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Sunday, December 8, 2013

Economic Stories of Relevance in Today's World -- December 8, 2013

Low wages are stalling America’s economy - Opinion: Stagnant wages hold back consumption and investment - Marketwatch - Rex Nutting - December 6, 2013 -WASHINGTON (MarketWatch) — American workers should get a raise. They deserve a raise, and the economy needs it, too.                            Low wages are holding us back. Since the official end of the recession more than four years ago, the average wage has barely kept up with inflation, even though workers are more productive and are creating more profits for the owners they work for.                         ALSO SEE: Why Diana Furchtgott-Roth thinks the inequality problem is overblown.
Since June 2009, real average weekly earnings have increased 0.3% per year , even as productivity has increased 1.5% per year. Most of the income gains have gone to the highest paid workers, including the bosses. Real median weekly wages have actually declined 0.8% per year since 2009.
Slow income growth means consumer spending has also grown slowly. Most households are still trying to avoid taking on too much debt (like they did in the 2000s), so they don’t have the purchasing power to buy the additional goods and services that the economy could be producing.
If those additional goods and services can’t be sold, then businesses won’t hire the workers who would produce them, nor will they invest in the buildings or equipment that would be needed.
The U.S. economy relies on consumer spending to drive growth, but consumption is stuck in second gear. With consumer spending growing at less than 2%, it is no surprise that gross domestic product is also stuck in the 2% range. 

Why milk prices may soar to $8 if US goes over 'dairy cliff' - CNBC - Katie Little - December 4, 2013 -Brace yourself: The U.S. is about to go over the "dairy cliff," which could cause milk prices to jump.                      If Congress is not able to pass a new farm bill before the 2008 farm bill expires at the end of the year, a decades-old law will then kick in. As part of this permanent legislation from 1949, the government would then buy dairy products from producers at about twice the current market rate.                  "It could take a period of weeks or a month or two for there to be a trickle-down effect at the retail level," said Chris Galen, senior vice president of communications at the National Milk Producers Federation, a group of 30 dairy cooperatives. "What happens under this permanent law, the USDA is required to basically support a much higher price to dairy farmers."....

Wall Street mortgage businesses bracing for additional layoffs? - Fox Business news - December 2, 2013 - FBN’s Charlie Gasparino on potential Federal Reserve tapering’s impact on Wall Street mortgage units.

Average 30-year mortgage rate jumps to 4.46% - AP Through USA Today - December 5, 2013 -
WASHINGTON (AP) — Average U.S. rates for fixed mortgages rose sharply this week, making home-buying slightly less affordable.                            Mortgage buyer Freddie Mac said Thursday the average rate on the 30-year loan jumped to 4.46% from 4.29% last week. The average on the 15-year fixed loan increased to 3.47% from 3.30%.                        Rates have risen a full percentage point since May after the Federal Reserve signaled it might slow its bond purchases by year's end. Rates peaked at 4.6% in August.                  Mortgage rates have stabilized since September, when the Fed surprised markets by taking no action. And rates remain low by historic standards. The Fed meets later this month and could slow the bond purchases if the economy shows further improvement.                  The bond purchases are designed to keep long-term rates low.

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