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How Ford and GM Turned a Corner
Tweet Share on Facebook July 30, 2010 Comment (5)Behold the Ford Fiesta. The newest addition to Ford's fleet is cute and perky, with solid handling and gas mileage that will make greeniacs grin. Japanese automakers have been building quality subcompacts for years, and while vehicles like the Honda Fit, Honda Civic, Toyota Corolla, and Nissan Versa typically earn strong reviews, they don't usually mark a crowning corporate achievement.
For Ford, however, it's different. For years, the No. 2 Detroit automaker turned out bland compacts and subcompacts, while focusing heavily on trucks and SUVs that were far more profitable. Neglecting the bottom end of its lineup nibbled away at Ford's customer base, then became a full-blown crisis when gas prices hit $4 per gallon in 2008 and buyers shunned the big vehicles that Ford was overdependent on. The new Fiesta—ranked first out of 31 vehicles on U.S. News's list of affordable small cars—shows that Ford got the message and finally stopped papering over the holes in its lineup. The prodigal automaker has returned to the fold.
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How a Non-Disaster Will Sink Democrats
Tweet Share on Facebook July 29, 2010 Comment (10)You won't hear any politicians talking about "counterfactuals" when they campaign this fall. Yet the biggest factor in the midterm elections will be what didn't happen over the last two years.
A counterfactual, according to Webster's, is something "contrary to the facts." In economic and political terms, it refers to a hypothetical outcome that might have occurred if certain decisions hadn't been made or had been made differently. And evidence is mounting that the Great Recession of 2008 and 2009 might have been dreadfully worse if Washington hadn't bailed out the banks, stimulated spending, pumped cash into the system, and generally leapt into action like a panicky parent trying to rescue a child from an oncoming train.
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When the Tax Hikes Are Coming
Tweet Share on Facebook July 28, 2010 Comment (6)If you love class warfare, your moment has arrived. The next several weeks, leading up to the November elections, are sure to be filled with resounding political invective over who should pay for Washington's profligate spending over the last decade. Democrats will argue that the rich and near-rich should pony up, since they have the most money to start with. Republicans will point to the needy, arguing that they've been getting too much aid for too long. Tea Partiers will struggle to decide whose benefits should be cut in order to achieve the smaller government they envision. All around, livelihoods will be threatened. Instead of the "silly season," the midterm elections will feel like the angry season.
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Video: One Upside Of a Weak Economy
Tweet Share on Facebook July 28, 2010 CommentWe all notice when prices go up, but falling prices get less attention. I talked about this phenomenon recently on MSNBC:
Visit msnbc.com for breaking news, world news, and news about the economy
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Video: The Outlook for Mortgage Rates
Tweet Share on Facebook July 28, 2010 CommentI recently appeared on MSNBC to discuss the outlook for housing and mortgage rates. Here's the clip:
Visit msnbc.com for breaking news, world news, and news about the economy
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Video: The Scoop on Deflation
Tweet Share on Facebook July 28, 2010 CommentABC recently invited me to appear on its Good Money program to discuss the growing risk of deflation. Here's the clip:
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7 New Skills Every Worker Needs
Tweet Share on Facebook July 26, 2010 Comment (17)You're an expert at something? Hey, congratulations. Now, go become an expert at something else.
Most Americans striving to find or keep a job know the sensation: It's getting harder to get ahead, and the demands keep intensifying. Everybody knows how the recession destroyed wealth and derailed careers, leaving millions in a hole they're trying to dig out of. Now we're beginning to see some of the longer-term changes in the way Americans live and work. Some are distressing, but there's also plenty of hope for people who are industrious and willing to do what's necessary to succeed.
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Why the Next Recovery Will Be Better
Tweet Share on Facebook July 22, 2010 Comment (5)Lots of companies are planning to hire—in a year or two. The housing market should bounce back—once prices fall another 5 or 10 percent. Consumers are nearly ready to start spending again. They just need to pay off a little more debt.
If this were a textbook recovery, growth would be accelerating, hiring would be picking up, and most of us would feel a lot better. Instead, the economy is slowing down and the job market shows signs of deteriorating. The stock market can no longer get traction. Consumer confidence is slipping back to recessionary levels of a year ago.
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How to Prepare for Deflation
Tweet Share on Facebook July 22, 2010 Comment (2)In the breathless days of the recession, doomsayers warned of runaway inflation thanks to more than $1 trillion worth of new money that the Federal Reserve pumped into the economy. That money is still there, but instead of steep inflation, prices are softening so much that deflation is now a risk. If it happens, Americans could face another economic ordeal that triggers a period of stagnation or even a second bout of recession.
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4 Reasons To Fear Deflation
Tweet Share on Facebook July 20, 2010 Comment (34)When the price of cars or sweaters or iPods declines, it's a break for consumers and a welcome sign that economic productivity is improving. That helps drive up living standards. But when the price of everything drops, it's an alarming development that portends stagnation.
The consumer price index, which measures inflation, declines every now and then, usually when there's a big drop in the price of volatile goods like energy or food. But there hasn't been sustained deflation in America since the early 1930s. Now, we may be on the verge of yet another unnerving economic adventure. Inflation over the last 12 months has been a scant 1.1 percent, which is below the level most economists deem optimal. And so far this year, inflation on a monthly basis has been negative as often as it's been positive. The odds are growing that low inflation could become deflation—with some economists worried that it has already started to happen.
