Free Republic

IT is ChINA’S gravest economic test since the most far-reaching of Deng Xiaoping’s reforms began in the 1990s. Last year the country achieved growth of 5%, but the pillars of its decades-long miracle are wobbling. Its famously industrious workforce is shrinking, history’s wildest property boom has turned to bust and the global system of free trade that China used to get richer is disintegrating. As our reporting explains, President Xi Jinping’s response is to double down on an audacious plan to remake China’s economy. Blending techno-utopianism, central planning and an obsession with security, this sets out China’s ambition to dominate...

The Board of Trustees for Social Security now predicts that the program will run out of money to pay beneficiaries by 2033. The problem is "higher-than-expected inflation rates and lower-than-expected output growth. The mechanism for restricting the annual cost-of-living adjustment (COLA) to the lesser of the increase in consumer prices or wages enacted in 1983 won't be enough to stave off bankruptcy. Some new way of decreasing the benefits paid out must be implemented." Secretary of the Treasury and Managing Trustee of the Funds Janet Yellen pointed out that "when Social Security was first enacted in 1935 average life expectancy...

As the US is engulfed in inflation while The Federal Reserve is engaged in trying to fight inflation (well, sort of), we are seeing markets taking a shellacking, particularly commodities. One indicator of a slowdown is declining commodity prices. Crude oil futures are down around -2.5%. Iron Ore is down -5% and steel rebar is down -3.21%. Inflation numbers are due out Wednesday and are forecast to be 8.1% YoY (based on headline CPI). But combined with a slowing global economy, we get the dreaded “STAGFLATION.” Meanwhile, the S&P 500 index futures are down around 1.726% for Monday open. Asian...

The core Personal Consumption Expenditures (PCE) deflator numbers for November were released this morning and the print was a whopping 4.7% YoY, the highest rate since 1989. Meanwhile, U.S. consumer spending, adjusted for inflation (aka, REAL personal spending), stagnated in November as the fastest price gains in nearly four decades eroded purchasing power. Stagnated to 0. Purchases of goods and services, after adjusting for higher prices, were little changed following a 0.7% gain in October, Commerce Department figures showed Thursday. And as Paul Harvey would say, here is the rest of the story. Core PCE growth YoY of 4.68% implies...

Gas stations across the country are facing fuel shortages, driving prices to a seven-year high as more than 40 million Americans prepare to hit the road for the Fourth of July weekend. The nationwide average price for a gallon of regular unleaded gas hit $3.09 on Monday, the highest price Americans have been asked to shell out ahead of the holiday weekend since 2014, according to data from the American Automobile Association. AAA forecasts that 43.6 million Americans will travel by car this weekend — the most so far this year.

As people in northeastern China grow increasingly dissatisfied with the central government’s neglect of the region’s economic development, authorities are worried that mass protests could soon break out, according to an insider. The insider, who requested anonymity in order to speak freely, formerly worked for a senior official at the Chinese Communist Party’s United Front Work Department (UFWD). The agency is in charge of persuading Chinese people domestic and abroad to agree with the Party’s policies and maintain the Party’s rule. While the insider caught up with his former superior during Lunar New Year, the latter revealed the central government’s...

In the first decade of the 21st century Western economic growth entered the doldrums. The question was why. Former Harvard president Larry Summers noticed that something changed after the 2008 financial meltdown. The economic spring which had always bounced back had lost its elasticity. He diagnosed it as secular stagnation. .... Most observers expected the unusually deep recession to be followed by an unusually rapid recovery .... Had the American economy performed as the Congressional Budget Office fore­cast in August 2009—after the stimulus had been passed and the recovery had started—U.S. GDP today would be about $1.3 trillion higher than...

Americans are stuck. Locked into our jobs, rooted where we live, frozen at our income levels. More than at any previous point in our history, we’ve stopped moving — whether moving up the income ladder or packing up a truck and finding another home. We’ve grown ossified, rigid. The flip side is that we’re stable. If we weren’t so content, we’d be more willing to gamble, to shake things up, to start a new firm or join one. Maybe we’re fine where we are. But maybe this period of stasis cannot last. Maybe it even portends a period of massive...

The American middle class is disappearing. We hear it from everybody. Senator Bernie Sanders (D., Vt.) focused throughout his campaign on what he termed the “disappearing middle class” — disappearing, Sanders said, thanks to income inequality. Sanders explained, “If you have seen a massive transfer of wealth from the middle class to the top one-tenth of 1 percent, you know what, we’ve got to transfer that back if we’re going to have a vibrant middle class.” From the other side, Donald Trump has echoed the same message: “The American worker is being crushed. . . . The great American middle...

Take a look back at some of the most popular TV programs of the mid-1960s -- "The Dick Van Dyke Show," "Bewitched," even "The Beverly Hillbillies" -- and what do you see? Like today, middle-class Americans typically had washing machines and air-conditioning, telephones and cars. The Internet and video games were not yet invented. But life, over all, did not look that different. There were TVs and radios in most homes. Millions of people worked in downtown offices and lived in suburbs, connected by multilane highways. Americans' average life expectancy at birth was 70, only eight years less than it...

During HSBC's Global Investment Seminar in New York this week, Harvard professor and economist Larry Summers brought up secular stagnation. In 2013, Summers revived the phrase, which, over time, has come to mean all sorts of things to different people. But at its core, secular stagnation refers to a global economy growing at a slow rate because there is too much saving and not enough investment. And right now, a lot of savings (and other monies) are heading out of emerging markets and into the developed world. "I would suggest that the defining financial development of the last year is...

The economic experts had anticipated the slowdown of the US economy to continue in the first quarter of 2015, after the 5.0% annualized real GDP growth in the 3rd quarter of 2014 slipped to 2.2% growth in the 4th quarter, with the consensus being +1.0% growth this past quarter. The bad news – it slowed down to 0.2%: Real gross domestic product — the value of the production of goods and services in the United States, adjusted for price changes — increased at an annual rate of 0.2 percent in the first quarter of 2015, according to the “advance”...

Jason Lange and Howard Schneider, Reuters Feburary 2, 2015WASHINGTON (Reuters) - Beneath President Barack Obama's plan to fight income inequality lies a gloomy view of an economy that is growing slower and creating fewer rewards for its workers than it did in much of the last century. In a budget proposal unveiled on Monday, the White House cut forecasts for an array of economic variables, depicting less growth, weaker inflation and lower interest rates than officials expected only a year ago. This comes despite an unemployment rate that the Obama administration expects to hit the 5.2 percent level considered to...

I recently wrote about sluggish and stagnant wages, which are said to weaken the economy's recovery. I argued that workers' fear of losing their jobs is an important - perhaps decisive - explanation. In a nutshell: Frightened of being fired and being unable to find a new job, workers are less inclined to quit and search for something better. Therefore, employers don't have to raise wages, or can raise them less, to retain their best workers. Wage gains have been running at about 2 percent annually, a bit above the rate of inflation. There are many competing theories. The most...

Eurozone in danger of repeating Japanese stagnation, IMF chief warns By Benjamin Fox BRUSSELS - International Monetary Fund boss Christine Lagarde has warned that the eurozone risks following Japan and falling into a prolonged cycle of recession and stagnation. Speaking on Thursday (9 October) ahead of the IMF's annual meeting in Washington DC, Lagarde said: “We have also alerted to the risk of recession in the eurozone", putting the likelihood of a drop in output at "between 35-40%, which is not insignificant". “We are not saying that the eurozone is heading towards recession, but we are saying that there is...

In 1988, the typical American adult was 40 years old, white and married, with a high school diploma. If he was a man, he probably worked full time. If she was a woman, she probably didn’t.Twenty-five years later, Americans are older, more diverse and more educated. We are less likely to be married and more likely to live alone. Work is divided more evenly between the sexes. One thing that hasn’t changed? The income of the median U.S. household is still just under $52,000.The government’s release last week of income and poverty data for 2013 brought renewed attention to the...

According to a new report by the U.S. Conference of Mayors, Americans are earning 23% less today than what they made before the 2008 recession for the same jobs. This terrible statistic doesn’t even take into account Americans still struggling with unemployment, and please remember that the real unemployment rate is over 20%. That figure reflects all the Americans who’ve given up even looking for jobs that just aren’t there in Obama’s economy. This issue of middle class wage stagnation is directly related to the current debate about amnesty. According to a recent Reuters/Ipsos poll, 70% of Americans believe illegal...

Last week, as Ukrainian emigre- turned-tech tycoon Jan Koum prepared to cash a multibillion-dollar check from Facebook — acquirer of his startup “WhatsApp” — Ukrainian President Viktor Yanukovich was checking out of his Gatsby-esque estate where he’d cached his stolen plunder. That the two Ukrainians derived their riches under diametrically opposed systems — free enterprise versus banana republic — illustrates why all income inequalities are not created equal. Most don’t resent the rich — only the undeservedly rich — as a recent Venezuelan protest sign conveyed: “These Castro-Chavistas speak like Marx, govern like Stalin, and live like Rockefeller, while the...

The Chicago Fed’s President Charles Evans sent this Tweet today: #CharlesLEvans our purchases will continue to be open ended. We may need to purchase 1.5 trillion in assets until January 2015. Well, that’s not good. Although he is only one person, this seems to be the mindset of soon-to-be-Fed Chair Janet “Bubbles” Yellen. This is a statement about how markets are addicted to the sugar high of easy money and declining expectations of inflation (at least how the Federal government measures it). In other words, lethargic growth is in our economic future. Here is a chart on nominal GDP growth...

AMERICA’S CHANGING demographics, long a delicate topic, have become an increasingly prominent part of national political debate... --snip-- "The Latino Education Crisis: The Consequences of Failed Social Policies," that encouraging reports of higher Hispanic rates of graduation from high school often did not account for Hispanics who never entered high school in the first place. They warned that “as a group, Latino students today perform academically at levels that will consign them to lives as members of a permanent underclass in American society. Moreover, their situation is projected to worsen over time.” Academic stagnation in so large and rapidly expanding...