Economy grows 2%: Consumer, government spending up

(MoneyWatch) There's no getting around a simple fact: The U.S. is mired in a slow growth recovery. The Commerce Department said third quarter GDP increased by 2 percent, boosted by a rise in consumer and government spending. Consumer spending, which accounts for about 70 percent of U.S. economic activity, grew at a 2 percent rate. And after eight straight quarters of declines, government spending finally contributed to economic growth. Federal government spending jumped 9.6 percent, versus a 0.2 percent drop in the second quarter. State and local government spending was down slightly. The result was on the higher side of analysts' expectations, but that's cold comfort for anyone who is hoping for trend-line historic growth any time soon. Through the first three quarters of the year, the economy has expanded by 1.75 percent, matching 2011's growth, though well below the average annualized GDP since World War II of 3 to 3.5 percent. After living through a deep and painful recession, we should probably appreciate the plus sign in front of the GDP. (Who can forget the 8.9 percent contraction in the fourth quarter of 2008?) But it's hard to see how the economy is going to put more than 12 million unemployed Americans back to work with just 2 percent growth. Regardless of who ends up in the White House, lackluster growth may be with us for the next few years. Slow economic growth unnerves investorsWhat is the "fiscal cliff"? A Q&A Economists Carmen M. Reinhart and Kenneth S. Rogoff, authors of "This Time Is Different: Eight Centuries of Financial Folly," recently reiterated "that recessions associated with systemic banking crises tend to be deep and protracted and that this pattern is evident across both history and countries... Today, there can be little doubt that the U.S. has experienced a systemic crisis -- in fact, its first since the Great Depression. Before that, notable systemic post-Civil War financial crises occurred in 1873, 1893 and 1907." Because the Continue Reading

Philip Hammond faces £41bn black hole in Government spending, warns IFS

Britain is heading for a £41bn financial black hole as the sustained failure to balance the books combined with an ageing population and new hints of extra spending leave the Chancellor facing tens of billions of pounds of further tax rises or spending cuts. Such a substantial gap would need to be filled by a hike of 5p on the basic rate of income tax, the Institute for Fiscal Studies said, or equivalent spending cuts or borrowing - if Philip Hammond is prepared to miss his deficit target. On the current fiscal path another £18bn of tax rises or spending cuts are needed to balance the books by 2025, the IFS said. That cost rises to £30bn per year if Mr Hammond wants to keep Government spending steady as a share of GDP over the same time period. On top of that the UK’s ageing population will increase demand for services such as healthcare and pensions, adding an extra £11bn to the bill. Mr Hammond gave an upbeat assessment of the economy’s prospects yesterday, highlighting the falling deficit and strong jobs growth. The recovery means more spending could be on the table later this year, the Chancellor said in his Spring Statement. “If, in the autumn, the public finances continue to reflect the improvements that today’s report hints at, then... I would have capacity to enable further increases in public spending and investment in the years ahead while continuing to drive value for money to ensure that not a single penny of precious taxpayers’ money is wasted,” he said. But the Chancellor is not currently on track to balance the books by 2025, making this plan tough to achieve without radical action. Paul Johnson, director of the IFS, said a 5p increase on the main income tax rate would be required if the Government were to opt for tax increases to plug the gap. Increases in National Insurance contributions would be an alternative way of meeting the figure. However, he added that Continue Reading

‘THE FLOODGATES ARE OPEN’: The US government is set to begin an unprecedented borrowing binge

Akin Oyedele, provided by Published 12:01 pm, Friday, February 16, 2018 flickr / Doug Wertman The US government's funding needs are set to increase following the two-year budget agreement that will hike spending. And so, the Treasury has boosted the amount of short-term debt it sells. But this is "just the beginning," according to Jefferies. Recommended Video: Now Playing: The market turmoil - dubbed Wall Street Bloodbath - started last week and got worse on Monday. The trigger? The US Jobs report. According to the January data released last Friday, nonfarm payrolls grew by 200,000 in January and the unemployment rate was 4.1 percent. More importantly, average hourly earnings increased 2.9 percent year on year, the best gains since the early days of the recovery in 2009. So far, so good. So what happened? US consumer prices rose in December: overall inflation has risen 2.1 percent, while core inflation is up 1.8 percent. Francois Chaulet, Managing Director of Montsegur Finance said: "This signal which comes from the United States, signals a return to a level of inflation which we haven't experienced for a long time, a signal of the great health of the economy." US Federal Reserve has a dual mandate. The American Central Bank's governing council is deciding on the monetary policy based on two factors: inflation and maximum employment. Both indicators look good and therefore the Federal reserve could increase interest rates more quickly than previously thought. These concerns triggered the stocks sell-off. James McBride, Managing Director of The McBride Group said: "Typically or historically, if the Fed does raise interest rates too far, too fast, it does have a negative effect on the stock market." The Federal Reserve's new chair Jerome Powell was sworn-in right in the middle of the market turmoil. In a recorded statement Powell signaled that during his term the policies would largely mirror those of his predecessor. Media: Euronews In Continue Reading

US government shuts down as Congress fails to overcome standoff over spending and immigration

WASHINGTON (AP) — US government shuts down as Congress fails to overcome standoff over spending and immigration. Copyright 2017 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed. Sign up for BREAKING NEWS Emails privacy policy Thanks for subscribing! Tags: newswires associated press us newswires Send a Letter to the Editor Join the Conversation: facebook Tweet Continue Reading

US government shuts down; Dems, GOP blame each other

US government shuts down; Dems, GOP blame each other Zeke Miller, Andrew Taylor and Alan Fram, Associated Press January 19, 2018 Updated: January 20, 2018 1:11am WASHINGTON (AP) — The federal government shut down at the stroke of midnight Friday, halting all but the most essential operations and marring the one-year anniversary of President Donald Trump's inauguration in a striking display of Washington dysfunction. Express Newsletters Get the latest news, sports and food features sent directly to your inbox. Sign up Most Popular 1 Traffic stop escalates into two-county chase, shooting of... 2 Comal County authorities didn’t charge Sutherland Springs... 3 Steve Kerr's son, other NBA offspring work for Spurs 4 Zachry reveals design for $200M Hemisfair development as... 5 Woman killed after losing control of SUV on slick Wurzbach... Last-minute negotiations crumbled as Senate Democrats blocked a four-week stopgap extension in a late-night vote, causing the fourth government shutdown in a quarter century. Behind the scenes, however, leading Republicans and Democrats were trying to work out a compromise to avert a lengthy shutdown. Congress scheduled an unusual Saturday session to begin considering a three-week version of the short-term spending measure — and to broadcast that they were at work as the shutdown commences. It seemed likely each side would try forcing votes aimed at making the other party look culpable for shuttering federal agencies. Since the closure began at the start of a weekend, many of the immediate effects will be muted for most Americans. But any damage could build quickly if the closure is prolonged. And it comes with no shortage of embarrassment for the president and political risk for both parties, as they wager that voters will punish the other at the ballot box in November. Now Playing: Social Security and most other safety net programs are unaffected by the lapse in federal Continue Reading

Some economists want the US government to put up to $50,000 in ‘Baby Bond’ bank accounts

Chris Weller, provided by Published 10:13 am, Wednesday, January 10, 2018 Yuriko Nakao/Reuters Two economists have proposed an idea for "Baby Bonds," a one-time deposit into a child's bank account at the time they're born. The program would help create upward mobility and reduce inequality in the US, they claim. Rich families would receive around $500 while poor ones would receive up to $50,000. Hamilton and Darity, both economists, say these "Baby Bond" accounts could go a long way toward reducing inequality in the US, where a raft of research has found academic achievement is directly tied to familial wealth. Local Channel Now Playing: Now Playing San Antonio's Confluence Park seen from the sky mysa Woman hit by driver after running into North Side street mysa Mayor and others discuss the symphony's new schedule mysa Natural gas explosion at South Side motel hospitalizes 2 with severe burns mysa This tamale-making hack may change your next tamalada mysa Dog caught in middle of family's New Year's Eve fireworks mysa San Antonio child sings 'Remember Me' from Coco in heart-wrenching tribute to baby sister mysa Well-known San Antonio cook gunned down on his front porch, suspect at large mysa Man found dead in rollover wreck at busy S.A. intersection mysa Woman killed in fiery rollover crash on U.S. 281 mysa "The key ingredient of how successful you will be in America is how wealthy your family is," Hamilton, an economist at the New School, told Heather Long of the Washington Post. The solution Hamilton and Darity presented at the recent American Economic Association conference was a federal government program that deposits between $500 for ultra-rich families, and $50,000 for extremely poor families, in an account they can't touch until the child turns 18. Hamilton and Darity expect the average amount to fall somewhere around $20,000. The two men claim such a program will cost approximately $80 billion, or 2% Continue Reading

US government requesting more and more user data from Facebook

Facebook is getting a growing number of requests for data on the social network’s users from US government entities, according to the company’s latest transparency report. The report, which was previously called the Government Request Report, covers the first half of 2017. The social network received 32,716 US government requests for account data, up from 26,014 in the prior six months. Facebook said it produced at least “some data” for 85 percent of requests from the US government in the first six months of 2017, compared to 84 percent during the last six months of 2016. In total, the social network received 78,890 requests for account data from governments worldwide, up from 64,279 in the second half of 2016. Examples of data requested (the company said “the vast majority of these requests relate to criminal cases”) include “basic subscriber information, such as name, registration date and length of service.” Other data that can be requested include IP address logs or account content. Some 57 percent of the data requests received from law enforcement in the US contained a non-disclosure order that prohibited Facebook from notifying the user, up from 50 percent in the last report. “We continue to carefully scrutinize each request we receive for account data — whether from an authority in the US, Europe, or elsewhere — to make sure it is legally sufficient,” explained Chris Sonderby, Facebook’s deputy general counsel, in a statement. “If a request appears to be deficient or overly broad, we push back and will fight in court, if necessary.” “We’ll also keep working with partners in industry and civil society to encourage governments around the world to reform surveillance in a way that protects their citizens’ safety and security while respecting their rights and freedoms,” he added. The requests include all of Facebook’s products, including Continue Reading

The Math on Government Spending

In 2009, the next President–whoever he or she is–will face red ink as far as the green eyeshades can see. This deficit dynamic will strain our ability to invest intelligently in high-payoff, long-term programs such as strengthening US competitiveness. The federal coffers will be strained by the Iraq war, Social Security, Medicare and other fiscal surprises, and editorialists and elites will likely demand “pay as you go” proposals to justify any new idea or program, no matter how good it may be. What emerges is not a pretty picture. Billions of dollars in “locked-in” federal spending programs, whose chief virtue is the presence of powerful political constituencies to defend them, are already in place. These programmatic incumbents often crowd out new investments and get far less scrutiny. Think prison spending and the drug war, weapons systems that don’t work and Alaskan bridges to nowhere. So how can we overcome Congressional and Beltway inertia so that smart, no-brainer, big-payoff ideas for new spending aren’t immediately crowded out or diminished in scope by locked-in programs and at the same time address the deficit intelligently and responsibly? Here’s an idea–let’s require economic and social impact assessments on all government spending and assess the total return/payback on all programs and tax expenditures. Just like the old environmental impact assessments changed state, local and federal decision-making by requiring new analysis and evaluation, a new EIA would force the debate to be about the net costs and benefits of all government investments. Here’s what we’d see: • Progressive programs like preventative health, investing in kids, jobs, education, safe bridges, workforce and clean energy would more than pay for themselves. • Insider tax giveaways and ridiculous earmarks would look like the economic losers they are. Continue Reading

Why Is the US Still Spending Billions to Fund Mexico’s Corrupt Drug War?

By February 2010, US consulate officials in Monterrey, Mexico, had long connected Héctor Santos Saucedo, then head of Coahuila’s state investigations, to the Zetas. This was at a time when the Zetas—the notorious criminal drug organization formed by soldiers who had defected from an elite army unit—had consolidated control over much of the political and security apparatus in Mexico’s northern region. According to internal US government reports from around that time, Zeta influence was “longstanding and widespread throughout local and state government,” and cartels were operating “with near total impunity in the face of compromised local security forces.” Despite US knowledge that Santos was part of the Zetas’ sphere of influence, he continued to hold central positions in the counter-drug effort; he was named director general of investigations in the State of Coahuila in January 2010 after being dismissed from his post as head of the state investigative unit in Nuevo León. The following year, the town of Allende, Coahuila, became the site of one of the drug war’s worst massacres—one that is just now coming to light after years of cover-up. Between March 18 and 21, 2011, the Zetas conducted an operation in the town of Allende, kidnapping and executing a reported 300 family members, friends and others associated with three Zetas believed to be informants for the US Drug Enforcement Administration (DEA). Even though Coahuila state government officials, as well as the federal attorney general’s office, received complaints of the attack as it was being carried out, no security forces intervened to prevent the killings. Neither state nor federal officials investigated the attack afterward, and Coahuila’s governor did not publicly acknowledge the killings until over a year later. It wasn’t until January 2014 that authorities began searching for the remains of those disappeared and Continue Reading

Readers sound off on fracking, public video screens and government spending

Drilling for the fracking facts  Staten Island : Your editorial “Go for the gas” (April 21) left out a few salient details about hydraulic fracturing, aka fracking. Those millions of gallons of water pumped miles below the surface under high pressure to release the natural gas are full of toxic, cancer-causing chemicals. Once the watershed has been contaminated by the poisons used in fracking, we never will have clean, safe drinking water again. Is it really worth taking that risk, just so the natural gas industry can make billions in profits? Joann Olbrich Manhattan: In 2005, fracking was exempted from regulation by what is called the Halliburton exemption. You fail to mention that fracking uses not just water, but hundreds of chemicals, many of which are known carcinogens. Many of them also are unidentified, since the industry refuses, under the exemption, to identify them. It is easy to say that state regulators will ensure that fracking fluid does not contaminate drinking water supplies, but that has not happened in the many places where there is widespread fracking. Kathleen A. Reynolds Screening meemies Manhattan: Is anybody else disturbed by the large TV and advertising screen on the Port Authority Bus Terminal? Why has the Port Authority allowed this? Does anybody know anything good about having that screen up there? Matt Gibbons No mercy Bronx: Washington spending is out of control. To support its habit of spending more then it has, it now wants to tax your nest egg. If you thought the dive in the stock market hurt your 401(k), wait until the government gets its hands on your retirement dollars. Robert Neglia New motto Brooklyn: What’s the difference between public and private enterprise? After a privately owned business gets 98 comments averaging one star on Yelp, the owner will do something about it. At the Williamsburg post office, nobody cares. Neither Italian grandma nor Polish housewife nor unemployed Continue Reading