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Sunday, September 2, 2012

Economic Stories of Relevance in Today's World -- September 2, 2012

The U.S. Drought Is Hitting Harder Than Most Realize - Peak Prosperity - Chris Martenson - August 29, 2012 - This is an important update on the U.S. drought of 2012, the combined record-setting July land temperatures, and their impact on food prices, water availability, energy, and even U.S. GDP.                     Even though the mainstream media seems to have lost some interest in the drought, we should keep it front and center in our minds, as it has already led to sharply higher grain prices, increased gasoline costs (via the pass-through of higher ethanol costs), impeded oil and gas drilling activity in some areas (due to a lack of water), caused the shutdown of a few operating electricity plants, temporarily reduced red meat prices (but will also make them climb sharply later) as cattle are dumped in response to feed- and pasture-management concerns, and blocked and/or reduced shipping on the Mississippi River. All this and there's also a strong chance that today's drought will negatively impact next year's Winter wheat harvest, unless a lot of rain starts falling soon.

World food prices jumped 10 percent in July: World Bank - Reuters - August 30, 2012 - From June to July, corn and wheat prices rose by 25 percent each, soybean prices by 17 percent, and only rice prices went down, by 4 percent, the World Bank said.                       Overall, the World Bank's Food Price Index, which tracks the price of internationally traded food commodities, was 6 percent higher than in July of last year, and 1 percent over the previous peak of February 2011.                        
"We cannot allow these historic price hikes to turn into a lifetime of perils as families take their children out of school and eat less nutritious food to compensate for the high prices," World Bank Group President Jim Yong Kim said. "Countries must strengthen their targeted programs to ease the pressure on the most vulnerable population, and implement the right policies."                 

Sears to drop out of S&P 500 - The London Telegraph - Andrew Trotman - August 30, 2012 - The retailer, which was founded in the 19th century, is one of the original members of the S&P 500, and in 1965 was the fifth largest stock in the country.                   However, the shares have struggled over the past few years and are down 70pc from its all-time high in April 2007 to trade at $53.26 on Thursday. However, the stock is up 81pc in 2012, the 6th biggest gainer in the index.                  S&P is pulling Sears out of the index as the stock’s public float - shares that regular investors can trade - has been below the 50pc of the index requirement “for an extended period of time".               Last year, Sears, Roebuck & Co - to give the group its full name - announced plans to sell a handful of stores and close more than 100 others in a bid to turn the company around.                 Sears made history in 1974 when it completed the 110-storey Sears Tower in Chicago. The tower became the world's tallest building upon its completion, a title it took from the World Trade Center in New York. Though no longer the tallest building in the world, it remains the tallest building in the US.

Majority of New Jobs Pay Low Wages, Study Finds - New York Times - CATHERINE RAMPELL -  August 30, 2012 - While a majority of jobs lost during the downturn were in the middle range of wages, a majority of those added during the recovery have been low paying, according to a new report from the National Employment Law Project.                        The disappearance of midwage, midskill jobs is part of a longer-term trend that some refer to as a hollowing out of the work force, though it has probably been accelerated by government layoffs.                       “The overarching message here is we don’t just have a jobs deficit; we have a ‘good jobs’ deficit,” said Annette Bernhardt, the report’s author and a policy co-director at the National Employment Law Project, a liberal research and advocacy group.                       The report looked at 366 occupations tracked by the Labor Department and clumped them into three equal groups by wage, with each representing a third of American employment in 2008. The middle third — occupations in fields like construction, manufacturing and information, with median hourly wages of $13.84 to $21.13 — accounted for 60 percent of job losses from the beginning of 2008 to early 2010.                       The job market has turned around since then, but those fields have represented only 22 percent of total job growth. Higher-wage occupations — those with a median wage of $21.14 to $54.55 — represented 19 percent of job losses when employment was falling, and 20 percent of job gains when employment began growing again. 

Half of Americans die with almost no money - Market Watch - Andrea Coombes - August 29, 2012 - Almost half of U.S. retirees die with savings of $10,000 or less, but that grim finding doesn’t fully describe the variability and uncertainty that characterize retirement in America, according to a recent study.                    While 46% of retirees have just $10,000 in savings when they die, “That doesn’t mean their standard of living is very low—they might have a relatively generous pension plan, most of them will have Social Security,” said James Poterba, professor of economics at M.I.T., president of the National Bureau of Economic Research, and a co-author of the study.                    But the findings “suggest something about the financial resiliency of these households,” Poterba added. “They may not have much capacity to absorb a shock, such as an out-of-pocket medical expenditure. They don’t have very much in the way of liquid assets they can access.” Read the study here.

Guest Post: The Shape Of 40 Years Of Inflation
- Zero Hedge - Tyler Durden - 09/01/2012 - While many claim that inflation is at historic lows, those who spend a large share of their income on necessities might disagree. Inflation for those who spend a large proportion of their income on things like medical services, food, transport, clothing and energy never really went away. And that was also true during the mid 2000s — while headline inflation levels remained low, these numbers masked significant increases in necessities; certainly never to the extent of the 1970s, but not as slight as the CPI rate — pushed downward by deflation in things like consumer electronics imports from Asia — suggested.

Bernanke says Fed will act if needed, but no QE3 yet

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