Lauren Friedman MacroEconomics
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What to watch for in the State of the Union speech

What to watch for in the State of the Union speech | Lauren Friedman MacroEconomics | Scoop.it
While we will know much of what President Obama plans to say and propose before he even hits the House floor around 9 pm, a thousand storylines will be born tonight.
Lauren Friedman's insight:

Obama is in his second term, and therefore does not need to concern himself with the rising public opinion as much as he did in his first term. Because he is not going to be up for reelection, this speech (unlike those in his first term that most likely were aimed at securing the votes of Americans in the next election) ideally would not require him to hold back on what he truly believes. The article also predicts that Obama will discuss more about economic matters than that of gun control.

 

The speech, in my opinion, was a good representation of what the article predicted. Obama, in his first term, was more timid about talking about tax increases for the wealthy than he was in the SOTU. In his debates with Romney, Obama tried to make it sound as if the wealthy would simply be paying their share (making it sound like the proper way to do things) but tonight he made it very clear that his plan to increase spending would without a doubt be funded by the upper class. Obama did speak a lot about the economy and the deficit, but his speech was overall pretty well-rounded, as he also spoke about education, environmental issues, immigration, raising the minmum wage, skills for workers and gun control.

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The GDP Drop Is a Warning to Washington

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The GDP decline- the first since the recession year of 2009, seems to be the cause of the sharpest reduction in defense spending in 40 years. More trouble could arise when automatic cuts take place on March 1, and the debt is still rising. However, this crisis will not unite Republicans and Democrats on the issue in any way, as both parties have different ideas of how to save and then stimulate the falling economy. Today's budget deficits are largely cyclical, and would be smaller if economic growth were stronger, but that is not the case. Unless Republicans and Democrats can seem to agree on a viable solution, we will remain in gridlock. The country needs to unite in times like this and both sides need to compromise.

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The only chart you need on the GDP report

The only chart you need on the GDP report | Lauren Friedman MacroEconomics | Scoop.it
Last quarter's GDP report has been been called "the best-looking contraction in US GDP you’ll ever see." Here's the exact picture it paints.
Lauren Friedman's insight:

Consumer spending is what contributes the most to increasing the GDP. In my opinion, consumer spending is the most important thing for the economy, because it puts money back into the economy. If people, especially, the top income earners, are overtaxed, they will buy less. It is a general rule of demand. People are so worried about the decrease in GDP, yet continue to support more government spending. Government spending requires money, money from texpayers. I think that small businesses need to be better supported, as they create jobs which will in turn, lower the unemployment rate and stimulate the economy. 

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GDP unexpectedly shrinks, decline seen temporary

GDP unexpectedly shrinks, decline seen temporary | Lauren Friedman MacroEconomics | Scoop.it
WASHINGTON (Reuters) - The economy unexpectedly contracted in the fourth quarter, but analysts said there was no reason for panic given that consumer spending and business investment picked up.Gross domestic...
Lauren Friedman's insight:

Perhaps the GDP panic is being over exaggerated. Consumer spending and Business investment has picked up, so maybe there is not such a dire problem after all, considering Consumer spending makes up the largest component of the GDP computation. Slow inventory growth and a 40% cut in defense spending have lowered the GDP 0.1%, but it is dubious that another cut that large would be implemented in the area of defense. Nevertheless, if it were not for these factors, the economy would be growing steadily at a rate of 2.5%. A second report, from payroll processor ADP, showed private-sector payrolls expanded by 192,000 jobs in January after increasing 185,000 in December, which also suggested the recovery's fundamentals were sound. The creation of jobs should make the country feel a bit more at ease in a situation like this. Federal Reserve officials are confident that the economy will pick back up again soon. However, some positives came out of the recent GDP report.  For example, household income after taxes and inflation increased at a strong 6.8 percent rate. That allowed households to step up their saving, and the saving rate rose by more than a percentage point.

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