"After a winter of confusing economic date, some important indicator show an economy coming out of hibernation". Over the past few months, the long winter, showed that consumers and the economy weren't quite as healthy as they should have been. However, now it looks like the economy is finally picking up and shaking off the cold-weather blues:
1. Retail Sales
The Commerce Department has stated that retail prices increase 1.1% in March, which is about what economists were expecting. This increase suggest that consumers have been waiting for the weather to become warm to spend big.
2. New Car Sales
US GD is primarily composed of consumer spending. When shoppers are spending on items like cars, this is a good sign for economic output and ultimately job growth. Automakers announced that they had sold 16.4 million new cars in March, the highest number since June 2006. Here we see the effects of the weather. The recent jump in sales is probably making up for a weak winter.
3. Jobless Claims
Economist track the number of Americans applying for jobless benefits. If this number falls, it is a good sign that the labor market is getting healthier. The Labor Department announced that this number dipped to 300,000, its lowest level since 2007.
It look's like the many months where Economists blamed the cold weather for the slowdown in the economy was true. Based on these three points, the economy is finally picking up where it left off in the Fall.
http://finance.fortune.cnn.com/2014/04/14/economic-recovery-accelerates-as-winter-turns-to-spring/
Saturday, April 19, 2014
China GDP slows to 7.4% in first quarter
http://money.cnn.com/2014/04/15/news/economy/china-gdp/index.html?iid=SF_E_River
China's growth has slowed to 7.4% in the first quarter. China's GDP growth is very important to keep an eye on because it is the most comprehensive gauge of the country's economic health. Some experts are predicting there will additional slow growth, while others aren't sure. China is searching to find a source of a more sustainable growth...where do you think they will find it? What do you predict will happen to China's economy?
Avg American Pays $8,577 for Welfare
http://moneymorning.com/ext/articles/wealthandpoverty/new-study-shows-average-american-pays-8577-for-welfare.php?iris=205888
According to the US Census Bureau, 101.7 million full time workers are paying for welfare benefits but 108.5 million Americans are receiving these benefits.
This article attacks President Obama for keeping the poor out of work and welfare.
The total benefit(food, medical care, housing, social service and cash) that a family of four could receive is $40,000/year in tax payer funded subsidies.
So the writer wonders, why would someone work making around $55,000 when, after paying taxes,they will receive LESS than they could stay at home live on welfare earnings ?
To keep the welfare program solvent, each American taxpayer is forced to pay an average of $8,776 every year. The avg welfare recipient is given $9,500 per year.
The difference of $724 per person aka "free govt benefits" is adding up in the already large
$17 trillion deficit.
The number of Americans relying on food stamps have risen by 1,625% since 1969.
It has also been projected that approximately 50% of all US children will be on food stamps at some point in their lives.
In 2011, the government spent $41.3 million ONLY for the advertisements of food stamps.
According to the US Census Bureau, 101.7 million full time workers are paying for welfare benefits but 108.5 million Americans are receiving these benefits.
This article attacks President Obama for keeping the poor out of work and welfare.
The total benefit(food, medical care, housing, social service and cash) that a family of four could receive is $40,000/year in tax payer funded subsidies.
So the writer wonders, why would someone work making around $55,000 when, after paying taxes,they will receive LESS than they could stay at home live on welfare earnings ?
To keep the welfare program solvent, each American taxpayer is forced to pay an average of $8,776 every year. The avg welfare recipient is given $9,500 per year.
The difference of $724 per person aka "free govt benefits" is adding up in the already large
$17 trillion deficit.
The number of Americans relying on food stamps have risen by 1,625% since 1969.
It has also been projected that approximately 50% of all US children will be on food stamps at some point in their lives.
In 2011, the government spent $41.3 million ONLY for the advertisements of food stamps.
Friday, April 18, 2014
Coal as an alternative source
http://www.economist.com/news/business/21600987-cheap-ubiquitous-and-flexible-fuel-just-one-problem-fuel-future
Coal is being recognized as an efficient power source recently: The cheap price and less cost in mining and assimilating is irresistible. However the emission of CO2 from coal burning is very high and also combustion of coal releases SO2 (Sulphur dioxide), which is harmful for the lungs and crumbles structures. Moreover the radioactivity emission from coal is technically higher than that of the nuclear power plants. mining itself also puts the miners in chemical and physical dangers, such as the toxic substances coming from the coal itself and the mines sometimes crash, killing or isolating the miners inside.
However, Japan, which had a recent disaster partially due to failure of nuclear power plants, is thinking of substituting coal as an energy source from nuclear power. On the other hand, USA is trying to cut down coal production but people predict that at least 20% + of the energy will be produced from coal. Yet it is quite clear that coal is not a very safe "fuel" to use. It has lots of risks of mining it (although it costs way less than petrol mining) and the pollution is lethal in a lot of ways as well, thus it's not a very good energy source.
Coal is being recognized as an efficient power source recently: The cheap price and less cost in mining and assimilating is irresistible. However the emission of CO2 from coal burning is very high and also combustion of coal releases SO2 (Sulphur dioxide), which is harmful for the lungs and crumbles structures. Moreover the radioactivity emission from coal is technically higher than that of the nuclear power plants. mining itself also puts the miners in chemical and physical dangers, such as the toxic substances coming from the coal itself and the mines sometimes crash, killing or isolating the miners inside.
However, Japan, which had a recent disaster partially due to failure of nuclear power plants, is thinking of substituting coal as an energy source from nuclear power. On the other hand, USA is trying to cut down coal production but people predict that at least 20% + of the energy will be produced from coal. Yet it is quite clear that coal is not a very safe "fuel" to use. It has lots of risks of mining it (although it costs way less than petrol mining) and the pollution is lethal in a lot of ways as well, thus it's not a very good energy source.
Housing Markets - The spectre haunting San Francisco
The housing industry in places like San Francisco present many issues. This is surprising as San Francisco is a place where many people would be very excited to live in, but that is partly the problem. In order to keep the area desirable, costs for housing must be increased in terms of individual houses and rent prices. This keeps over-population out of the question, but it also rises the issue that not just anyone can live there. Only the wealthy can. This presents housing issues for those who cannot afford the heavy price tags.
In addition, there is not a ton of area to just continually build new homes. This leaves builders hoping that home owners will want additions added to their house or improvements of some sort. This is how the housing industry is overall - people buy an old home and renovate it.
This housing dynamic raises the capital intensity of consumption which contributes to an increase in capital share of income. Zoning restrictions are then used to dictate who can live where essentially. It is like a government tool. In order to fix this, one option could be to use the government in order to seize back the surplus of redistribution, which is definitely not the ideal solution. Another idea, as mentioned by the author of this article, says to reform local institutions to generate better zoning outcomes. This would create better living situations for everyone while keeping the economy in check. How to create these institutions is the difficult part.
The housing market could correct itself, but it is highly unlikely. The government probably has the most influence in this situation, so they will need to use their power of zoning in order to help the economy out.
Thursday, April 17, 2014
In Europe, Auto Sales Are Still Low, But They Are Rising
The european auto sales reported today that more newly cars were sold in the Eurozone in the past 12 month then had been in the earliest years. “The increase was a tiny one, just .4 percent,” Floyd Norris says. This increase portrayed a return in economic growth in Europe. Countries that benefited from this growth were amongst those countries who experienced most of the recession. Countries like Greece, Portugal, Spain and Ireland had 10 percent increase than did in the previous years. However, this increase could be the result of a decline in prices of the newly cars, but the economy in the Eurozone seems to be recovering.
http://economix.blogs.nytimes.com/2014/04/17/in-europe-auto-sales-are-still-low-but-they-are-rising/?_php=true&_type=blogs&ref=economy&_r=0
http://economix.blogs.nytimes.com/2014/04/17/in-europe-auto-sales-are-still-low-but-they-are-rising/?_php=true&_type=blogs&ref=economy&_r=0
England's Housing Market Getting Too Hot Again
http://www.economist.com/news/britain/21600728-property-prices-are-rising-swiftly-bank-england-may-intervene-cool-it
Since the financial crisis, Great Britain has been recovering well. Housing prices are on the rise, especially in London. However, since last year prices have risen 6.8% and up to 13.% in London. This is nothing surprising since the demand for new housing has risen due extremely low interest rates and mortgages up to 5.5x income are available. Seeing the potential for another bubble and collapse, England's Financial Policy Committee is considering making borrowers meet more strict qualifications. One way to do this is to make banks ensure that applicants have enough to cope if the Bank of England raises interest rates as expected. Hopefully, they committee makes smart decisions so that England doesn't have another crisis in a few years.
Since the financial crisis, Great Britain has been recovering well. Housing prices are on the rise, especially in London. However, since last year prices have risen 6.8% and up to 13.% in London. This is nothing surprising since the demand for new housing has risen due extremely low interest rates and mortgages up to 5.5x income are available. Seeing the potential for another bubble and collapse, England's Financial Policy Committee is considering making borrowers meet more strict qualifications. One way to do this is to make banks ensure that applicants have enough to cope if the Bank of England raises interest rates as expected. Hopefully, they committee makes smart decisions so that England doesn't have another crisis in a few years.
Oklahoma Bans Minimum Wage Hikes
That headline sounds like a horrible joke, but it's real. After some states have raised local minimum wage and President Obama and some of congress have urged the raising of minimum wage, Oklahoma has taken a huge step in the opposite direction. The new law bans not only the raising of minimum wages in towns and cities, but also refuses to allow localities from setting required sick days and vacation days.
Critics of this move bring attention to the fact that a petition had been started to add a wage increase to the ballot measures in November. Proponents say that allowing minimum wage to rise would result in loss of business as companies moved out of areas with a higher minimum wage and prices would rise for those that stayed.
Read the article here.
Critics of this move bring attention to the fact that a petition had been started to add a wage increase to the ballot measures in November. Proponents say that allowing minimum wage to rise would result in loss of business as companies moved out of areas with a higher minimum wage and prices would rise for those that stayed.
Read the article here.
Yellen makes careful forecast on economy
http://www.washingtonpost.com/business/economy/yellen-makes-careful-forecast-on-economy/2014/04/16/19c57c64-c59a-11e3-9f37-7ce307c56815_story.html
Janet Yellen, chair of Federal Reserve, said U.S.’s economic recovery will be almost complete within two years on Wednesday in monetary policy speech. To be more specific, the Fed forecasts inflation rate will rise to moderate rate and unemployment will fall back to bottom in 2016. As the economy is recovering, the Fed nada announced that it will pull back its support.
I think this is kind of over-optimistic because Yellen just said at the beginning of April that job market is still tough. Moreover, the higher interest rate is coming so investment will drop and we don't know how will market react.
Janet Yellen, chair of Federal Reserve, said U.S.’s economic recovery will be almost complete within two years on Wednesday in monetary policy speech. To be more specific, the Fed forecasts inflation rate will rise to moderate rate and unemployment will fall back to bottom in 2016. As the economy is recovering, the Fed nada announced that it will pull back its support.
I think this is kind of over-optimistic because Yellen just said at the beginning of April that job market is still tough. Moreover, the higher interest rate is coming so investment will drop and we don't know how will market react.
Monday, April 14, 2014
Why long-time unemployed can’t get back on track
This article talks about true problem of long term unemployment and the risk that people face when looking for a job after being out of the market for more than 6 months. The article focuses on this who had higher income in their careers and lost their jobs. After losing their jobs, it has become very hard to go back to making the exact same money the longer they are not in the job market. Eventually, some end up having to find a job somewhere and end up getting part time jobs for fear of not having any money to live. Much of the problems that deal with this long term unemployment has to do with the fact that Congress failed to extend unemployment benefits last year.
http://www.marketwatch.com/story/for-long-time-unemployed-full-time-work-is-elusive-2014-04-04
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