Macroeconomic
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The 5% recovery: Why most are still in recession

The 5% recovery: Why most are still in recession | Macroeconomic | Scoop.it

How strong the economic recovery has been since the Great Recession ended in 2009 probably depends on viewpoint.

 

For those in the top 5 percent, the recovery has been pretty good.

 

As for the other 95 percent, well ... maybe not so much.

 

Post-financial crisis wealth disparity has been well-chronicled.

 

Federal Reserve Gov. Sarah B. Raskin drew widespread attention with this speech in April that showed how poorly the lower income levels have fared during the recovery, particularly because those demographics have their wealth concentrated in housing and are hit far more severely by falling prices.

 

The unemployed in lower-income groups also take a hit because they have a more difficult time finding jobs that pay at a rate commensurate with the positions they lost.

 

Finally, history has shown that highly accommodative monetary policy widens income disparity by awarding speculators and penalizing savers. While the S&P 500 is up nearly 150 percent since the March 2009 lows, that's most helped those heavily invested in stocks.

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Equifax Reports Credit Card Balances Increase Year-Over-Year for the First Time in 5 Years

According to Equifax's (NYSE:EFX) latest National Consumer Credit Trends Report, the total balance of bank credit cards increased slightly over the year ending July 2013 (from $533.3 to $536.5 billion), realizing the first year-over-year increase in 5 years.

For other verticals, year-over-year changes in balances include:

-- Student loan: increased 11.3% (from $794.6 billion to $884.2 billion); -- Auto: Increased 10.9% (from $745.3 billion to $826.8 billion); -- First mortgage: decreased 0.9% (from $7.79 trillion to $7.72 trillion); -- Home equity installment: decreased 4.1% (from $142.3 billion to $136.5); and -- Home equity revolving: decreased 8.9% (from $553.2 billion to $504.1 billion).

"Only two major consumer credit segments are currently growing: auto financing and student loans," said Equifax Chief Economist Amy Crews Cutts. "In all other segments, consumers are reducing their debt burdens, either negatively, through foreclosures and bankruptcies, or positively, through payoffs -- payoffs are dominating in most cases today. We expect mortgage balances to begin rising again over the next several months as new home purchase loans overtake foreclosures and payoffs."

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Now That You're Done With Your Summer Travels, Gas Prices Are Lower Than Last Year's

Now That You're Done With Your Summer Travels, Gas Prices Are Lower Than Last Year's | Macroeconomic | Scoop.it

According to the U.S. Energy Information Administration, the average price per gallon currently sits at $3.55, $.13 lower than this summer’s peak in late July. In 2012, gas prices actually dipped during the middle of the summer, reaching around $3.40/gallon, but then began rising quickly in August. So between the current, somewhat flattened price, and last year’s rapid increase, folks getting out for one last road trip this International Bacon Day weekend are paying $.19 less per gallon on average than they did a year ago, and $.03 less than during the same time period in 2011.

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Growth Beats Estimate as U.S. Weathers Budget Cuts

Growth Beats Estimate as U.S. Weathers Budget Cuts | Macroeconomic | Scoop.it

Consumer spending climbed 1.8 percent, the same as previously reported, propelled by gains in durable goods such as automobiles and appliances. That followed a 2.3 percent increase from January through March. Purchases added 1.2 percentage points to growth.

 

Consumers’ purchasing power improved, with disposable income adjusted for inflation rising at a 3.2 percent annualized rate from April through June after a 7.9 percent decrease in the first quarter. The saving rate in that period increased to 4.5 percent from 4.1 percent.

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Cooler Spending in U.S. Signals Slow Start for Quarter

Cooler Spending in U.S. Signals Slow Start for Quarter | Macroeconomic | Scoop.it

Consumer spending cooled in July as income growth slowed, indicating the world’s largest economy was off to a slow start in the third quarter.

 

Purchases rose 0.1 percent after a 0.6 percent June gain that was larger than previously estimated, according to Commerce Department data issued today in Washington. Other reports showed business activity picked up this month and consumer sentiment declined less than projected from July’s six-year high.

 

Gains in incomes are barely keeping pace with inflation, a sign employment will need to pick up for the expansion to strengthen. At the same time, rising home values are helping bolster household purchases of appliances and automobiles even in the face of rising mortgage rates, prompting Ford Motor Co. (F) to project sales this month will be the strongest since 2007.

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So is the glass half empty? Conflicting views of U.S. trajectory

So is the glass half empty? Conflicting views of U.S. trajectory | Macroeconomic | Scoop.it

The U.S. has fallen into what Adam Smith called "the stationary state," a formerly wealthy country that has stopped growing, where a rich elite exploits laws and regulations to the detriment of business and the individual, and where worsening inequalities, especially in income, may lead to social upheaval.

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Equifax Reports Auto Loan Originations Total More Than 50% of All New Non-Mortgage Credit in 2013

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Home prices continued to advance in June but the pace may slow

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Economy glued to middle path of growth

Economy glued to middle path of growth | Macroeconomic | Scoop.it

The consumer confidence index for August, released Tuesday, is expected to dip slightly from July‘s score of 80.3. The consumer sentiment index on Friday could show a similarly small decline from its last reading of 80.0.

 

Both indexes have recently touched post-recession highs. Economists say consumers have been partially comforted by higher home values, more help-wanted signs, a leveling-off of gas prices and, until recently, sharp stock gains.

 

No one should be fooled into thinking that the U.S. is suddenly in another era of good feeling however.

 

“Consumer confidence has seen some improvement, but historically it’s still depressed,” pointed out Sam Bullard, an economist at Wells Fargo. The nation’s high unemployment rate, at 7.4%, underlies the more optimistic but still cautious outlook of consumers, he said.

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Consumers Skip Dining for Cars as Sales Slow

Consumers Skip Dining for Cars as Sales Slow | Macroeconomic | Scoop.it

While restaurants try to rebound from this slowdown, some chains could suffer until consumer confidence improves, said Barish, who maintains a buy recommendation on Red Robin Gourmet Burgers Inc. (RRGB) and a hold on Cheesecake Factory. Sentiment, as measured by the Bloomberg Consumer Comfort Index, fell to minus 28.8 in the week ended Aug. 18, the lowest in two months.

 

Higher payroll taxes and gas prices, along with sequestration -- automatic, across-the-board federal spending cuts, also continue to constrain many diners’ budgets, Knapp said.

 

U.S. paychecks shrank this year after Congress and President Barack Obama let the tax that funds Social Security benefits revert to 6.2 percent from 4.2 percent. Meanwhile, the average price of a gallon of regular unleaded gasoline rose as high as $3.67 in mid-July, the most since March, based on data from Heathrow, Florida-based AAA, the largest U.S. motoring organization.

 

Even with the sluggishness, the industry’s performance doesn’t necessarily suggest a broader economic slowdown is imminent, Luschini said. Rather, weak casual-dining sales show that some households continue to struggle, living paycheck-to-paycheck, and must “decide where to allocate what discretionary capital they may have.”

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U.S. jobless claims jump 13,000 to 336,000

The number of people who applied for new U.S. unemployment benefits climbed by 13,000 to 336,000 in the week ended Aug. 17 but remained near a post-recession low, according to the latest government data. Economists surveyed by MarketWatch expected claims to rise to 330,000 on a seasonally adjusted basis. The average of new claims over the past month, a more reliable gauge than the volatile weekly number, fell for the sixth straight week and touched the lowest level since November 2007, one month before the Great Recession started. The four-week average dropped by 2,250 to 330,500, the U.S. Labor Department said Thursday. Continuing claims, however, increased by 29,000 to a seasonally adjusted 2.99 million in the week ended Aug. 10. Continuing claims, released with a two-week lag, reflect the number of people already receiving benefits. Initial claims from two weeks ago, meanwhile, were revised up to 323,000 from an original reading of 320,000, based on more complete data collected at the state level.

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At end of summer driving season, gasoline prices are lower than past two years

At end of summer driving season, gasoline prices are lower than past two years | Macroeconomic | Scoop.it

As the Labor Day weekend approaches, the U.S. national average retail price for regular gasoline has fallen 13 cents per gallon below the apparent summer peak of $3.68 per gallon, reached on July 22. Last Monday, August 26, it was $3.55 per gallon, despite an increase in crude oil prices since early July. At $3.55 per gallon, the average U.S. retail price for regular gasoline is 19 cents below last year's price at that time and 3 cents below the level in 2011 leading into the holiday weekend. According to the American Automobile Association, gasoline prices were $3.59 per gallon August 29.

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Premium Increases Under Obamacare May Be Overstated

Premium Increases Under Obamacare May Be Overstated | Macroeconomic | Scoop.it

Predictions of sharp increases in health-insurance premiums for people getting coverage under the U.S. Affordable Care Act have been overstated and many states will see little to no change, researchers at Rand Corp. found.

 

Out-of-pocket premiums for most individuals who buy health plans through new insurance exchanges will decline because of federal subsidies, the Santa Monica, California-based nonprofit research group said today in a report. The researchers looked at insurance markets in 10 states to project costs as core parts of the 2010 health law kick in next year.

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US consumer confidence rises in August

US consumer confidence rises in August | Macroeconomic | Scoop.it

Americans’ confidence in the economy inched closer to a 5 ½-year high on growing optimism that hiring and wages could pick up in coming months.

 

The Conference Board, a New York-based private research group, said Tuesday that its consumer confidence index rose to 81.5 in August. That’s up from a revised reading of 81 in July. And it’s just below the 82.1 reading in June, which was the highest since January 2008.

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Whither the Consumer?

Whither the Consumer? | Macroeconomic | Scoop.it

There is something rather odd about the recent recovery dynamic. In the U.S., the business cycle is mostly about investment spending. Consumer spending (non-durables and services) is relatively stable. And in the typical recovery dynamic, consumption and investment tend to move together (this applies to booms as well).

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Disposable income must reach consumers for economic turnaround

Hope for economic recovery is just that — hope. American credit card debt is at an all-time high and the student loan total has surpassed that at $1.2 trillion. High credit card interest rates can make it difficult to pay finance charges, let alone pay down any balance, while young people will be saddled with student loan obligations for years as they find jobs in their fields difficult to obtain.

 

And 52 percent of those who do find work have jobs that don't require a degree. The average car loan is over $13,000. Deposits in savings accounts and CDs pay the most minimal interest rates so those are not money making options but do provide basically free money for the banks to operate with.

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National Foreclosure Report - July, 2013

National Foreclosure Report - July, 2013 | Macroeconomic | Scoop.it
CoreLogic releases its latest National Foreclosure Report which provides data on completed U.S. foreclosures and the overall foreclosure inventory.
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Stronger Job Growth Signals Time to Scale Back Bond-Buying

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Why Future Tax Rates Will Be Higher

Today, we are staring down the barrel of a national debt of $16.9 trillion dollars. By the time you read this, it may well be $17 trillion! Even though the annual deficit is falling, it is still $787 billion, down from its $1 trillion dollar level just one year ago. The tax law changes that went into effect this year were mainly targeted at the highest income earners. Of course, the expiration of the payroll tax holiday caused tax rates to rise on everyone who earns a paycheck, but the majority of the tax hikes hit the higher income earners. The more income government requires, the more taxes will have to be raised. The problem is that there are not enough “high income earners” to satisfy today’s debt and deficits. This means that middle income America will soon be in the scope of the Congressional rifle. As I have written before, a government can over-tax the rich until they are no longer rich. However, the rich will take measures to avoid this, and they can certainly afford to do so. Because the poor have nothing to tax, the middle class will be forced to ante up.

 

Therefore, before you pull the lever in your next election, ask yourself how much are you willing to pay. After all the sound bites and finger pointing, the facts cannot be changed. Our debt is too high and higher taxes are coming to a neighborhood near you soon!

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Food stamp cuts coming soon, sponsored by Democrats (You read that correctly)

Food stamp recipients this fall -- 16 percent of all Ohioans --  will have their benefits reduced because of an act of Congress, with a family of four losing up to $36 a month.


And this time, Democrats are the ones who did it. While Democrats complain that House of Representatives Republicans want to dramatically cut the federal Supplemental Nutrition Assistance Program, or SNAP, the cuts that will take effect Nov. 1 were passed by Democrats in 2010.

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