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10 States Where Taxes Are Rising the Most
Tweet Share on Facebook June 30, 2010 Comment (43)In Washington, the “T” word is political dynamite. New federal taxes seem inevitable at some point, thanks to the gargantuan federal debt—just not yet. The only new taxes enacted by the feds recently have been on a tiny minority of wealthy earners and on institutions like banks and health insurers, which politicians can easily vilify. Other than that, they’d rather not talk about it.
[See how all the states rank in terms of higher—and lower—taxes.]But many Americans are paying higher taxes anyway because states can’t borrow the way Washington can or put off the day of reckoning. The listless economy has shredded state budgets, forcing tough decisions nationwide about whether to slash services, raise taxes, or both. Last year’s big federal stimulus package helped, sending about $250 billion to states. But that emergency funding is starting to peter out and tax increases passed during the recession are finally starting to hit people’s wallets.
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How Consumer Gloom Might Save the Economy
Tweet Share on Facebook June 30, 2010 Comment (2)Americans are bummed out. Consumer confidence has turned south, with more than half of all Americans believing we're still in a recession, even though economic indicators say otherwise. People are afraid to spend money. Rising numbers of people worry that they won't be able to retire or their kids will end up with a lower standard of living.
Maybe it's about time.
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Where Taxes Are Headed In Your State
Tweet Share on Facebook June 30, 2010 Comment (12)With tax revenues down sharply, most states face a grim choice: Hike taxes during a weak economy, slash spending, or do both. A few states have managed to hold taxes steady and a few have even cut taxes. But in most states, the tax burden has gone up.
[Read more about the states where taxes are rising the most.]
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5 Reasons a Double-Dip Recession Could Happen
Tweet Share on Facebook June 30, 2010 Comment (31)Most economists still think the odds of a relapse are low, but the listless economy is starting to resemble a moribund patient who doesn't respond to conventional treatment. The government has transfused trillions of dollars of aid into the economy, defibrillated the banking sector, subsidized housing for millions, and propped up other sectors, like autos. Yet hiring is far weaker than it should be, stocks have tumbled, consumers are depressed, and skeptics are predicting a dreaded double-dip recession. Here's why it could happen:
The stock market boom might have been artificial. After a steep plunge in 2008 and early 2009, stocks began an epic rebound in March 2009, rising about 83 percent over the next 13 months. In the traditional view, rising stocks are a leading indicator that ultimately helps pull the broader economy out of recession. So the rally seemed like a preview of a healthy recovery. But it's also possible that something else was going on. Beginning in March of last year, the Federal Reserve began an enormous program to buy mortgage-backed securities in order to help stabilize the housing market. The Fed ultimately injected about $1.2 trillion of capital into securities markets, which by some accounts is the largest "buy" program ever. The investors who sold the Fed all those mortgage-backed securities suddenly had cash they needed to invest in something else, and some of that money found its way to the stock market.
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4 Things Financial Reform Won’t Do For You
Tweet Share on Facebook June 25, 2010 Comment (9)Sweeping new rules on banks are meant to protect consumers against greedy lenders and risky financial offerings. What they won’t do is protect consumers from themselves.
There’s a long list of villains who contributed to the financial meltdown of 2008 and the economic blowout that followed: shady lenders, reckless Wall Street firms, naïve policymakers and torpid regulators who couldn’t find a rat in a sewer. But American consumers weren’t exactly innocent bystanders. Millions of Americans fueled the problem by bingeing on debt, living beyond their means and using their homes as piggy banks. For every booby-trapped mortgage, there was a borrower happy to commit to monthly payments his income couldn’t cover.
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What To Do If There's a Double-Dip
Tweet Share on Facebook June 22, 2010 CommentABC News recently invited me on air to talk about my recent story on how to plan for a double-dip recession. Here's the clip:
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14 Things That Are Getting Cheaper
Tweet Share on Facebook June 22, 2010 Comment (24)Everybody notices when prices go up. But when they fall, it's an unacknowledged gift.
Ask a typical American family, and they'll tell you that the surging costs of healthcare and education are among their biggest strains. Energy prices are an ongoing concern, stable now but punishing when they spike. But many consumers don't realize that dozens of everyday goods and services have been getting cheaper. Overall inflation in 2010 is just 2 percent or so, after a record drop in prices in 2009. Some economists even think deflation is a bigger risk to the economy than inflation, since falling prices can cut into corporate profits and force long-lasting pay cuts.
[Slide Show: 14 Things That Are Getting Cheaper.]
But for now, consumers are enjoying a windfall of cheap stuff, thanks to low-cost imports, rapid technological change, and falling demand for some things. To determine the most significant price declines, I analyzed data from the Bureau of Labor Statistics on the 211 categories that make up the consumer price index, the most common measure of inflation. Over the last 10 years, the cost of goods and services in about 60 of those categories has fallen, while overall inflation has been about 28 percent, or 2.8 percent per year. A lot of other stuff has risen in price, but by less than inflation, which means it's getting more affordable for people whose incomes are keeping up with inflation.
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10 Reasons You Don't Need a Hybrid
Tweet Share on Facebook June 18, 2010 Comment (51)They said it couldn't be done. Now they're proving themselves wrong.
For years, auto executives—especially those from Detroit—insisted it wasn't possible to build high-mileage cars at reasonable prices that Americans would want to drive. Thrifty drivers were stuck with weezy econoboxes like the Ford Escort or Chevy Cavalier, designed not to delight drivers but to raise the automakers' fleetwide fuel economy, assuage regulators, and compensate for gas-guzzling SUVs. Early hybrids from Toyota and Honda upped the ante, with mpg in the 40s and 50s, but their high mileage required tradeoffs that produced a mediocre driving experience, at best.
[See 10 new things we can't live without.]
But over the last few years, automakers have kicked their engineering departments into high gear, and they're starting to turn out some truly fun cars that get eye-popping mileage. It's not happening by accident. New gas-mileage requirements passed by both the Bush and Obama administrations are forcing automakers to either downsize their cars or come up with technology that will dramatically boost mileage. The carmakers are doing both. Most of them now build hybrids, which J.D. Power estimates will comprise a sizeable 8.6 percent of the market by 2015. And many automakers will soon be rolling out electric vehicles that can be charged more cheaply from a receptacle at home. But other types of technology are pushing mileage higher for traditional gas-powered engines, with less complexity than a hybrid or electric, lower costs, and practically no driving tradeoffs. Here are some of the vehicles proving that cars can be cool and thrifty at the same time:
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Why American Workers Need To Toughen Up
Tweet Share on Facebook June 17, 2010 Comment (13)A lot has changed over the past few years. A grueling recession has rearranged America's economic landscape, like a hurricane that reshapes the coastline and leaves some places permanently underwater. Millions of lost jobs are probably gone forever. Many Americans lack the skills needed in a fast-paced, tech-driven marketplace. And a prolonged slump has left many people feeling like they're falling behind. To sort out what's changing, I spoke recently with business guru Tom Peters, author of 15 books, including The Little Big Things, his latest. We talked about the Gulf oil spill, overprotective parents, volunteering, and self-reliance. Business, too. Here are some excerpts:
You recently said that we lack resilience in America. What makes you think that? Look at the Gulf disaster. Large numbers of people, way beyond the Tea Party folks, want us to have smaller government, while others are screaming bloody murder because the regulations we have weren't executed properly. We're very much conflicted. I really have this strong feeling, whether it's the war on terror or the situation in the Gulf or things that led to the Gulf problem, that none of our presidents have asked us to sacrifice.
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Why the BP Spill is Bigger Than You Think
Tweet Share on Facebook June 17, 2010 Comment (17)Americans are notoriously bad at math, so it may come as a shock to learn that the BP oil spill in the Gulf of Mexico is 42 times bigger than many people might have believed.
It's not just because of the ballooning guesstimates of the size of the spill. It's also because the standard unit of measurement for oil makes the volume of goo sound smaller than it is, at least to the untutored ears of anybody who doesn't pump or process oil for a living.
[See 10 companies back from the brink.]
The oil industry measures crude in barrels, and the government has adopted the industry standard for purposes of describing the spill. Right after the disaster occurred on April 20, we heard that about 1,000 barrels a day were spilling into the Gulf. That didn't sound catastrophic, but of course the figure has rocketed upward, thanks to information revealed by the BP spillcam we've all found oddly mesmerizing. The latest estimate is 60,000 barrels a day. Big increase. Big number. About the same as the number of minutes in six weeks. Or about 15 times the number of Tweets sent out by Kim Kardashian in her Twitter career.
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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