Eurozone business activity at 7-month high

http://www.bbc.com/news/business-31549178

This article draws conclusions from Markit’s composite flash purchasing manager’s index for the month of February. This month, it was 53.5, up from the number in January. Any number above 50 indicates expansion, and any number below 50 indicates contraction. The rate of hiring is the highest since August 2011 as firms need to meet demand. Even though Greece is having problems, this has not hampered economic growth in the eurozone as it gains momentum. The data indicates that eurozone is more reliant on service sector growth and that jobs are clearly being added, which is what the euro needs at the moment. It seems that in general, the US and Eurozone are both seeing positive growth, but the US economy doing the best at the moment with their recovery. What's you prediction for the next recision? I say 2025. 

Jobless Claims Fall as U.S. Economy Gains Strength

The U.S. economy has showed even more signs of strengthening.  The amount of people who were claiming unemployment benefits declined so far during the month of February.  Economists forecast that during the month of February there would be 293,000 people who would file for unemployment benefits.  The labor market has gotten stronger and beat the prediction because only 283,000 filed for unemployment benefits.  These are great signs that the economy continues to recover and the labor market continues to grow while the unemployment rate continues to drop.  There are several factors to the economic growth of the country, for example the U.S. dollar continues to become stronger in value.  It will be interesting to see in the labor market continues to trend positively.  Hopefully, the economy can continue to show signs of a strong recovery from the recession.

Article Link:http://www.nytimes.com/2015/02/20/business/economy/jobless-claims-fall-as-us-economy-gains-strength.html?ref=international&_r=0

The Promise and Failure of Community Colleges

http://www.nytimes.com/2015/02/18/business/economy/the-promise-and-failure-of-community-colleges.html?ref=economy&_r=0

"There are two critical things to know about community colleges. The first is that they could be the nation’s most powerful tools to improve the opportunities of less privileged Americans, giving them a shot at harnessing a fast-changing job market and building a more equitable, inclusive society for all of us. The second is that, at this job, they have largely failed."

Debt Rises to New Highs: The Good and the Bad

http://www.wsj.com/articles/u-s-household-debt-rises-slightly-in-to-11-83-trillion-1424188820


Debt formation can be a good sign. It generally signals that people are confident enough in the future to leverage themselves. However, with student debt levels (and default levels) growing, is this debt growth healthy? Let me know what you think about the study.

Apple is Forming an Auto Team

Apple has its sight set on a new industry.  The tech giant is looking to create an electric car that would potentially compete against Tesla and other electric car manufacturers.  Apple is still in the developmental stages of the car that they plan to build.  Also, Apple has been hiring several hundreds of automotive experts to make sure they develop the car correctly.  However, it will be a few years before Apple releases a car.  One of the main concerns for this project is that the electric car team has to develop a suitable business model in order to impress the apple executives that this is a project worth doing.  It is interesting to see how Apple is looking to expand to new markets.  It will be interesting to see how other competitors respond to this act by Apple.

Article Link: http://www.nytimes.com/2015/02/20/technology/auto-team-is-forming-at-apple.html?ref=international

Can Money Buy Happiness? A Growing Industry

For many years now, dating sites such as match.com have developed into a sizable industry.  As a result, a new industry has emerged.  New companies are now providing services to users of these websites.  Services range from providing coaching tips to actually using your account to talk to your matches for you.  Other services include rewriting and managing your profile to make it look appealing.  The article highlights three companies, each of which charge monthly subscriptions, where the prices depend on the extent of the services.  One company, Virtual Dating Assistants, says the average total amount a customer will spend is $2,000 and they expect over $1 million in revenue this year.  Is this a fad, or a concept that will continue to evolve into a legitimate industry that involves a lot of money being spent?  Also, is it ethical, considering in some instances the person you think your talking with online is really a different person that is being paid to attract your attention?    

http://money.cnn.com/2015/02/09/technology/online-dating-coaches/index.html?iid=SF_SB_River

US retail sales fall unexpectedly in January

http://www.bbc.com/news/business-31442760

According to the article, the US experienced a sudden and unexpected drop in retail sales in the January fiscal month, led by dropping car sales and gas revenues with a fall in oil prices. Economists had expected the US economy to take low oil prices in strength, coupled with stronger labor markets and consumer confidence. Growth forecasts for the US have been demoted to below 3%.

These disappointing results have an array of possible causes or contributors: though consumer confidence may be up, the fallout from the recession, including lost wages, jobs, and portfolio performance may have encouraged personal-level fiscal conservatism, with the public more willing to save than before in anticipation of further instability or simply as a "lesson learned" from the recession. New household receipts may be going to pay off existing debts as well. Moreover, concerns over the Greek economic situation may be promoting uncertainty in consumer's minds, leading to retraction in their willingness to spend. However, since consumer confidence has gone up to pre-recession levels, the more likely cause of this is a greater consumer propensity to save despite confidence in economic resurgence as a result of personal losses or debts incurred during the 2007 recessionary period.

India Looking to New Budget for Growth Prospects

http://www.economist.com/news/leaders/21644145-india-has-rare-opportunity-become-worlds-most-dynamic-big-economy-chance-fly

BRICS are the emerging economies in the world.  They are Brazil, Russia, India, China, and South Africa.  While some of these economies have been failing, there is hope in India.  Last week, many articles noted the worries of the Chinese, as they look to develop long-run economic growth.  On the other hand, on February 28th, India will be releasing its first new budget under Arun Jaitley, India's finance minister.  He is part of the new government that ran on the platform of major reform and less red-tape.  There was a major budget in 1991 that opened up India's economy to trade, competition, and outside capital markets.  The article calls for another game-changing budget.

India possesses many qualities that could spur growth.  It has a population of approximately 1.25 billion and half of that is under 25 years old.  Although not all qualities are good.  There has been a problem of taxes and tax collections in the past, but there is talk for reform that could level the playing field.  From a macroeconomic standpoint, India has taken control of inflation, and the budget deficit has declined.  All of these factors point toward a more stable economy.  India does have some major problems to address if it will be the next growth-economy of the world.  It has to take control of its power shortage and land distribution issues to promote growth.  Furthermore, it needs to update its labor laws, some of which date back to pre-1950.  These are major red flags that must be addressed by the new government.

I believe that India has many of the attributes necessary to achieve growth in the future, but its government needs to be proactive in lifting up this economy.  What do you think?

Greek stand-off

http://www.economist.com/blogs/buttonwood/2015/02/euro-crisis-0

So the talks between Greece and the EU finance ministers broke up in acrimony last night and we have a new "deadline" of Friday. That is the date Jeroen Dijsselbloem, the Dutch finance minister, set for Greece to apply for an extension of the bailout programme. Greece called the EU plan "absurd and unacceptable".

The good news is that this is partly an issue of semantics. The EU wants Greece to apply for an extension to the existing bailout programme, and the conditions can be altered once the extension is in place; Greece wants the existing programme to be abandoned and a bridging loan to be offered while a new deal is agreed. It is not difficult to see how a form of words might be found to bridge this gap; one wag suggested that the deal be called an extension in the German language text and a bridging loan in the Greek version.

But the bad news is also that the argument is about semantics. Syriza won election on a platform of rejecting the bailout terms, so needs a victory on this specific issue; the EU has constructed an entire system of condition loans and bailout programmes and does not want to see this destroyed. Neither side will want to give way on the language. It is also a matter of negotiating tactics; the EU is in a better position to drive a bargain if Greece is operating under the existing bailout, Greece will be in a much stronger position if it is able to get money without conditions. So success on this seemingly minor point of language may lead to success on the entire deal.

Yes, a Northeast Blizzard Can Slow U.S. Economic Growth

http://blogs.wsj.com/economics/2015/01/26/yes-a-northeast-blizzard-can-slow-u-s-economic-growth/

The article argues that snow storms are bad for the economy in the short run, but beneficial to the economy in the long run.  According to the article, when snow hits majorly populated areas, such as New York City and Boston, where a considerable amount of economic activity takes place, "if activity is slowed for a few days, it could have an impact on GDP".

A forecasting group estimated that the unusually harsh weather last winter knocked .1 percentage point off of the fourth quarter GDP of 2013 and 1.4 percentage point off of the first quarter of 2014.
However, GDP bounced back in the second quarter of 2014 and accelerated in the third, suggesting severe storms tend to delay economic activity, rather than eliminate it, and that weather may also distort economic indicators.  

A Federal Reserve Bank of Philadelphia paper from earlier this year called for incorporation of unusual weather effects into data.

Ben Herzon, senior economist at Macroeconomic Advisers, suggested that while most production will return to normal, some production will be irretrievably lost during major snowstorms.  According to Herzon, exactly how much production is lost depends on the scale of the storms.

I think this is a great example of how external or unusual factors can impact GDP. 

Negative Interest Rates

http://www.bbc.com/news/business-31436657

Sweden's central bank cut its key interest rate from 0% to -0.1%. They have also started quantitative easing, which is used when standard monetary policy does not work to stimulate an economy. The government is prepared to use more expansionary monetary policy to continue the global economic recovery.

Eurozone economy sees growth pick up

Germany once again bringing the Eurozone's economy up after its strong growth during the fourth quarter at 0.7%, and 1.6% over the year of 2014. Economist Christian Schulz suggested that the weaker euro and lower oil price amongst other things are helping German domestic market to do a lot better than predicted, despite spillover effect from Russian and Greece. Meanwhile Greece is amongst the only three countries of the region to record contraction during the year. Potential of a new recession seems inevitable and talks will be in place soon about another bail out by the Eurozone.

Personally i think Germany economy is too big to fail, and they have continually proved that they can still carrying the whole region's economy on their back. In 2015, I expect Germany to maintain a steady and slow growth rate. On the other hand, Greece seems to be nearly at its rope and I don't think they can hold off any longer, even with more loans and aids from other European countries. I believe it is better for Greece to leave the Eurozone and start restructuring their finance and economy. It might be bad in the short term, but over the long term the economy should get better.

http://www.bbc.com/news/business-31451879

States Consider Increasing Taxes for the Poor and Cutting Them for the Affluent

Many Republican led states are looking toward a new tax reform. They want to lessen income tax and raise consumption tax. However, doing so would "hit the poor and middle class harder than the rich." Kansas and North Carolina previously attempted this and the results weren’t what were expected. Both states experienced huge budget shortfalls. Still, the Keystone Research Center experts believe lessening the tax burden is the way to remedy the budget deficits. They believe cutting income tax will encourage the rich to spend and invest more into the economy, providing "more jobs and economic benefits for everyone."


Is a less progressive tax system the way to go?

Link to Article