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An Economic Agenda for Democrats
Tweet Share on Facebook October 17, 2006 CommentIf the public-opinion polls and online betting markets are correct, Democrats will be running one or both houses of Congress come Jan. 3, 2007. But if that moment does arrive, will their congressional leaders find themselves repeating the famous question asked at the end of the 1972 Robert Redford film The Candidate, "What do we do now?" Let me quote from an E-mail I recently got from Jacob Hacker, a Yale political science professor and author of The Great Risk Shift, a new book in which he identifies growing income volatility as the prime cause of widespread worker angst. His bleak take on the Dems' economic agenda in the upcoming 110th Congress: "One thing that's clear is that Democrats are focusing right now on taking down the GOP and very little on what they might do once elected–which may work as an electoral strategy but is going to leave them with a pretty blank slate if they actually win one or both houses."
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Should Uncle Sam Help Domestic Manufacturers?
Tweet Share on Facebook October 16, 2006 Comment (14)A recent study from the National Association of Manufacturers claims that the competitiveness of domestic companies is being hurt by rising "structural costs." Problem areas include taxes, employee benefits, litigation expenses, and energy prices. As the NAM figures it, U.S. manufacturers are at a 31.7 percent cost disadvantage vs. foreign rivals. That's up from 22.4 percent in 2003. "The sharp rise in these nonwage costs represents a significant and long-term problem for our nation's manufacturers and America's economy," said John Engler, the NAM's president and former Republican governor of Michigan, when the report was released.
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October Surprise for the Investor Class
Tweet Share on Facebook October 13, 2006 Comment (32)How will investors affect the midterm congressional elections on November 7? (That was the cogent question asked of me by Lawrence Kudlow when I appeared on yesterday afternoon's edition of CNBC's Kudlow & Company.) To even begin to tackle the issue beyond a sound bite, you first have to understand what the "investor class" is. Slightly more than half of all U.S. households own stock, either directly or through retirement accounts such as 401(k)'s and IRAs, according to the Investment Company Institute. In the early 1990s, that fraction was only about a third. And in the early 1980s, just a fifth of all households invested in stocks. During the 2004 presidential election, about 46 percent of investors, according to polling by Zogby International, identified themselves as members of the investor class. And this group voted for President Bush in a landslide over Sen. John Kerry, 61 percent to 39 percent.
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Those Strange Jobs Numbers
Tweet Share on Facebook October 11, 2006 Comment (14)It was the big twist in last week's so-so jobs report. Labor Department number crunchers said they had–oops!–undercounted by a whopping 810,000 the number of jobs created by the U.S. economy for the 12 months ending in March 2006. That means nearly 3 million new jobs were created instead of just over 2 million. So what does the megarevision–the biggest ever in terms of absolute numbers–really mean? To get some insight, I shot an E-mail to Diana Furchtgott-Roth, a former chief economist at the Labor Department and currently director of the Hudson Institute's Center for Employment Policy in Washington, D.C.
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Is '70s-Style Stagflation Next Up for the U.S. Economy?
Tweet Share on Facebook October 10, 2006 Comment (23)Gail Fosler, chief economist of the Conference Board, came out with her stagflation call this morning. Oh, and the Fed is also going to resume raising rates, she added. Ugly stuff. The global research organization's index of leading economic indicators has turned downward of late, leading to Fosler's prediction of a slowing economy. But she also thinks inflation will remain stubbornly high. Slow growth plus inflation equals stagflation. Here's her two cents:
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Job Numbers: Good But Not Good Enough for GOP
Tweet Share on Facebook October 6, 2006 CommentToday's new jobs numbers from the Labor Department were a missed chance for President Bush and congressional Republicans to slightly nudge the national conversation away from Mark Foley and E-mails and instant messages. The headline — Jobless Rate Drops to 4.6 Percent — is certainly positive news for them, but it wasn't coupled with the sort of boffo job-growth numbers needed to create a clear, unambiguous picture of a powerful, pro-incumbent economy. (According to the Intrade political betting market, the GOP has just a 44 percent chance of keeping the House, though the economy is obviously not the only factor in voters' minds.)
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A Surprise in the Job Numbers?
Tweet Share on Facebook October 5, 2006 CommentWill tomorrow's September payroll numbers from the Labor Department provide a big surprise? That's certainly been the case in recent years. Economists have been unable to predict with any accuracy how many jobs this economy creates on a monthly basis. Usually the pros are overly optimistic, predicting, say, 250,000 new jobs when it turns out that only half that many had been generated. This time around, economists are looking for payrolls to increase by around 120,000.
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Bernanke Speaks! (On Housing, Energy, Entitlements)
Tweet Share on Facebook October 4, 2006 CommentSince chatting up Fed policy with CNBC anchor Maria Bartiromo at a dinner in April–sending stocks plunging–Federal Reserve Chairman Ben Bernanke has kept his public utterances formal. But speaking at the Economic Club of Washington today, Bernanke did take some audience questions after his prepared remarks on America's entitlement problems.
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Fed may slash rates to save the economy
Tweet Share on Facebook October 3, 2006 Comment (1)"Apocalyptic."
That's how a Wall Street economist described to me the attitudes of south Florida homebuilders to whom he recently gave a speech. The economist might have gotten a similar earful had he chatted with homebuilders in the Northeast or California. Same dreadful story in all the formerly hot markets. But how much will a housing slump infect the rest of the economy? One look at the severely inverted yield curve–often a predictor of coming recessions–sure hints at coming nastiness (though the elevating stock market tells a different tale).
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Why Bernanke should be smiling
Tweet Share on Facebook October 2, 2006 CommentAnother sign that the economy may be headed for a soft landing, rather than a hard one: today's September manufacturing report from the Institute of Supply Management–which showed the sector slowing a bit but still expanding. It was seen by economists as a sort of a tiebreaker after a series of mixed manufacturing reports. Stocks tumbled after the recent negative survey from the Federal Reserve Bank of Philadelphia, but both the Empire State and Chicago purchasing managers index reports last week were rosier. So all eyes turned to the ISM report for a mountaintop view of things.
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