Unlce Sam's Payrolls

In spite of job losses, the Federal Government has been increasing jobs. Throughout the recession, the federal government grew, and as of recently there has been a huge spike in the sector. State employment has stayed steady, but local government has been decreasing in jobs. However, not every sector in the federal government is doing well. The US Postal Service has decreased employment by 114,300, which is almost 15% of their payroll. The US Postal Service has been seeing a decline though since the 90's and have been thinking about eliminating deliveries on Saturdays! (There are some graphs that demonstrate these figures in the article)

Iceland expected to turn down bank failure repay

Iceland is in a lot of trouble. Not only did they have their financial sector implode like ours did, but they were unable to bail out their institutions and are now reliant on the charity of other European nations. It's entirely possible the way of banking most of us grew up knowing will be overhauled and replaced with a system less likely to take on this much risk.

For those of you interested, SNL has a skit discussing what Obama might do to overhaul the financial system here in America:
http://www.funnyordie.com/videos/f5a57185bd/funny-or-die-s-presidential-reunion?rel=player

Oil-rich countries demand a bigger cut of profits

Brazil produces around 2.4 million barrels of oil per day and requires oil companies doing business in its country to pay around 50% of their profits to the government in royalties or corporate taxes. However, a new discovery off of the country's coast containing 50 billion barrels of oil and natural gas could see this number rise to around 80%. Both Brazil and Nigeria were known for offering fairly good contracts to oil giants that operate within their borders. Nigeria is also considering increasing its royalty rate and will require materials used in construction projects to be locally made in order to help out local material providers. It also wants its state oil firm to have a bigger role in projects.Partnering with state-owned companies in oil-rich nations could help increase oil production and give them more access to better oil deposits.

Jobs report shows unemployment unchanged

The Labor Department reported that the economy lost 36,000 jobs in the month of February, that is 32,000 less than what job economists had predicted. However the results were still worse than those of the month of January (26,000) and there was no significant change in the number of unemployment rate which held steady at 9.7%. The government is attributing the winter storms in the East Coast for part of the fall, claiming that many businesses were temporarily shuttered and many workers had to stay home without pay. Among the sectors that took the biggest hit as a result of the blizzard were the retail, construction, and factory sectors.

New Home Sales Plunge 11.2 Percent; Prices Down 7.5 Percent

New home sales fell in January by 11.2%, this is the continuation of the trend of declines over the last six months. During this span only one month has shown growth in new home sales, while five have shown decline. From last January sales dropped 6%, this is the worst drop in home sales in 47 years. While the sales of homes continues to plummet prices of homes rose by 4.5% since last January. It seems that since the housing bubble burst people are not confident in buying new homes, that coupled with prices of new homes going up is discouraging buyers. Hopefully in the next few months we will see some growth in the sale of homes.

Personal Income Up 0.1 Percent, Personal Consumption Up 0.5 Percent

According to the Bureau of Economic Analysis income only rose by .1% from December to January. This is slow compared to recent trends. Although slow income growth was not good, the personal consumption growth increases .5%, and spending increases by .3%. While consumption and spending were increasing the inflation was able to remain flat and prices only rose .2%. While the increase in incomes by only .1% is not ideal, it is still an increase. Also the fact that we are spending and consuming by that inflation is not growing out of control is obviously a good thing. This means that we are able to consume and spend more without much averse consequences.

Frozen Cash

Should Iceland accept the debt-repayment deal? Icelanders must decide to accept or reject a deal made by the government to repay British and Dutch authorities a total of $5.3 billion lost by British and Dutch savers in a failed Icelandic bank called Landsbanki. Unless they accept, Britain and the Netherlands have said they will block Iceland's accession to the EU. However, those opposed argue that the country has huge debts already. The Landsbanki debts amount to over 12,000 euros for every citizen (320,000 citizens) and total debts are approximately 1,000% of GDP so it would take decades to repay. Also, those opposed to the deal insist that Iceland is a democracy (70% oppose the deal) and they have the right to vote so they will on March 6th.

Tomato Shortage Hits Restaurants

This article describes all of the supply and demand problems we have come to expect from a supply shortage due to natural weather causes. However, it is also relevant to us because it describes how some restaurants, such as Wendy's, are only putting tomatoes on sandwiches when customers request them rather than having their presence be assumed.

Greece's Recovery Plan

This article details how Greece is planning to save money. It is interesting because they use some of the techniques we have used in class, as well as using policies similar to our country's.

Sovereign Debt Woes: Who's the 'U' in STUPID?

This article mentions the acronyms that we have learned in class such as PIIGS and explains that there is a new one in the economic world, STUPID. The debate is whether or not the U stands for Ukraine, USA, or the UK. The author goes into detail how Spain, Turkey, Portugal, Ireland and Dubai have tremendous amounts of national debt and that the USA and UK are traveling down this same road. The author finishes with, "A solution to the PIIGS problem and a credible plan for the UK economy after the election could see the focus return to the US deficit and investors would be STUPID to ignore the risk".

Recovery in Progress

"World trade is on the mend, but the strength of the rebound remains uncertain." Global trade volumes were on the rise in the 4th quarter of 2009, a revival is clearly underway, but to what extent remains to be seen. Despite the positive outlook, its not hard to see serious threats to the worlds economic recovery on the horizon. Global demand continues being anchored by the governments extravagant stimulus package. If mistimed, a stimulus withdrawal could spell disaster for the US economy. The article goes on to highlight the worlds changing export data, reflected in the major gains of emerging economies, specifically China's overtaking of Germany as the worlds largest exporter. Has the US stimulus package instilled a false sense of recovery in the American people? Information is often misleading, people must take the time to realize that not all growth is sustainable growth.

Recovery in Progress

Vice Chairman of Fed to Retire, Letting Obama Reshape Board

Vice Chairman of the Federal Reserve Board of Governors, Donald L. Kohn, announced his upcoming retirement in June, leaving three vacancies in the current Board of Governors for President Barrack Obama to fill. As per the rules for appointment, President Barrack Obama then would have the opportunity to place his stamp on Fed policymaking as 4 of the 7 members will have been through his appointment. Currently, the major economic issues at hand include staving off inflation, lowering high rates of unemployment and recovering from the recession. It is interesting to see which route President Obama focuses on however the general belief is that he will appoint Keynesian economists with the belief that full employment does not return on its own following a recession. President Obama has the opportunity to make a lasting impact on economic policy with this chance to select 3 new members and it will be interesting to see what he prioritizes under an ever-watchful public eye.

Reports show modest but steady economic recovery

Exciting stuff.

For those of you who are interested in the amazing correlation between economic success and political success, go to ukpollingreport.co.uk and examine how the opinion polls between the three largest political parties (Conservatives, Labour, and Liberal Democrats) have fared during the 2007-2008 global economic crisis. As the American economy has improved, so has the rest of the world's, and so have the fortunes of the pro-regulation party, Labour. The more laissez-faire party, Conservatives, have had relatively high poll numbers but as economic growth has increased, their numbers have begun to slide and Labour have returned.

Anyone want to guess the Liberal Democrat numbers? Any explanation for their remarkable stability? The failure of the free-trade yet regulatory LibDems to capitalize on growing disenchantment with both major parties suggests that it could be hard for free-trade, socially-regulatory third parties (aka Tea Partiers) to perform well at the polls in a recovering economy. While there are many domestic issues that do not cross borders, the movement of Tory/Labour poll numbers correlates well enough to the NASDAQ and unemployment numbers in the United States that the oft-repeated phrase "The US coughs, and the world catches a cold" has political credence.

Consumer Protection

As Senator Dodd prepares to leave the senate at the end of his current term, he is making financial regulations a top priority. This article deals with the creation of a new consumer protection agency. The agency would be responsible for detecting misleading terms in financial products including mortgages and credit cards. The agency would be a branch of the Treasury Department with its own governing officer. Financial services have been lobbying strongly against such an institution. This article deals with Dodd's desire to compromise, which some are afraid will weaken the agency to the point of being ineffective. This article raises the idea of conflicting agency roles and the power of politics in creating financial institutions.

Buffett vents on financial fat cats

The Obama administration has proposed separating the banks proprietary trading activities from their federally subsidized deposit-gathering and lending ones in order to prevent further banking failures in the future. Obama has also proposed a rule that increases the amount of capital that banks should hold against their losses. However, many, including Warren Buffet, chairman of Berkshire Hathaway say that it is the behavior of the CEOS and directors that needed to change. He believes that by putting some of their own wealth at stake they will make more responsible decisions for the companies.

European Union Moves Toward a Bailout of Greece

This article focuses on the bailout of Greece, mostly focusing on Germany and France who will be the main two countries providing the funds if the deal goes through.

Back to the crash

The headquarters of the National Bureau of Economic Research reported the growth in the decade between 2000 and 2009 has been slower than in all previous decades since the '30s. Real GDP grew by an average of 1.9% a year during the 2000s compared to the previous decades where growth was 3.9% a year. In the '30s however, growth was only 0.9% a year. Only in the '30s was growth in Americans' personal consumption worse as well. Employment growth was an average of 27% a decade compared to a drop in employment by 0.8% between 2000 and 2009. This was surprising to me because I knew our current economic situation was bad, I just didn't know it was the worst since the Great Depression.

Mukherjee: India Aims to Cut Debt

This article is about how India plans to borrow heavily in the coming fiscal year but will roll back some costly spending that helped support the economy through the global crisis as the government begins trying to repair its tattered finances.

Data, data everywhere

This article is a special report in The Economist on managing information in the wake of the "Big Data" phenomena. Information has gone from scarce to superabundant and with such astronomical amounts of information has come a host of new problems. As information expands and is shared around the world ensuring data security and protecting privacy becomes increasingly difficult. The explosion of information has in turn given way to an emerging industry in information management- helping organizations make sense of their abundant data. Hal Varian, google's chief economist, explains "data is widely available; what is scarce is the ability to extract wisdom from them."