Analysis Topic: Economic Trends Analysis
The analysis published under this topic are as follows.
Sunday, July 31, 2011
U.S. Q2 GDP The Numbers Don't Add Up / Economics / Economic Statistics
By: Tony_Pallotta
Q1 2011 GDP was revised one final time from 1.9% to 0.4% and Q2 2011 GDP the first estimate was 1.3%. Before analyzing the data I have one very simple question.
Economic growth slowed during Q2 as acknowledged by the Fed and indicated by regional Fed surveys, ISM, durable goods, etc so how could Q2 GDP be higher than Q1 GDP? That would imply the economy accelerated and clearly that has not happened. In other words just as Q1 2008 was eventually shown as the start of the great recession so will Q2 2011 in subsequent revisions.
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Sunday, July 31, 2011
U.S. Real GDP Revisions Indicate Economy Still in Recovery Phase / Economics / US Economy
By: Asha_Bangalore
The U.S. economy grew at an annual rate of 1.3% in the second quarter after a downwardly revised 0.4% increase in the first quarter (previously estimated to have increased 1.9%). From a year ago, real GDP advanced only 1.6%, the smallest increase in the current recovery.
Friday, July 29, 2011
U.S. Debt Default or Credit Ratings Downgrade Could Crush the Global Economy / Economics / Global Debt Crisis
By: Money_Morning
Shah Gilani writes:
If there's a "worst-case scenario" for this whole debt-ceiling debacle, this is it.
After studying everything that could happen due to a downgrade of the United States' top-tier AAA credit rating, and the potential default on its debt, we found a scenario that would result in forced asset sales that are so widespread that global stock-and-bond markets would plunge - and economies around the world would crash.
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Friday, July 29, 2011
U.S. Debt Ceiling Consquences, If Cooler Heads Do Not Prevail / Economics / US Debt
By: Paul_L_Kasriel
Our working assumption is that legislation authorizing an increase on the ceiling on federal debt will be enacted in time for the U.S. Treasury to make all of its previously-authorized expenditures. If, however, this legislation is not passed, then the U.S. federal budget will move into balance. In the 12 months ended June 2011, the Treasury had run a cumulative budget deficit of $1.26 trillion. For the sake of argument, let's assume that the August 2011 budget deficit at an annual rate also is $1.26 trillion. At an annual rate, this is the amount that federal outlays would immediately decline. $1.26 trillion is about 8.4% of what U.S. nominal GDP was running at an annualized pace in the first quarter.
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Thursday, July 28, 2011
U.S. Businesses Appear to Have Selective Uncertainty / Economics / US Economy
By: Paul_L_Kasriel
I keep hearing that what is holding U.S. businesses back from expanding and hiring is “uncertainty.” Exactly what new types of uncertainty businesses face in the current environment vs. past environments is rarely spelled out. But if, in fact, businesses are paralyzed due to uncertainty, I would not expect them to be stepping up their purchases of capital equipment. After all, capital equipment has a relatively long life. If businesses were unusually uncertain about the long-term outlook, they would be more reluctant to make longer-term commitments, which the purchase of capital equipment is. Rather, if businesses were unusually uncertain about the future, they might be more inclined to hire workers, who, after all, can be dismissed on short notice if conditions were to change suddenly.
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Thursday, July 28, 2011
U.S. Debt Limit Debate Sign of Deeper Economic Dysfunction / Economics / US Debt
By: The_Gold_Report
ShadowStats Editor John Williams advises legislators to stop fooling around with the country's credit rating. Regardless of the deal reached, he predicts that the Treasury and Fed will continue to print money to meet obligations and add liquidity to the economy. In this exclusive interview with The Gold Report, he explains how that will have the effect of pushing the price of gold and other commodities even higher.
Wednesday, July 27, 2011
Washington Had a Spending Problem / Economics / Government Spending
By: Paul_L_Kasriel
But does it have one now and through 2017? In an historical context, no. Consider Chart 1, which shows the rate of growth in the 12-month cumulative amount of total federal outlays from year-ago month. In the 12 months ended June 2011, total federal outlays are up 3.28% from 12 months ended June 2010 -well below the 6.64% median growth in this 12-month cumulative total from December 1955 through June 2011. So, Washington hardly has a spending problem now vs. history.
Monday, July 25, 2011
The Economics of Big Cities / Economics / Social Issues
By: Robert_Murphy
Large, densely populated urban areas put economic principles in a pressure cooker, as it were. The extremes of urban life make things evident that would not be as obvious in a small town. With the right combination of entrepreneurial drive and the rule of law, metropolitan areas are economic powerhouses.
Saturday, July 23, 2011
European Leaders Kicking the Debt Crisis Can Down the Road / Economics / Global Debt Crisis
By: John_Mauldin
This week we start with the latest version of the solution to the European Crisis, the details of which are now coming out. Then we look at the global economy, and some signs that seem to point to a softening. And then there's some data on US employment from a friend who has some thoughts about what we really need to do to get unemployment to come down. There is a lot to cover.
Saturday, July 23, 2011
Outcome of Tax Cuts Following the 2001 Recession - Noteworthy Facts / Economics / US Economy
By: Asha_Bangalore
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) lowered taxes on personal income, dividends and capital gains. Personal income tax rate for the highest bracket was reduced in steps from 39.6% (tax rate prior to EGTRRA) to 35% (after the JGTRRA legislation). These changes of income tax rates had sunset provisions and were set to expire in 2010; but they were extended under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (TRUIRJCA). Read full article... Read full article...
Saturday, July 23, 2011
U.S. Real GDP in the Economic Current Recovery, How Does it Compare? / Economics / Economic Recovery
By: Asha_Bangalore
The current economic recovery is eight quarters old. The first estimate of real GDP growth for the second quarter will be published on July 29. Chart 1 is an index chart where real GDP data are set equal to 100 at the trough of each recession and real GDP for subsequent quarters are computed accordingly to enable comparisons of real GDP growth across recoveries. For example, a reading of 104 would mean that real GDP increased 4.0% from the trough. In 2011:Q1, the seventh quarter of economic recovery, real GDP rose 4.95% from the trough of the current recovery. At a similar stage of economic recovery after the 2001 recession, real GDP recorded a 4.88% gain.
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Friday, July 22, 2011
Who's Afraid of Deflation? / Economics / Deflation
By: Philipp_Bagus
When it comes to deflation, even Austrian economists disagree. In contrast to those who favor a 100 percent–reserve system and the effect such a system would have on prices, Austrian defenders of a fractional-reserve, free-banking (FRFB) system still seem to harbor a fear of price deflation.[1] Examples of this group include Steven Horwitz, George Selgin, and Lawrence H. White, who support a banking system or monetary policy that stabilizes nominal income (MV).[2] Broadly speaking, they favor an increase in the money supply if the demand to hold money (i.e., hoarding) increases. Without a corresponding increase in the money supply, an increase in the demand to hold money would cause a general fall in prices (i.e., price deflation).
Friday, July 22, 2011
The Never-Ending Economic Depression , Recovery Only If We Repudiate the Debt / Economics / Great Depression II
By: Washingtons_Blog
Economics Professor: "[We’ll Have] a Never-Ending Depression Unless We Repudiate the Debt, Which Never Should Have Been Extended In The First Place" Economists: The Economy Can Only Recover If We Repudiate the Debt
Leading Austrian-school economist Murray Rothbard - an American - wrote in 1992:
Read full article... Read full article...I propose ... out-right debt repudiation. Consider this question: why should the poor, battered citizens of Russia or Poland or the other ex-Communist countries be bound by the debts contracted by their former Communist masters? In the Communist situation, the injustice is clear: that citizens struggling for freedom and for a free-market economy should be taxed to pay for debts contracted by the monstrous former ruling class. But this injustice only differs by degree from "normal" public debt. For, conversely, why should the Communist government of the Soviet Union have been bound by debts contracted by the Czarist government they hated and overthrew? And why should we, struggling American citizens of today, be bound by debts created by a ... ruling elite who contracted these debts at our expense?
Thursday, July 21, 2011
Continued Sluggish U.S. Economic Growth Expected Through 2012 / Economics / US Economy
By: Paul_L_Kasriel
With this commentary, we unveil our first formal forecast of U.S. economic activity and interest rates for 2012. The forecast for real GDP growth is only marginally better in 2012 vs. the forecast for 2011 - on a Q4/Q4 basis, 2.45% in 2012 vs. 2.20% in 2011. We do expect some forward momentum to build in the second half of 2012 with respect to real GDP growth and for this momentum to intensify in 2013. The reason for this building momentum is an expectation of a resumption of Federal Reserve quantitative easing (QE) early in 2012 and/or a pick-up in bank credit creation. Because our forecast is for below-potential real economic growth, our view is that the unemployment rate will creep up from its Q2:2011 average of 9.1%, peaking at 9.5% in Q3:2012. It will not be until 2013, that any sustained meaningful decline in the unemployment rate sets in.
Thursday, July 21, 2011
Society Lacks Purchasing Power, Robots Don’t Buy Cars / Economics / Economic Theory
By: Christopher_Quigley
Our world lurches from financial crisis to financial crisis yet very few academics, reporters or commentators point out the fatal flaw in current orthodox economic theory which is the central force behind these crises. The flaw relates to the general LACK OF PURCHASING POWER in contemporary society. This weakness in classical economic theory is not new and many scholars have explained the problem however, increasingly, the issue is being conditioned out of people’s consciousness. The collapse of the international banking system, as a result of the Sub-Prime; “Originate to Distribute” catastrophe, has brought this Achilles heel of Keynesian economics into sharp focus.
Tuesday, July 19, 2011
U.S. Economic Policy Failures, Federal Debt Bomb End Game / Economics / US Debt
By: John_Mauldin
Long-time readers are familiar with the wisdom of Lacy Hunt. He is a regular feature of Outside the Box. He writes a quarterly piece for Hoisington Asset Management in Austin, and this is one of his better ones. Read it twice.
"While the massive budget deficits and the buildup of federal debt, if not addressed, may someday result in a substantial increase in interest rates, that day is not at hand. The U.S. economy is too fragile to sustain higher interest rates except for interim, transitory periods that have been recurring in recent years. As it stands, deflation is our largest concern ..."
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Tuesday, July 19, 2011
Does It Make Economic Sense to Strive for a Balanced Federal Budget? / Economics / Government Spending
By: Paul_L_Kasriel
When business make capital expenditures in order to enhance future profitability, do they typically fund all of these capital expenditures out of current income? No.Read full article... Read full article...
Monday, July 18, 2011
The Critical Flaw in Keynes's Economic System / Economics / Economic Theory
By: Robert_Murphy
As part of my Mises Academy class Keynes, Krugman, and the Crisis, I have reread large portions of The General Theory. In his masterpiece, Keynes erects an impressive framework on one crucial assumption: left to its own devices, the free market can get stuck in an equilibrium with very high unemployment.
Although Keynes's whole edifice and critique of the "classical economists" rests on this belief, he devotes surprisingly little time to supporting it. In the present article I'll point out the weakness in his view. If it turns out that the free market does naturally move toward full employment in the labor market, then the entire Keynesian "general theory" falls apart.
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Monday, July 18, 2011
Why Banks Aren’t Lending: The Silent Liquidity Squeeze / Economics / Credit Crisis 2011
By: Ellen_Brown
Why aren’t banks lending to local businesses? The Fed’s decision to pay interest on $1.6 trillion in “excess” reserves is a chief suspect.
Where did all the jobs go? Small and medium-sized businesses are the major source of new job creation, and they are not hiring. Startup businesses, which contribute a fifth of the nation’s new jobs, often can’t even get off the ground. Why?
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Sunday, July 17, 2011
Who Benefits from the Greek Bailout? / Economics / Global Debt Crisis
By: Andrew_G_Marshall
Continuing From Part 1 (The Great Global Debt Depression: It's All Greek To Me) - Greece has a total debt of roughly 330 billion euros (or U.S. $473 billion).[60] In the lead-up to the Greek bailout orchestrated by the IMF and European Union in 2010, the Bank for International Settlements (BIS) released information regarding who exactly was in need of a bailout. With the bailout largely organized by France and Germany (as the dominant EU powers), who would be providing the majority of funds for the bailout itself (subsequently charged to their taxpayers), the BIS revealed that German and French banks carry a combined exposure of $119 billion to Greek borrowers specifically, and more than $900 billion to Greece, Spain, Portugal and Ireland combined.