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Monday, May 5, 2014

Economic Stories of Relevance in Today's World -- May 4, 2014

US economy slowed to 0.1 percent growth rate in Q1 - AP through myway news - MARTIN CRUTSINGER - April 30, 2014 - WASHINGTON (AP) — The U.S. economy slowed drastically in the first three months of the year as a harsh winter exacted a toll on business activity. The slowdown, while worse than expected, is likely to be temporary as growth rebounds with warmer weather.                      Growth slowed to a barely discernible 0.1 percent annual rate in the January-March quarter, the Commerce Department said Wednesday. That was the weakest pace since the end of 2012 and was down from a 2.6 percent rate in the previous quarter.                     Many economists said the government's first estimate of growth in the January-March quarter was skewed by weak figures early in the quarter. They noted that several sectors — from retail sales to manufacturing output — rebounded in March. That strength should provide momentum for the rest of the year.

17 Facts To Show To Anyone That Still Believes That The U.S. Economy Is Just Fine - Zero Hedge - Tyler Durden - April 30, 2014 - ...
#1 The homeownership rate in the United States has dropped to the lowest level in 19 years.
#2 Consumer spending for durable goods has dropped by 3.23 percent since November.  This is a clear sign that an economic slowdown is ahead.
#3 Major retailers are closing stores at the fastest pace that we have seen since the collapse of Lehman Brothers.
#4 According to the Bureau of Labor Statistics, 20 percent of all families in the United States do not have a single member that is employed.  That means that one out of every five families in the entire country is completely unemployed.
#5 There are 1.3 million fewer jobs in the U.S. economy than when the last recession began in December 2007.  Meanwhile, our population has continued to grow steadily since that time.
#6 According to a new report from the National Employment Law Project, the quality of the jobs that have been "created" since the end of the last recession does not match the quality of the jobs lost during the last recession...
  • Lower-wage industries constituted 22 percent of recession losses, but 44 percent of recovery growth.
  • Mid-wage industries constituted 37 percent of recession losses, but only 26 percent of recovery growth.
  • Higher-wage industries constituted 41 percent of recession losses, and 30 percent of recovery growth.
#7 After adjusting for inflation, men who work full-time in America today make less money than men who worked full-time in America 40 years ago.
#8 It is hard to believe, but 62 percent of all Americans make $20 or less an hour at this point.
#9 Nine of the top ten occupations in the U.S. pay an average wage of less than $35,000 a year.
#10 The middle class in Canada now makes more money than the middle class in the United States does.
#11 According to one recent study, 40 percent of all Americans could not come up with $2000 right now even if there was a major emergency.
#12 Less than one out of every four Americans has enough money put away to cover six months of expenses if there was a job loss or major emergency.
#13 An astounding 56 percent of all Americans have subprime credit in 2014.
#14 As I wrote about the other day, there are now 49 million Americans that are dealing with food insecurity.
#15 Ten years ago, the number of women in the U.S. that had jobs outnumbered the number of women in the U.S. on food stamps by more than a 2 to 1 margin.  But now the number of women in the U.S. on food stamps actually exceeds the number of women that have jobs.
#16 69 percent of the federal budget is spent either on entitlements or on welfare programs.
#17 The number of Americans receiving benefits from the federal government each month exceeds the number of full-time workers in the private sector by more than 60 million...

US Economy Is A House Of Cards — Paul Craig Roberts - April 30, 2014 -   The US economy is a house of cards. Every aspect of it is fraudulent, and the illusion of recovery is created with fraudulent statistics.                                   American capitalism itself is an illusion. All financial markets are rigged. Massive liquidity poured into financial markets by the Federal Reserve’s Quantitative Easing inflates stock and bond prices and drives interest rates, which are supposed to be a measure of the cost of capital, to zero or negative, with the implication that capital is so abundant that its cost is zero and can be had for free. Large enterprises, such as mega-banks and auto manufacturers, that go bankrupt are not permitted to fail. Instead, public debt and money creation are used to cover private losses and keep corporations “too big to fail” afloat at the expense not of shareholders but of people who do not own the shares of the corporations.                           Profits are no longer a measure that social welfare is being served by capitalism’s efficient use of resources when profits are achieved by substituting cheaper foreign labor for domestic labor, with resultant decline in consumer purchasing power and rise in income and wealth inequality. In the 21st century, the era of jobs offshoring, the US has experienced an unprecedented explosion in income and wealth inequality. I have made reference to this hard evidence of the failure of capitalism to provide for the social welfare in the traditional economic sense in my book, The Failure of Laissez Faire Capitalism, and Thomas Piketty’s just published book, Capital in the 21st Century, has brought an alarming picture of reality to insouciant economists, such as Paul Krugman. As worrisome as Piketty’s picture is of inequality, I agree with Michael Hudson that the situation is worse than Piketty describes.                       Capitalism has been transformed by powerful private interests whose control over governments, courts, and regulatory agencies has turned capitalism into a looting mechanism. Wall Street no longer performs any positive function. Wall Street is a looting mechanism, a deadweight loss to society. Wall Street makes profits by front-running trades with fast computers, by selling fraudulent financial instruments that it is betting against as investment grade securities, by leveraging equity to unprecedented heights, making bets that cannot be covered, and by rigging all commodity markets.

Wake Forest Baptist Medical Center to cut 350 jobs - WGHP (High Point, NC) - Web Staff and Joe Dominguez - May 1, 2014 - WINSTON-SALEM, N.C. — Wake Forest Baptist Medical Center announced Thursday that they are laying off approximately 350 employees.                    The job cuts are to help close the increasing gap between growing expenses and declining reimbursement from federal and state health insurance and other revenue sources, according to a press release.                    Here in North Caroline we got the first part of that with the cuts but we did not get the expanded Medicaid program.                          “At the end of the day the Affordable Care Act is just reforming payments, it’s not really reforming health care,” said John McConnell, CEO of Wake Forest Baptist. “That job is left up to institutions like ours to figure out how we drive up quality and drive down cost.”                            The Medical Center employs approximately 14,686 faculty and staff at all of their locations.                         The release states that the announcement was not unexpected...

Seattle mayor unveils plan for $15 minimum wage - CNN Money - Gregory Wallace - May 1, 2014 - Mayor Ed Murray unveiled on Thursday his proposal for a $15 minimum wage, a plan he said has broad support across the local government, business and labor communities.                         Washington already has the nation's highest state-level minimum wage of $9.32. The Seattle proposal would be more than double the current federal minimum wage of $7.25.                          Mayor Murray's plan would take effect over several years and apply first to some large businesses starting in 2017, and ultimately to all businesses by 2021.                      All told, the wage hike will apply to 102,000 workers, according to 15 for Seattle, an advocacy group that supports the plan. Annual increases would then be tied to inflation.                           The city council will begin considering the proposal next week and hold a series of public meetings this month, Councilmember Sally Clark said.
Related: What is the minimum wage in your state?... 

Money Pit: Officials struggling to fix state ObamaCare exchanges - Fox News - Jim Angle - May 01, 2014 - As the Obama administration touts its latest enrollment numbers for the ObamaCare exchanges, some state networks are grappling with major changes ahead of the next sign-up period – meaning more cost to taxpayers.                       The biggest overhaul came out of Oregon, which last week decided to junk its broken health care exchange and turn to the federal government for help.
"Their health exchange has been a disaster,” said Michael Cannon, of the Cato Institute.                   "They're the only state in the country that built their own exchange and couldn't get it to a level of functionality to sign a single person up,” said Jim Capretta, of the Ethics and Public Policy Center.
But Oregon isn’t the only state still struggling, months after the major problems with were addressed.                           Systems in Vermont, Massachusetts, Nevada and Maryland continue to have problems.                        "The federal government spent about a billion dollars on those five state exchanges, and none of them are very likely to work well ever,” Capretta said. “So that's a lot of wasted taxpayer money."                        Maryland's exchange imploded, and it decided a month ago to adopt the system used by Connecticut. But officials say they’ll need $40-50 million more to cover the costs.
Officials refuse to say where the money will come from, but taxpayers somewhere will pay.
In all, the state exchanges cost taxpayers almost $4.2 billion to build,and will cost even more to fix.
Meanwhile, the administration reported updated figures Thursday showing more than 8 million signed up in the first enrollment period.
But Republicans in Congress cast doubt on the figures in a report a day earlier, putting out estimates they claim show how many people actually paid their first month’s premiums.
The House Energy and Commerce Committee said, based on information from insurance providers in the federal exchange, only 67 percent of people who selected a plan on had paid their first premium as of April 15.
“Now what we don't know is how many of those have continued to make that payment and are successfully enrolled," noted Rep. Marsha Blackburn, R-Tenn.
The information from Republicans came from contacting 160 insurance companies listed on and getting payment rates as of April 15.
The administration argues some didn't have to pay until May 1 and several insurers have reported higher payment numbers.

About that jobs report...maybe it wasn't so great - CNBC - Jeff Cox - May 2, 2014 - While the numbers may change, the story of the U.S. labor market ultimately is the same. Job growth continues, but significant weakness remains.                    Friday's nonfarm payroll report was the best in months, with 288,000 new jobs and an unemployment rate dropping all the way down to 6.3 percent.               The internals were somewhat less impressive.                     The headline rate fell due to a stunning decline in the labor force, the quality of new jobs remained iffy and long-term unemployment is still immune to ultra-easy monetary policy as the average length of joblessness holds at more than 35 weeks.                          "The unemployment rate, which fell to 6.3 percent in April from 6.7 percent the prior month, wholly masks the extent of the problem," University of Maryland economist Peter Morici said in an analysis. "The percentage of adults seeking employment dropped precipitously. One out of 6 men between the ages of 25 and 54 are without jobs, and many have given up looking for work and are not counted in the jobless rate."...                        For the Federal Reserve, then, the report likely does nothing to move policy. The central bank will continue on its road of decreasing monthly bond purchases but holding its key policy rate near zero. The Fed already has given up on its old yardstick of 6.5 percent unemployment to begin raising rates, and the uneven internals of the report probably will only fortify that position.                         "All of this leaves the Fed on its super-slow exit path," Michelle Meyer, U.S. economist at Bank of America Merrill Lynch, said in a note to clients. "They want a full healing and that means getting the unemployment rate below 6 percent and getting wage growth back to normal. Today's data helped us move toward the first goal, but we actually took a small step back on the second goal."

It’s An Illusion: Here Are the REAL Unemployment Numbers - -Mac Slavo - May 2nd, 2014 - Mainstream financial pundits are falling over themselves today following a report from the Labor Department indicating that the national unemployment rate has fallen yet again, this time to just 6.3%.                           The Associated Press, whose report on the new rate is being distributed to news services around the country, says this is “the strongest evidence to date that the economy is picking up.” They cite numerous economic experts, claiming that the U.S. economy is now experiencing vigorous job growth, which they say is confirmation that the economic health of our nation is bouncing back from a rough winter. In fact, they mention bad “weather” and “winter” eight times in a single article just to make sure we understand that the problems we’ve seen over the last few months were seasonal.                        But, as is generally the case with mainstream assessments and government statistics as of late, the devil’s in the details...                               Thus, while U.S. companies added some 288,000 jobs last month, three times as many people were dropped from the official unemployment statistics and are no longer counted in the labor pool.                     At this rate we’re well on our way to achieving the Communist dream of 0% unemployment before the end of the President’s term.                        Karl Denninger looks even deeper into the report at Market Ticker and points out that, while jobs were created last month, the claims of vigorous job growth are not even close....


Most jobs created in this recovery are low-wage, study finds - MarketWatch Wall Street Journal - May 1, 2014 - A majority of the new jobs created in the four years of the recovery have been in low-wage sectors, according to a new report released this week.                 “Deep into the recovery, job growth is still heavily concentrated in lower-wage industries,” said the National Employment Law Project, a progressive research group which has been pushing for Congress to increase the minimum wage.                          Lower-wage industries accounted for 22% of job losses during the recession but 44% of employment growth over the past four years.                    Mid-wage industries accounted for 37% of job losses but 26% of recent employment growth.                     Higher-wage industries accounted for 41% of job losses but 30% of the recent employment growth.                   Michael Evangelist, a policy analyst at NELP, said this trend toward low-wage job is another reason to boost the minimum wage...

Thanks to Obamacare, more companies are likely to dump health benefits - Yahoo Finance - Rick Newman - May 1, 2014 - Get ready for a trip back to the 1950s.                      Back then, fast-growing companies were in the habit of offering health insurance as a fringe benefit to help recruit workers, a practice that got started during World War II to reward loyal employees when wage controls were in place. It helped that the government had passed a few tax breaks making it affordable for corporations. So it was basically by accident that employer-provided health insurance became the norm in the United States, even though the government came to oversee healthcare in most other developed nations.                             We may soon go back to a model in which employers provide healthcare more as a perk than as a routine benefit, requiring workers to get insurance from other sources. That could save big companies up to $700 billion by 2025, according to a new report from S&P Capital IQ. It’s hard to think of any other single change that could save companies that much money, indicating how powerful the Affordable Care Act (ACA) could become once it has fully impacted the U.S. healthcare system.                       S&P predicts that companies will do the math and find it irresistible to move more and more of their workers off company-run plans and into the exchanges established under Obamacare, as the ACA is known. Companies with more than 50 workers will have to pay a penalty if they don’t offer insurance, but it could still be cheaper when factoring in the savings on healthcare; that’s because insurance costs have skyrocketed during the last 20 years, making healthcare one of the costs companies find most difficult to control.                    The rising and unpredictable nature of healthcare costs led AOL CEO Tim Armstrong to make his unfortunate comment about "distressed babies" earlier this year. Armstrong took a lot of heat and later apologized, but many CEOs expresss similar frustrations (usually privately).

GOP REPORT: 1 in 3 Obamacare ‘Enrollees’ Haven't Paid - Breitbart - May 1, 2014 - WASHINGTON (AP) — House Republicans issued a report Wednesday saying that one-third of people who signed up for health insurance through new federal exchanges hadn't paid their first month's premium as of mid-April, which could undermine the Obama administration's claims of robust enrollment under the new health law.                             But administration officials, outside experts and even the health insurance industry immediately questioned the report, offering the latest skirmish over questionable claims and counterclaims that have come to characterize debate over President Barack Obama's signature health law.                   The report by House Energy and Commerce Committee Republicans said 67 percent of people who had signed up for health insurance through federal marketplaces had paid their first month's premiums as of April 15. That was far lower than the numbers emerging from individual insurance companies, which have been reporting payment numbers in the range of 85 percent and above. Wellpoint reported on an earnings call Wednesday that some 90 percent of people signing up for insurance actually had paid.                         Administration officials, insurers and others were quick to point out that because the GOP data cut off in mid-April, it didn't capture a surge of health law sign-ups in March prior to the end of the first open enrollment period.

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