Will Democrats Raise Taxes
Slow The Economy

Investopedia explains Okun's Law

The relationship is represented by a ratio of 1 to 2.5. Thus, for every 1% excess of the natural unemployment rate, a 2.5% GDP gap is predicted.

List of Terms With Definition of Each List of Economic Terms Investopedia

Collapsing Ceiling--Obama, Democrats
Are Allowing Total Debt Limit To Collapse

Investors Business Daily

February 6, 2010

Excerpts:

Leadership: Congress stands ready to lift the debt ceiling an additional $1.9 trillion and is eager to waste hundreds of billions more. Do our representatives realize the long-term damage they're doing to the economy?

A topic that would have seemed absurd just a few years ago is now raised openly by investment advisers and some economists: What if the U.S. defaults on its debt? It's not out of the question, given the extraordinary surge of debt-related spending by this Congress and president.

As we've noted, the debt that will be added over the next decade or so will break all records. Indeed, by some recent estimates our debt will surge $13 trillion by 2020, more than twice the total debt accumulated in our nation's first 220 years of existence.

Full article Deficits Matter Investors Business Daily

UNEMPLOYMENT INSURANCE WEEKLY CLAIMS REPORT

SEASONALLY ADJUSTED DATA

Various States Various Categories

In the week ending June 27, the advance figure for seasonally adjusted initial claims was 614,000, a decrease of 16,000 from the previous week's revised figure of 630,000. The 4-week moving average was 615,250, a decrease of 2,750 from the previous week's revised average of 618,000.

The advance seasonally adjusted insured unemployment rate was 5.0 percent for the week ending June 20, a decrease of 0.1 percentage point from the prior week's revised rate of 5.1 percent.

The advance number for seasonally adjusted insured unemployment during the week ending June 20 was 6,702,000, a decrease of 53,000 from the preceding week's revised level of 6,755,000. The 4-week moving average was 6,751,500, a decrease of 13,750 from the preceding week's revised average of 6,765,250.

The fiscal year-to-date average for seasonally adjusted insured unemployment for all programs is 5.375 million.

UNADJUSTED DATA

The advance number of actual initial claims under state programs, unadjusted, totaled 556,863 in the week ending June 27, a decrease of 11,689 from the previous week. There were 368,544 initial claims in the comparable week in 2008.

The advance unadjusted insured unemployment rate was 4.5 percent during the week ending June 20, a decrease of 0.1 percentage point from the prior week. The advance unadjusted number for persons claiming UI benefits in state programs totaled 6,058,925, a decrease of 54,348 from the preceding week. A year earlier, the rate was 2.1 percent and the volume was 2,855,557.

Extended benefits were available in Alaska, Arizona, Arkansas, California, Colorado, Connecticut, the District of Columbia, Florida, Georgia, Idaho, Illinois, Indiana, Kentucky, Maine, Massachusetts, Michigan, Minnesota, Missouri, Montana, Nevada, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, Puerto Rico, Rhode Island, South Carolina, Tennessee, Vermont, Virginia, Washington, and Wisconsin during the week ending June 13.

Initial claims for UI benefits by former Federal civilian employees totaled 1,574 in the week ending June 20, a decrease of 258 from the prior week. There were 2,095 initial claims by newly discharged veterans, an increase of 181 from the preceding week.

There were 17,022 former Federal civilian employees claiming UI benefits for the week ending June 13, an increase of 278 from the previous week. Newly discharged veterans claiming benefits totaled 28,364, an increase of 514 from the prior week.

States reported 2,437,825 persons claiming EUC (Emergency Unemployment Compensation) benefits for the week ending June 13, an increase of 8,053 from the prior week. EUC weekly claims include both first and second tier activity.

The highest insured unemployment rates in the week ending June 13 were in Michigan (7.5 percent), Oregon (6.7), Puerto Rico (6.6), Nevada (6.3), Pennsylvania (6.2), Wisconsin (5.7), California (5.4), South Carolina (5.3), Arkansas (5.2), Illinois (5.2), and North Carolina (5.2).

The largest increases in initial claims for the week ending June 20 were in California (+14,570), New Jersey (+3,170), Oregon (+3,062), Maryland (+2,342), and Michigan (+2,032), while the largest decreases were in Missouri (-5,753), Pennsylvania (-3,037), Texas (-2,759), Alabama (-1,926), and Florida (-1,894).

UNEMPLOYMENT INSURANCE DATA FOR REGULAR STATE PROGRAMS

Advance

Prior1

WEEK ENDING

June 27

June 20

Change

June 13

Year

Initial Claims (SA)

614,000

630,000

-16,000

612,000

405,000

Initial Claims (NSA)

556,863

568,552

-11,689

558,407

368,544

4-Wk Moving Average (SA)

615,250

618,000

-2,750

616,750

393,750

Advance

Prior1

WEEK ENDING

June 20

June 13

Change

June 6

Year

Ins. Unemployment (SA)

6,702,000

6,755,000

-53,000

6,714,000

3,152,000

Ins. Unemployment (NSA)

6,058,925

6,113,273

-54,348

6,082,559

2,855,557

4-Wk Moving Average (SA)

6,751,500

6,765,250

-13,750

6,764,250

3,132,750

Ins. Unemployment Rate (SA)2

5.0%

5.1%

-0.1

5.0%

2.4%

Ins. Unemployment Rate (NSA)2

4.5%

4.6%

-0.1

4.5%

2.1%

INITIAL CLAIMS FILED IN FEDERAL PROGRAMS (UNADJUSTED)

Prior1

WEEK ENDING

June 20

June 13

Change

Year

Federal Employees

1,574

1,832

-258

1,377

Newly Discharged Veterans

2,095

1,914

+181

1,519

PERSONS CLAIMING UI BENEFITS IN FEDERAL PROGRAMS (UNADJUSTED)

Prior1

WEEK ENDING

June 13

June 6

Change

Year

Federal Employees

17,022

16,744

+278

11,221

Newly Discharged Veterans

28,364

27,850

+514

19,759

Railroad Retirement Board

11,000

11,000

0

2,000

Extended Benefits

282,059

287,780

-5,721

1,511

EUC 20083

2,437,825

2,429,772

+8,053

0

FOOTNOTESSA - Seasonally Adjusted DataNSA - Not Seasonally Adjusted Data1 - Prior year is comparable to most recent data.2 - Most recent week used covered employment of 133,683,433 as denominator.3 - EUC weekly claims include both first and second tier activity.

UNADJUSTED INITIAL CLAIMS FOR WEEK ENDED 06/20/2009

STATES WITH A DECREASE OF MORE THAN 1,000

State

Change

State Supplied Comment

MO

-5,753

Fewer layoffs in the construction, service, transportation, and warehousing industries.

PA

-3,037

Fewer layoffs in the construction, service, transportation, and transportation equipment industries.

TX

-2,759

Fewer layoffs in the service, information, and manufacturing industries.

AL

-1,926

Fewer layoffs in the transportation equipment, electronics, and computer industries.

FL

-1,894

Fewer layoffs in the construction, trade, service, and manufacturing industries.

IN

-1.676

Fewer layoffs in the automobile, trade, and manufacturing industries.

PR

-1,464

No comment.

STATES WITH AN INCREASE OF MORE THAN 1,000

State

Change

State Supplied Comment

GA

+1,041

Layoffs in the textile industry.

TN

+1,652

Layoffs in the trade, service, transportation equipment, rubber/plastics, and fabricated metals industries.

IL

+2,028

Layoffs in the construction, trade, and manufacturing industries.

MI

+2,032

Layoffs in the automobile and service industries.

MD

+2,342

No comment.

OR

+3,062

Increase is seasonal, school closings related.

NJ

+3,170

Layoffs in the transportation, warehousing, and service industries.

CA

+14,570

Layoffs in the service industry.

State Detail Prior WeekUI Claims Series 1967 to current

Consumer Price Index -0.1% Apr 2009

Unemployment Rate 9.4% May 2009

Payroll Employment -345,000(p) May 2009

YAHOO NEWS!

Treasury needs record $361B April-June borrowing

By MARTIN CRUTSINGER, AP Economics Writer

Mon Apr 27, 3:42 pm ET

Full article Martin Crutsinger Yahoo News!

Excerpts:

"...WASHINGTON – The Treasury Department said Monday it will need to borrow $361 billion in the current April-June quarter, a record amount for that period.

Treasury also estimated it will need to borrow $515 billion in the July-September quarter, down slightly from the $530 billion borrowed during the year-ago period. The all-time high of $569 billion was set in the October-December period.

The administration is projecting the federal deficit for the entire budget year ending Sept. 30, will total a record $1.75 trillion. A deficit at that level would nearly quadruple the previous record of $454.8 billion set last year."...

PERSONAL INCOME AND OUTLAYS

December 2008

Personal income decreased $25.3 billion, or 0.2 percent, and disposable personal income (DPI)decreased $25.1 billion, or 0.2 percent, in December, according to the Bureau of Economic Analysis.

Personal consumption expenditures (PCE) decreased $102.4 billion, or 1.0 percent.

In November, personal income decreased $44.0 billion, or 0.4 percent, DPI decreased $33.9 billion, or 0.3 percent, andPCE decreased $77.8 billion, or 0.8 percent, based on revised estimates.

Real disposable income increased 0.3 percent in December, compared with an increase of 0.8 percent in November.

Real PCE decreased 0.5 percent, in contrast to an increase of 0.3 percent.

Theprice index for PCE decreased 0.5 percent, compared with a decrease of 1.1 percent.

2008 Aug. Sept. Oct. Nov. Dec. (Percent change from preceding month)Personal income, current dollars 0.3 0.0 -0.1 -0.4 -0.2Disposable personal income: Current dollars -1.1 0.1 0.0 -0.3 -0.2 Chained (2000) dollars -1.1 0.0 0.5 0.8 0.3Personal consumption expenditures: Current dollars -0.2 -0.4 -1.1 -0.8 -1.0 Chained (2000) dollars -0.1 -0.5 -0.6 0.3 -0.5

Wages and salaries

Private wage and salary disbursements decreased $23.5 billion in December, compared with a decrease of $12.1 billion in November.

Goods-producing industries' payrolls decreased $15.7billion, compared with a decrease of $4.4 billion; manufacturing payrolls decreased $9.6 billion, compared with a decrease of $3.1 billion.

Services-producing industries' payrolls decreased $7.8 billion, compared with a decrease $7.7 billion. Government wage and salary disbursements increased $2.3 billion, compared with an increase of $1.7 billion.

Other personal income

Proprietors' income decreased $6.8 billion in December, compared with a decrease of $17.6billion in November.

Farm proprietors' income decreased $0.9 billion, compared with a decrease of$1.3 billion.

Nonfarm proprietors' income decreased $5.9 billion, compared with a decrease of $16.3 billion.

Rental income of persons increased $4.3 billion in December, compared with an increase of$2.8 billion in November.

Personal income receipts on assets (personal interest income pluspersonal dividend income) decreased $29.0 billion, compared with a decrease of $28.8 billion.

Personal current transfer receipts increased $24.4 billion in December, compared with anincrease of $7.5 billion in November.

The December increase in personal current transfer receiptsreflected retroactive social security benefits payments of $7.4 billion at an annual rate, resultingfrom a recalculation of the earnings base underlying the benefits for recent retirees.

The Decemberincrease in personal current transfer receipts also reflected provisions of the Supplemental Appropriations Act of 2008, which provides up to 13 weeks of additional unemploymentcompensation benefits to those who have exhausted their regular unemployment benefits.

Theadditional unemployment benefits boosted the level of personal current transfer receipts by $7.1billion in December.

Contributions for government social insurance -- a subtraction in calculating personal income --decreased $3.1 billion in December, compared with a decrease of $1.9 billion in November.

Personal current taxes and disposable personal income

Personal current taxes decreased $0.2 billion in December, compared with a decrease of $10.1billion in November.

Disposable personal income (DPI) -- personal income less personal currenttaxes -- decreased $25.1 billion, or 0.2 percent, in December, compared with a decrease of $33.9billion, or 0.3 percent, in November.

Personal outlays and personal saving

Personal outlays -- PCE, personal interest payments, and personal current transfer paymentsdecreased $104.6 billion in December, compared with a decrease of $80.0 billion in November.

PCE decreased $102.4 billion, compared with a decrease of $77.8 billion.

Personal saving -- DPI less personal outlays -- was $378.6 billion in December, comparedwith $299.1 billion in November. Personal saving as a percentage of disposable personalincome was 3.6 percent in December, compared with 2.8 percent in November. For acomparison of personal saving in BEA's national income and product accounts with personalsaving in the Federal Reserve Board's flow of funds accounts and data on changes in net worth,which help finance consumption, go to www.bea.gov/national/nipaweb/Nipa-Frb.asp.

Real DPI and real PCE

Real DPI -- DPI adjusted to remove price changes -- increased 0.3 percent in December,compared with an increase of 0.8 percent in November.

Real PCE -- PCE adjusted to remove price changes -- decreased 0.5 percent in December, incontrast to an increase of 0.3 percent in November. Purchases of durable goods decreased 0.8percent, in contrast to an increase of 1.0 percent. Purchases of nondurable goods decreased 1.8percent in December, in contrast to an increase of 0.9 percent in November. Purchases of servicesincreased 0.1 percent, in contrast to a decrease of less than 0.1 percent.

PCE price index -- the price index for PCE decreased 0.5 percent in December, compared witha decrease of 1.1 percent in November. The PCE price index, excluding food and energy, wasessentially unchanged in December and in November.

Economy

Revisions

Estimates have been revised for October and November. Changes in personal income, current-dollar and chained (2000) dollar DPI, and current-dollar and chained (2000) dollar PCE for Octoberand November -- revised and as published in last month's release -- are shown below.

Change from preceding month October November Previous Revised Previous Revised Previous Revised Previous Revised (Billions of dollars) (Percent) (Billions of dollars) (Percent)Personal Income: Current dollars...................... 11.3 -11.3 0.1 -0.1 -20.7 -44.0 -0.2 -0.4Disposable personal income: Current dollars...................... 16.7 -2.0 0.2 0.0 -11.8 -33.9 -0.1 -0.3 Chained (2000) dollars............... 61.2 47.0 0.7 0.5 88.1 70.7 1.0 0.8Personal consumption expenditures: Current dollars...................... -102.6 -116.2 -1.0 -1.1 -56.1 -77.8 -0.6 -0.8 Chained (2000) dollars............... -38.6 -48.7 -0.5 -0.6 45.6 28.5 0.6 0.3

This release also includes revised estimates of population, per capita disposable personal income (DPI),and per capita real DPI. The revised population estimates reflect newly available estimates from the CensusBureau for March 2000 through December 2008. BEA population estimates are a mid-month average of CensusBureau data. The revised per capita estimates reflect the revisions to the population estimates. Estimates for thecomplete revision period are available on BEA's Web site atwww.bea.gov/national/nipaweb/SelectTable.asp?Selected=Y#S2.

BEA's national, international, regional, and industry estimates; the Survey of Current Business;and BEA news releases are available without charge on BEA's Web site at www.bea.gov. Byvisiting the site, you can also subscribe to receive free e-mail summaries of BEA releases andannouncements.

* * *

WALL STREET JOURNAL

Economists Have Abandoned Principle

Twelve months ago nobody could have imagined government interventions we now take for granted.

By OLIVER HART and LUIGI ZINGALES

Full article By OLIVER HART and LUIGI ZINGALES WSJ

Excerpts:

This year will be remembered not just for one of the worst financial crises in American history, but also as the moment when economists abandoned their principles. There used to be a consensus that selective intervention in the economy was bad. In the last 12 months this belief has been shattered.

Practically every day the government launches a massively expensive new initiative to solve the problems that the last day's initiative did not. It is hard to discern any principles behind these actions. The lack of a coherent strategy has increased uncertainty and undermined the public's perception of the government's competence and trustworthiness.

The Obama administration, with its highly able team of economists, has a golden opportunity to put the country on a better path. We believe that the way forward is for the government to adopt two key principles. The first is that it should intervene only when there is a clearly identified market failure. The second is that government intervention should be carried out at minimum cost to taxpayers.

DECEMBER 3, 2008

November 2008

GDP and the Economy

Advance Estimates for the Third Quarter of 2008

THE ECONOMY contracted in the third quarter of 2008, according to the “advance” estimates of the national income and product accounts (NIPAs).1 Real gross domestic product (GDP) decreased 0.3 percent after increasing 2.8 percent in the second quarter.

The third-quarter downturn in real GDP primarily reflected a sharp downturn in consumer spending, a smaller decrease in imports, a deceleration in exports, a downturn in nonresidential fixed investment, and a larger decrease in residential investment. In contrast, inventory investment turned up, and federal government spending accelerated.3

Prices of goods and services purchased by U.S. residentsincreased 4.8 percent after increasing 4.2 percent(see page 3). Food prices accelerated, and energy prices decelerated in the third quarter. Excluding food and energy, gross domestic purchases prices increased 3.1 percent in the third quarter after increasing 2.2 percent in the second.

Real disposable personal income (DPI) decreased 8.7 percent in the third quarter after increasing 11.9 percentin the second quarter, reflecting a downturn in current-dollar DPI and an acceleration in the personalconsumption expenditures implicit price deflatorused to deflate DPI. Current-dollar DPI turned down sharply, reflecting a sharp deceleration in personalincome and a sharp upturn in personal current taxes (see page

4); both primarily reflected the second-quarter effects of the rebate payments to individualsfrom the Economic Stimulus Act of 2008.4●The personal saving rate was 1.3 percent in the

Consumer Price Index -0.1% Sep 2008 Unemployment Rate 6.5% Oct 2008 Payroll Employment -240,000(p) Oct 2008 Average Hourly Earnings +$0.04(p) Oct 2008

Consumer Price Index -0.1% Sep 2008

Unemployment Rate 6.1% Sep 2008

Payroll Employment -159,000(p) Sep 2008

Average Hourly Earnings +$0.03(p) Sep 2008

Consumer Price Index -0.1% Aug 2008

Unemployment Rate 6.1% Sep 2008

Payroll Employment -159,000(p) Sep 2008

Average Hourly Earnings +$0.03(p) Sep 2008

Custom Search

BUREAU OF ECONOMIC ANALYSIS (BEA)

Disposition of personal income

Current-dollar personal income increased $214.5 billion (7.4 percent) in the second quarter,compared with an increase of $109.1 billion (3.7 percent) in the first. The acceleration primarilyreflected an acceleration in personal current transfer receipts due to the effects of the rebates toindividuals who pay no income taxes (or for whom the rebate exceeded the amount of taxes they pay)from the Economic Stimulus Act of 2008.

Personal current taxes decreased $178.9 billion in the second quarter, in contrast to an increase of$20.7 billion in the first. The sharp downturn reflected the rebates to individuals with tax liabilities,which are treated as an offset to taxes.

Disposable personal income increased $393.4 billion (15.9 percent) in the second quarter,compared with an increase of $88.5 billion (3.5 percent) in the first. Real disposable personal incomeincreased 11.3 percent, in contrast to a decrease of 0.1 percent.

Economy

Personal outlays increased $143.6 billion (5.6 percent) in the second quarter, compared with anincrease of $95.7 billion (3.8 percent) in the first. Personal saving -- disposable personal income lesspersonal outlays -- was $284.9 billion in the second quarter, compared with $35.1 billion in the first.The personal saving rate -- saving as a percentage of disposable personal income -- was 2.6 percent inthe second quarter, compared with 0.3 percent in the first. Saving from current income may be near zeroor negative when outlays are financed by borrowing (including borrowing financed through credit cardsor home equity loans), by selling investments or other assets, or by using savings from previous periods.For more information, see the FAQs on "Personal Saving" on BEA's Web site. For a comparison of personalsaving in BEA's national income and product accounts with personal saving in the Federal Reserve Board'sflow of funds accounts and data on changes in net worth (which helps finance negative saving), go tohttp://www.bea.gov/bea/dn/nipaweb/Nipa-Frb.asp.

TOWNHALL.COM

Small Business in 2008

by Michael Steele

July 15, 2008

Full article Michael Steele

Excerpts:

While politicians across the country continued to fight over who is liable for the current economic downturn, the Pennsylvania State Senate took matters into its own hands, seeking to provide concrete solutions for a stronger Keystone state economy.

Last month, legislators – under Republican leadership – passed a comprehensive tax stimulus package, focused on strengthening the foundation of any strong economy: small business.

In times of economic uncertainty, the Pennsylvania Senate reaffirmed faith in market-based solutions. Republican candidates across the nation should take note of the policies being pursued here, for a focus on small business is a focus on families – two winning themes for 2008.

Economy

Pennsylvania legislators engaged in an honest discussion on local economies, what is needed to spur growth and ultimately the necessary stimulus to turn the current economic tide.

With the Pennsylvania job market worse-off than the national average, helping to better equip employers to invest for growth in the commonwealth – as proposed legislation provides – will prove critical.

However, over the past week the General Assembly passed and the Governor signed the Fiscal Year 2008-2009 Budget Bill, without including these critical provisions. Unfortunately, the stimulus package will not pass this session. If nothing else, Senate Republicans have made their intentions clear in this debate and have held firm on some basic principles on behalf of the people of Pennsylvania: empowering small business is the cornerstone for a more prosperous state.

The New York Times

Economic View

What if the Candidates Pandered to Economists?

Gregory Mankiw

Full article Gregory Mankiw The New York Times

Excerpts:

IN the months to come, John McCain and Barack Obama will be vying for the support of various voting blocs. It is safe to say, however, that one group won’t get much attention: economists.

The American Economic Association represents only a small fraction of 1 percent of the electorate. In every election season, we economists expect to be largely ignored, and, unlike many of our other forecasts, that one often turns out to be right.

But suppose it were otherwise. Imagine that those running for office tailored their economic positions to attract the experts in the field. What would it take to put the nation’s economists solidly behind a candidate?

PERSONAL INCOME AND OUTLAYS

May 2008

Personal income increased $225.7 billion, or 1.9 percent, and disposable personal income (DPI)increased $600.3 billion, or 5.7 percent, in May, according to the Bureau of Economic Analysis.Personal consumption expenditures (PCE) increased $77.4 billion, or 0.8 percent. In April, personalincome increased $33.5 billion, or 0.3 percent, DPI increased $39.8 billion, or 0.4 percent, and PCEincreased $41.1 billion, or 0.4 percent, based on revised estimates.

Real disposable income increased 5.3 percent in May, compared with an increase of 0.1 percent inApril. Real PCE increased 0.4 percent, compared with an increase of 0.2 percent.

2008 Jan. Feb. Mar. Apr. May (Percent change from preceding month)Personal income, current dollars 0.2 0.5 0.3 0.3 1.9Disposable personal income: Current dollars 0.4 0.5 0.3 0.4 5.7 Chained (2000) dollars 0.1 0.3 0.0 0.1 5.3Personal consumption expenditures: Current dollars 0.5 0.1 0.5 0.4 0.8 Chained (2000) dollars 0.2 -0.1 0.2 0.2 0.4

The May and April changes in disposable personal income (DPI) -- personal income lesspersonal current taxes -- were boosted as a result of provisions of the Economic Stimulus Act of2008. The federal government issued rebate payments of $48.1 billion in May ($577.1 billion atan annual rate) and $1.9 billion in April ($23.3 billion at an annual rate). These paymentsreduced personal current taxes and increased government social benefit payments. As a result,disposable personal income increased substantially. Excluding these special factors, which arediscussed more fully below, disposable personal income increased $46.4 billion or 0.4 percent inMay, after increasing $16.6 billion, or 0.2 percent, in April.

Economy

Wages and salaries

Private wage and salary disbursements increased $15.9 billion in May, in contrast to a decreaseof $9.6 billion in April. Goods-producing industries' payrolls increased $1.7 billion, in contrast to adecrease of $6.8 billion; manufacturing payrolls increased $1.1 billion, in contrast to a decrease of$2.7 billion. Services-producing industries' payrolls increased $14.3 billion, in contrast to adecrease of $2.9 billion. Government wage and salary disbursements increased $3.7 billion,compared with an increase of $4.0 billion.

Other personal income

Supplements to wages and salaries increased $4.3 billion in May, the same increase as in April.

Proprietors' income increased $6.4 billion in May, compared with an increase of $4.3 billion inApril. Farm proprietors' income increased $3.0 billion, compared with an increase of $2.1 billion.Nonfarm proprietors' income increased $3.4 billion, compared with an increase of $2.2 billion.

Rental income of persons increased $10.0 billion, compared with an increase of $9.8 billion.Personal income receipts on assets (personal interest income plus personal dividend income)increased $1.0 billion, compared with an increase of $0.6 billion.

Personal current transfer receipts increased $186.8 billion in May, compared with an increaseof $19.3 billion in April. Provisions of the Economic Stimulus Act of 2008 boosted the level ofpersonal current transfer receipts by $179.6 billion at an annual rate in May and $7.8 billion at anannual rate in April. The increase reflected payments to individuals who either paid no income taxor whose payment exceeded the amount of income tax paid (see box below).

Contributions for government social insurance -- a subtraction in calculating personal income --increased $2.4 billion in May, in contrast to a decrease of $0.9 billion in April.

Economy

Personal current taxes and disposable personal income

Personal current taxes decreased $374.5 billion in May, compared with a decrease of $6.4billion in April. A reduction in federal income taxes accounted for the decreases in May and inApril. Provisions of the Economic Stimulus Act of 2008 reduced the level of personal current taxesby $397.5 billion at an annual rate in May and $15.5 billion at an annual rate in April. Thereduction in current personal taxes reflected rebate payments to eligible individual taxpayers (seebox below).

Disposable personal income (DPI) -- personal income less personal current taxes -- increased$600.3 billion, or 5.7 percent, in May, compared with an increase of $39.8 billion, or 0.4 percent, inApril.

Personal outlays and personal saving

Personal outlays -- PCE, personal interest payments, and personal current transfer paymentsincreased $84.3 billion in May, compared with an increase of $47.9 billion in April. PCE increased$77.4 billion, compared with an increase of $41.1 billion.

Personal saving -- DPI less personal outlays -- was $555.7 billion in May, compared with $39.7billion in April. Personal saving as a percentage of disposable personal income was 5.0 percent inMay, compared with 0.4 percent in April. Saving from current income may be near zero or negativewhen outlays are financed by borrowing (including borrowing financed through credit cards or homeequity loans), by selling investments or other assets, or by using savings from previous periods. Formore information, see the FAQs on "Personal Saving" on BEA's Web site. For a comparison ofpersonal saving in BEA's national income and product accounts with personal saving in the FederalReserve Board's flow of funds accounts and data on changes in net worth (which help financeconsumption), go to http://www.bea.gov/bea/dn/nipaweb/Nipa-Frb.asp.

Economy

Real DPI and real PCE

Real DPI -- DPI adjusted to remove price changes -- increased 5.3 percent in May, comparedwith an increase of 0.1 percent in April.

Real PCE -- PCE adjusted to remove price changes -- increased 0.4 percent in May, comparedwith an increase of 0.2 percent in April. Purchases of durable goods increased 0.1 percent, comparedwith an increase of less than 0.1 percent. Purchases of nondurable goods increased 0.4 percent inMay, the same increase as in April. Purchases of services increased 0.4 percent in May, comparedwith an increase of 0.1 percent in April.

The price index for PCE increased 0.4 percent in May, compared with an increase of 0.2percent in April. Prices, excluding food and energy, increased 0.1 percent in May, the same increaseas in April.

Revisions

Estimates have been revised for January through April. Changes in personal income, current-dollar and chained (2000) dollar DPI, and current-dollar and chained (2000) dollar PCE for Marchand April -- revised and as published in last month's release -- are shown below.

Change from preceding month March April Previous Revised Previous Revised Previous Revised PreviousRevised (Billions of dollars) (Percent) (Billions of dollars) (Percent)Personal Income: Current dollars...................... 44.7 40.9 0.4 0.3 20.1 33.5 0.2 0.3Disposable personal income: Current dollars...................... 35.4 31.8 0.3 0.3 23.4 39.8 0.2 0.4 Chained (2000) dollars............... 2.7 -1.0 0.0 0.0 -1.0 13.0 0.0 0.1Personal consumption expenditures: Current dollars...................... 41.7 54.8 0.4 0.5 21.4 41.1 0.2 0.4 Chained (2000) dollars............... 9.1 19.4 0.1 0.2 -1.7 14.8 0.0 0.2

Economy

Economic Stimulus Act of 2008

The Economic Stimulus Act of 2008 provides rebate payments to eligible individual taxpayers aswell as tax reductions for businesses. For individuals, the amount of the rebate is determined byinformation reported on tax filings for 2007 and is based on filing status, level of adjusted gross income,and the number of qualifying children. According to the Joint Committee on Taxation and theCongressional Budget Office, rebates to individuals are expected to total $106.7 billion for 2008. Themajority of rebates will be sent during the initial round of payments, which began April 28, 2008, andwill continue on a weekly basis through mid-July 2008.

In the NIPAs, rebates for residents of the 50 states and the District of Columbia will be recorded aseither an offset to personal current taxes or as a social benefit payment to persons. Rebates forindividuals with tax liabilities that exceed the rebate amount will be treated as an offset to personalcurrent taxes in the NIPAs. Rebates for individuals who pay no income taxes (or for whom the rebatewould exceed the amount of the income taxes they do pay) will be treated as a government socialbenefitpayment to persons in the NIPAs.

Economy

Annual Revision of the National Income and Product Accounts

As part of the annual revision of the national income and product accounts, revised estimates ofpersonal income and outlays covering January 2005 through May 2008 will be released along withpreliminary estimates for June 2008 on August 4. An article describing the revision will appear in theAugust 2008 issue of the Survey of Current Business.

BEA's national, international, regional, and industry estimates; the Survey of CurrentBusiness; and BEA news releases are available without charge on BEA's Web site at www.bea.gov.By visiting the site, you can also subscribe to receive free e-mail summaries of BEA releases andannouncements.

GDP and the Economy: Preliminary Estimates for the First Quarter of 2008

Real GDP increased 0.9 percent after increasing 0.6 percent in the fourth quarter.

Consumer spending for services, exports, federal government spending, and inventory investment increased.

In contrast, consumer spending for durable goods and housing investment decreased.

FREEP.COM

By DAVID EGGERT

Associated Press

May 14, 2008

Michigan's revenue will decrease, budget experts predict

Full article David Eggert Associated Press

Excerpts:

Economy

LANSING — Fiscal experts say Michigan could have $434 million less than expected to spend on K-12 schools and other government services in the next budget year.Advertisement

The financial trouble is here despite last year’s increases in the state’s personal income and business taxes to balance a budget deficit. Reasons include the national economic slowdown’s effect on Michigan’s economy and fewer people purchasing cigarettes and buying and selling homes.

The revenue forecast comes from the House Fiscal Agency. Another will come this afternoon when a legislative committee hears from Senate analysts.

Alan García

Peru's Born-Again Free Marketeer

By MARY ANASTASIA O'GRADY

May 3, 2008; Page A9

Lima, Peru

Full article Mary Anastasia O'Grady

Excerpts:

'Knock on the door," a solider standing guard in front of Peru's Government Palace says when I tell him I have an interview with President Alan García. I gaze up at the massive wooden portal – the perfect entry for the palace's 6-foot-5-inch resident or even someone twice that size – and do as I'm told.

A small wicket in the middle of the big door swings open and I give my name. I am admitted and escorted through the famous mirrored "golden salon," modeled on a room at Versailles. At 8:30 on a Saturday morning, the palace is silent. The click of my high-heels on the marble floor echoes under the vaulted ceiling. We reach another smaller chamber; coffee is served.

Economy

Terry Shoffner

The Peruvian economy is doing well these days, but with the world's attention focused on an aspiring dictator in Venezuela, its success has gone relatively unnoticed outside the region. Thus I want to talk to Mr. García and he has agreed to talk to me: A clever and seasoned politician, legendary for his silver-tongued populism, he is now in the business of marketing his country to investors. And why not? With an average growth rate over the past six years of better than 6.2%, the story is a good one. And it is about much more than a boom in mining exports. Peru has blossomed because of competitiveness, something that could not have been imagined a decade ago.

March 27, 2008

McCain is Right on Free Trade

Press Release

McCain is Right on Free Trade

Club For Growth

Washington – The Club for Growth commends Senator John McCain for calling for a new free trade agreement with the European Union.

Currently, the United States and the European Union have low tariffs on most manufactured goods traded between the two entities. Even with these tariffs in place, U.S. trade with the EU accounts for the largest bilateral trade relationship in the world. These tariffs, though, function like a tax on goods and services at the international level. Tariffs penalize American and European consumers for engaging in business with their transatlantic partner and serve as a disincentive for commerce. Removing these tariffs would be a huge boon for economic growth for all countries involved.

Just as the American economy has benefited from increased commerce with Canada and Mexico following NAFTA’s passage in 1993, an agreement with the European Union would produce similar economic benefits. With the American economy on the verge of a recession, opening up the country’s doors to more commerce around the globe is exactly what is needed right now.

“In an increasingly protectionist and demagogic atmosphere, it is encouraging to hear a voice of sanity on this issue,” said Club for Growth President Pat Toomey. “The Democratic Party, led by Barack Obama and Hillary Clinton, are determined to isolate America from the global marketplace with calls for renegotiating NAFTA and a freeze on future free trade agreements. But the protectionist utopia Clinton and Obama are selling is a dangerous nostrum with the potential to do much damage to the U.S. economy. We commend Senator McCain for standing up for free trade and the prosperity that comes from it.”

One of the fastest routes to economic expansion is free trade.

Recent data from the U.S. Commerce Department reveals that “U.S. exports...increased 12.7 percent to $1.4 trillion, in 2007, the highest amount on record. If the trend so far this year holds, we'll again beat last year's figure, and continue double-digit growth.

Free trade agreements have resulted in much of the growth in gross domestic product (GDP) as a result of that the United States has negotiated with 14 countries.

Other data from the U.S. Department of Commerce, provide data that supports the benefits that Free Trade Agreements have brought to Americans.

-Since January 2000, the U.S. has negotiated and implemented seven Free Trade Agreements (FTAs) with 11 countries. Between 1999 and 2007, U.S. merchandise exports to these countries increased by 75.1 percent, compared to the 66.7 percent growth in these exports to the rest of the world.

-From 1999 to 2007, U.S. merchandise exports to Chile increased By 170 percent, or $5.2 billion, to reach $8.3 billion.

-Since the United States began implementing its free trade agreement with Central American nations and the Dominican Republic (CAFTA-DR) last year, U.S. exports have grown by 13 percent. This growth accelerated a trend.

-From 1999 to 2007, U.S. merchandise exports to the CAFTA-DR region increased by 78.5 percent, or $9.9 billion, to reach $22.4 billion. The U.S. trade balance with the CAFTA-DR region improved from a $2.8 billion deficit in 1999 to a $3.7 billion surplus in 2007.

-FTAs increased U.S. merchandise exports to Singapore by 61.8 percent to $26.3 billion (in 2007); to Jordan by 211.0 percent to $857 million; to Australia by 62.5 percent to $19.2 billion; to Morocco by 137.3 percent to $1.3 billion; and to Bahrain by 69.9 percent to $591 million.

Every dollar of export earnings results directly in benefits to U.S. businesses and workers in a wide broad categories of themanufacturing and service sectors.

The largest beneficiaries include, transportation equipment, machinery, electrical equipment, appliances and parts, textiles and fabrics, petroleum and coal products, computer and electronic products, agricultural products, chemicals, and miscellaneous manufactured commodities.

Insourcing has replaced many lost jobs, jobs that could not be saved.

This is a worldwide phenomenon. Advancing techology has always replaced workers, especially in manufacturing.

It is and always has been sad when workers lose jobs. Many businesses will go out of business without finding ways to survive, which sometimes finding cheaper labor is the only way, thus businesses are forced to go overseas.

However for years, jobs replacing those lost, have been better, high paying jobs.

The Federal Reserve cut a key interest rate to 4 1/2%.

This cut in rates will make it cheaper for consumers to borrow money using credit cards and for auto loans and many home mortgages.

The cut also give some breathing room to companies that are taking on new debt.

The Fed hopes this will stimulate the economy. Markets rallied, rising by more than 130 points.TOOLBOXResize Text

H

The bull market is now 5 years old. It is about to become the fourth-longest wealth-building run ever.

Since October 2002 at the end of the bear market the stock market has enjoyed an upward run creating $10 trillion in shareholder wealth.

Beginning in the third quarter of 2002, companies have had their best earnings run in history. Earnings have grown for the past 20 quarters, including 18-straight quarters of double-digit growth.

BEA–07–48

Research and Development Satellite Account

2007 Satellite Account Underscores Importance of R&D

GDP would be an average of 2.9 percent higher between 1959 and 2004 -- or $284 billion higher in 2004 -- if research and development spending was treated as investment in the U.S. national income and product accounts, the Bureau of Economic Analysis (BEA) announced today.

These experimental estimates, produced in conjunction with the National Science Foundation, demonstrate how business spending on research and development would affect the national accounts and gross domestic product.

The 2007 Research and Development (R&D) Satellite Account updates and extends the 2006 BEA estimates of the effect of R&D on economic growth.

“Today's data highlight the role of R&D spending in improving the competitiveness of industries such as information technology, pharmaceuticals, and other manufacturing industries,” said Commerce Secretary Carlos M. Gutierrez.

“These new estimates from BEA demonstrate the importance of one key source of innovation – research and development -- in the U.S. economy. Our data must keep pace with the changing and growing economy, and more improvements are planned.

For example, an initiative of the Department’s Census Bureau to collect additional data on the services industries will help us better understand the importance of R&D in that dynamic sector as well.”

National Science Foundation Director, Dr. Arden L. Bement, said of the estimates produced by the Department of Commerce and NSF: “NSF is proud of this partnership.

It will lead to a better understanding of the importance of R&D to economic growth, scientific progress and international competitiveness.”

The satellite account recognizes that when R&D is treated as investment:

* R&D accounts for 5 percent of real GDP growth between 1959 and 2004, and 7 percent between 1995 and 2004. This ramp-up in R&D’s contribution helps explain the pick-up in economic growth and productivity since 1995.

o To put the contribution of R&D in perspective, the business sector’s investment in commercial and other types of structures accounts for just over 2 percent of real GDP growth between 1995 and 2004.

* Information, communication, and technology (ICT) and biotechnology-related industries account for two-thirds of the business sector’s R&D contribution to GDP growth between 1995-2004. *Economy

Recognizing R&D as investment boosts the level of state GDP the most in New Mexico (8.2 percent) and in Maryland (6.2 percent) between 1998 and 2002. *

In 2004, the value added of majority-owned foreign affiliates of U.S. multinational corporations (MNCs) rises by $26 billion, or 3.1 percent, with R&D capitalization. The value added of majority-owned U.S. affiliates of foreign MNCs rises by $28 billion, or 5.5 percent. For U.S. parent companies, value added rises by $148 billion, or 6.7 percent.

More detailed information about the 2007 R&D accounts is available on the BEA Web site, www.bea.gov.

###

MAY 2007 CONSTRUCTION AT $1,176.6 BILLION ANNUAL RATE

The U.S. Census Bureau of the Department of Commerce announced today that construction spending during May 2007 was estimated at a seasonally adjusted annual rate of $1,176.6 billion, 0.9 percent (±1.6%)* above the revised April estimate of $1,166.0 billion.

The May figure is 2.8 percent (±2.2%) below the May 2006 estimate of $1,210.0 billion.

During the first 5 months of this year, construction spending amounted to $442.1 billion, 3.9 percent (±1.8%) below the$460.1 billion for the same period in 2006.

PRIVATE CONSTRUCTION

Spending on private construction was at a seasonally adjusted annual rate of $892.1 billion, 0.5 percent (±1.3%)* abovethe revised April estimate of $887.6 billion.

Residential construction was at a seasonally adjusted annual rate of $549.0 billion in May, 0.8 percent (±1.3%)* below the revised April estimate of $553.6 billion.

Nonresidential construction was at a seasonally adjusted annual rate of $343.1 billion in May, 2.7 percent (±1.3%) above the revised April estimate of $334.1 billion.

PUBLIC CONSTRUCTION

Economy

In May, the estimated seasonally adjusted annual rate of public construction spending was $284.5 billion, 2.2 percent(±2.7%)* above the revised April estimate of $278.3 billion.

Educational construction was at a seasonally adjusted annualrate of $79.7 billion, 0.7 percent (±3.5%)* above the revised April estimate of $79.1 billion.

Highway construction was at a seasonally adjusted annual rate of $76.4 billion, 0.5 percent (±8.3%)* above the revised April estimate of $76.0 billion.

June 2007 data will be released on July 31, 2007 at 10:00 A.M. EDT.

###

The term heard most frequently from the drop off in the housing market in recent months is collapse. In August 2006, a global economic service, RGE Monitor, called it the "The Biggest Slump In U.S. Housing In The Last 40 Years"

The chief spokesman for that group went on to say:

"I have also argued before that the effects of housing on US economic growth and the role of housing in tipping the US economy into a recession in early 2007 are more significant than the role that the tech sector bust in 2000 played in tipping the economy into a recession in 2001."

That was about as dire as one could get. There were many such voices in the doom and gloom crowd, last summer.

The Mainstream Media then and now has done very little to highlight the continuing good news that we've received month after month.

Luckily the tax cuts on individuals and on the cost of capital, have kept the economy on a robust pace. Increases in worker productivity are also a large factor.

These measures have also withstood the drop off in the auto industry, which has seen job losses in the thousands and losses in the billions to GM and Ford.

Now we get the news that GDP increased by a very healthy 3.5 % in the 4th quarter, giving us a final number for the year of 3.4%, also quite healthy.

GDP, wage and benefit gains, job growth, the stock market, business profits, revenues to federal state and local governments, take home pay, and too many areas to mention are churning out favorable numbers.

Will Democrats continue to deny the benefits to the average American because some at the top do better than others. Attacking the successful is the usual ruse for raising everyone's taxes.

Bill Clinton promised a middle class tax cut while seeking the presidency. He immediately raised income taxes upon taking office. Not only that, he initiated a separate tax increase on social security recipients, along with several other tax increases.

Since the George W. Bush tax cuts, the economy has added about $2.5 trillion dollars. How do we measure such numbers? That growth is almost identical to the entire economy of China.

A majority of economists predicted in July 2006 that the economy will weaken throughout the year.An economist who had a totally different point of view was Brian Wesbury.

Mr. Wesbury is Chief Economist for First Trust Advisors in Chicago, IL.

On July 10, 2006 he said the following:

"The four things that can kill an economy are all policy related - tax hikes, trade protectionism, government over-spending or regulation, and bad monetary policy."

1. Tax Hikes: Democrats always want tax hikes for redistribution to their 'victim" constituency.

In recent years, they’ve grown much more watchful of how much they can get away with. This may be due to the price paid in 1994, for Bill Clinton’s 1992 deception.

2. Trade Protectionism: Democrats are beholden to unions. Unions want their members protected, even if it stifles overall growth.

We always here about the outsourcing of jobs but rarely is there talk of insourcing which often creates more jobs in the long run.

3. Government Over-Spending Or Regulation: Democrats always want more spending and more regulation. The first budget they submit will almost certainly be higher than what Republicans and the president will accept.

The minimum wage hike and certain other regulations have already passed, while others are just waiting their turn.

4. Thankfully, monetary policy is in the hands of the Federal Reserve. So far, inflation has been moderate.

The politics of envy has the support of millions of Democratic voters. However tax increases have a negative effect on those who create jobs, even if they are upper income individuals.

If you are an everyday worker, not depending on government largesse, supporting tax increases and bigger government is a vote against your self.

Incidentally, lower tax rates have increased the share of the burden being paid by those at the very top.

Economy

Thriving Economy To Editorials