Obama Says Tax Breaks Shouldn't Reward Companies for Creating Jobs Abroad

President Obama criticized the Republican Party for rewarding billion-dollar tax cuts to major US corporations who created jobs abroad, while saying that US tax dollars should be supporting companies who create jobs in the United States.
Just last month the president signed a legislation that helped small businesses by increasing credit help and slashing taxes. According to the statistics, the legislation has helped many business owners.
In order to prevent doubts that could potentially hurt the economy, US Representative Mike Pence from Indiana recommended that Congress extend current income-tax rates, referring to the Bush administration’s tax cuts that are to expire at the year’s end. Although the Republicans and Democrats support the extension of low tax rates for households making more then $250,000 per year, the Republican Party is going to oppose the upcoming tax increase in January.
The incentive to create jobs in the US may look appealing but I don’t suspect this to be enough to sway corporate America who currently out-source.

The X Factor of Economics: People

The latest evidence came last week, in the form of the minutes of the latest meeting of the Federal Open Market Committee, the brain trust that establishes monetary policy. The committee, we learned, is divided on a seemingly straightforward question: Should the Fed take action to goose the economy now, or wait, watch and perhaps goose later?

Income Inequality: Too Big to Ignore

During the last three decades the economy has grown much more slowly, and our infrastructure has fallen into grave disrepair. Most troubling, all significant income growth has been concentrated at the top of the scale. The share of total income going to the top 1 percent of earners, which stood at 8.9 percent in 1976, rose to 23.5 percent by 2007, but during the same period, the average inflation-adjusted hourly wage declined by more than 7 percent.

Yet many economists are reluctant to confront rising income inequality directly, saying that whether this trend is good or bad requires a value judgment that is best left to philosophers. But that disclaimer rings hollow. Economics, after all, was founded by moral philosophers, and links between the disciplines remain strong. So economists are well positioned to address this question, and the answer is very clear.

`Liquidity Trap' Plagues U.S., More Stimulus Is Required, Fed's Evans Says

According to this article, the US needs much more monetary accommodation in the face og high unemployment and inflation that's too low. The regional bank chief of Chicago, Charles Evans also advocated targeting a path for the price level as a way to stop the inflation rate from falling.

Central bankers, seeking ways to boost flagging growth after lowering interest rates almost to zero and buying $1.7 trillion of securities, are weighing strategies for raising inflation expectations as well as expanding the balance sheet by purchasing Treasuries, according to minutes of the Fed’s Sept. 21 meeting released this week.

Inflation Looks Tame, and Shoppers Take Heart

The economy still show little inflation during September, but consumers provided a glimmer of hope for the retail sector.
The Labor Department said that excluding volatile energy and food prices, the core index was flat in September, the same as in August. And it had been running at 0.9 percent for five consecutive months, its lowest level in more than 50 years. Economists suggest that growth would remain slow for the rest of the year, given the slowdown in jobs and output. The bottom line for the recovery still remains pinned on job growth, but it is not easy. What is more, the trade deficit widened to 46.3 billion in August, which will be a drag on growth.
Separately, according to Reuters, consumer sentiment in the US declined in early October to its weakest level since July. On October 15th, new statistics for retail sales provided a growth for consumer spending, which is a cornerstone of economic growth. This upward revision to the retail sales does offer a glimmer of hope.

Recent DOW and stock trends show mixed results

The banking sector was weak, but the technology sector was impressive. Overall, the DOW dropped 32 points, mostly due to housing markets and recent foreclosure trends. Google, though, posted substantial gains as shares of the tech company increased 11 percent. Remarks made by FED chief Ben Bernanke impacted many investors and financial analysts. Bernanke alluded, not very subtly, that the FED is now less concerned with inflation and will act to ensure that interest rates stay low in the US economy. According to the article, this means 'quantitative easing', as the FED will soon begin to buy US treasuries to pump more money into the economy. Analysts are remarking that there is no doubt the FED will do this, but that the only question regards the magnitude of the FED's purchases.

Trade Deficit Widens By 8.7 Percent; Imports Grow Faster Than Exports

In August, the trade deficit widened considerably, increasing 8.7 percent to a monthly pace of $46.3 billion. The increase in the trade gap comes after a large drop in July of 14.5 percent. Though volatile in recent months, the trade deficit began to accelerate following the Greek debt crisis last spring, which put a damper on exports. This drop in net-exports was a major drag on Q2 GDP growth. Though Q3 will likely not see a large drag on growth from net-exports, it will likely not be an area of strength either.

Over the month, exports grew 0.3 percent. At the same time, imports rose 2.1 percent, following an equally sized drop in July. From a year prior, exports were up 18.6 percent, while imports were up 25.0 percent.

PPI: Headline Up 0.4 Percent; Core Prices Up 0.1 Percent

In September, the Producer Price Index for finished goods rose 0.4 percent for the second straight month. This was the third continuous months of rises in the index. Recent moves in producer prices have largely been dominated be swings in energy prices. Energy product prices rose 1.2 percent in September. Also notable was a significant rise in food prices, particularly meat products which jumped 5.4 percent.

The core index, which does not include energy or food product prices, rose by a lesser 0.1 percent. From a year ago, the core index was up 1.5 percent. Though this is still quite modest producer price inflation, it ties the highest year-over-year increase since September 2009. The top line index, including all finished products, was 4.0 percent higher from a year prior.

Retail Sales in U.S. Climbed More Than Forecast in September

According to the article, the retail sales in the US climbed more than forecast in September, easing concern that unemployment still stuck at a really high percent.

The purchase was larger than previously estimated and according to Commerce Department. In addition, there is a concern that inflation is too low and too many Americans are still out of job and it would be needed another monetary stimulus.

The consumer and the economy are still in need of support, as private job creation is insufficient to cause a material improvement in the unemployment rate and in consumer confidence

Stocks: Banks under pressure, techs rise