US Expected To Grow At 2.5 Percent In 2013
Chicago Federal Reserve Bank President Charles Evans said the US can expect to grow at a 2.5 percent rate in 2013. In a January 14 speech, Evans also concluded that “over the near term, many U.S. households will continue to be challenged by a debt overhang and large losses of wealth that were incurred during the financial crisis. Together, these factors point to lower rates of personal consumption in the United States.”
Spending Cuts Will Not Mean Fewer Jobs Over Long-Term
Bloomberg News columnist Edward Glaeser examined several studies that conclude increased stimulus spending may boost jobs in the short-term, but the impact is disproportionate.
Researchers found that lower-density states and those with more senior members in Congress received more funding. They also found that “an extra $100,000 in a month creates slightly more than 3.2 jobs, but ‘this indicates a cost of about $300,000 per job over the course of a year for this subset of spending.’ They also looked at whether job growth persists after the stimulus and found little evidence for that.”
How Geithner Rescued The Banks
As Timothy Geithner prepares to depart Treasury, Matthew O’Brien in the Atlantic looks at the actions he (and Federal Reserve Chairman Ben Bernanke) took during the financial crisis.
“Four years later, Geithner can say mission accomplished. His tenure has hardly been without fault, from not enough action on housing to fear of invisible bond vigilantes, but he got the biggest thing right — ending the banking panic,” says O’Brien, adding that Geithner and Bernanke devised a plan to restore the banks’ credibility in the guise of the stress tests “and that was enough to get the financial system off life support.”
Is The Age Of Technological Innovation Slowing?
James Pethokoukis of the American Enterprise Institute says declining prices for information technology equipment could be a danger sign for the American economy.
Examining a new report from JP Morgan, Pethokoukis says the downside to lower prices is that the decline is usually accompanied by a slowdown in tech investment, which negatively impacts the overall economy. However, he notes, there could be an upside in that “slower gains in technology and productivity, at least for a bit, might make it easier to absorb workers — labor in place of capital — back into the economy.”