Usually, a decrease in the unemployment rate is something to celebrate: We like to see the figure, which measures the percentage of Americans looking for work but can’t find it, to go down. And in this morning’s jobs numbers, that’s what we saw: The unemployment rate dropped to 8.2 percent, its lowest point in three years.
Think President Obama will win re-election come November? Don’t bet on it—well, at least literally. The Commodity Futures Trading Commission is reportedly expected to ban U.S. traders from betting on the 2012 election, the New York Times reports:
The Dodd-Frank Act... mandated that the agency ban event contracts tied to terrorism, war, gambling and other matters contrary to the “public interest” ... the agency on Monday is expected to say that election derivatives, while a novel idea, have the potential to improperly affect election results. One problem, the agency argues, would arise if a candidate’s supporters bought huge positions and drove public opinion in their favor.
The ruling could scuttle the plans of one Chicago-based derivatives exchange to offer futures contracts on the election results. It’s “unclear” whether the new law will also apply to Americans betting on the Ireland-based Intrade, the Times adds.
Bloomberg reports that U.S. consumer confidence is almost back to pre-recession levels. But is that actually good news? Over at the Big Picture, James Bianco says it’s not clear why “consumer confidence” is a useful metric. It’s not correlated with jobs. Or retail sales. Or anything except recent stock-market headlines:
Respondents don’t really know how to answer such abstract questions as business and employment conditions, so they describe what they think is the ultimate economic indicator, the stock market’s recent movements. While spikes in gas prices or other economic events (i.e., 9/11, “The Great Recession”) will supersede this method at times, most of the time the stock market is used. . .In the last few months the stock market is up strongly, so it should not be a surprise that consumer confidence is up as well.
Since we already have fairly reliable methods of figuring out what the stock market has been doing of late, do we need consumer confidence too?
Here’s one reason high gas prices haven’t blunted the U.S. economic recovery — at least so far. The Wall Street Journal’s Ben Casselman reports that the average American household actually spent $25 less on energy costs this winter, compared to last.
How can that be? Two things to bear in mind are that this winter was freakishly warm and natural gas prices are spectacularly cheap. Add those up, and heating bills have plummeted for the vast majority of Americans who heat their homes with electricity or natural gas. At $643, the typical natural-gas heating bill between October and March was $204 smaller than the average of the previous five years. (On the other hand, the 7 million Americans who use oil to heat their homes paid about $26 more this winter, particularly in the Northeast, though this represents just 6 percent of all households.) That drop in heating bills has offset the pain from rising gasoline prices. In the aggregate, Americans aren’t seeing their wallets squeezed by energy prices — yet.
Just a few days before the Michigan primary, a private equity trade group has released a video celebrating the impact of a $850 million investment by the Blackstone Group in the Detroit Medical Center. The group says the investment created 15,000 construction jobs and a children’s hospital, among other politically salient accomplishments:
It’s all part of the Private Equity Growth Capital Council’s campaign to rehabilitate the industry’s public image — an effort launched a few weeks ago after the attacks on Romney’s tenure at Bain Capital.
The White House’s 2013 budget request is the first that has to follow the terms of last year’s debt-ceiling deal. That means it’s the first year that domestic discretionary spending — the money for agencies that Congress funds each year — gets strictly capped. So how does this shake out?
First, let’s define terms. “Non-defense discretionary spending” is a relatively small part of the budget, about 18 percent. It’s not Social Security. It’s not Medicare. It’s not the Pentagon. It’s not multiyear highway or farm bills. But it is just about everything else that gets set each year by Congress. The Veterans Health Administration. Medical research at the National Institutes for Health. Low-income housing assistance. And under last year’s Budget Control Act, it’s all getting squeezed. Two years ago, the White House predicted that such domestic spending would amount to $477 billion in FY 2013. After the debt-ceiling deal, the White House is asking for just $410 billion — a full 14 percent less. Which means, inevitably, there are winners and losers.
Northwestern University and University of Chicago’s business schools surveyed a group of top economists, as well as the public at large, and found some big differences when it came to economic policy. Some of the questions tested basic economic literary: A full 100 percent of economists agreed that permanently raising the federal tax rate by 1 percent for those in the top income tax bracket would increase federal tax revenue over the next 10 years. By contrast, only 66 percent of the general public agreed that this was the case, with just 50 percent of Republicans concurring and 80 percent of Democrats. The misconception could partly explain why there’s such aversion to tax increases.
Harry Reid is aiming for a Senate vote this week on a $35 billion jobs bill that would help state and local governments rehire or retain teachers, first-responders, policemen, firefighters. Democrats claim that it will save some 400,000 jobs at a time when state and local budget cuts are forcing these public-sector layoffs. So how do things look for state budgets these days?