Weak Labor Cost Data Darken Consumer Outlook – To get a handle on the outlook for the recovery, look past Friday’s gross domestic product report and focus on a report released at the same time: the employment cost index for the second quarter. Compensation is barely growing and that highlights an obstacle to growth: consumers–even those with jobs–are strapped for cash. Without household spending rising at a healthy clip, the recovery will struggle to gain traction.Employment costs for civilian workers rose a mere 0.5% in the second quarter. Benefits, up 0.6% in the quarter, outpaced wages and salaries, up 0.4%.
Federal Government Covering Up Severity of Gulf Oil Spill? – Yves Smith – It looks as if Team Obama has reverted to form. In a repeat of its perfromance post the financial crisis, it appears to believe that no problem cannot be solved by PR, which puts it in league with the perps. (CNN video embedded)
A new day for Chinese workers – RECENTLY, we asked our economic experts at Economics by invitation whether the era of cheap Chinese labour is over. The consensus was that whether or not the end of the era has arrived, an important transition has seemingly begun, and the results are likely to be positive for China and the world as a whole.This week, The Economist explores the changing dynamics of China’s labour markets in a Leader and Briefing. It’s worth thinking about the potential impact on global markets of an ascendent Chinese consumer:Deflation is now a bigger threat than inflation. And with 47m workers unemployed in the OECD alone, labour is not holding back the global economy. What the world lacks is willing customers, not willing workers. Higher Chinese wages will have a similar effect to the stronger exchange rate that America has been calling for, shrinking China’s trade surplus and boosting its
Why Is Economic Inequality Higher in English Speaking Industrialized Democracies? – What I really find conspicuous in the comparison of top income shares across rich nations is the similarity of the patterns observed in English-speaking countries as opposed to those found in continental European countries. It is striking that, after a prolonged period of moderate decline, the income share of the richest 1 percent suddenly began to rise in the mid-1980s in the United Kingdom, Canada, Ireland, Australia, and New Zealand as well as in the United States, while it exhibited no upward trend in France, Germany, the Netherlands, Spain, and Switzerland.
Fed Outlook Now Looks Too Rosy – It was just over a month ago the Federal Reserve downgraded its outlook for the economy slightly, citing the financial market fallout from Europe’s debt crisis. But Friday’s gross domestic product report reinforces a view that the Fed’s downgraded outlook already looks too rosy. At its last meeting June 22-23, the Fed’s policy-setting body trimmed its GDP prediction to around 3.3% this year and to some 3.8% in 2011. Fed Chairman Ben Bernanke stuck to that scenario in testimony before Congress last week, probably more out respect for the Federal Open Market Committee than because he’s convinced they are still right. Second quarter GDP growth, at 2.4%, was well below the forecast. Many private analysts see the economy continuing to languish at a slow pace. In the latest Wall Street Journal survey published July 15, they forecast, on average, that growth will come in just below 3% both this year and next, also below the Fed’s forecast.
American Economy So Awful Parents Now Buying Franchises to Keep Adult Children Employed -The American economy is so awful, the Wall Street Journal reports that parents of means are now resorting to buying franchise businesses to keep their adult children employed, shelling out six figure sums to purchase their little darlings Pita Pit restaurants and College Hunks Hauling Junk moving trucks: Watching fellow college students working for $7.50 an hour after graduation, Tana Walther, a fashion-design major at Kent State University in Ohio, snapped up an alternative offered by her father — to run a Pita Pit restaurant he would buy.“I guess I bought her a job,” says her father, Jan Walther, of North Canton Ohio. Prospects of a career in fashion seemed remote, and Tana, a college athlete, loved eating at Pita Pit restaurants while traveling with her track team. Her first new restaurant opened last year near campus in Kent, and the 25-year-old hopes to open several more.
Sites Feed Personal Details To New Tracking Industry – The largest U.S. websites are installing new and intrusive consumer-tracking technologies on the computers of people visiting their sites—in some cases, more than 100 tracking tools at a time—a Wall Street Journal investigation has found. The tracking files represent the leading edge of a lightly regulated, emerging industry of data-gatherers who are in effect establishing a new business model for the Internet: one based on intensive surveillance of people to sell data about, and predictions of, their interests and activities, in real time.The Journal’s study shows the extent to which Web users are in effect exchanging personal data for the broad access to information and services that is a defining feature of the Internet.In an effort to quantify the reach and sophistication of the tracking industry, the Journal examined the 50 most popular websites in the U.S. to measure the quantity and capabilities of the "cookies," "beacons" and other trackers installed on a visitor’s computer by each site. Together, the 50 sites account for roughly 40% of U.S. page-views.The 50 sites installed a total of 3,180 tracking files on a test computer used to conduct the study. Only one site, the encyclopedia Wikipedia.org, installed none. Twelve sites, including IAC/InterActive Corp.’s Dictionary.com, Comcast Corp.’s Comcast.net and Microsoft Corp.’s MSN.com, installed more than 100 tracking tools apiece in the course of the Journal’s test.The Journal also surveyed its own site, WSJ.com, which doesn’t rank among the top 50 by visitors. WSJ.com installed 60 tracking files, slightly below the 64 average for the top 50 sites.me two-thirds of the tracking tools installed—2,224—came from 131 companies that, for the most part, are in the business of following Internet users to create rich databases of consumer profiles that can be sold. The companies that placed the most such tools were Google Inc., Microsoft. and Quantcast Corp., all of which are in the business of targeting ads at people online.
Trucking Industry Says Economy Is Slowing – The quote of the week comes from Bob Costello, Chief Economist of the American Trucking Association who is warning of an economic slowdown: ATA Chief Economist Bob Costello said that the two sequential decreases reflect an economy that is slowing. Furthermore, growth in truck tonnage is likely to moderate in the months ahead as the economy decelerates and year-over-year comparisons become more difficult. Nevertheless, Costello believes that tonnage doesn’t have to grow very quickly at this point since industry capacity has declined so much. “Due to supply tightness in the market, any tonnage growth feels significantly better for fleets than one might expect.” This came on the back of yesterday’s data release showing the second consecutive month of declines in truck tonnage:
Chernobyl zone shows decline in biodiversity – The largest wildlife census of its kind conducted in Chernobyl has revealed that mammals are declining in the exclusion zone surrounding the nuclear power plant. The study aimed to establish the most reliable way to measure the impact on wildlife of contamination in the zone. It was based on almost four years of counting and studying animals there. "The truth is that these radiation contamination effects were so large as to be overwhelming"The scientists say that birds provide the best "quantitative measure" of these impacts. They report their findings in the journal Ecological Indicators.
BP Defines Deviancy Down – The national press stuffs a big story today on a massive new oil spill in the Kalamazoo River. Size, of course, is all about context. And unfortunately for the Michiganders affected by it, it comes in the wake of the gargantuan BP oil spill in the Gulf, which dumped 94 million to 184 million gallons of crude into the Gulf of Mexico over three months (assuming it’s stopped for good).The Kalamazoo River spill is “just” a million gallons. But that makes it the sixth biggest spill in U.S. in the last forty-plus years, if this Reuters list is complete.The New York Times stuffs it on A13 and briefed it yesterday. The Wall Street Journal dropped a sentence in its “What’s News” box yesterday and briefs it on A4 today, which is unfortunate because it has a much longer story online, if you can find it. That’s not good enough, folks.
The Aftermath of the Global Housing Bubble Chokes the World Banking System. Only a Coordinated Loan Massacre Could Defeat a Japanese-Style Dead-and-Dying-of-Debt Kamikaze. Hell Approaches Us All, But Only For An Extended Period. -Sometimes the complexity of the world is a ruse, and seeing the overwhelming future of our fortunes is strangely simple. Our past and future credit crisis is but one case in point. Remember when fear and failure wrecked markets wising up to the fallout of debt given to anybody for anything, but especially for buying houses? Naturally our financial leaders around the world took the radical steps required to reduce the debt created in a massive credit bubble. Oh, sorry, that was my fantasy world I was talking about. What our leaders are doing is correcting a severe cyclical recession. What our reporters are doing is covering a severe cyclical recession. What sublime kabuki theater. Back in the real world, the destruction of debt required to cure a credit bubble hasn’t been done. That means the reason for the new credit crisis is no different than during that past time of fear and failure – except that now we have new magnificent malignant clusters of sovereign debt serving as a sort of hand-held fan covering the unclothed emperor. Does that count as cover?