US Retail Industry Sales Seen Up 2.5% for 2010

According to this article on cnbc.com, the economy is showing some glimmering signs of hope. This article reports that U.S. consumer confidence rose for the third straight month and highest since September 2008. This indeed is an encouraging sign. Another notable statistic is major retail shares tracked by the Standard & Poor's Retail Index rose 1.1 percent. This is coming off of retailers finishing up a holiday season that was forecasted to be dismal. Job losses have been slowing in numbers every month as well so hopefully employment follows this trend. There are some other important things that relate back to class and that is high income consumers are more likely and in fact, are spending more because they feel that their job is secure. Comparing this to middle income markets, retailers will struggle to break through to this segment. Forecasters also predict that the recovering housing market will continue the retail market.

Home Prices Up Slightly in November

There are mixed feelings within the community concerning the Housing Prices. According to data released Tuesday by Standard & Poor’s Case-Shiller Home Price Index the recovery in the housing market is struggling to stay alive. In November on a seasonally adjusted basis, Home prices were just able to create a 0.2 percent gain. David M. Blitzer, Chairman of the Index Committee at S.&P. declared in a statement, “There is no clear sign of a sustained, broad-based recovery.” A second index, compiled by the government using different data, showed a significantly healthier market. The Federal Housing Finance Agency said Tuesday that its index rose 0.7 percent in November from the previous month, however the October data was revised downward. On the other hand, a third national housing index, released last week by the data firm First American CoreLogic, showed a decline of 0.2 percent in November. However, the pricing data lags the sales data by one month. November home sales were unusually strong because of the rush to take advantage of the government’s tax credit. But December sales, released Monday, fell sharply. That is leading analysts to believe that the long-anticipated winter slowdown has probably begun, even if it is not yet reflected in the data.“We expect home price deflation to resume in the December or January Case-Shiller indices and continue through 2010,” Zelman & Associates wrote in a research note. However, prices in 15 of the 20-city composite cities rose in November from the previous month, while 5 fell, including Chicago, Miami and New York.

Budget Freeze is Proposed

In order to fight the US' $1.4 trillion deficit, President Obama has proposed a three-year stop in spending. This would account for 1/6Th of the federal budget. There will be limits on discretionary spending, but not on military, veterans, homeland security, social security, Medicare and international affairs. The freeze would be on 17% of the budget, $447 billion, which hopefully will save $250 billion over the decade. The cuts potentially will be in the departments of Housing and Urban development, Justice, Energy, Transportation, Agriculture, and Health and Human Services. This is just one of several proposals that will be in the State of the Union address. This is all in efforts to fix our economy and the huge amount of spending that the Democrats have done since in office. Along with the proposal to scale back the federal budget, there is talk of energy reformations and more support for middle-class families.

After 10 Years, Federal Money for Technology in Education

More than 10 years ago, the former president of NBC News and PBS, Lawrence K. Grossman and the former chairman of the Federal Communications Commission, Newton N. Minow, were both asked to research how nonprofit organizations such as schools and libraries could tune into new digital technologies. They planned to construct a multibillion dollar trust to research learning technology. Their organization could be handing out grants by this fall. Although the organization which has bipartisan support did not get as much funding as planned, they continue to expect growth after a few successful projects. This is an example of a positive externality where private costs are greater than social costs. The public is benefiting greatly by expanding their ability to use technology at the expense of private parties and government spending.

Sites to Refuel Electric Cars Gain a Big Dose of Funds

Better Place is a start-up company that has high hopes for creating a green alternative for gas-stations - they are in the process of creating "charge spots" for electric cars, which is a large step in an eco-friendly direction.

Today, Better Place is set to receive $350 million towards its electric car goals, making its total $700 million in investments. The whole business idea is an extremely costly venture, but with such huge financial backing from places like Morgan Stanley and HSBC the company is on its way to putting their goal of having electric car charging centers into reality. The first stations are expected to be built in Denmark and Israel, but Better Place hopes to extend its reach to the US, Australia, and other cities in Europe.

A major obstacle that Better Place faces is convincing the public to go green and to begin using electric cars, as well as convincing auto-makers to begin making more eco-friendly cars. Additionally, it is estimated that Better Place will need billions more in order to finance their potentially ground-breaking company.

In Unions, Government Workers Surpass Private-Sector Workers

Many people, when they hear the phrase “union worker,” probably imagine someone who works on an assembly line. But such blue-collar jobs are probably no longer representative of the typical union man or woman.

For the first time in American history, the majority of the nation’s union members are government workers, rather than private-sector workers, according to a Bureau of Labor Statistics report released today. This is despite the fact that there are five times more wage and salary workers in the private sector.

McCain says campaign finance reform is dead

This article is brief, so I will include a link to the NYT report on the Supreme Court decision so you can dissect the particulars:
http://www.nytimes.com/2010/01/22/us/politics/22scotus.html

What this essentially means is that the Supreme Court believes that the First Amendment is more inclusive than the contested legislation currently reads, and in the instance of campaign-finance legislation, rules that corporations may donate unlimited sums of money to political candidates. Currently, under McCain-Feingold, contributions are limited to a certain amount to prevent candidates from garnering huge sums of money. This is not to say corporations WILL; it merely states they can. For economics, this does mean that politicians will have more of an incentive under the current electoral system to seek donations from corporations (and thus support policies that corporations prefer). For those of you who have read Freakonomics, this does not necessarily mean we will live in a corporatist state - money plays a large but not all-consuming role in politics. However, it is an important decision and should encourage people on both sides of the aisle to try and manipulate the new system.

Cities to Rebound, but Job Growth Stunted

The "nation's economic engines", i.e. large metropolitan areas have had unemployment rate up more than 50% over the year in almost one-third of cities as of Novermber of last year. The cities make up 86% of U.S. employment and 90% of output, therefore cities were the first to feel the strong hit of job cuts and unemployment in general. The article believes the night is the darkest right before the dawn as it claims the economies of the urban areas will start improving in 2010, however, they will first witness the highest unemployment rate in the first quarter of this year.

The report from the United States Conference of Mayors showed that not all the regions were hit equally - the West, Southeast and Uppen Midwest happened to be the unfortunate ones with Michingan being in the lead (7 large cities in Michigan had highest unemployment rate) mainly due to real estate market problems and because those regions/cities are heavily dependent on the manufacturing sector.

Bailouts, Stimulus Were ‘Essential,’ White House’s Axelrod Says

White House senior advisor, David Axelrod defends the decisions made by the Obama Administration when faced with the recent economic recession. What was seen as a highly unpopular decision to provide bailout aid to so many financial institutions on Wall Street, the very same group of companies and employees that are supposed to protect and maintain our economy, Axelrod defends the policies implemented especially as the Democrats face pressure from the loss of a senate seat in Massachusetts. However the process of recovery from the recession as economic growth was at the fastest pace in nearly four years. President Obama will continue to spur employment opportunities to further boost GDP however may face opposition from Republicans wishing to continue spending and continue to accumulate debt.

Well, It Wasn’t a Bad Year for Everyone

Interesting break down of the major private industries and their change in sales over 2009.

"The last year will be remembered as a bad one for business. Losses, layoffs, pay cuts, furloughs, closings — the numbers and the news were largely negative. And yet, over all, some industries managed to avoid the negative vibrations. A sampling of sales figures in major industry categories makes this clear."


Despite the hardships for most industries, the health care and educational systems sales are increased.

Obama presses banks to lend more

This article is about how Obama has urged the county's biggest banks to lend money to help the economy recover from the recession. Obama said that America's banks were should help by doing their part after they have been saved by taxpayers. He also stated how banks should ease up on lending as they were saved by public bailouts. Chief executives of banks who were present stated they would try to increase lending. US banks bosses have said that lending is limited by factors over which they have no control. Businesses are reluctant to grow since banks are not lending but without lending it will be difficult for the economy to grow.

Wall Street's Latest Worry: Life Without Bernanke

In the turmoil of the current recession, China's economy growing rapidly, and the democrats losing the Mass. Senate seat, the vote to reconfirm Bernanke as the Fed's Chairman. This comes after more Senators have come out against voting to reconfirm Bernanke for another term. His current term is terminating at the end of the month. Wall Street has grown trustworthy that Bernanke will raise interest rates in time to control inflation so that we can continue our path towards economic growth. Bernanke is the reason why we didn't fall further into recession and if he is removed from office Wall Street's confidence in the government will be shaken. This comes a day after Obama announced his plans to put tighter restrictions on big banks. As the market showed towards the end of the week that removing Bernanke might send the economy into a downfall. The next question is who would take Bernanke's place as chairman. There is no sure predecessor to Bernanke, which is another scare for the economy. Keep in mind this was written by the "Fair & Balanced news," Fox.

Out of Bankruptcy, Genetics Company Drops Drug Efforts

The article discusses DeCode Genetics climb out of bankruptcy through company modifications. They have decided to continue their genetics research and gene-based diagnostics but the change is they are no longer developing drugs from their discoveries. It is expressed that DeCode Genetics could no longer make money for their marketable products so that is why they've chose to stop developing drugs. The company's other change is it will also be run by a new chief executive.

Since listening to Romer's broadcast, it appears that this article could support the purpose behind Meta-Ideas. Although DeCode Genetics original change resulted from bankruptcy, they could still look at their new objective as focusing on new technology.

Leading Economic Indicators Rise

The latest report from The Conference Board show that the economy is starting to rebound. The Leading Economic Index (LEI) shows increases in economic productivity of .3% in October, 1.0% in November and 1.1% in December. The (CEI) rose .1% in both October and November and another .1% in December. The Conference Board Lagging Economic Index (LAG) declined by .2% in October, .5% in November and .2% December. According to this article and the statistics it looks as if the economy is taking a turn upward.

Business Looking Up For Luxury Retailers

The article looks at luxury retailers such as Saks Fifth Avenue, Macy's, Nordstrom and Tiffany's are peforming in the current economic downturn. Surprisingly they are faring better than experts had thought. Saks, for instance showed a 9.9% gain in December store sales but the retailers are aware that the current upturn is nothing like the bull market that they were seeing before the recession. The article emphasizes that although the luxury sales market has taken an upward path since last year, people have changed how they shop and that it may never return to normal levels.

Sam’s Club Cuts 11,200 Jobs

Sam's Club, the No. 2 U.S. warehouse club, and division of Wal-Mart Stores Inc is outsourcing about 10 percent of their in-store product demonstrations and is eliminating its new business membership representative jobs, essentially cutting around 11,200 jobs. The warehouse club will cut 10,000 jobs primarily held by part-time workers, and instead use Shopper Events, a third-party company, to run its in-store product demonstrations. However, the current demo employees will have the opportunity to apply for new positions with Shopper Events. The Chief Executive Officer of Sam's Club, Brian Cornell defends these cutbacks by saying, "We look at this as an investment in the in-club experience. This is not a cost-cutting move for us in the short term. We really hope it will be cost neutral for our operation. It's an investment in building loyalty, enhancing the member experience and driving future growth."

Get Ready for a New Tax

This article is about how income taxes alone won't help the economy recover from the recession. The Tax Policy Center did some calculations on how the congress could cut the current deficit to 2% of the GDP. The calculated what would happen to tax revenues under three plans which were to raise the top 3 income tax rates, raising taxes proportionally for everyone or raising taxes for couples whose incomes is over $250,000 and singles whose incomes is over $200,000. President Obama said he would only raise taxes for the latter. However, the results were ridiculous and tax rates would have to be increased by a very large amount to help the economy with its deficit.

Haiti Emergency Summit Planned by UN to Organize A

This article talks about the earthquake that hit Haiti and the effects it has had on the countries infrastructure. The earthquake destroyed one third of the buildings in Haiti's capitol Port-au-Prince along with its seaport and sewage system. Already the poorest country in the Western hemisphere, Haiti has a long way to go to rebuild and reach a point of economic stability. Many actors from the United States have given generous donations toward rebuilding Haiti. The Inter-American Development Bank, which supports economic development in the Caribbean, is considering a plan to alleviate Haiti’s $441 million in debt to the bank, the group said in a statement yesterday. This is an interesting plan, but would make sense considering that Haiti has no way of paying back the amount owed, especially with the current state of the country.

Green With Envy

This article, published in the November 2009 issue of The Economist magazine, grapples with the quintessential issues surrounding the rising interests among Washington bureaucrats to pass a carbon-reduction cap-and-trade policy. Despite the urgency to resolve climate change, cap-and-trade carbon-reduction policies have been met with widespread resistance. Economists have pointed to the fundamental tensions between the effectiveness of such environmental policies and a countries allegiance to globalize open trade as the underlying issue. Is what’s good for the environment good for the global market?

She Works. They're Happy

This article relates to a discussion we had in class about women in the workplace. The article talks about that women are entering the workforce more and more and that women are becoming the bread winner in more marriages in the past twenty years. The article also correlates the fact that the more women are able to be independent and self sufficient the more likely that marriages will be successful.

Incentive structures of Economic Systems

I found this article to be one particularly pertaining to the incentive structure of economic systems. This is a particular strong example and I believe it to be one that shows the changing dynamics of capitalism in the U.S. As the article mentions, for some, Idaho power's choice to pay customers to not use power may seem a bit crazy, but it is working in Idaho! After all, people respond to incentives!

Obama: Bank Regulators May Have Gotten Too Tough

I thought this articles was interesting as it reflected what we went through in class about how a change in policies does not mean a fundamental change in the economic system. Although policy such as the government bailout can become politicized, it is clear that the banking and financial markets as well as the automobile industry still retain control over its business decisions and thus talk about america going 'socialist' is clearly an absurd assertion.

Get Ready for a New Tax

In order to cut the deficit to 2% of GDP, the Tax Policy Center thinks that there will need to be help from more than just income tax. Rosanne Altshuler, Katherine Lim and Roberton Williams talked about three different tax proposals such as "raising all tax rates proportionally; raising only the top three income tax rates; and raising rates only for couples with income over $250,000 and singles with income over $200,000." However, they realized that this would not be beneficial in decreasing the deficit unless the tax rates were extremely high so the best bet would to be to decrease government spending.

Obama vs. Big Banks

This article discusses President Obama's statement on banking made yesterday. Obama announced that there will be stricter regulations on banks. There is a tax proposal to tax the nations 50 largest banks. This tax will raise $90 billion over ten years. The article involved a great deal of discussion over it being a populist stance. This article not only deals with a larger government involvement in private business, but the political decisions behind making such a decision. This seemed especially interesting because economic decisions are not made in an political vacuum.

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Chilly Climate for Oil Refiners

This article discusses the sharp decrease in demand for gasoline. Refineries are shutting down because refiners are convinced that even after we recover from the recession, demand is not expected to increase due to the increase in ethanol use and the availability of other alternative biofuels. Automobile fuel-efficiency standards are increasing as well with averages rising to 35.5 miles/gallon by 2016 from 25 miles/gallon today. The number of refineries in the U.S. has fell from 300 in 1982 to about 150 today showing that demand continues to decrease. It is suggested in the article that gasoline consumption peaked in 2007 at 9.7 million barrels a day and will not rise to that amount again. This unanticipated drop in demand of gasoline is not only an issue for the U.S., but for the entire world. This article relates to markets and sovereignty. Consumers are not demanding gasoline so markets are responding causing refineries to shut down. What will the shutting down of refineries lead to? Also, won't this be somewhat inefficient because the land will be ruined where these refineries once stood?

US Military Operations Block Relief efforts in Haiti

This is an article I find very complicated. Basically in this article, the US military forces have taken over the Port-au-Prince airport in Haiti in an effort to help with the sudden disaster. The problem with this takeover is that doctors and other health providers are complaining of US forces denying humanitarian flights the permission to land. Most of these flights are flights with supplies needed to treat victims with crushed limbs and other infections. The two sides of the story is that, US forces are very concerned of the fact that since the earthquake, everybody is flying in to help, which to some extent is a great thing; however, it is making things very difficult because too many people are trying to fly in. The airport on the other hand, has only one runway and there are literally hundreds of flights trying to make it in; therefore they decided to give priority to US military flights and the flights that that they know and can identify have contents of Humanitarian supplies. On the side of the Doctors, they are complaining that most of the flights with the supplies are being redirected and these flights contain the things they need immediately to treat the victims. According to them, the delay in getting the supplies is causing them to amputate most of the victims in order to prevent the infections from spreading.
This is a conflict that is very tricky because both sides have a point, but the question here is how will they come to a decision of figuring things out to achieve the ultimate goal of helping the people in Haiti.

Fed up with the Fed

The article talks about the Federal Reserve's current policy of keeping interest rates near zero, "zero interest rate policy". The policy has helped consumers spend more than they normally would, but that increase in spending has not been much, 2.7% over the past 12 months. The problem with keeping interest rates consistently low is that it causes inflation. The article cites the increases prices of gas lately. The article argues that while inflation may not be horrible right now, the fed can not keep interest rates at zero indefinitely and expect everything to be okay.

How to Build a Better Bond Portfolio

The article talks about how bonds used to be a safe investment with a constant return and how they have now shifted from that to being unreliable. The author gives you three different options/strategies for people. The first option is for people who don't want much risk, the second is for people who want some risk and the third is for people who are willing to take risks to gain profit.

Efficiency in the Marijuana Business

This article, although somewhat satirically, captures the second (efficiency) of the five performance criteria for economic evaluation. The focus is on the efficiency of Mexico's drug cartel primarily in the marijuana business. One of Mexico's lead officials even goes so far as to say that marijuana should be allowed to be legally grown in California in order to be grown more efficiently in a better climate as well as to be grown closer to the ultimate consumers.

The Principal-Agent Problem

This article exemplifies the principal-agent problem discussed in class earlier this week. The article describes to the reader how to best go about receiving disability insurance, while also shedding light on the ways disability insurance companies make it difficult for consumers to receive full payouts, such as by making it more difficult for consumers to qualify for benefits and also by limiting payouts for certain types of diseases.

Japan Gives Downbeat Forecast, Warns of Deflation

This article from www.cnbc.com explains some of the economic woes facing Japan. After reading this, we can draw some parallels between the USA and Japan. Japan is currently facing a mild deflation of prices and large job losses across the island country. The Japanese government is depending on the Bank of Japan to help fight against the deflation and form a better monetary policy. The deflation hurts company profits because the consumer will wait to see if prices will drop more. Industrial output is increasing but core machinery orders are decreasing. This is a fragile economy with limited resources but can almost be seen as a very small reflection of the United States.

Expanding Use of Wind Power Feasible, but May Be Costly

This article basically states that by 2024, wind power would replace coal and natural gas for about 20 to 30% of the electricity supplied on the eastern part of the United States. This shift in energy, however, will obviously be very costly, but they will have a dramatic effect on cutting carbon emissions.

The new study, conducted by EnerNex Corp., of Knoxville, Tenn., is the first major effort to compare those assertions. It found that in the “reference” case, with new windmills being built to satisfy state-by-state requirements for renewable energy, yearly electricity costs in the Eastern Interconnection would be about $125 billion (in today’s dollars) in 2024. Building enough windmills in the Midwest, with matching transmission lines, would raise that to about $140 billion, and building offshore would bring costs of about $150 billion.

I thought this article was interesting since we dicussed about scarce resources and ideas today, which this article is a good combination of the use of both of them.

Landesbank Losses May Bring Change to German

http://www.nytimes.com/2010/01/12/business/global/12landesbank.html

The mishandling of funds by Bayerische Landesbank, a state-owned German bank based in Munich may bring change to the German banking system. Being a state-owned bank, BayernLB has resulted in cries from rivaling commercial banks, economicsts and European Union antitrust regulators to reevaluate the German banking system. BayernLB has been forced to scale back their operations, essentially resulting in more space for private-sector banks such as Deutsche Bank and other commercial banks to step in and have more impactful positions in the German economy. Although Germany is currently the largest economy in Europe, their big banks have the lowest profit margins among Western European countries.

The mistakes by BayernLB have forced for a larger separation between government involvement in the banking sector and will eventually result in the restructuring of the banking system in Germany.

China's growth rate

This article talks about how China may be growing at too fast of a rate to sustain. It is consistent with Romer's podcast because it supports the notion that China is growing so quickly due to it's ability to copy technology that already exists. While the Chinese government is concerned with strengthening domestic demand, the article goes on to discuss why withdrawing their current stimulus measures may not be such a bad thing.

Glassmaking Thrives Offshore, but Is Declining in U.S.

The decline of glassmaking in America started gradually in the 1990s and accelerated during the Great Recession. What’s more, the big companies, like Corning and Guardian Industries, say that even as the economy improves, they are unlikely to bring domestic employment and production back to prerecession levels. Imports, for one thing, inhibit sales. And bigger profits lie abroad, so they are channeling investment and expansion to their overseas factories.

“Those who are looking through the rearview mirror, waiting for the glass industry in this country to come back, should know it isn’t going to come back, not the way it was,” Russell J. Ebeid, Guardian’s chairman, said in an interview.

In War Against the Internet, China Is Just a Skirmish

I thought this article is a good addition to the previous post- "Google's Threat Echoed Everywhere, Except China". This article touches on how other countries such as South Korea and France, are attempting some form of internet censorship. The UK is looking with interest on how France's law on allowing Internet connections to be cut off if a user is pirating copyrighted material. There appears to be an increasing belief among media companies and governments that "curbing some freedoms is necessary to foster the development of legitimate business on the Internet".

It will thus be interesting to see how this will pan out in different systems, each having its own unique set of cultural norms.

The Beginnings of the Real Recovery?

A report published Friday by the Federal Reserve Bank of New York indicated that manufacturing had expanded beyond expectations in the region during the month of January, pointing to gains in production as a cause of the lifting economy.

The New York Fed's general economic index rose to 15.9 from 4.5 in December, and readings above zero signal expansion in manufacturing in New York State and parts of New Jersey and Connecticut. Lean inventories combined with gains in consumer and business spending have led the turnaround in combination with strong growth in export demand, which has showed seven straight months of improvement as of November, on the back of a relatively weak U.S. dollar.

Inflation Remains Tame, With a Warning Sign

Holiday discounting helped keep inflation at bay in December, but fresh data on the state of U.S. industry suggest price pressures could yet become an obstacle to recovery.

The Labor Department reported Friday that its index of consumer prices rose a tame 0.1% in December from the previous month, held down by decelerating fuel prices and declines in the prices of items such as toys, televisions and new cars. In a reflection of the depth of the recession and a sharp drop in oil prices, the index average for all of 2009 was 0.4% lower than in 2008.

Subsidies Help Missouri Cotton Farmers

Missouri’s Bootheel cotton country has been given millions in federal farm subsidies to help against the recession. Four of the top 50 cotton-growing counties are included in Missouri’s Bootheel. These counties that are heavily dependent on agriculture have a per capita income that’s at least 30 percent lower than the U.S. average. Thanks to the $70 million in subsidies given in 2008, cotton could be grown and harvested this year. However, critics of the subsidies say they don’t produce enough jobs and that much of the money farmers spend goes to fertilizer and pesticide makers outside the Bootheel area.