes injuries or fatalities compared to one of their more recent ones where the problems were linked to at least 23 deaths.  I think if they keep having to recall vehicles their public image is going to be seriously damaged if it hasn't been already.  I can't think of any other automobile companies who have had so many recalls in recent memory, let alone the last year.  If people start viewing GM as a sub par vehicle maker their market share would most likely be devastated.  This may affect jobs, GDP and GNP over time.  

saving for retirement prudence penalised

This article looks at how many countries in the European Union are having troubles with getting their citizens to invest in retirement programs. As stated in the article, "A new report from the European Federation of Financial Services Users reveals how bad things have been. It finds that, for many savers in Belgium, Britain, France, Italy and Spain, the real (after inflation) returns from private pension schemes have been negative for much of this century." Some examples that were given from the article were pension plans in Spain lost 1.2% a year in real terms between 2000 and 2013. Another example is one French equity fund returned just 16% after charges over ten years, compared with a gain for the index it was tracking of 73%. One of the more astonishing parts about this was the fact that the it was very hard for the researchers to obtain the figures because of the, "complexity of pension savings taxation in EU countries makes it also extremely difficult to compute after-tax returns.” This is a problem for governments that are trying to get their citizens to buy into retirement programs, so that they were lest dependent on the government when they retire. 

http://www.economist.com/news/finance-and-economics/21621883-european-savers-have-suffered-terrible-returns-pension-funds-prudence

Unemployment rate falls below 6% for first time since 2008

In September employers added 248,000 jobs. Unemployment fell to 5.9% while the labor force was virtually unchanged. This is very good news since a lot of the drops in unemployment during this recession have been due to people dropping out of the labor force. I also expect this kind of growth to happen in October and December in preparation for the Christmas season. Unless there is some other underlying issue, it seems like the economy is improving steadily. I wonder how long this growth will continue, and I wonder if wages will suffer from the growth of workers. Maybe the increase in workers would leave firms less money to raise wages. Sort of the opposite effect of minimum wage increasing and firms not being able to hire as many workers.

http://money.cnn.com/2014/10/03/news/economy/september-jobs-report-unemployment-below-6-percent/index.html?iid=SF_E_River

India's Modi Hopes to Rekindle U.S. Investment

Indian Prime Minister Narendra Modi is visiting the United States today to discuss a plan to help resuscitate the investment interest in the Indian economy with 15 top executives from large companies. India has not lived up to its economic potential that it is supposed to have achieved already. Our FDI in India has shrank from $1.9 billion four years ago to just $800 million this year. The reason for this is its overstretched infrastructure, confusing and sometimes contradicting regulations, and foreign investment restrictions and tax authorities. Kenichi Ayukawa stated about India, “It is not the easiest place to do business”. Mr. Modi is trying to implement some economic reform ideas that will help India become more of an economic powerhouse.

I was wondering what you guys think the results will be and if the United States will heavily invest in India?

GoPro's Devastating Drop

GoPro has been an extremely successful stock since its IPO in June 2014. GoPro has been the best U.S.-listed performing IPO so far this year, with a $24 IPO price. However that all changed Thursday October 2nd, when the stock took a nose dive. The stock fell as much as 14%. The reason for this massive plummet was due to the company's founder and Chief Executive Nicholas Woodman. Woodman and his wife, Jill Woodman, gave 5.8 million Class A shares valuing around $500 milion to charity. It was a great gesture from the Chief Executive, that only caused GoPro a two day hick up and gave some investors a minor heart attack from fear. The stock has been slowly increasing back to its normal price today. 

The charity that received this large donation was the Silicon Valley Community Foundation. This is a well known charity foundation, which receive tons of donations, including one from Mark Zuckerberg who famously announced a $1 billion gift a few years back. The foundation has a few options of what to do with the gift, either sell them and cash out or to keep the stocks and hope the company's value sky rockets as it has done in the past. Mari Ellen Loijens, the chief business, development and brand officer for the Silicon Valley Community Foundation, expressed no conclusion to the question. I believe the best call would be to hold on to the stocks and wait for GoPro to get out of the recent slump and sell them once they are back to a reasonable level, which it is bound to do. 


Source: http://online.wsj.com/articles/gopro-ceos-foundation-doesnt-intend-to-sell-shares-1412281879

NASA to Work With India in Future Mars Mission

Last week, both NASA's MAVEN and India's Mangalyaan satellites made it into Mars's orbit, further cementing NASA's competence in space and proving India's ability to play in the big leagues. Mangalyaan is set to scan the surface of Mars and made India both the first Asian country to make it to Mars (among the competitive Chinese and Japanese) and the first country to make it to Mars successfully on their first try. This impressive feat was topped by the fact that the mission was completed with $74 million, a little over one tenth of the budget for MAVEN. This new deal between NASA and ISRO (Indian Space Research Organisation) is exciting on multiple fronts: the countries can continue learning about Mars and the possibility of making it habitable for people and NASA can get a lesson on frugal budgeting from India. Space exploration is imperative for humans to learn more about possible business ventures (asteroid mining), human real estate for colonization, and even for further understanding of things on Earth (ex. photosynthesis and cancer research). The things we learn in space have tremendous impacts on the economy and way of life here on Earth but, as many NASA critics will be quick to point out, they aren't cheap. By working with ISRO, NASA and the world will be able to learn things about Mars's atmosphere and surface at a much lower price than ever before, boosting the overall production of both agencies and opening up more possibilities for the future. If NASA can learn to do more with less of a budget, taxpayers will be much happier with where their money is going and everyone will be better off.

India, U.S. Agree to Joint Exploration of Mars