Overvalued Housing Market is Delaying Housing Purchases

Home prices rose substantially since September of 2016, which is impacting real estate agents and those searching for homes significantly. "As a result, 48 percent of America's top 50 housing markets are overvalued, up from 46 percent in August." This means that the average listed home prices are valued at least 10 percent higher than what they will be in the "long term, sustainable value." This is significant because the housing market is one of the backbones of the U.S GDP.

These increased prices are causing a large reduction in demand for new houses.This is also decreasing the supply of homes on the market as homeowners fear they will not be able to find a new home after the sale of their current property. These supply and demand changes are due to changes in expectations of those in the housing market. Both sellers and buyers are expecting a decrease in prices and are waiting until they are lower to sell and/or buy. Once rates settle closer to the long term sustainable value, we should see increased consumption and more action in the housing market. This will help bolster U.S GDP, as housing is so important to the health of our economy.


https://www.cnbc.com/2017/11/07/more-housing-markets-are-overvalued-and-consumers-feel-the-pain.html

Democrat's big electoral win

I saw a post going around a few weeks ago that reminded us that Democrats are very good at claiming moral victories, and much worse at claiming electoral victories, which is usually true. Last night they outperformed even the most optimistic predictions, sweeping the Virginia and New Jersey gubernatorial races as well as possibly claiming a majority in Virginia's House of Delegates (the race is so close they are relying on absentee and provisional ballots, which could take days to count), and picking up two state senate seats in rural Georgia.

There are a few reasons for this, and it would be impossible to talk about without mentioning the liberal backlash to President Trump's administration and the various policy-based, ethical, and moral failures of that administration. However, I think it's also important to talk about how Democratic candidates responded to demagogic attacks and campaigns from Republican candidates. The Virginia governorship is especially notable here - Ed Gillespie (the Republican candidate) ran a ton of ads attacking Ralph Northam saying that his immigration policies would bring Mexican gangs in and that sanctuary cities are havens of crime (never mind that there are currently no sanctuary cities in Virginia). Northam did an excellent job of making the campaign about economic issues, and pointing out that his opponent was relying so heavily on racial and cultural attacks because he didn't want to draw attention to the fact that Northam's election would improve the economy and healthcare, consistently ranked as the two most important issues for Virginians. It appears economic messaging worked for Northam.

https://www.politico.com/story/2017/11/07/democrats-virginia-new-jersey-election-results-244674

GOP tax bill's big losers: NFL, and other sports leagues

As republicans begin to push the tax reform forward, sports teams could be affected tremendously. The bill has two provisions that would cost teams, the first one eliminates the ability to deduct college donations made in exchange for tickets. The second, which is a lot more impactful is that professional sports teams would not be able to use tax-exempt municipal bonds to build stadiums. Interest payments from municipal bonds have been exempt from taxes since the early 1900's although they were not designed for the use of building stadiums. There were 36 stadiums built from 2000 to 2016, the total amount of tax exemptions for these stadiums was $13 billion which ultimately had to be payed for by taxpayers. The NFL is expected to take in $14 billion this season alone but still has taken almost $7 billion dollars from tax payers over the last 20 years. When it is explained in this way, this elimination of tax exempt bonds for the NFL seems like the right way to go but the NFL argues that "These sorts of infrastructure projects have a long history and the benefits of them are obvious in many of our communities around the country, so we will continue to make our opposition known on that."

It will be interesting to see as the tax reform moves forward the amount of push back that it gets from the NFL. I imagine with the amount of money in the NFL and other professional sports that these two provisions will be very hard to push through It is a little ridiculous that these teams and owners that have billions of dollars can't pay for their own stadiums. At the same time I understand that they feel like they are bringing a lot of jobs and stimulation to a community and want compensation (tax exemptions) for that.


http://www.foxbusiness.com/politics/2017/11/07/gop-tax-bills-big-losers-nfl-and-other-sports-leagues.html

There are two realities in this country

Billionaire entrepreneur and financier Ray Dalio says there are two very different economic realities in the United States right now. That divide is threatening the nation's stability, the Bridgewater Associates founder says, and it's only going to get worse as technology replaces workers.

"[T]here are two economies. We talk of 'the economy.' Recognize that you can't talk about the economy ... there are two economies," says Dalio, speaking to Recode executive editor Kara Swisher on her podcast, Recode Decode, published Monday.

There's the "top 40 percent" and "the bottom 60 percent," says Dalio. And for those at the bottom, life is hard without a lot of hope.

"If you look at the economy of the bottom 60 percent, it is a miserable economy. Not only hasn't it had growth and economic movement and so on, it has the highest rising death rates, it is the only place in the world where death rates are rising because of a combination of opiates, other drugs and suicides," Dalio says. (Indeed, Princeton Professors Anne Case and Angus Deaton found that drugs, alcohol and suicide are a major reason behind rising death rates among non-Hispanic whites in the U.S. with a high school diploma or less.)

https://www.cnbc.com/2017/11/07/billionaire-ray-dalio-for-many-in-the-us-its-a-miserable-economy.html

Why Ohio's Medical Community says vote no on issue 2

              With the general election day tomorrow in Ohio it is relevant to bring up the topic of Issue 2.  Issue 2 in a nutshell would make the pharmaceutical companies charge state agencies the same price  or a lower price for drugs as they charge the U.S. Department of Veteran Affairs.  This would decrease the profits of the drug companies.  This would benefit the people receiving drugs from the state by most likely lowering costs for them.  However, as talked about in class wages are sticky in a downward direction.  These drug companies would not want to see their profit margins fall for the reason just stated.  One way for these companies to regain what would be lost revenue is to up raise the prices of non-state buyers of drugs.  This would take money out of the pockets of consumers.  If this law passed another law might have to be passed to protect private consumers.

https://www.usatoday.com/story/sponsor-story/ohioans-against-deceptive-rx-issue/2017/10/30/why-ohios-medical-community-says-vote-no-issue-2/107166350/

Trump visits China: Here's what to expect

This Wednesday, November 8th President Donald Trump will be visiting Beijing, China to meet with one of China's most powerful leaders in decades, Xi Jinping. During the meeting, Trump will likely address the trade imbalance that the United States and China have. Many analysts are expecting the POTUS to announce a series of high value deals between the countries that will help narrow the trade imbalance. These deals will likely include the Chinese buying American energy, farm products, aircrafts and likely other heavy machinery items. In addition to these moves, it has been noted that reforms to Chinese financial sector could be seen as a result of delegations from Goldman Sachs CEO Lloyd Blankfein.

Although the deficit is a major issue for the U.S. economy, many leading businesses are hoping that Trump's fixation with the deficit doesn't distract him from dealing with other larger issues. An example of an issue that Trump may be overlooking is the US-Sino relations such as market access and competition in industries of the future.

Overall, the best case scenario from Trump's visit is described as , "proactive, reciprocal treatment" by William Zarit, the chairman of the American Chamber of Commerce in China. He describes his worst case scenario as reactive motion from the United States which would include limiting investment and limiting Chinese exports.

https://www.cnbc.com/2017/11/06/trump-visits-china-heres-what-to-expect.html

A Peek at Future Jobs Shows Growing Economic Divides

Forecasting jobs for the future is vital to economic and career planning. As technology evolves, more and more manufacturing jobs are lost to automated processing. Its cheaper, and more efficient despite the fact that it is putting Americans out of a job. As the world continues to evolve, jobs requiring at least a bachelors degree are expected to grow. In addition to this, "Jobs in health care and clean energy will continue to grow rapidly. Manufacturing jobs will shrink, as will occupations involving data entry or other tasks that are increasingly being done by machines or algorithms. Overall job growth will continue to be slow, partly as a result of the aging of the baby boom generation; by 2026, even the youngest boomers will be approaching retirement". I think it will be very interesting to see if these projections are accurate, because there have been instances where projections were wrong and young adults were lead in the wrong direction. When looking at potential career paths, did you consider the future job market before you made any major decisions? 

U.S. Jobs Grow 261,000 to Rebound From Hurricanes

According to the Washington Post, the United States has added 261,000 new jobs just in the month of October. As a result, the jobless rate is now down to 4.1, which is the lowest since the year 2000. There are many different things that may occur as a result of these job additions.

There are some positives involved in this growth, many more people are employed now. After the devastation of Hurricanes Irma and Harvey, thousands of people were unemployed due to the fact that their home and environment were destroyed. Through the month of October, though, it showed that the economy is slowly rising again. The result of many people finding jobs again could be a big reason as to why the economy is starting to grow again.

Although, with all of this growth also comes some controversy. The wages of workers in the month of October has fallen as a result of many people recovering their jobs. Looking at the numbers, it is only by a very small amount (just about 1 cent). Which is not a big amount and may not have a big impact. But, this amount will accumulate over time and may effect the salaries of workers nonetheless. The biggest industry that seems to be in high demand, especially in Texas, is construction workers. This is no surprise, as the state of Texas was impacted heavily by these two Hurricanes are are still feeling the devastation it left.

Overall, many economists are happy with this data. They are content with workers taking a lower wage to improve the economy as a whole. The biggest question now is can the economy continue to add more jobs at this rate, or will it eventually slow down this next month?

https://www.washingtonpost.com/news/wonk/wp/2017/11/03/after-hurricanes-economists-expect-return-to-steady-job-growth/?utm_term=.29b50c170471

Who wins and loses under the House GOP tax bill: Let the wonkery begin

The new proposed tax bill could impact people in different ways. Looking at the tax reform from in totality, every income group will benefit from a tax cut. However, it seems that people in the highest tax bracket will receive the greatest tax cut. The top 1% of people would have a 7.5% greater income, after tax, with the new system. On the other hand, the bottom 80% of people would experience an increase between 0.8%-2.4% of income, after tax.

The Tax Foundation performed a "dynamic analysis" of the new tax bill. Meaning, they examined how the House's GOP tax bill would impact economic growth, by looking at how people's behaviors would be influenced. The analysis results were not totally decisive, but they showed the new tax reform could create economic growth, increased wages, and close to a million new jobs. Of course, all of that sounds great, but some economists do not believe this will happen. The Tax Foundation estimated the new tax reform could result in a 3.9% higher GDP over the next 10 years, compared to if the current tax system was kept in place. The GDP growth is great, but economists see how cutting taxes by such a significant amount, could add close to a trillion dollars to the deficit. Therefore, the economy's GDP would be experiencing growth, but the deficit would continue to increase.

Obviously, there are always going to be positives and negatives to big government changes, like tax reform. However, it is important to look at who will be impacted the most. Is it a problem that the top 1% would benefit the most? Should the bottom 80% of people be upset if the new tax bill is put in place? Will there actually be economic growth?

http://money.cnn.com/2017/11/05/news/economy/tax-reform-bill-house-republicans/index.html?iid=SF_LN

Multiple people killed in shooting at Texas church

Twenty people have been killed due to a shooting in Sutherland Springs, Texas.  
The shooter is now dead after a brief chase, but it is unclear if the he was killed by police or took his own life.  It has also not been determined if it was a domestic or international act of terrorism.   A witness reported that they heard about 20 gun shots from a gas station across the street.  Sutherland Springs is in Wilson County, about 30 miles east of San Antonio.  A woman described the small town by saying, "there are two gas stations, a church, community center, post office, a Dollar General, a tire shop, and that's about it".
President Trump tweeted "May God be with the people of Sutherland Springs Texas".  He is currently in Japan for his first trip to Asia as president.  

How do you think the government to yet another horrific event? Will gun control laws become more strict?  How many more events will happen before the government notices there needs to be a change?

http://www.cnn.com/2017/11/05/us/texas-church-shooting/index.html