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Getbig Main Boards => Politics and Political Issues Board => Topic started by: blacken700 on April 12, 2013, 04:44:34 AM
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Bearish forecasts for the U.S. economy are giving way to more upbeat views of the nation’s ability to weather federal spending cuts and tax increases.
At Morgan Stanley in New York, Chief U.S. Economist Vincent Reinhart now sees a 3 percent pace of growth in the first quarter, up from 0.8 percent in December. JPMorgan Chase & Co.’s Bruce Kasman raised his forecast to 3.3 percent from 1 percent.
“What happened at the beginning of the year was a genuine surprise in terms of how well the economy held up,” Kasman, the firm’s New York-based chief economist, said in an April 5 conference call.
Gross domestic product probably climbed at a 3 percent annualized rate from January through March, according to the median forecast in a Bloomberg survey of 69 economists from April 5 to April 9. That’s up from the 2 percent gain projected last month and 1.6 percent in December.
Consumers overcame a 2 percentage-point increase in the payroll tax and higher gasoline prices to spend at the fastest pace in two years, the survey shows. The pickup, combined with sustained gains in housing and business investment, will help propel the expansion through the worst of the automatic government cuts that are projected to take effect this quarter.
“We are surprised that there wasn’t a bigger and more immediate hit to spending” by consumers, said Reinhart. “There is an underlying momentum in spending, which means that sequestration and the tax increase will only lead to a momentary pause.”
Shares Climb
Stocks are climbing to unprecedented levels as optimism on the outlook for earnings and the economy heartens investors. The Standard & Poor’s 500 Index (SPX) rose 0.4 percent yesterday to close at a record 1,593.37.
The Bloomberg survey shows the expansion will cool this quarter, to a 1.5 percent pace, then reaccelerate to an average 2.4 percent rate in the last six months of 2013.
Consumer spending, which accounts for 70 percent of the economy, climbed at a 3 percent annualized rate in the first quarter, the best reading since the same period in 2011, according to the Bloomberg survey median. Last month’s survey projected a 1.6 percent advance.
“We feel good about the consumer in 2013,” Karen M. Hoguet, chief financial officer of Macy’s Inc. (M), said in a March 13 investor conference. “Every indication we’re seeing is that he and she are doing fine, still buying.”
Payroll Tax
The levy used to fund Social Security reverted to 6.2 percent of income this year, the same as in 2010, from 4.2 percent in each of the past two years as part of the agreement to avert the so-called fiscal cliff of tax increases and spending cuts that were to take effect in January. That reduced take-home pay by about $83 a month for anyone earning $50,000 a year.
Buoyed by rising stock and home prices and a surge in income at the end of last year, households responded to the higher taxes by putting less money away in the bank, Kasman said. The saving rate, or the share of disposable income that consumers set aside, plunged to 2.2 percent in January, the lowest since August 2007, from 6.5 percent the prior month, according to figures from the Commerce Department. It improved to 2.6 percent in February.
“The fundamentals do look firmer,” said JPMorgan Chase’s Kasman. “The business sector is looking like it’s healthy.” While he sees growth slowing to 1.5 percent this quarter, he projects it will pick up to 2 percent in the third quarter and to 2.5 percent in the last three months of the year.
Improving Fundamentals
Among the improving fundamentals is the country’s growing fuel independence. The U.S. produced 84 percent of its own energy in 2012, the most since 1991, according to data from the Energy Information Administration, the statistical arm of the Energy Department. The measure of self-sufficiency rose to 88 percent in December, the highest since February 1987.
U.S. production of crude oil in the fourth quarter of this year will exceed imports for the first time since 1995, as extraction from shale rock formations in North Dakota and Texas put the nation on track to surpass record output, the EIA projected last month.
Low-cost energy has been a boon for U.S. refiners, who are processing cheaper domestic oil to make fuel to meet rising demand in countries such as Brazil, China and India. Shares of Marathon Petroleum Corp. and Phillips 66 hit records in January after earnings beat estimates. In the first week of March, U.S. exports of products such as gasoline and diesel rose to a record 3.2 million barrels a day, according to EIA data.
Natural Gas
Cheap natural gas has also attracted investment in steel making, petrochemicals and fertilizers, such as the $550 million methanol project being built by Methanex Corp. (MX) in Geismar, Louisiana. The fuel has declined 73 percent to $4.139 per million British thermal units since reaching a peak in 2005.
The rebound in housing presents another boost. Builders will break ground on 970,000 houses this year, up from 780,600 in 2012 and the most since 2007, the Bloomberg survey median showed.
The increase in construction is unfolding as property values firm. The median price of an existing house climbed 11.6 percent in the 12 months ended February, the biggest year-over- year advance since November 2005, according to figures from the National Association of Realtors.
“House-price appreciation is creating wealth, as is the run-up in stocks,” said Morgan Stanley’s Reinhart. That is also helping buoy household spending, he said. In addition, “there is a lot of business activity that is tied to housing,” he said, including sales of furniture, appliances and automobiles.
Auto Sales
Cars sold at an average 15.3 million annualized rate in the first quarter, the most since the same period in 2008, according to figures from Ward’s Automotive Group.
While the increase in the payroll tax and cuts in government spending are a concern, “everything else seems to be pretty positive,” Kurt McNeil, vice president of U.S. sales and service at Detroit-based General Motors Co. (GM), said on an April 2 conference call. McNeil said gains in employment and housing, the thawing in consumer credit and the increase in stock prices outweighed the negatives.
“I think most Americans are pretty tired of what goes on in Washington, so they’ve started to tune that out a little bit,” McNeil said.
What’s being tuned out is the prospect of $85 billion in across-the-board cuts in planned federal spending that started on March 1. The reductions trim 5 percent from domestic agencies and 8 percent from the Defense Department this fiscal year.
Sequestration’s Impact
The so-called sequestration will probably shave around 0.75 percentage point from growth in the second and third quarters, according to a forecast by economists at Goldman Sachs Group Inc. in New York.
“Right now, the onus is on the people that think the economy is going to be stuck at 2 percent” for the rest of the year, said Neil Dutta, head of U.S. economics at Renaissance Macro Research LLC in New York. “Really, tell me why? I just don’t get it.”
The U.S. economy managed to grow at about that pace in the first three years of the expansion while housing was contracting, state and local government agencies were cutting spending, households were trimming debt and Europe was in a recession, Dutta said.
Now at least three of those obstacles -- residential real estate, state and local government and households -- are poised to contribute more to growth, he said. In addition, companies will probably begin to spend more freely as concern over the economic outlook dissipates, according to Dutta.
“I think the real surprise is going to come at the end of the year when we realize that the first quarter was not in fact the strongest quarter for the U.S.,” said Dutta.
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Stop posting such nonsense.
We need republicans in charge of the economy.
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hahahahahaha!!!
So, after 7 years of Democratic "leadership" the economy might hit 3% GDP IN A QUARTER for the first time under that leadership, after spending over a trillion dollars in stimulus that will never be recovered, hanging on at over 7% UE, the stockmarket only going up because of the fed never ending printing of money, and millions added to welfare benefits because they can't find a job, we should be grateful and pat the idiotic demotwats on the back?
HEHEHEHEEH!!! Only idiots like the other 2 posters on this thread could actually believe that the demotwats have done an adequate job with the economy.
Morons.
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hahahahahaha!!!
So, after 7 years of Democratic "leadership" the economy might hit 3% GDP IN A QUARTER for the first time under that leadership, after spending over a trillion dollars in stimulus that will never be recovered, hanging on at over 7% UE, the stockmarket only going up because of the fed never ending printing of money, and millions added to welfare benefits because they can't find a job, we should be grateful and pat the idiotic demotwats on the back?
HEHEHEHEEH!!! Only idiots like the other 2 posters on this thread could actually believe that the demotwats have done an adequate job with the economy.
Morons.
this coming from the guy who believes in a 600 year old man building a boat to hold 2 of every animal priceless i think i hear that talking snake calling your name :D :D :D
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hahahahahaha!!!
So, after 7 years of Democratic "leadership" the economy might hit 3% GDP IN A QUARTER for the first time under that leadership, after spending over a trillion dollars in stimulus that will never be recovered, hanging on at over 7% UE, the stockmarket only going up because of the fed never ending printing of money, and millions added to welfare benefits because they can't find a job, we should be grateful and pat the idiotic demotwats on the back?
HEHEHEHEEH!!! Only idiots like the other 2 posters on this thread could actually believe that the demotwats have done an adequate job with the economy.
Morons.
I stand corrected.
The previous administration did a much better job.
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'Disabled' outnumber workers in U.S. manufacturing
Bankruptcy now looming for another social help program
Published: 13 hours ago
John BennettAbout | Email | Archive
John T. Bennett is a contributing writer to WND. A former Army officer with tours of duty in Iraq, Afghanistan and Djibouti, Africa, he holds an M.A. from the University of Chicago and a J.D. from Emory University School of Law. In addition to WND, Bennett’s articles have also appeared in the American Thinker, the Chicago Tribune, Townhall.com, Accuracy in Media and FrontPage Magazine.
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The stories are many, and this is just one:
It seems there was a psychiatrist who reported about a woman who was “disabled” when a casino money cart fell on her leg in Reno.
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She still managed to play basketball, crawl about under her car, carry heavy groceries and tote luggage around. But she developed a limp and used a cane just in time for a hearing on her disability benefits.
There currently are 14 million Americans on disability payments, up from 4.3 million in 1990.
The program is paying out $200 billion per year, and according to the Congressional Budget Office, as of 2009, Social Security Disability Insurance pays out more than it takes in from payroll taxes.
SSDI is slated to go broke in 2016.
Now from across the political spectrum, experts are warning of problems ahead, not just economic but societal, as one of the products of the decades-old SSDI system is that it has fostered a standard of long-term dependency.
MIT economist David Autor tells WND, “As currently designed, the SSDI program spends too few societal resources helping individuals with disabilities to remain employed and too many resources supporting the long-term dependency of individuals who could be self-sufficient with the appropriate accommodation and support.”
Autor is sympathetic to the plight of those on disability, noting that many workers with non-medical problems have turned to SSDI as a “last resort” in the face of a dismal economy.
Mary C. Daly, an economist with the Federal Reserve Bank of San Francisco, tells WND, “Disability insurance has turned into a long-term unemployment benefit program, which taxpayers have to pay for.
“SSDI is reducing the nation’s potential workforce as people move onto the program,” Daly says.
She “doesn’t like the word dependency because it is pejorative,” and instead criticizes the structure of the disability system for incentivizing continued use without any constructive route into work for those who are able.
Others are less sympathetic: SSDI “has become a voluntary life sentence to idle poverty,” concludes the Washington Examiner.
And a consensus is emerging that SSDI is not being used for its intended purpose, which was to support those who are unable to work.
Cornell Professor Richard Burkhauser, a disability policy expert, warns, “SSDI is increasingly being used as a long-term unemployment program for workers who, given the appropriate rehabilitation and accommodation, could work.”
The sheer number of people on disability is staggering, without even considering the policy’s other consequences. The number of people on disability, 14 million, is “more than the total number of employees in the manufacturing sector of the economy,” observed Nicholas Eberstadt of the American Enterprise Institute.
The government spends more on disability than it does on both food stamps and welfare combined, according to a blockbuster NPR report. The dependency trend and fiscal trajectory continue their death spiral, unmoved by the supposed economic recovery.
The recession officially ended in 2009. Since the recession ostensibly ended, the number of SSDI enrollees is double the number of jobs created, as Investor’s Business Daily reported.
The current unemployment rate would necessarily be higher if some of those on disability were instead seeking work. Aside from the economic consequences, SSDI could lead to a destructive self-fulfilling prophecy.
Self-fulfilling prophecy
Going on to SSDI creates a self-fulfilling prophecy, according to Dr. Marvin Fischbach, a psychiatrist who works directly with patients on disability.
Fischbach generated controversy with a powerful opinion piece, charging that the disability system creates “a vested financial and psychological interest in not getting better while still applying for disability.”
He told WND, “The system is a crisis for the individual,” and “many should never have applied for disability.”
He describes a pattern that deeply concerns him: “Patients come to me with mild to moderate symptoms of depression, that will get better, and do get better. But they get on disability and many are lost forever to gainful employment, lose their self-sufficiency, and lose their self-esteem.”
He acknowledges, “Some beneficiaries are severely mentally ill and truly disabled, but I’m not talking about them.”
He describes a pattern of generational dependency that is reminiscent of pre-reform welfare.
“People on disability develop a lifestyle, then their children are acculturated into the disability way of life.”
And “the child begins to see this as normal.”
From Fischbach’s vantage point, “once you’re on the program, the government doesn’t encourage you to work, and there seems to be no verification that you are still disabled.”
He believes “abuse is common, and the system is enabling people to abuse themselves.”
His conclusion is stark. “The effect of the system is destructive to individuals and society.”
Even for those who are psychologically unaffected, SSDI may encourage undesirable aspects of human nature. The Wall Street Journal described a truck driver with herniated disks who got on disability and then thought about seeking work.
But, he said, “I don’t know anything but driving a truck.”
Crisis long time coming
SSDI began in 1956. Most media coverage has placed the SSDI controversy in the context of the recent recession. However, the growth of SSDI was a clear problem well prior to the recession. Autor and Mark Duggan have been warning about the growth of SSDI since 2003. Between 1984 and 2001, the number of working-age adults receiving disability rose 60 percent to 5.3 million people.
Also, the fiscal crisis in SSDI is nothing new. Autor and Duggan warned in 2006 of a “fiscal crisis unfolding” in SSDI.
While economists tend to focus strictly on the incentive structure of the system itself, there are reasons to begin scrutinizing individual claims, and the ethical and moral components of individual dependency.
Autor and Duggan point to three reasons for SSDI’s growth. First, Congress decided in 1984 to relax eligibility standards. Second, the ratio of disability insurance to income has shifted over time so that disability is more and more attractive. Third, the increase in the number of women in the workforce increased the number of potentially insured.
The recession added a fourth major reason for the current explosion: As NPR reports, SSDI is now “a de facto welfare program for people without a lot of education or job skills.”
Abuse in program
While it is impossible to say what percentage of SSDI cases are fraudulent or abusive, a British program analogous to SSDI has just been discovered to be rife with fraud.
A British program named Employment and Support Allowance is designed to support those who are allegedly unfit to work. However, recently, an incredible one third of all of those on ESA voluntarily left the program instead of facing a test that would require genuine proof of disability.
Nearly 880,000 people, one third of the total number of British receiving the ESA benefit, simply dropped their claims and left the program. They left rather than submit to a test that would determine whether they were actually fit to work. On top of that, another 837,000 took the test and were determined to be “fit to work immediately,” according to the Telegraph. An additional 367,300 were found able to perform “some level of work.”
Ultimately, only one in eight of those tested were deemed by doctors to be “too ill to do any sort of job.”
America has a far more liberal standard for receiving disability than the British system. The American test to verify disability is called the Continuing Disability Review.
But Autor points out that “Congress does not provide SSA sufficient funds to perform the CDRs it’s already mandated to conduct.”
Autor notes that “CDRs should be done to eliminate beneficiaries who have made a medical recovery.”
Based on his research, he believes tightening those standards alone will not correct the long-term dependency problem, or the “fiscal dire straits” that the program is currently in. Instead, he advocates for more incentives that encourage work on the part of disabled people.
Read more at http://www.wnd.com/2013/04/disabled-outnumber-workers-in-u-s-manufacturing/#t3iW6WuBeRY82t4M.99
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CONSUMER CONFIDENCE MISSES EXPECTATIONS AND FALLS
Sam Ro|20 minutes ago|428|1
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A lone fan of the Michigan Wolverines sits dejected.
The latest reading of the University of Michigan's consumer confidence index is out, and it's a miss.
The preliminary April reading of this measure unexpectedly fell to 72.3 from 78.6 last month.
Economist expected the index to be unchanged at 78.6.
This report just adds to the bad news of the morning. Earlier, we learned that retail sales unexpectedly fell in March.
SEE ALSO: Gundlach Warns Bond Bears They're Dead Wrong In This Awesome Presentation >
Read more: http://www.businessinsider.com/u-michigan-consumer-confidence-2013-4#ixzz2QG5b8iQd