Posts Tagged unemployment
Are Taxes in the U.S. High or Low?
Posted by Oksana Grebenjuk in Budget, Favourites on Июнь 9th, 2011
Historically, the term “tax rate” has meant the average or effective tax rate — that is, taxes as a share of income. The broadest measure of the tax rate is total federal revenues divided by the gross domestic product.
By this measure, federal taxes are at their lowest level in more than 60 years. The Congressional Budget Office estimated that federal taxes would consume just 14.8 percent of G.D.P. this year. The last year in which revenues were lower was 1950, according to the Office of Management and Budget.
The postwar annual average is about 18.5 percent of G.D.P. Revenues averaged 18.2 percent of G.D.P. during Ronald Reagan’s administration; the lowest percentage during that administration was 17.3 percent of G.D.P. in 1984.
In short, by the broadest measure of the tax rate, the current level is unusually low and has been for some time. Revenues were 14.9 percent of G.D.P. in both 2009 and 2010.
Yet if one listens to Republicans, one would think that taxes have never been higher, that an excessive tax burden is the most important constraint holding back economic growth and that a big tax cut is exactly what the economy needs to get growing again. Read the rest of this entry »
Stocks rise sharply after unemployment claims fall
Posted by Oksana Grebenjuk in Fund Markets on Март 3rd, 2011
Stocks jumped higher Thursday after an unexpected drop in new applications for unemployment benefits and higher February sales reports from retailers.
The Labor Department said first-time claims for unemployment benefits fell to 368,000. That’s the lowest level for claims since May 2008. Economists had expected them to rise. Separately, the Institute for Supply Management reported that its measure of hiring by service companies rose to the highest level since April 2006. The index covers a broad range of industries including retail, health care and financial services.
The signs of job growth followed a report Wednesday from payroll processor ADP that said that private employers are added more jobs than expected last month. Those gains are helping to bolster expectations that Friday’s jobs report will show that the unemployment rate fell from its current level of 9 percent.
The Dow Jones industrial average gained 183 points, or 1.5 percent, to 12,250 in afternoon trading. The Standard & Poor’s 500 index rose 19, or 1.5 percent, to 1,328.
All 10 company groups that make up the S&P index rose. Industrial companies had the largest gain, with 2.3 percent. Caterpillar Inc. gained 3 percent, the largest increase among the 30 stocks that make up the Dow average. Read the rest of this entry »
Egypt Stocks Drop Most in Six Weeks on Concern Tunisia Unrest May Spread
Posted by Oksana Grebenjuk in Fund Markets on Январь 19th, 2011
Egyptian stocks fell the most since November after a popular uprising in Tunisia forced the ouster of President Zine El Abidine Ben Ali, raising concern Egypt’s regime may face similar pressure.
Commercial International Bank Egypt SAE, the country’s biggest publicly traded lender, closed at the lowest level in more than a month. EFG-Hermes Holding SAE, Egypt’s biggest publicly traded investment bank, declined 2.4 percent. The EGX30 Index lost 1 percent, the biggest drop since Nov. 30, to 7,082.09 at the 2:30 p.m. close in Cairo. Tunisia’s benchmark Tunindex tumbled 13 percent last week as increasing violence lead to the toppling of the country’s leader on Jan. 14.
The Tunisian protests may embolden demonstrators who have recently taken to the streets in other North African and Middle Eastern countries, including Egypt, Morocco and Jordan, all of which have experienced demonstrations about economic conditions, said Marina Ottaway, director of the Middle East program at the Carnegie Endowment for International Peace in Washington.
“People are selling because they think the same might happen here” given unemployment and inflationary pressure, Alia Khalil, senior equity trader at Cairo-based Pharos Holding for Financial Investments, said by telephone. Read the rest of this entry »
November 2010 Federal Deficit $150.4 Billion — Highest November on Record
Posted by Oksana Grebenjuk in Budget on Декабрь 13th, 2010
….on an unrelated note, corporations are flush with cash and paid the lowest % of taxes to GDP in history in last year we have records (2008), Americans are being sent cash by the bushel, entitlement spending is through the roof, aid to states is historic, and the stock market propels higher. These items are completely unrelated as long as there is no cost in cost-benefit analysis. 
Just like I suddenly have $50,000 if I borrow $50,000 on my credit card. (no cost of course…only the benefit)
Kind of laughable in retrospect when I hand wringed about half a trillion deficits «back in the day» (Jul 28, 2008: US Budget Deficit to Half a Trillion) — that’s 3-4 months of federal government work nowadays.
Via WSJ
The U.S. government ran its 26th straight monthly budget deficit in November amid wrangling over a package that would extend big tax cuts to Americans trying to recover from recession.
The Treasury Department, in its regular budget monthly statement, said the government spent $150.4 billion than it collected in the second month of fiscal 2011.
Last month’s red ink pushes up the deficit to $290.8 billion for the fiscal year, which began Oct. 1. That figure is a little smaller than the deficit during the same period last year. But President Barack Obama’s administration expects the deficit to top $1 trillion in this fiscal year. (uhhh… that’s an understatement considering this latest $900B package soon to pass). Read the rest of this entry »
Bernanke Threatens Extension Of QE Past $600 Billion
Posted by Oksana Grebenjuk in Favourites, Fund Markets on Декабрь 7th, 2010
Bernanke the chairman of the federal reserve has said that the US might need to extend bond purchases past the the $600 billion announced last month to spur on economic growth. The argument for this extension is based upon fears that the US economy is expanding at a bairly sustainable pace and ongoing fears that the employment sector is still faltering after Non Farms last week. The unemployment rate last month rose to 9.8 percent and surprised the markets after a previous string of positive news, this is the highest level since April and has dampened economic sentiment significantly.
Bernanke appeared on CBS Corp’s ’60 Minutes’ program and defended the Fed’s efforts to prop up the US recovery. He argued thatthe economy was clearly still very weak and that just 39,000 jobs were created in November. He stated that the potential for the purchase of more bonds than previously planned last month is «certainly possible,»; dependant on the outlook for inflation and the US economy over the coming months. Bernanke went on to say that although growth looks set to continue at a slow pace, a return to recession ‘seems unlikely’.
The Fed’s decision to undertake a new bond purchasing program, known as quantitative easing, has been criticized heavily by the worlds finance officials, amidst fears of a global currency war and competitive devaluation. Policy makers in emerging markets have expressed concern that this kind of devaluation could drive down the dollar and cause a re-surgence of capital abroad.
Today has been a relatively quiet day in the currency markets. The week ahead is likely to continue to be dominated by the European sovereign debt crisis. The much awaited budget for 2011 will be a key release for the Euro tomorrow as traders speculate on the austerity measures set to reign in €6bln (3.7%) of GDP. Two thirds of the planned austerity will come from spending cuts with one third from higher taxes. Read the rest of this entry »
A Lesson In Government Math
Posted by Oksana Grebenjuk in Budget on Декабрь 6th, 2010
According to Friday’s Bureau of Labor Statistics’ (BLS) November US unemployment report, private employers added 39,000 jobs last month. The report missed most analysts’ projections for low six-figure hiring gains—and showed the unemployment rate rose from 9.6% to 9.8%. Predictably, the moment the report was released, many resumed banging the same old employment-doom drum they’ve been beating for a couple years (like here, here, and here.) But November’s unemployment rate increase tells us something different than increases in 2008 or early 2009. And it isn’t bad news.
In the wonky realm of government statistics, the unemployment rate can actually increase while hiring picks up and layoffs fall—which is exactly what happened in November. The reverse is also possible. Why? The unemployment rate isn’t calculated by taking the number of people out of work and dividing by the population—the unemployed person must be seeking a job. When long-term unemployed people become discouraged and stop looking for work, they fall out of the unemployment rate calculation.
And when they become more encouraged and resume their search, they’re added back to the ranks of the unemployed. This is the primary takeaway from November’s unemployment report: Previously discouraged unemployed people, seeing layoffs at 2-year lows and watching friends obtain jobs, became more encouraged and sought work. The implied increase in economic confidence is positive but bumped up the headline unemployment rate.
Sure, we’d hoped for more robust hiring data. A larger gain in jobs could’ve incrementally boosted investor sentiment. But even the hiring data is somewhat murky. Each year, the BLS seasonally adjusts hiring statistics, particularly during the holiday shopping season.
This large adjustment factor may well have understated the actual amount of hiring (specifically, in the retail sector). Read the rest of this entry »
Hard for Fed policy to lower unemployment
Posted by Oksana Grebenjuk in Budget on Ноябрь 29th, 2010
The Federal Reserve might risk higher inflation if it focuses on efforts to bring down unemployment, Richmond Fed President Jeffrey Lacker said. In a speech that hinted at his scepticism of the Fed’s latest efforts to stimulate the economy, Lacker, a vocal inflation hawk, said monetary policy can lower joblessness only temporarily.
«Trying to keep unemployment permanently lower than it otherwise would be … is a recipe for continually accelerated inflation,» he said, pointing to the inflation experience of the 1960s and 1970s as a cautionary tale.
With the jobless rate currently stuck at 9.6 percent and inflation running below the Fed’s implicit target of 2 percent or a bit below, the Federal Reserve this month announced it would buy an additional $600 billion in Treasury securities.
The measure, which comes as official interest rates are already effectively zero, is aimed at lowering borrowing costs and spurring lending, and hopefully to boost hiring in the process. However Lacker, who is not a voter this year on the Fed’s policy-setting Federal Open Market Committee, appeared suspicious of the policy. Read the rest of this entry »
Retail stocks have already priced in strong Black Friday
Posted by Oksana Grebenjuk in Fund Markets on Ноябрь 25th, 2010
As “Black Friday” approaches tomorrow, U. S. retailers are expecting a strong holiday season – at least, compared to the dismal performance of the past two years.
Indeed, retail sales rose a surprisingly strong 1.2 percent in October, despite persistently high unemployment, continued foreclosures and an overall fragile economy.
The National Retail Federation (NRF) forecasts that holiday sales for 2010 will increase by 2.3 percent to $447.1 billion, far better than last year’s 0.4 percent uptick and the 3.9 percent sales drop in 2008. In addition, retail sales have climbed in four of the past five months; while same-store sales have risen for fourteen consecutive months.
“This continued momentum is good news for the industry, especially with Black Friday… quickly approaching,” said NRF CEO Matthew Shay.
“While there is no question that consumer demand has improved, there are still questions about consumer confidence tied to high unemployment. We need to see improvement in key economic indicators to sustain any long-term growth.”
Indeed, retail stocks have surged the past few months, far outperforming the broader market, largely in anticipation of a robust Christmas shopping season. Read the rest of this entry »
Two million may lose unemployment benefits at year-end
Posted by Oksana Grebenjuk in Budget on Ноябрь 22nd, 2010
One of the worst aspects of the Great Recession is not only the persistently high rate of unemployment, but the length of joblessness many have fallen into.
According to the Economic Policy Institute (EPI), a Washington D.C.-based think-tank, in the third quarter of 2010, 43 percent of the unemployed had been looking for work for more than six months, and 22.7 percent had been looking for work for more than a year.
Moreover, two million long-term unemployed – those who have been seeking work for six months or longer – will lose their unemployment insurance benefits before the end of this year if Congress fails to act to maintain extended benefits.
“In the three years since the Great Recession began, there have at times been more than six unemployed workers competing for every job opening,” wrote Andrea Orr, and editor at EPI.
“Today, well over a year since the recession officially ended, there remain five unemployed workers for every job opening. That current ratio is well above the peak of 2.8-to-1 reached in the prior recession and speaks to the difficult odds even the most motivated unemployed worker faces in finding a new job today.”
Orr notes that critics of extended unemployment insurance often maintain that giving money to people who cannot find work removes the incentive to look for work. Read the rest of this entry »
Bernanke Says Buy ‘Em, Trichet Says Not So Fast
Posted by Oksana Grebenjuk in Fund Markets on Ноябрь 11th, 2010
During the credit crisis the central bankers of the world bonded together in an effort to present a united front in the battle against a problem that very easily could have caused the global banking sector to crumble. However, with most of the world now well on the way to recovery, it appears that the paths of the U.S. Fed and the ECB are diverging greatly.
On Wednesday, Ben Bernanke tried to make a statement with the FOMC decision. Our view of what the FOMC said was as follows: There is not going to be a deflationary spiral on our watch. As a renowned scholar on the causes of the Great Depression, the Fed Chairman appears determined to do whatever it takes in order to stave off the potential for a repeat of the mistakes made by Japan over the past 20 years.
On that score, it is our humble opinion that Bernanke & Co. are planning to err on the side of caution for a while. How else does one explain the committee’s citing of too little inflation as a means to provide additional stimulus? Too little inflation, really?
Don’t take that wrong as we are all for the QE II and more stimulus (the more the merrier, right!). However, the justification for additional bond buying during a period of economic expansion might be a bit of a reach at this stage of the game. And before you start sending the hate mail about the need to «do something» to help unemployment, I agree that this step will likely help – in the long run. It’s just that based on my 30+ years of Fed watching, this move is clearly a little out of the ordinary. Read the rest of this entry »
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