Last Friday, President Barack Obama proposed massive tax credits estimated at $33 billion to encourage small businesses to hire workers and raise current employees’ wages. According to the plan, employers would receive a payroll tax credit of up to $5,000 for every net new employee they hire in 2010. The proposal also allows businesses to claim tax credits for pay raises, such that they will receive a bonus 6.2 percent tax credits on aggregate wage increases in excess of inflation. Via the new plan, the Obama administration is simultaneously seeking to stimulate employment by reducing payroll taxes and to regain some political capital after recent Democrats’ mishaps. The new initiative came hours after the authorities announced that the real gross domestic product in the United States increased at an annual rate of 5.7 percent in the fourth quarter of 2009. Continue reading ‘Growth Without Jobs’
Tag Archive for 'Economic Indicator'
Starting with the Thanksgiving Day, consumers have focused mostly on promotional deals and have made fewer impulse purchases as they are still concerned about the state of the economy. Retailers are in fact driving traffic to their stores through much targeted promotions that ultimately will lead to reduced profit margins. This year, it appears that the Black Friday and Cyber Monday surveys could not provide a clear picture about the retail sales numbers for the entire holiday season. In part, that could be attributed to a warm November weather, which kept consumers from buying winter clothes. US retailers have decided to extend discounts on computers, toys and clothes beyond Christmas to attract consumers who held out for lower prices and have gift cards to redeem. Continue reading ‘Shop Till You Drop’
First Friday of every month at 8:30 a.m., the whole financial world is watching the release of the most important indicator: the US employment report. The official unemployment number is the U-3 rate, which is defined as “total unemployed, as a percent of the civilian labor force“. This number was 9.8% in September of 2009. There are three different types of people who are not included in the U-3 rate:
a) People that hold a part-time job, look for full-time work, but simply cannot find any (a.k.a. the underemployed)
b) People that have not had a job for a long period of time, look for full-time work, but simply cannot find any (a.k.a. the unemployed)
c) People that have not had a job for a long period of time, gave up looking for full time work, but would work if they could find a full-time job (a.k.a. labor force reserve) Continue reading ‘The Real Unemployment Picture’
One of the weirdest questions we hear these days is: “where can I buy the alarm clock that is going to wake me up when the recession is over?” Though there is no one-formula-fits-all type economic indicator that can accurately forecast the movement of the economy as the business cycle enters different phases, I would bring up for discussion an interesting composite index released in US by the Conference Board: the Leading Economic Indicator (LEI). The index increased 0.7% in June versus a revised 1.3% gain in May and a 1.2% jump in April. The June increase puts the year-to-year decline at 1.18%. The trough for the year-to-year change appears to have occurred in December 2008 (-3.98%). Continue reading ‘Magic Crystal Ball’
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