Archive for the ‘Economy’ Category

Obama administration: This recovery is slow, so let’s repeat the mistakes of the Great Recession!

Forget about banks being Too Big to Fail — or, per Attorney General Eric Holder, Too Big to Jail. As the Obama administration tries to restart some of the same bad decision-making that created the last housing crisis, any banks coerced into re-inflating a housing bubble may be able to say the system was Too Rigged for Them to Fail/Be Jailed. From the Washington Post:

The Obama administration is engaged in a broad push to make more home loans available to people with weaker credit, an effort that officials say will help power the economic recovery but that skeptics say could open the door to the risky lending that caused the housing crash in the first place.

President Obama’s economic advisers and outside experts say the nation’s much-celebrated housing rebound is leaving too many people behind, including young people looking to buy their first homes and individuals with credit records weakened by the recession.

In response, administration officials say they are working to …

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Stock gains don’t make up for continued sluggishness in economy, job market

The Dow Jones Industrial Average today briefly touched the 14000 mark, before falling slightly. As I write, it’s hovering right around that level, the first time it’s done so since late 2007. The broader S&P 500 is at a five-year high, about 3 percent off its all-time peak in October 2007. The Nasdaq is at a 10-year high, though it’s significantly lower than its tech-bubble peak. In all, though, these major indices finally are back to roughly where they were before the housing crash and Great Recession (as long as we don’t adjust them for inflation, that is).

Yet, earlier today, the Bureau of Labor Statistics announced the unemployment rate had ticked upward to 7.9 percent even though more people had stopped looking for work than found a job. At January’s rate of job growth (157,000 net jobs created), it would take until at least 2025 to regain pre-recession employment levels. At the rate for all of 2012 (an upwardly revised 181,000), it would take “only” until 2022, a decade …

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An obvious point rarely made about income inequality

We’ve heard a lot over the past four years about income inequality. The unequal distribution of wealth, and efforts to redistribute it more “fairly,” arguably have been the chief animating concerns of the Obama presidency, from tax laws to social-welfare policies.

With that in mind, I recommend the latest post by economist and blogger Mark J. Perry, who simply compiled census data to show what we know about the characteristics of U.S. household income. There’s a complete chart and fuller discussion of the data in his post, some of which echoes points I’ve made in the past about the correlation between marriage rates and poverty. I recommend reading the whole thing.

But in this space I want to touch on two other points he makes that ought to be blindingly intuitive, but aren’t always mentioned amid the heated rhetoric:

On average, there are significantly more income earners per household in the top income quintile households (2.03) than earners per household in the …

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How Obamacare is making it harder to find a full-time job

The drag Obamacare has had on the economy has been hard to quantify in the two-plus years since it became law, because so many of its economy- and job-altering provisions had yet to be written. But that’s changing, and the law’s negative impact on the economy is becoming clearer. The Washington Post’s Robert Samuelson explains one of the ways: the law’s exemption for part-time employees and its definition of what counts as “part time”:

In September, 34 million workers, about a quarter of total workers, were part-time, reports the Bureau of Labor Statistics (BLS). But the BLS defines part-time as less than 35 hours a week; Obamacare’s 30 hours a week was presumably adopted to expand insurance coverage. There are now 10 million workers averaging between 30 and 34 hours a week. To the BLS, they are part-time; under Obamacare, they’re full-time.

Employers have a huge incentive to hold workers under the 30-hour weekly threshold. The requirement to provide insurance above that acts …

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About the legend of Henry Ford and the middle class

Andy Kessler has a great op-ed in today’s Wall Street Journal explaining why President Obama’s policies regarding government handouts and tax rates on wealthy investors are wrong-headed. It’s worth reading in its entirety. But along the way, he dispenses with a popular myth about Henry Ford, wages and the middle class:

In his acceptance speech at the Democratic convention in Charlotte, N.C., this month, President Obama said, “We believe that when a CEO pays his auto workers enough to buy the cars that they build, the whole company does better.” …

This myth — that you can just give money to the middle class and good things happen — is widely shared and is at the basis of a lot of government policy. And it is why the recovery is stuck between lack and luster.

Let’s go back. Henry Ford is popularly credited with inventing the middle class by doubling his workers’ salaries to $5 per day in 1914. A multiplier for the economy, right? Wrong.

The year before, Ford revolutionized …

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Fed: Quantitative easing now, quantitative easing tomorrow, quantitative easing forever

The Federal Reserve’s Open Market Committee today said it will keep trying to print money until the economy recovers. In short, the Fed said it will increase its purchases of mortgage-backed securities by $40 billion a month until employment improves. So, indefinitely. Combined with other maneuvers, the Fed said its asset holdings will increase by about $85 billion a month through the end of this year. And the money-printing may not end there; from the Fed’s statement:

The Committee will closely monitor incoming information on economic and financial developments in coming months. If the outlook for the labor market does not improve substantially, the Committee will continue its purchases of agency mortgage-backed securities, undertake additional asset purchases, and employ its other policy tools as appropriate until such improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, the Committee will, as always, …

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NYT’s Keller gets it half-right on need to reform entitlements

In a column addressed to his fellow baby boomers (sorry, this Gen-Xer peeked anyway!) New York Times columnist Bill Keller says one way for his generation to shed its reputation of entitlement and selfishness is, well, to be less selfish about entitlements.

He refers to a study by the Democratic think tank Third Way that examines the tremendous growth of, as Keller puts it, the federal government’s “safety-net programs that provide a measure of economic stability for the aging and poor: Social Security, Medicare, Medicaid, etc.” The growth of this spending, he and Third Way argue, is crowding out federal spending for “‘investments,’ which includes maintaining our national infrastructure, keeping our military equipped, helping assure that our work force is educated to a high standard, and underwriting the kind of basic scientific research that is too risky or long-term to attract private money.”

The answer, he suggests, is for liberals to embrace reforms of the entitlement …

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Small firms say regulation is fastest-growing concern

It’s been exactly three and a half years since Barack Obama was inaugurated, and here are two things that folks on the left have been saying about the economy every day since then: It’s Bush’s fault, and the problem is a lack of aggregate demand.

Here’s what small businesses have to say about the situation:

Chart by Dan Clifton at Strategas Research, via the AEIdeas blog

Chart by Dan Clifton at Strategas Research, via the AEIdeas blog

Keeping in mind that these are what small firms are “most concerned” about, meaning many likely have concerns to varying degrees about all three, a few things jump out at me:

1. In 2005, these three concerns accounted for a little more than one-third of small firms’ biggest worries. Today, they combine for about 60 percent. That suggests to me that these firms have less time and energy to devote to specific concerns about growing their business.

2. After shooting to the top in the second half of 2008, concerns about sales plateaued for about two years. Those concerns have been falling pretty steadily for the …

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Mr. President: When will ’somebody else’ build my business?

There was a lot of buzz over the weekend, stretching into today, about these remarks President Obama made during a campaign stop Friday in Roanoke, Va.:

There are a lot of wealthy, successful Americans who agree with me — because they want to give something back. They know they didn’t — look, if you’ve been successful, you didn’t get there on your own. You didn’t get there on your own. I’m always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there.

Well, that’s not so controversial, is it? I’ve had some success in my career in journalism, and I am in the habit of referring to the great teachers I had (in college and before), the great upbringing I got from my parents, and some favorable timing/circumstances along the way. Certainly, there are a lot of successful people who …

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No court victories can keep bad economic news at bay for Obama

While I was away* several people asked me how long I thought President Obama would ride his Obamacare victory at the Supreme Court. My answer: Until the next bad economic news comes out.

Which turned out to be Friday’s jobs report.

The government reported just 80,000 net jobs created in June and an unemployment rate holding steady at 8.2 percent. That means the second quarter was the worst for job creation in two years and represented three more months in which job creation didn’t even keep pace with population growth. If labor-force participation was at the same level it was when Obama took office, the unemployment rate would be a dismal 10.9 percent — almost double what the Obama administration predicted for June 2012 with its “stimulus” package passed. As it is, our 41-month streak of more than 8 percent joblessness — covering Obama’s entire presidency — is the longest since the Great Depression.

This chart from economist Greg Mankiw’s blog tells the story:

Greg Mankiw employment population ratio

The percentage …

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