Submitted by Alan Beaulieu on Wed, 07/10/2013 - 14:35
The Chinese General Administration of Customs reported a decline in both exports from and imports to China in June. Exports fell 3.1% from last year, the single largest drop since the Great Recession. The decline in trade shows how vulnerable the export-driven Chinese economy is to foreign recessions, and helps underscore the slowdown seen in the world’s second largest economy.
Presently, China Industrial Production (our benchmark for the overall economy) is growing at 9.5% (officially), the slowest pace in over three and a half years. The latest trade dat
Potential Economic Impact of the Affordable Care Act Employer Mandate Delay
Submitted by Alan Beaulieu on Fri, 07/05/2013 - 10:05
The White House has pushed off the employer mandate section of the Affordable Care Act until January 2015, a one-year delay. A quick refresher: this mandate calls for businesses with over 50 employees to provide affordable quality insurance that meets minimum standards or pay a fine of $2,000 per employee. A lot of what has been written about this development has been politically driven, and we will not go there with this blog.
Implementing Basel III Capital Rules in the US Financial System
Submitted by Alan Beaulieu on Tue, 07/02/2013 - 11:45
Basel III is an international agreement designed to improve stability in the banking industry in the aftermath of the 2007-09 crisis. The agreement begins with a light touch but phases in over the next several years to a level where most banks would be required to have three times as much top-quality capital as is currently required.
The Fed will ease some requirements that would be tough on community banks, but they also want to add four rules aimed at big US banks. These rules would go beyond Basel III requirements because financial officials believe the Basel III rule
Submitted by Alan Beaulieu on Thu, 06/27/2013 - 09:37
Recently Fed Chairman Ben Bernanke announced that the country’s central bank might start slowing down the amount of bond purchases later this year and end it entirely by mid-2014. There was a qualifying statement about IF the economy achieves the sustainable growth that they believe quantitative easing will produce.
That last sentence is important. The reduction of quantitative easing is dependent on a strengthening US economy. They believe in a brighter 2014, and you and I know that the leading indicators are signaling a slower economy with a sluggish consum
French Tax Proposals Show Politics, Not Economics, At Work
Submitted by Alan Beaulieu on Tue, 06/25/2013 - 13:24
Here’s a good example of what the US should NOT do. French President Hollande wants companies to pay a 75% payroll tax on employees that make more than one million euros ($1.3 million) a year.
The new payroll tax would be in place for two years, meaning it is largely a symbolic political gesture. This idea is to replace his earlier plan to institute a 75% income tax on high-income individuals, a plan thrown out by France’s highest court.
The goal is for the French government to raise €100-300 million in additional revenue, a sum that will hardly dent the €8
Submitted by Alan Beaulieu on Tue, 06/18/2013 - 07:59
Tensions in the Middle East have pushed oil prices higher. The meeting of government leaders in Ireland highlights the tensions regarding Syria as Russia stands alone in supporting the Syrian government. The US, UK, and France are supporting the rebels while Canada maintains a pro-rebel/uninvolved/keep-my-distance stance.
Prices moved to a nine-month high at $98.25 a barrel as the geopolitical stress pushed prices higher. Results are tracking a slim 0.1% below our forecast prepared early this year. Syria does not contribute a significant amount of oil t
Submitted by Alan Beaulieu on Tue, 06/11/2013 - 14:51
In a recent news release, the U.S. Bureau of Economic Analysis (BEA) announced that the real gross domestic product (GDP) increased in 49 states and the District of Columbia in 2012. Durable–goods manufacturing, finance, and insurance and wholesale trade were the leading contributors to real U.S. economic growth. U.S.
Nationalism Will Not Help In the European Banking Recovery
Submitted by Alan Beaulieu on Thu, 06/06/2013 - 09:34
The European Central Bank (ECB) has been pushing for a central pan-European banking authority that will operate under the auspices of the ECB. They are right to do so because there are many banks that need to be wound down and others that need to have trust restored (think Spain).
Smartphone Manufacturers Show the Free Market at Work
Submitted by Alan Beaulieu on Tue, 06/04/2013 - 13:11
According to a recent news article, Motorola's next flagship phone, the “Moto X” will be the first smartphone assembled in the U.S. While not all the components will be made here, the designers and engineers are based in the U.S. and assembly will be in a 500,000 square foot facility in Fort Worth, Texas. The company estimates it will be adding 2,000 jobs by August.
More good news: Apple will be making one of its iMac computers in the U.S.