WebProNews

Tag: Economy

  • Infographic: LinkedIn Analyzes Global Economic Confidence

    Infographic: LinkedIn Analyzes Global Economic Confidence

    LinkedIn recently surveyed 14,000 senior business leaders in 16 countries to get an idea about the health of local and global economies. The company has put the highlights together in an easy-to-read infograhpic for your viewing pleasure.

    It’s not the most rosy picture. Most of those surveyed are concerned their countries will be left behind in a global economic recovery.

    LinkedIn says it will revisit the research each quarter to track how insights from business leaders change. You can follow here.

    LinkedIn announced last week that it has surpassed 300 million members.

    Image via LinkedIn

  • Mortgage Rates Decline; Rises Loom in Future

    As the spring season rolls in and the winter doldrums roll out, people are finally exiting their homes and exploring the world once again. Luckily for those recovering from an intense winter hibernation, the economy shows positive signs for the first quarter. Job growth increased by 192,000 for the month of March, and unemployment remained at 6.7 percent. More important for future home-buyers, though, was news that mortgage rates are slowly declining despite fears of an increase in 2014.

    Recent reports show that average mortgage rates fell from 4.5 percent to 4.375 percent at the beginning of April, a much-needed positive sign for the housing market.

    While most big banks are reporting a drastic decline in the number of mortgage originations for the first quarter, with Wells Fargo reporting a 67 percent decline in originations and JP Morgan reporting a 68 percent decline, most signs showcase that for the month of April, more homeowners are coming onto the market and expressing interest in purchasing a new home.

    The Mortgage Bankers Association has reported a 13 percent increase in home-purchase mortgage applications over the past five weeks, hitting a two-month high.

    Along with a recent increase in home-buying applications, US consumer confidence ratings hit its highest point in the past six years, indicating that consumers feel secure in the current economic climate and are more willing to make large purchases.

    The surge in demand for houses and the rise in mortgage applications may simply be a brief blip on the radar, however.

    Mortgage rates increased over the past year most likely in response to news that the Federal Reserve was going to draw-back on its bond-buying program, pulling $10 billion from the economy in monthly installments until the average monthly investment dropped from $85 billion to $55 billion.

    Once this transition is complete, much economic pundits believe mortgage rates will increase. Because of this, many first-home-buyers may be rushing to the market now to circumvent potential higher mortgage rates in the future.

    If the Fed is planning on pulling $30 billion out of the US economy each month soon, it should hope that banks keep mortgage rates low. Lower mortgage rates spur increased consumer spending, a sector which accounts for 70 percent of the US GDP.

    Image via YouTube

  • U.S. Economy Adds 175,000 Jobs in February

    U.S. Economy Adds 175,000 Jobs in February

    The American economy added 175,000 jobs in February which is higher than the goal of 149,000 set by Wall Street economists. However, the numbers on actually hiring were a little less impressive.

    With all the new jobs, the unemployment rate still rose .1% to rest at 6.7% for February. That’s 10.5 million people if you’re counting.

    What’s the cause of the uptick in unemployment? The severe weather experienced around the nation this winter has been one possibility tossed around at some pretty heated debates among economists and traders, according to the New York Times. However, the uptick can also be attributed to optimistic unemployed people returning to the job search market.

    In fact, some involved in the debate will not even consider the numbers for February “clean data”. Those will wait for the weather to clear and look forward to the numbers from March and April for a more accurate account of how things really look for the U.S. economy.

    February’s report was difficult to predict because other surveys have offered contradictory signs about the labor market this week, such as the private sector adding 162,000 jobs, and the public sector adding 13,000.

    Ian Shepherdson, chief economist at Pantheon Macroeconomics, said before February’s numbers were announced, “We are braced for just about anything tomorrow. Mixed payroll signals and unpredictable seasonals make tomorrow’s number a very tough call.”

    February’s numbers for some people undoubtedly create a bright outlook after previous uninspiring reports. December saw the economy only adding 75,000 jobs. January was a little better with 129,000 jobs added, but both fell short of the hopes presented by Wall Street. With the announcement, the blow was softened by about 25,000 as the jobs numbers for January and February were revised, according to AFP.

    However, the optimistic numbers for February are still down from last year’s average of 190,000 added jobs.

    Image Via Wikimedia Commons

  • Janet Yellen Confirmed as Next Federal Reserve Chair

    Yesterday, the Senate voted 56-26 to usher in Janet Yellen as the next Chair of the Federal Reserve.

    Yellen’s acceptance came as no surprise, especially seeing as she was easily approved by the Senate Banking Committee in November. Yellen is the first woman to ever head the Federal Reserve and is expected to continue the country on the path it has been traipsing since the beginning of the “Great Recession” 8 years ago.

    Yellen will officially take office on February 1, after Ben Bernanke’s term is officially over. Bernanke’s shoes will be hard to fill due to the unique situation the Federal Reserve finds itself in at the current moment. In order to abate an impending economic collapse, the Federal Reserve has been investing $85 billion per month in a bond-buying program. This program was intended to push money into the US economy, driving down interest rates on loans and spurring investment and spending from consumers.

    However, Bernanke’s bond-buying program has come under much fire from the GOP, where many politicians insist that continuing the program “risks fueling an economic bubble and even hyper-inflation,” potentially leading to “real and lasting damage to our economy.” Senator Rand Paul has perhaps been the Fed’s most outspoken opponent, recently stating that the policies of the Federal Reserve have destroyed “97 percent of the dollar, along with millions of jobs” since its inception.

    However, Yellen has already shown that she is willing to work with both sides of the political spectrum, recently voting to ease the quantitative easing program of the Federal Reserve from $85 billion per month to $75 billion, a move which presents dangers in itself: If Yellen eases the program too quickly, it could worry potential investors and lead to withdrawal from the markets and increased interest rates; if she moves too slowly, more “bubbles” could appear in the economy, leading to constant fear that said bubbles may burst: “There are dangers, frankly, on both sides of ending the program or ending accommodation too early. There are also dangers that we have to keep in mind with continuing the program too long or more generally keeping monetary policy accommodation in place too long,” Yellen told Senators during Congressional confirmation hearings in November.

    While most politicians are worried about the logistics of the Fed’s bond-buying program, Yellen will most likely spend her time worrying about how to decrease the unemployment rate. During all of her time as a student, a professor (at UC Berkeley, Harvard, and the London School of Economics), and a policymaker, Yellen’s primary focus has been on unemployment. Yellen has been termed “dovish” on monetary policy, meaning she is willing to let inflation rise if it brings about higher employment more rapidly.

    After her confirmation, President Obama championed Yellen as the next Chair of the Federal Reserve, stating, “The American people will have a fierce champion who understands that the ultimate goal of economic and financial policy making is to improve the lives, jobs and standard of living of American workers and their families.” Obama originally nominated Yellen following the withdrawal of his initial nominee, Larry Summers, and at the behest of economists across the world.

    Image via Wikimedia Commons

  • Unemployment: A Long Term Problem; No End in Sight

    CNN Money reported recently about one woman’s struggle to find a job. Lena Rouse was an IT analyst at a regional bank and was laid off from her job. She has 2 Master’s degrees – one in business and one in IT. She has 22 years of work experience. And she spent all of 2013 unemployed in Columbus, Ohio, the largest city in the state, and home to five Fortune 500 companies.

    Rouse’s tale is becoming all too common. And people are asking the question, “If someone with 2 Master’s degrees, that much experience, and a good résumé can’t find a job in over a year, what hope is there for the rest of us?”

    Rouse’s story gets even more frightening when you factor in the news that federal funding for long-term unemployment benefits was not renewed before legislators headed home for the holidays last year. Rouse received her last benefit check this week.

    According to Labor statistics, 37% of unemployed people have been out of work for at least 6 months. These folks are entering a phase of unemployment that renders then virtually unhireable.

    “I’ve heard from recruiters at larger companies, and they will absolutely tell you they don’t like to hire long-term unemployed people,” Rouse said. “They think our skills are less sharp.”

    Twenty-two years of experience gets trumped by 6 months of unemployment? And some people are working freelance as fast as they can, even taking additional training as they can afford it, to keep up with their professions.

    A Fundamental Change

    More and more, folks are starting to realize that a fundamental change has taken place over the past few years since the market crash and recession of 2008. They listen to financial news shows and hear about how much “the economy” has bounced back, how great “the market” is doing. But the very next news story talks about how unemployment numbers are still high, even new unemployment claims. They hear political parties blame each other. They hear economists bicker about models for recovery. But no one is answering the question: If the market is better, why aren’t the jobs coming back?

    MoneyNews reported last year on the meteoric rise in temp jobs – positions with few, if any, benefits, abysmal working conditions, and no expectation of long-term employment, much less permanence and retirement.

    Businesses are moving to a temp model. The days of in-house Human Resources, long-term hiring, retirement, and good benefits are gone. Corporations used the 2008 crash as cover for divesting themselves of their most troublesome resource: people. No one could blame them for laying off workers. Everyone was doing it. But during the tumult of the economic recovery, businesses went out and changed their structure entirely.

    No more hiring. Now they contract with a temp agency who does all the screening and dirty work for them, including the firing.

    According to the Bureau of Labor Statistics, over one-fifth of job growth since the recession ended in 2009 has been in the temp sector. In fact, temp work is outpacing traditional hiring tenfold.

    The “coal towns” of last century are gone. But now we have “temp towns,” neighborhoods or whole towns where even people with vocational training can’t get entry-level factory work without being first directed to a temp agency.

    One of the worst effects of such a model is the conundrum over health insurance. Commonly in the United States, getting health insurance was tied to ones job. If the U.S. business community is moving toward a temp model, how can one be expected to get health insurance through work? Even if that person has been working steadily and receiving a paycheck for weeks, they are still under contract, and their “employer” is not required to provide them health insurance.

    All these factors, and many more like them, come into play every time a person sits down with today’s version of the Help Wanted classifieds – a job search website or app. They watch useless job postings scroll by, positions they long ago applied for and never could even get more than an automated email reply to. Many postings are outright scams, and it takes applicants weeks to suss out the chaff.

    It’s a problem that won’t likely be solved anytime soon.

    Image via YouTube

  • Bitcoin Value Continues to Puzzle Economists

    Bitcoin Value Continues to Puzzle Economists

    2013 will be a year remembered for many important reasons, with perhaps the most interesting being the rise of the digital currency, the bitcoin.

    Bitcoins have been in existence for 4 years now, and over those four years the value of a bitcoin has fluctuated drastically. These intense changes in value make many people wonder what gives a bitcoin value and if they’re worth the investment. Several economists shed some light on the issue.

    Nobel Prize winning economist and author of several bestselling books Paul Krugman warns consumers and businesses about the dangers of bitcoins, saying that he is “deeply unconvinced” that the whole bitcoin phenomenon will really work:

    “So far almost all of the Bitcoin discussion has been positive economics — can this actually work? And I have to say that I’m still deeply unconvinced. To be successful, money must be both a medium of exchange and a reasonably stable store of value. And it remains completely unclear why BitCoin should be a stable store of value.”

    In order to explain why the value of bitcoins are disputed, Krugman points us toward Brad DeLong, who ponders the question himself. DeLong points out that the intrinsic value of gold being used to make pretty things gives it its market value, while the value of the dollar comes from its ability to pay taxes and create transactions here in the US.

    Considering bitcoins are a form of digital currency with no intrinsic value, then what gives them a stable, market value?

    The answer to that question comes from Business Insider’s Joe Weisenthal, who sees bitcoins as a hybrid of 3 factors: currency, equity, and social network.

    Bitcoins are obviously a form of currency due to their ability to complete transactions. While bitcoins were used almost entirely to complete online transactions at their inception, the acceptance of bitcoins as a form of currency in the physical marketplace has drastically increased over the past 4 years. Currently, there are 2,252 locations across the world that accept bitcoins as a form of currency, adding legitimacy to the argument that bitcoins are indeed a form of currency.

    Bitcoins are also a form of equity in the fact that the more people who invest in bitcoins and use them as a form of currency, the more the bitcoins are worth. Thus, bitcoins act much like individual stock shares – the more people who invest in a company’s particular stock, the higher stock prices climb due to the increased perception of said company’s value.

    However, bitcoins only act as equity as far as its social network exists and continues to grow. This is perhaps the biggest concern to consumers when pondering whether or not to make an investment in bitcoins.

    As previously stated, bitcoins have no intrinsic value; they are simply 0’s and 1’s transmitted through the internet. The value of a bitcoin is derived from its use; i.e. bitcoins gain more value as more people use them, much like how Facebook gains value as more people use its service.

    But that is where the problem lies. Recent research has shown that Facebook users are declining, especially in the younger generation. If Facebook users continue to decline, it could wind-up facing the same fate that befell MySpace.

    Or, as Joe Weisenthal put it, “Without the network effects, the technology is nothing. It’s just a theoretical amusement.”

    So, in the end, the value of a bitcoin will be ever-fluctuating as its numbers of users and businesses which accept payment continue to fluctuate. While one bitcoin is worth $750.99 today, its value could easily increase or decrease ten-fold overnight.

    If you’re still questioning whether or not you should invest in bitcoins, ask yourself this: Do you have surplus cash that you don’t know what to do with? If that answer is yes, invest in some bitcoins, ride the bubble, and hope the gamble pays off (and if it does, send some of those excess bitcoins this way).

    Image via Wikimedia Commons

  • Consumer Confidence Rising Going Into the New Year

    The world economy has been slow to stabilize following the recession that began five years ago. In the U.S., high unemployment and low consumer confidence have led to a stagnating economic situation that is slowly crawling back.

    One of the market segments to weather the crisis well is the technology market. It seems that consumers have been saving their funds for larger purchases such as smartphones and tablets – particularly during the holiday seasons.

    This week the Consumer Electronics Association (CEA) revealed that its consumer confidence index for December is maintaining its higher November levels. The firm’s rating for December is even up slightly from last month.

    The CEA cites the coming end of the federal reserve’s stimulus programs as a major factor in the improved consumer outlook on the U.S. economy.

    “Consumers are closing out the year with a decidedly optimistic view as the sentiment index recovers lost ground from earlier this year,” said Shawn DuBravac, chief economist at CEA. “Recent announcements regarding Federal Reserve policy, as well as improving economic fundamentals, reaffirms that 2014 will begin on more solid footing than we’ve seen in the last five years.”

    Though the tech industry enjoyed massive Black Friday sales this year, it seems that consumers are broadening their spending habits this year. The CEA’s report shows that consumer tech spending expectations fell slightly in December. This follows previous findings from the CEA that showed consumer tech spending expectations rising throughout the late summer and fall.

    “Despite a small decrease, December sentiment levels are holding onto the positive momentum gained in October and November,” said DuBravac. “We are watching tech sentiment closely as key areas of growth – namely tablets and smartphones – will begin to slow naturally in 2014. However, several areas, such as wearable tech devices, will see gains as consumer awareness about these products continues to increase.”

  • Russia Boosts Ukraine Economy with $15 Billion Loan

    Over the past month, Ukraine has faced its largest series of anti-government protests since the Orange Revolution in 2004, where thousands of citizens protested what appeared to be a corrupt and fraudulent presidential election. This series of protests are not the result of election fraud, but rather outrage against current president Viktor Yanukovych and his decision to not sign the Association Agreement with the EU, an agreement that would cement a cooperative relationship between EU member-states and the non-EU state of Ukraine.

    On Tuesday, protesters were given even more fuel to add to their ire as Russian president Vladimir Putin agreed to give Ukraine $15 billion in order to help bolster their struggling economy. As it currently stands, Ukraine has $9 billion in sovereign debt to repay by the end of 2014.

    The $15 billion was not the end of the agreement, however. Putin also stated that Gazprom, Russia’s state-controlled energy service, would reduce the price of gas sold to Ukraine from $400 per 1,000 cubic meters to $268.50. This deal may be just as important as they $15 billion seeing as winters in Ukraine are harsh and the grand majority of their gas comes from Russia.

    Much of the apprehension created in potentially signing the Association Agreement with the EU stemmed from the fact that much of Ukraine’s economy is dependent upon goods and services being exchanged with Russia. Throughout this ordeal, Russia has coerced Ukraine into siding with them through imposed sanctions and future threats of withholding crucial goods to Ukraine, such as natural gas.

    While this $15 billion deal will do wonders toward helping Ukraine repair its economic woes, many citizens in Ukraine are still calling for new leadership. The protesters do not want Ukraine to devolve back to the days of Ukraine being a Soviet satellite-state, but rather want the country to become more integrated into Western Europe and seek its own autonomy.

    The protesters also fear what caveats come with the agreement between Yanukovych and Putin, despite Putin’s claim that “… this is not tied to any conditions … I want to calm you down – we have not discussed the issue of Ukraine’s accession to the customs union at all today.”

    Vitali Klitschko, head of the opposition Udar party, parliament member, and former WBC heavyweight champion, has publicly voiced his frustrations with this agreement, stating, “We are sure that everything is already decided: that Yanukovych will bring quite good loans, financial support, a new gas price. The question is, in exchange for what?”

    Most Ukrainians would likely suspect that the cost of this agreement will be that Ukraine will have to join Russia’s newly founded customs union, Russia’s response to the EU. If this is the case, Ukraine will likely not see stability for quite some time. Police have been unable to move protesters from Independence Square, and Parliament has been unable to resume duties due to being blocked by said protesters. The vehemence of the opposition movement, coupled with the facts that Yanukovych has stated that “Ukraine’s trade with Russia makes it impossible for us to act in any other way. There is no alternative to this,” and that the IMF and EU were not able to come up with the $20 billion Ukraine said it would need to support their economy once in a relationship with the EU, makes the stalemate unlikely to change anytime in the near future.

    Image via YouTube

  • World Economy To Continue Modest Growth in 2014

    Since the economic downturn that began more than five years ago, the world economy has struggled to lurch forward. There are signs, however, that the global economy is beginning to pick back up, albeit slowly.

    Market research firm IHS today released top economic predictions for the coming year. Among them is the prediction that the global economy will grow 3.3% in the year 2014. This growth would represent a slight increase over the 2.5% growth measured for 2013.

    This modest growth could be an indication that economies around the world are finally digging themselves out of the financial crisis of the past half-decade. IHS expects the U.S., Europe, and China to lead the economic turnaround through growing export markets. Growing consumer spending in the U.S. and European governments ending austerity spending programs will be two of the factors in the growth seen next year.

    “The easing of the twin headwinds of private sector de-leveraging and public sector austerity will bolster the improved outlook, especially for the developed economies,” said Nariman Behravesh, chief economist at IHS. “Many emerging economies will also likely enjoy stronger growth in 2014, pulled along by export-led growth to the United States, Europe and China. That said, the global growth rebound is likely to be quite modest.”

    Other predictions from IHS include a mixed bag of economic trends.

    The U.S. dollar is predicted to strengthen as the U.S. economy grows 2.6% in 2014. The U.S. Federal Reserve is also expected to begin ending its massive stimulus programs over the course of the year.

    Emerging markets are expected to see significant real GDP growth through exports, though commodity prices are expected to stay flat.

    Despite the good indications, IHS does not predict the economic turnaround will include all of those who have lost their jobs over the past few years. The firm predicts that unemployment in established markets will hit 7.9% in 2014 – only a slight drop from this year’s 8.1% unemployment. Improved productivity and continued reorganization efforts among companies were cited by IHS as major causes for continued high unemployment.

  • Ukraine Protesters Gain Traction; Police Back Down

    Early Wednesday morning, riot police in Ukraine’s capital, Kiev, withdrew from two separate areas where protesters were demonstrating. This move by the police signifies progress being made on behalf of the Ukrainian opposition party, which has seen brutal crackdowns during their protests over the past month.

    Many of the protesters are optimistic that this withdraw of troops represents a shift in governmental allegiance of the culture writ-large, with Yuri Lutsenko, a former Interior Minister, stating “basically only some units remain at the service of the regime.”

    During the late night Tuesday, riot police entered Independence Square and started dismantling tents and barricades that had been put in place by protesters. Despite the fact that the standoff lasted for several hours with both police and citizens being injured, Ukrainian Interior Minister Vitaliy Zakharchenko stated that there would be no attempt to dissolve the protests and that the police were there to simply keep the streets clear and navigable: “I want to reassure everyone — there will be no crackdown of the Maidan. Nobody is infringing on citizens’ right to peaceful protests. However, one cannot ignore the rights and lawful interests of other citizens.”

    Thus far, Kiev has seen over 300,000 protesters, the largest movement against the government since the Orange Revolution in 2004.

    Protests in Ukraine started last month when current president Viktor Yanukovych surprised everyone by choosing to not sign the Association Agreement with the EU – a move which would have led Ukraine down a path to further westernization, something a majority of Ukrainian citizens support.

    Instead of siding with the EU, signs show that Yanukovych is leaning toward Ukraine’s former mother-state, Russia. Earlier last month, Russia declared harsh sanctions against Ukraine if they decided to follow through with the proposed partnership with the EU. In a case of international bullying which was common when Ukraine was a Soviet satellite state, Russia banned Ukrainian imports of chocolate, increased inspections of goods exchanged between the countries to slow economic transactions, and threatened to cut Ukraine’s natural gas supplies from Russia, a good Ukraine is dependent on in order to heat their homes during the harsh winter months.

    While opposition forces are upset with Yanukovych for essentially making Ukraine once again subservient to the Russian state, others view the move as essential for the continuation of the Ukrainian state. Ukrainian citizens living in the eastern portion of the state share more cultural similarities to Russians than the rest of central Europe. The eastern part of Ukraine is also dependent upon the success of the coal industry, something which would be negatively impacted by signing the Association Agreement with the EU due to stricter regulations and preference toward greener energies.

    President Yanukovych and Ukrainian Prime Minister Mykola Azarov share another concern – if Ukraine was to sign with the EU, it would lose millions of dollars in revenue due to decreased trade of manufactured goods and the current subsidy Ukraine receives for buying Russian gas. Thus, Azarov has asked the EU and the IMF to give Ukraine 20 billion euros to mitigate the damage that would be done if Ukraine decided to side with the EU.

    As it currently stands, the most the EU has been able to offer Ukraine in terms of monetary support is 610 million euros, a figure falling well-short of the amount needed to make the deal successful. As a result, both the EU and Ukraine have spoken with the IMF about receiving a loan. The IMF is reluctant to do so at this point, however, due to the current $7 billion in debt Ukraine is slated to repay soon and Ukraine’s current debts to Russia for gas. If the EU or the IMF are not able to come up with the money, then Ukraine may find itself a satellite state of Russia once again due to economic coercion.

    [Image via YouTube]

  • Janet Yellen Approved for Fed by Senate Committee

    Thursday morning, the Senate Banking Committee approved Janet Yellen’s nomination to become the next Chair of the Federal Reserve by a 14 to 8 vote. This vote comes as no surprise to political pundits, especially seeing as Democrats hold 12 of the 22 seats on the committee and Yellen has been supported by Democrats and Republicans, alike, before the vote took place.

    In early October, Barack Obama announced Janet Yellen as his nomination to replace Ben Bernanke as Chair of the Federal Reserve when his term ends on January 31, 2014, and for good reason. Currently, Yellen holds the position as vice-chair of the Federal Reserve. Before her current role, Yellen had served as the President and Chief Executive Officer of the Federal Reserve Bank of San Francisco and as an economic adviser during the Clinton administration. Not only does Yellen have the pedigree to make her an appropriate candidate for the next chair of the Fed, but over 350 economists sent a letter to President Obama earlier this year voicing their approval of Yellen as the next nominee for Fed chair.

    Despite her credentials, however, many Republicans had voiced their opposition to her nomination. Republican Senator Marco Rubio, of Florida, has expressed his doubts that Yellen has the right monetary policy to lead the Fed during the current US financial situation: “She has championed policies that have diminished people’s purchasing power by weakening the dollar, made long-term savings less attractive by diminishing returns on this important behavior, and put the US economy at increased risk of higher inflation and another future boom-bust.”

    Senator Mike Crapo of Idaho, the ranking Republican on the Senate banking committee, also voiced concern about Yellen’s continued support of the US bond-buying program: “The long-term costs of these policies are unclear and, frankly, worrisome. The immediate benefits are questionable and markets have become too reliant on monetary stimulus.”

    While most Republicans have apprehensions and disagreements with how the Federal Reserve is handling the financial situation of the US, Yellen is most likely going to win nomination while continuing the same policies as her predecessor, Ben Bernanke. Yellen is described as a “dove”, meaning that during times of financial crisis, she will bolster Fed policies that fight against unemployment and attempt to drive spending. Conversely, Republicans would like to see a Fed chair who was a “hawk”, one who would focus more on suppressing inflation than worrying about unemployment.

    The biggest concern of Republicans, however, deals with the Fed’s bond-buying program. As it currently stands, the Federal Reserve purchases $85 billion of government bonds per month in an effort to drive down interest rates and encourage loans and investments. Republicans, as Senator Crapo expressed in the statement above, are worried that these investments are artificially driving-up the price of stocks and will soon result in a bubble-burst similar to the 2008 financial crisis.

    Democrats, and some Republicans (such as Bob Corker of Tennessee, Mark Kirk of Illinois and Tom Coburn of Oklahoma – who voted for Yellen’s nomination on the Senate banking committee, and Susan Collins of Maine, Orrin Hatch of Utah and Lisa Murkowski of Alaska – who have voiced that they will support Yellen’s nomination), point toward Yellen’s proven track record of intellect and success as the reasons as to why there should be no issues concerning her nomination: “She has devoted a large portion of her professional and academic career to studying the labor market, unemployment, monetary policy, and the economy. As we saw in her testimony last week, Dr. Yellen understands the challenges facing our economy and the balance the Fed must strike as we navigate the path back to full employment,” stated Senate Banking Committee Chairman Tim Johnson (D-S.D.).

    Due to her current role as vice-chair of the Federal Reserve and bipartisan support, Yellen should receive the 60 votes necessary to secure her position as the next Chair of the Fed (especially if Harry Reid is successful in changing the rules to make 51 votes the number required to secure nomination). If she is successful, Yellen will become the first woman to head the Federal Reserve since its inception over 100 years ago, a move which would be another huge step toward incorporating more women within politics in Washington, DC.

    What do you think? Is Yellen the appropriate candidate to become the next Chair of the Federal Reserve? Let us know in the Comments Section below.

    [Image via Wikimedia Commons]

  • Yulia Tymoshenko Case May Delay EU Agreement

    Ukraine was one of the fifteen satellite states compromising the Soviet Union from 1922 to the dissolution of the of the USSR in 1991. Since that time, Ukraine has been trying to find its footing as an independent European nation, a journey which has been wrought with struggles due to its proximity to and past with Russia. In 2004, Ukraine experienced the Orange Revolution, a public response to the political and voting corruption occurring within the Ukrainian government. Out of this revolution rose an opposition leader, Yulia Tymoshenko. Tymoshenko was able to garner enough support due to her progressive political views to be elected as Prime Minister of Ukraine from 2007-2010. Her victories were short-lived, however, as Tymoshenko was sentenced to 7 years in prison due to her alleged abuse of power in constructing gas deals between Ukrainian companies and Russia. While current President of Ukraine, Viktor Yanukovych, contends that the allegations placed upon Tymoshenko were legitimate and that the sentence was handed down with due process of the law, representatives in the EU believe that the verdict was an instance of “selective justice”

    The reason the Tymoshenko case holds so much importance is that it serves as a potential block to achieving a partnership between the EU and Ukraine, something Ukrainian President Yanukovych has been striving for since he took office in 2010. On November 28-29, Vilnius, the capital of Latvia (current head of the EU) will hold an Eastern Partnership Summit in order to attempt to bring former Soviet satellites and Eastern bloc members into the EU and establish an economic relationship with them.

    As it currently stands, Ukraine would not be allowed to sign the partnership with the EU at Vilnius due to the Tymoshenko controversy. One of the driving ideologies of the European Union is a respect of human rights. While the EU has no rights to declare that the trial was the result of political game-playing, the sticking point actually has to do with medical services guaranteed to prisoners. Tymoshenko has battled back issues for many years. Since her stint in prison, Tymoshenko has not been able to receive proper medical care. In order to seek a solution to her back ailments, Tymoshenko would have to be transported to Germany to receive medical treatment, something the Ukrainian Parliament is opposing.

    Most believe Yanukovych opposes the transport of Tymoshenko because the move would allow her to be competitive in the 2015 presidential race. Evidence for this position comes from the fact that Yanukovych has stated that he is willing to allow Tymoshenko to receive medical treatment in Germany, but he is not willing to concede to EU pleas that she be pardoned at the same time.

    If Ukraine does not come to an agreement concerning the Tymoshenko issue by November 19th, the EU will not allow Ukraine to sign the Association Agreement or Deep and Comprehensive Trade Agreement (DCFTA), meaning that the EU’s attempt to expand its influence and economic power into eastern Europe would be a failure. That failure may not be the total fault of the EU, however. Russia has been placing demands upon Ukraine to sign into their Eurasian Customs Union instead of the EU. Putin and the Russians have casually threatened that if Ukraine signs with the EU, it will block certain imports, such as chocolate and gas. In order to combat this pressure, German Chancellor Angela Merkel has announced that she “will push in Vilnius for the EU to counteract this pressure with concrete opportunities and real solidarity.” Merkel followed by stating, “This could be done by offering additional sales possibilities for products of our partner that cannot be exported to Russia, or through help in broadening its supplies of energy.”

    The Tymoshenko case holds great import toward the future balance of European economic relations. Ukraine is a burgeoning eastern power with a $330 billion economy. By enacting proper legislation and siding with the EU, Ukraine would be taking a firm stance against the influence of Russia and the historic holdings of the Soviet Union. If Yanukovych and the Ukrainian Parliament fail to sign with the EU, though, Russia will once again showcase just how powerful of a county they are becoming in the 21st century. While most signs currently point toward the latter, there is still time.

    [Image via Wikimedia Commons]

  • China to Shift Economy, Loosen One Child Policy

    A reform document released by China’s Communist party, after a four day-long meeting of its top officials, includes a flood of sweeping changes to reportedly attempt to undo decades of failed expansion plans, according to Reuters.

    Among the reform plans are allowances that would accelerate capital account convertibility and scrap residency restrictions in small cities and townships. There are also plans to integrate urban and rural social security systems and to move ahead with a long over-due environmental tax.

    Keith Bowman, equity analysts at Hargreaves Lansdown, thinks this is at least a great start for China. “Whilst further assessment and detail is needed, the policy moves on the surface appear to be a sizeable step in the right direction. Any actions which aid the domestic Chinese economy and therefore help re-balance the global economy should be welcomed with open arms.”

    One of the more surprising elements of the reform, include changes to China’s strict family planning policies, according to a previous report from Reuters. Up until now, parents were only allowed to have one child. They could have a second child if both parents were only children. Now, under the new reforms, only one parent has to be an only child in order to have a second child.

    Another unexpected area of reform is the abolition of China’s Labor Camp system. The system was set up in order to provide “education through labor” and also to reduce the number of crimes that were considered punishable by death.

    One of the major goals with these reforms is a shift in China’s economy. The party is hoping to transition the main feeders of their economy away from imports and investments, and toward services and consumption.

    These announcement come just hours after a major change in China’s leadership, as reported by the New York Times. The new leadership is now headed by Xi Jinping, who is the son of nationally respected revolutionary leader and reformer, Xi Zhongxun. Xi Jinping has also assumed the chairmanship of the 12-member Central Military Commission.

    Time will tell how all of these changes will affect China, as well as the rest of the world.

    Image via wikimedia commons

  • Elizabeth Warren Speaks Out Against Wall Street: Too Big Too Fail Is Even Bigger?

    The view that initially got Elizabeth Warren elected to the Senate, her strict criticism of Wall Street, has surfaced again in a critical speech. Throughout her political career, she has continued to challenge the big banks, and has been viewed as a hero of the people from the work that she has done.

    Once again, Senator Warren slammed financial regulators saying that their complacency has allowed those banks that are “too big too fail” to continue to flourish, five years after they sent the economy in a downward spiral.

    Warren talked at the event organized by the Roosevelt Institute and Americans For Financial Reform about how the Too Big Too Fail problem has gotten worse, something that most people probably do not realize. She points out that the four biggest banks today are 30% larger than they were five years ago.

    Today, Elizabeth Warren gave an important speech in support of the 21st Century Glass-Steagall Act, which was put into action by herself, along with John McCain, Maria Cantwell, and Angus King. The law, which was repealed under Bill Clinton, banned deposit-taking banks from engaging in risky financial activities. Warren is a Senator from Massachusetts, and was elected in the 2012 election, continuing her quest to defeat the big banks.

    Here is a clip from a speech that she gave earlier this year.

    Many people are hoping that Warren will run for president in 2016, and who can blame them when hearing her saying things like “What we need is a system that puts an end to the boom and bust cycle. A system that recognizes we don’t grow this country from the financial sector; we grow this country from the middle class.”

    In her speech, she also talked about how even though Dodd-Frank was passed, there is little that has been done to alter the Too Big Too Fail status of many of our financial institutions. Elizabeth Warren further urged regulation agencies to set a timeline, in order to address the problem of bank concentration.

    As CNN Money mentions, her case for a presidency is looking even more likely, and with inequality and the sluggish economy looking to remain a problem in the years to come, Warren’s progressive credentials could urge frustrated Democrats to turn to her as the best option, over presidential hopeful Hilary Clinton.

    The idea of Too Big Too Fail banks proved to not exactly work the way that they were supposed to, and as a result, the economy tanked. Elizabeth Warren, the possible presidential candidate, wants to make a significant change in the way that things are done on Wall Street, and this is something that much of the American public can certainly support her in.

    Image via Facebook

  • Americans’ Economic Confidence Dropped Sharply in October

    Though Americans seem to be slowly gaining the confidence to spend more of their money, those same Americans are increasingly pessimistic about the U.S. economy.

    Gallup today released the results of its daily tracing poll for the month of October, showing that the pollster’s economic confidence index now sits at -35. This is down from -19 at the end of September, making the 16-point drop the largest Gallup has seen since it started tracking economic confidence each day in 2008. The index had reached -7 back in May, but has continued to drop each month since.

    The decline was directly associated by Gallup with the government shutdown that occurred during the first half of the month. The pollster’s daily metrics for economic confidence began to sink as House Republicans threatened shutdown in late September, and the shutdown itself came on the same week Gallup saw its largest weekly drop in confidence since the recession began in 2008. The confidence drop became even steeper the next week as the shutdown continued.

    All major demographics that Gallup polled saw economic confidence drops last month including Democrats, who had a positive economic outlook the previous month. Overall, 68% of the more than 15,000 Americans polled by Gallup stated that the U.S. economy is getting worse.

    Evaluations of the current state of the economy weren’t quite as bad, perhaps explaining why Americans are still comfortable spending more going into the holiday quarter. Still, 44% of those polled stated that the current U.S. economy is “poor,” with only 15% stating that it is now “excellent” or even “good.”

  • Labor Department Reports 148,000 Jobs Added

    The U.S. Labor Department finally released its September employment report Tuesday morning, having been delayed by the government’s 16-day shutdown, which began on October 1. According to the monthly overview, U.S. employers added 148,000 new job positions in September, a dismal comparison to the 185,000 jobs that were added each month last year. The most enterprising positions indicated in the summary were in warehousing, transportation, construction, and wholesale trade.

    Currently, the number of people employed by the federal government looks even more discouraging, economically, as only 2% of Americans worked in federally-run positions before the shutdown – the lowest of this century, as well as the lowest in almost 50 years; in 1966, 4.6% of citizens were on federal payrolls – more than twice what it is now. To further put that into perspective, those figures don’t even include military employment, which was 2.6 million people in 1966 and, today, is 1.4 million.

    Now, upon the bleak figures of the report, economists are concerned about the Federal Reserve’s spending; the Fed was presumed to be planning to cut down on major asset purchases, as the economy showed a steady incline. With September’s report, however, that does not now seem likely.

    In a letter to customers, Barclays analysts’ wrote, “In light of the moderate tone of the September employment report, we have pushed out our expectation for the first Fed tapering in the pace of asset purchases to March 2014 from December 2013.”

    As reported by The New York Times, Pantheon Macroeconomics’ chief economist Ian Shepherdson expressed to clientele that, now, because of the shutdown, economic data based on the monthly employment report by the Labor Department will continue to be tainted until December. That means that the Fed, whose “core criteria to change policy is clear evidence of a sustained improvement in labor market outlook,” probably won’t make any effort to reduce spending until December’s report comes out in January 2014.

    You can read the entire report for yourself by clicking the link above or visiting the homepage for the Bureau of Labor Statistics at bls.gov.

    Image courtesy Dan Smith (Rdsmith4) via Wikimedia Commons.

  • Janet Yellen Nominated to Lead Federal Reserve

    As expected, President Obama announced Wednesday that he would be nominating Fed vice chairwoman Janet Yellen to lead the Federal Reserve. She would replace retiring chairman Ben Bernanke.

    “For nearly 8 years, Ben has led the Fed through some of the most daunting economic challenges of our lifetime…Against the volatility of global markets, he’s been a voice of wisdom, and a steady hand. At the same time, when faced with global economic meltdown he has displayed tremendous courage and creativity. He took bold action that was needed to avert another depressions, helping us stop the freefall, stabilize financial markets, shore up our banks, and get credit flowing again. And all this has made a profound difference in the lives of millions of Americans,” said President Obama of outgoing head Ben Bernanke.

    “A lot of people aren’t necessarily sure what the chairman of the Federal Reserve does, but thanks to this man, more families are able to afford their own home, more small businesses are able to get loans, more folks can pay their mortgages and their car loans. It’s meant more growth, and more jobs.”

    Of Yellen, Obama had this to say:

    “Janet is exceptionally qualified for this role. She’s served in leadership positions at the Fed for more than a decade. As vice chair for the past three years she’s been exemplary and a driving force of policies to help boost our economic recovery…she has a keen understanding of how markets and the economy work.”

    Obama called the nomination one of the most important economic decisions he’ll make as President, as the head of the Fed is one of the most important policy-making positions in the world.

    Before her appointment to the vice chair position, Yellen served as President and Chief Executive Officer of the Federal Reserve Bank of San Francisco, and before that the Chair of the White House Council of Economic Advisers under Bill Clinton.

    “While I think we all agree, Mr. President, that more needs to be done to strengthen the recovery, particularly for those hardest hit by the Great Recession, we have made progress. The economy is stronger and the financial system sounder,” said Yellen.

    The nomination comes at a time when the country is facing economic uncertainty as the government shutdown enters its second week and the countdown keeps ticking for Congress to act on the impending debt ceiling deadline.

    Images via Wikimedia Commons, YouTube

  • Obama Nominates Yellen To Fed Chief Position

    President Obama will nominate the Vice Chair of the Federal Reserve, Janet Yellen, to fill Ben Bernanke’s position as chairman of the nation’s central bank when Bernanke’s term ends on January 31st. The fact that Janet will be the first woman to head the organization especially in the middle of the present economic climate is being widely discussed and, in many cases, enthusiastically promoted.

    The Head of the Senate Banking, Housing and Urban Affairs Committee, Senator Tim Johnson, D-S.D., recently praised Professor Yellen’s skill and knowledge.

    “She has a depth of experience that is second to none, and I have no doubt she will be an excellent Federal Reserve chairman,” Senator Johnson said.

    Others have taken to Twitter in order to vocalize support for the sixty-seven-year-old University of California, Berkeley, professor.

    She has an impressive CV including serving as the president of the Federal Reserve Bank of San Francisco as well as her time teaching at the University of California, Berkeley. The following video gives a brief overview about her political viability for the newly appointed role in which she finds herself.

    In December 2007, Janet Yellen spoke about the important task banks faced to encourage financial growth in spite of reservations and hesitations.

    “If banks only partially replace the collapsed shadow banks or, worse, if they cut back their lending in anticipation of a worsening economy, then the resulting credit crunch could push us into recession. Thus, the risk of recession no longer seems remote, especially since the economy may well already have begun contracting in the current quarter,” Janet Yellen said.

    Her past expertise during the near financial breakdown of 2008 was instrumental in seeing the country through that difficult period. Her anticipated efforts to continue striving to lower unemployment and encourage economic growth will be critical for the nation’s future.

    The following video shows Janet Yellen speaking at the Haas School of Business, University of California, Berkeley, where her focus on “communication” serves as the crux in ensuring that “monetary policy” is sustainable.

    [Image Via Wikimedia Commons/ Courtesy of U.S. Government And Serves As The Official FRBSF Picture For Janet Yellen]

  • Food Stamps Cut: $4 Billion Cut by House

    Food Stamps Cut: $4 Billion Cut by House

    Millions of people could see their food stamps benefits decrease or go away after the House voted for $4 billion per year for the next 10 years in food stamp cuts. House Republicans introduced the new legislation earlier this week, and passed H.R. 3102, the Nutrition Reform and Work Opportunity Act, on Thursday with a 217-210 vote.

    The bill still has to pass the Senate, which is unexpected, and the Obama administration said that food stamp cuts that exceed 5 percent wouldn’t be signed. There are currently almost 50 million people on the program receiving about $57 billion per year, according to figures released by the USDA. This is an increase of approximately 10 million people from October 2009.

    No House Democrats voted for the legislation, and all but 15 Republicans voted in favor of it. According to Republicans, the bill will eventually help increase employment rates. “This bill is designed to give people a hand when they need it most. Most people don’t choose to be on food stamps. Most people want a job,” said House Majority Leader Eric Cantor (R-Va.) “Most people want to go out and be productive so that they can earn a living, so that they can support a family, so that they can have hope for a more prosperous future. They want what we want.”

    Senate Majority Leader Harry Reid doesn’t see eye-to-eye with Cantor on the bill. “In the richest country in the world, 1 in 6 people are in danger of going to bed hungry tonight, and half of those people are children. But despite these sobering numbers–and despite the difficult economic times–House Republicans…are determined to gut the nutrition assistance program,” Reid said. About 3 million people will lose their benefits if the bill is signed into law.

    While many are quick to wag their fingers at House Republicans for introducing the food stamps cuts, some are happy to hear that it would allow states to suspend food stamps if a recipient tested positive for drugs. The bill also prohibit lottery winners from receiving food stamps. “Able-bodied” adults without dependents won’t be able to receive benefits indefinitely and must meet certain job requirements:

    (1) register for work; (2) accept a suitable job if offered one; (3) fulfill any work, job search, or training requirements established by administering SNAP agencies; (4) provide the administering public assistance agency with sufficient information to allow a determination with respect to their job availability; and (5) not voluntarily quit a job without good cause or reduce work effort below 30 hours a week.

    Many Twitter users are split on the bill just like our lawmakers. Some believe that we do need a certain amount of food stamp cuts, while others accuse Republicans of wanting to starve people.

    Are the food stamp cuts needed? Add your opinion below.

    Image via YouTube

  • Unemployment Benefits: What the Newest Numbers Mean

    According to data released today by the U.S. Department of Labor, the number of Americans applying for unemployment benefits fell 9,000 for the week ending June 22, 2013. The seasonally adjusted initial benefits claims was 346,000. Numbers of initial claims for the previous week was 355,000.

    Unemployment initial claims are near a five-year low, which was actually hit last month. The question of why that is happening remains largely unanswered. There is, of course, the explanation that businesses are hiring again. But keep in mind that these are number for initial claims. They do not reflect how many people are on and have been on unemployment for a while. Another way to say this is, “How many people got laid off in that week?” The rate of job loss has slowed. Which is to say, things aren’t getting bad as fast as they once were. But it says nothing about whether things are actually getting better.

    None of these figures says anything about whether people who have been receiving unemployment benefits have actually found work. None of these figures says anything about people who were without work for long periods, got a job, then lost it, now finding themselves unable to apply for unemployment again because they haven’t “worked enough” in the previous year before their new claim.

    None of these figures says anything about people who were self-employed, lost their business income, and can not file for unemployment because they never paid in to the insurance plan on themselves. None of these figures says anything about people who were laid off from organizations who are exempt from paying in to unemployment, such as churches.

    In fact, this bit of data hides a number that actually may be telling, within the same report:

    For the week ending June 8, the latest data released by the Department of Labor, 23,000 more people were drawing unemployment than in the previous week.

    So the rate of new applicants slowed. But the ranks of unemployed are still growing. The neighborhood is flooded. The rain slowed down last week. But it’s still raining.

  • U.S. Online Retail Spending Up 15% From Last Year

    U.S. Online Retail Spending Up 15% From Last Year

    comScore put out some new data on U.S. retail ecommerce spending for the third quarter of 2012. It was up 15% from the same quarter in 2011.

    Online retail spending reached $41.9 billion for the quarter, and the fourth quarter is where we should see the real spending. It’s the twelfth consecutive quarter, by the way, that comScore has shown positive year-over-year growth. It’s the eighth consecutive quarter of double digit growth.

    Comscore online shopping numbers

    “The Q3 growth rate of 15 percent growth remained in line with the prior quarter and provided confirmation of the strength in the e-commerce sector, despite a few negative headwinds in the macroeconomic environment during the quarter,” said comScore chairman Gian Fulgoni. “Such performance offers some optimism as we approach the holiday season, especially given recent improvements in consumer sentiment.”

    “With the housing market beginning to show signs of recovery in addition to increasing – if still underwhelming – job growth, there appears to be strong enough footing to support a very healthy online holiday shopping season,” Fulgoni notes.

    comScore found the top-performing product categories to be Digital Content & Subscriptions, Consumer Electronics, Event Tickets, Apparel & Accessories, and Computer Software. Each of these grew by at least 16% compared to the year ago quarter.

    The firm also found that 37% of U.S. consumers say they have engaged in “showrooming” behavior, where they use a smartphone while in a retail store. Google recently shared some interesting stats about this trend as well.

    “The survey also shows that despite a slow-moving economic recovery there has been marked improvement in consumer sentiment in the past quarter, although many consumers still remain challenged by economic conditions,” says comScore. “48 percent of U.S. consumers now rate the economy as ‘poor’ an 8-percentage point improvement vs. the prior quarter and the most pronounced improvement since early 2009 (following the worst of the financial crisis).”