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As the Economy Sinks, So Do Odds of a Tax Cut
Tweet Share on Facebook October 9, 2008 Comment (13)One of the riskiest financial moves you make this year could be listening to the presidential candidates—and banking on a tax cut after the November elections.
John McCain and Barack Obama both promise that widespread tax cuts will be one major way they'll revive the economy and help lift consumers' sagging spirits. They differ, of course, on who should enjoy the largesse. McCain wants to cut estate and corporate income taxes, and extend broad-based tax cuts that were enacted earlier this decade. Obama agrees about extending some of those Bush era tax cuts, while offering lots of other relief to people earning less than $250,000 and raising taxes on the wealthy.
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Forget the Stock Market. Worry About Jobs
Tweet Share on Facebook October 9, 2008 Comment (20)The depressed stock markets have dominated the news lately, as investors recalibrate their finances—and their lives. But it looks like there's more bad news on the way that could hit even closer to home.
The job market has gradually drifted out of the comfort zone this year, with the unemployment rate rising from 4.9 percent in January to 6.1 percent this fall. That's higher than what economists call the "sustainable" rate that's normal, more or less, as people move between jobs in a healthy economy. And suddenly it looks as though the job market will be the next pillar to quake as global economic tremors continue. Consider some of these recent projections—mostly downgrades—for the U.S. unemployment rate over the next year:
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The Economy on Election Day: Worse
Tweet Share on Facebook October 6, 2008 Comment (8)Politicians often like to ask voters if they feel better off today than at some carefully chosen point in the past. If Barack Obama or John McCain asks that question on November 4, most Americans will probably answer no. And it won't matter what point in recent years they're comparing it to.
Economic predictions always come with caveats, because nobody completely understands how consumers behave or markets react. But most economists agree that the next several months are shaping up as one of the gloomiest stretches in years. Here's how key parts of the economy will probably look when voters go to the polls on November 4:
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Bailout Will Help, but Pitfalls Remain
Tweet Share on Facebook October 3, 2008 Comment (17)The mammoth financial bailout plan is finally in place. But don't exhale just yet.
The $700 billion rescue bill that Congress finally passed will limit panic in the markets, since it gives the government vast new authority to take over sclerotic securities that have clogged the credit system and already brought down some of America's biggest companies. With the feds stepping into the bloodbath, the hemorrhaging should stop. But the economy is still in precarious shape, and unrealistic expectations about the bailout could end up disappointing consumers hoping for some kind of immediate relief.
Here are some likely developments for which consumers should prepare:
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How the Credit Crunch is Hitting Home
Tweet Share on Facebook October 3, 2008 Comment (23)Where's the pain?
That's what most Americans have been wondering, as they digest warnings from Washington about the dire ramifications of a global credit crunch. Up till now, the credit freeze has mainly hit parts of the economy hidden from ordinary consumers: Short-term corporate loans, hedge-fund borrowing, derivatives markets. No wonder most people have been scratching their heads—and calling Congress to protest a massive Wall Street bailout.
But like the proverbial Blob, the credit crunch is now spreading beyond the back-office parts of the economy into areas felt more directly by consumers. The biggest examples:
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How Sarah Palin, Joe Biden Would Guard Your Wallet
Tweet Share on Facebook October 1, 2008 Comment (12)Vice presidential candidates spend most of their time cheerleading for their boss—and attacking his opponent. But with intense interest in the upcoming debate between Democrat Joe Biden and Republican Sarah Palin, the two No. 2's have been staking out their own turf on the financial bailout, the housing crisis, and other economic matters. Here's where they stand on issues that matter most to consumers:
THE WALL STREET BAILOUT
The bailout bill, with its huge price tag, is deeply unpopular among voters, and while both campaigns tepidly support it, the candidates have all bashed Wall Street fat cats, greedy banks, and failed companies like the mortgage giants Fannie Mae and Freddie Mac.
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Better Ways to Sell the Bailout
Tweet Share on Facebook October 1, 2008 Comment (17)Financial panic? Yaaaaaawwwwn.
When President Bush tried to make the case for his $700 billion bailout bill on prime-time TV, he painted a dire picture if it didn't pass. "America could slip into a financial panic," he warned. "The value of your home could plummet.... More businesses would close their doors, and millions of Americans could lose their jobs.... Ultimately, our country could experience a long and painful recession."
Americans obviously didn't buy it. Unmoved by Bush, they barnstormed Congress in protest, and the result was the stunning defeat of the first bailout bill in the House, five days after Bush pleaded for it on TV.
Rick Newman
The global economy is mysterious, even scary. Chief Business Correspondent Rick Newman connects the dots. In addition to his writing for U.S. News, Rick is the co-author of two books: Firefight: Inside the Battle to Save the Pentagon on 9/11, and Bury Us Upside Down: The Misty Pilots and the Secret Battle for the Ho Chi Minh Trail.
Read Rick's latest blog entries here.
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