● White-Collar Government: The Hidden Role of Class in Economic Policy Making
By Nicholas Carnes
Essay by author via NewsObserver.com
On both sides of the aisle, the vast majority of our lawmakers come from the most privileged slice of American society. If Barack Obama, John Boehner, Nancy Pelosi, Harry Reid and Mitch McConnell sat down to talk about how to solve the budget impasse, no one at the table would have a net worth under $1.7 million.
And they aren’t alone. Working-class jobs – manual labor and service-industry positions – make up a majority of our labor force, but people from those kinds of jobs make up less than 2 percent of Congress. Meanwhile, millionaires – who make up less than 5 percent of the country – control all three branches of the federal government: They have a majority in the House, a filibuster-proof supermajority in the Senate, a 5-4 majority on the Supreme Court and a man in the White House.
The Status Quo Below The Headlines
Today’s updates on nonfarm payrolls and personal income & spending beat expectations, but when you look beyond the monthly comparisons it’s not obvious that the numbers have broken free of their recent bias for slow-to-modest growth. But let’s start with the crowd’s standard obsession: headline data, which is to say the month-over-month comparisons. Private-sector payrolls increased by substantially more than expectations, rising 212,000 in October, or nearly double the consensus forecast. Meantime, personal income in September jumped 0.5%, a sizable margin over the 0.3% prediction by economists overall. Personal consumption expenditures, however, fell in line with the consensus view and advanced by a tepid 0.2%. On the surface, two healthy upside surprises and one decent gain look like a big win and perhaps a game-changing day if you were expecting darker data. But as we’ll see, putting today’s numbers in perspective suggests that nothing much has changed.
Personal Consumption Expenditures: September 2013 Preview
Personal consumption spending for September is projected to rise 0.3% vs. the previous month in tomorrow’s delayed update from the government, based on The Capital Spectator’s average econometric forecast. Today’s average projection matches the previously reported 0.3% increase for August. Meanwhile, the Capital Spectator’s average 0.3% forecast for September is at the upper range of several consensus predictions based on surveys of economists.
US Nonfarm Private Payrolls: October 2013 Preview
Private nonfarm payrolls in the US are projected to increase by 133,000 (seasonally adjusted) in tomorrow’s October update from the Labor Department, according to The Capital Spectator’s average econometric point forecast. The projected gain is slightly higher than the reported increase of 126,000 for September. Meanwhile, The Capital Spectator’s average October projection is slightly higher than a pair of consensus forecasts, based on surveys of economists.
Q3 GDP Delivers An Upside Surprise
The US economy picked up speed in the third quarter, or so today’s initial estimate of Q3 GDP shows. The economy expanded by 2.8% in the three months through September vs. the previous quarter, based on a seasonally adjusted annualized real rate. That’s quite a bit better than the consensus forecast of 2.0% and The Capital Spectator’s 2.1% average econometric nowcast. The faster pace of growth in Q3 was driven largely by “a deceleration in imports and accelerations in private inventory investment and in state and local government spending,” according to the Bureau of Economic Analysis. But it’s unclear if this is a sign that the economic growth will continue to improve. For one thing, consumer spending remains tepid, according to today’s report. Still, it’s hard to argue that the economy is slowing via the data du jour. In a separately released report today, new filings for jobless benefits dropped again last week. Overall, today’s news reinforces the message that the economy continues to grow at a moderate pace with minimal signs of distress on the immediate horizon.
Macro-Markets Risk Index: 12.2% | 11.07.2013
The US economic trend has rebounded in early November after slumping during the past two months, according to a markets-based profile of macro conditions. The Macro-Markets Risk Index (MMRI) closed at 12.2% on Wednesday, Nov. 6—a level that suggests that business cycle risk remains low. One interpretation of the benchmark’s revival is that it reflects optimism that the end of last month’s government shutdown removes a weight on the economy. The current 12.2% value is nearly twice as high as the lowest reading for the year to date—7.5% posted in mid-September—and comfortably above the 0% danger zone. If MMRI falls under 0%, that would be a sign that recession risk is elevated. By comparison, readings above 0% imply a bias for economic growth.
The Biggest Little Secret In Money Management
It happens all the time. A new strategy emerges from the obscure recesses of the research caverns and morphs into an ETF, mutual fund, or a separate account program. Or perhaps it’s outlined on an investor’s blog for all the world to see. Sometimes there are glowing reviews fueled by compelling back-tests. For the most successful strategies that spawn products, there are big inflows of assets. There’s usually plenty of hype too. But when you peel back the details and drill down into the core of the strategy du jour, you’ll typically find a familiar combination of variables: rebalancing with one or more factor tilts.
Cutting Through Market Noise With Boxplots
Separating the noise from the signal is the bane of modern investment analytics. An excess of opinion and data confound and complicate our capacity to focus on the key decisions for designing and managing investment portfolios. One of my favorite tools for cutting through the clutter is a graphical tool known as boxplots. If I could only choose one charting methodology for analyzing performance data, I’d go with boxplots. Here’s why.
Q3:2013 US GDP Nowcast: +2.1% | 11.04.2013
US GDP is expected to rise 2.1% in this year’s third quarter (real seasonally adjusted annual rate), according to The Capital Spectator’s average econometric nowcast. Today’s revision is slightly higher than the previous 2.0% average nowcast for Q3, which was published on September 25. The government’s initial estimate of this year’s Q3 GDP is scheduled for release this Thursday, Nov. 7.
Book Bits | 11.2.13
● Keynes’s Way to Wealth: Timeless Investment Lessons from The Great Economist
By John F. Wasik
Summary via publisher, McGraw-Hill
Few people know, however, that he was also a daring, steel-nerved investor who built a multi-million-dollar fortune in the stock market while providing financial counsel to the likes of Winston Churchill and FDR. Now, you can learn from–and imitate–Keynes’s success by examining the story of his life and investment strategies, masterfully told by awardwinning author John F. Wasik. As you follow Keynes from his early years with the Bloomsbury Group, through two world wars and the Great Depression Keynes’s theories and practices come to life by way of the historic and personal events that shaped them. Like today’s investors, Keynes faced markets roiled by panic, inflation, deflation, widespread unemployment, and war–and he developed a core set of principles to prosper in every climate.
