Some Good News for the 99 Percent?

James Pethokoukis, in The Week, argues that the economy isn’t as bad as it seems.

“What if things are actually a lot better than we think — or at least better than GDP figures suggest? Think about it: Month after month, the economy is generating about a quarter million net new jobs. The unemployment rate is close to 5 percent. Corporate profit margins are at record highs, with stock values not far behind. And Silicon Valley is on fire.”

“So why then do the all-important GDP numbers — the broadest measures of economic activity — show a perpetual funk? It’s a puzzle for which Goldman Sachs has a simple answer: We are measuring productivity wrong, and therefore we are measuring GDP wrong.”

“U.S. inflation is lower than we think due to sharply falling, ‘quality adjusted’ IT hardware and software prices — and thus real economic growth and productivity are higher. GDP growth might actually be close to 3 percent right now, which would be more in sync with what’s happening in labor markets and the tech sector. Oh, and it also means real incomes are growing faster than we think, which is why the economists are ‘skeptical of confident pronouncements’ that American living standards aren’t improving as fast as they used to. By the way, new analysis by the Peterson Institute suggests worker incomes have pretty much been keeping up with productivity gains. So perhaps more good news for the 99 percent.”

‘Trumpcare’ Looks a Lot Like Obamacare

Sahil Kapur in Bloomberg: “Donald Trump says Obamacare is ‘very bad’ and needs to go. ‘Repeal and replace with something terrific,’ he told CNN on Wednesday.”

“What would the terrific replacement be? The Republican presidential front-runner was vague, but health experts say that a number of the broad replacement ideas he outlined sound similar” to Obamacare.

“Trump proposed: competing private plans (which Obamacare exchanges provide for); protecting hospitals from catastrophic events (which Obamacare deals with by requiring people to get insurance so they don’t pass on their emergency care costs), and government plans for low-income people who get sick and lack options (which Obamacare does by expanding Medicaid).”

“‘He should take a closer look at the ACA, he might like it,’ said Timothy Jost, a leading expert on Obamacare who supports the law. ‘What he is proposing does look a lot like the ACA.'”

“As Obama does in promoting his plan, Trump emphasized the value of universal coverage. That includes people ‘at the lower end’ of the income spectrum, he said, who won’t get ‘the finest plan’ but deserve to be covered. He was unapologetic about his goal to help provide health care for low-income people, even if it costs him the Republican nomination.”

Obamacare Led to Increased Competition

USA Today: “Competition among insurers offering plans on the federal health care exchange rose between last year and this year, tamping down growth in premiums, says a federal report released Thursday.”

“The report says 86% of people eligible for qualified health plans on HealthCare.gov had access to at least three insurers this year, up from 70% in 2014. Nearly 60% of U.S. counties saw a net gain of at least one insurer, 8% saw a loss, and 33% saw their numbers unchanged, the report says.”

“Competition affected how much people paid for their plans, the report says, with premium growth between 2014 and 2015 for benchmark (second-lowest cost) silver plans 8.4 percentage points lower in counties that gained insurers than in other counties. In fact, a net gain of one insurer was associated with a 2.8 percentage point drop in the rate of benchmark premium growth.”

“The average growth rate in the benchmark premium was 2%, the report says.”

The Rent is Too Damn High

Wall Street Journal: “The cost of renting a home is rising faster than wages across wide swaths of the country, a problem that has become especially acute in the past year, putting a big squeeze on many household budgets.”

“The situation is particularly noticeable in long-pricey areas across the West and in big cities like New York, where the average household pays more than 40% of its gross income for rent, according to online real-estate database Zillow. But rising prices also have spilled over into cities like Denver, Atlanta and Nashville.”

“The homeownership rate hit a 48-year low, according to estimates published Tuesday by the Commerce Department, declining to 63.4% in the second quarter from 64.7% in the year-earlier period.”

California’s Obamacare Success: A Model for the Nation?

Kaiser Health News: “A statewide survey has found that newly insured Californians no longer rank health care costs as their top financial concern. It has dropped below other essentials such as housing, utilities and gasoline.”

“About two-thirds of Californians who were uninsured in 2013 now have health insurance, according to the survey by the Kaiser Family Foundation, which was released Thursday.”

“The Kaiser Family Foundation survey found the recently insured are largely satisfied with their coverage, including 83 percent of Medi-Cal enrollees and 63 percent of Californians who purchased private plans on the Covered California exchange. One positive, according to the survey respondents, was that they are having an easier time getting medical attention.”

KFF CA tracking 600

“The survey also found a striking reduction in the percentage of recently insured Californians who struggled to pay medical bills: 23 percent said they faced difficulties, down from 45 percent in 2013.”

Trump’s Upward Momentum Slows

Gallup: “The controversy Donald Trump created when he questioned the heroism of Vietnam veteran John McCain on July 18 may have reversed the upward momentum the Republican presidential candidate enjoyed in mid-July, although his ratings have mostly reverted to where they were earlier in the month. Last week, 51% of Republicans viewed him favorably, down from 59% the week prior but similar to 53% in the second week of July.”

Donald Trump Favorable Ratings -- Recent Seven-Day Averages

“Meanwhile, Trump’s image among all national adults continues to tilt negative, with 31% viewing him favorably and 57% unfavorably, essentially unchanged this month.”

“The most recent three-day average through July 28 shows Trump with a 49% favorable score, identical to where he started in July. The fact that Trump not only survived the firestorm that erupted in June over his immigration comments, but initially thrived on it, suggests that he has staying power in the GOP race. But it will soon become clear if his image is now suffering either from a delayed reaction to the McCain controversy, or from more recent issues. Either way, these figures will serve as valuable reference points for evaluating the impact of the first Republican candidate debate coming up next week.”

Who Appeals to the Very Conservative?

Frank Newport at Gallup: “A relatively small group of Republicans, 15%, say that they are very conservative. It is this hard-core group of very right-leaning Republicans that I will focus on in this analysis.”

“One way to look at the data is the straight rank order of the candidates based on the percent of very conservative Republicans who have a favorable opinion of each. The average favorable rating of the 16 candidates among this group is 54%, with ratings ranging from 74% for Florida Sen. Marco Rubio at the top, to 17% for former New York Gov. George Pataki at the bottom.”

Favorable Opinions of GOP Candidates Among Very Conservative Republicans

“Seven candidates have favorable ratings of about two-thirds or more among conservative Republicans, including Rubio, Cruz, Rick Perry, Mike Huckabee, Donald Trump, Scott Walker and Ben Carson. At the other end of the spectrum, the losers among conservative Republicans are Pataki, Lindsey Graham, John Kasich, Chris Christie and Carly Fiorina, each with a favorable rating of less than 50%.”

Who Are Trump’s Supporters? Uneducated Whites.

Washington Post: “Trump’s support is strongest with Republicans in the Midwest, conservatives across the country who do not have a college degree and (perhaps not surprisingly) those who report the most negative views of immigration and Mexican immigrants in particular, according to a Washington Post-ABC News poll released last week.”

Source: July Washington Post- ABC News poll

“Economic worries as well as anxiety about a shifting cultural landscape have long been hard to separate from this. American immigration policy has even been directly shaped by these forces. And people who face the most direct competition with immigrants for jobs or see large numbers of immigrant workers entering or working in their fields have repeatedly fueled or responded to political movements in the United States that center around concern, fear and or loathing of immigrants.”

“Immigrant workers are clustered in manual labor jobs, service industry work and some factory and retail positions. These are, of course, jobs largely held by American-born people of color and whites with limited education … In regions such as the Midwest and South, where globalization and American trade deals have arguably ravaged industries that once provided family-sustaining wages for some of these same sets of workers, the competition for even these often low-wage jobs is intense.”

Don’t Panic About Health Spending Projections

Drew Altman: “Rather like a broken record, I have been warning for years that historically low rates of increase in health-care spending would not last. Now it’s time for a different warning: The higher rates of growth now expected are moderate and should be seen in context. Media outlets–especially headline writers–should take care not to dramatize them.”

“The chart above shows why. Whatever the wishful thinking, the slowed rates of 2008 to 2013 did not represent a watershed period when we had some secret formula for controlling growth in health spending; they were an aberration … But the projected 2014-24 growth rate is moderate by historical standards, and a bounce back to the higher growth rates of the past is unlikely given the many changes in the marketplace and in public programs aimed at restraining costs and producing greater value per health-care dollar. The increases in premiums that employers and most Americans pay for group coverage are likely to remain moderate for the immediate future.”

U.S. Economy Expanded in Second Quarter

Washington Post: “The U.S. on Thursday will release growth figures for the months between April and June, providing a read on the direction of the economy following a contracting in the first quarter.”

“Economists expect that the nation’s gross domestic product grew at an annual rate of 2.5 percent in the second quarter.”

“The Federal Reserve had signaled on Wednesday that it could soon raise interest rates for the first time in nearly seven years, and Thursday’s data will likely influence the decision.”

 

The Widening Wealth Gap Between Young and Old

Washington Post:  A new paper by economists at the St. Louis Fed’s Center for Household Financial Stability shows “evidence of a growing wealth gap that few people are talking about — the gap between the young and the old.”

“Everyone’s income and wealth tend to follow a kind of natural pattern during their life … You can see these trends in this incredible graph below, from their paper. People born in different years (1901, 1904, 1907 and so on) were surveyed at various times between 1989 and 2013 about their median family income. The chart below shows their age on the horizontal axis, and the median family income they reported making at the time on the vertical axis.”

“The period of time in which someone is born can also have a dramatic effect on their wealth compared with other generations. The winners of this historical jackpot appear to be those who were born between 1930 and 1945 and came of age after World War II, who are sometimes called The Silent Generation.”

“In just 25 years, the wealth gap between young and old people has yawned wider. In 1989, old families had 7.6 times as much median wealth as young families. By 2013, it had grown to 14.7 times.”

Employment Growth is Up, But Productivity Down. Why?

Ryan Cooper in The Week: “After a huge spike following the Great Recession, productivity growth has fallen to historically low levels. For the first quarter of 2015, the Bureau of Labor Statistics reported that productivity actually fell at a 3.1 percent annual rate.”

“Employment growth has been relatively strong, but output weak — and thus output per hour worked is down.”

Cooper attributes the problem to “weak aggregate demand. In 2015, we are seven years out from the worst economic crisis in 80 years. And though things have improved greatly since 2010, the problem is still not even close to being fixed.”

“Whatever one’s pet theory about how to increase productivity, it almost has to be the case that a tight labor market plays a role. Full employment — in which good employees are scarce and must be paid well — provides a powerful impetus towards increased productivity.”

“Weak aggregate demand … is both one of the most plausible explanations for the drop in productivity and a complete no-brainer to fix. You just dump money into the economy (literally) until inflation starts to kick up, and then back off. It’s really that simple.”

Trump and Delusional Punditry

Paul Krugman explains how Trump’s popularity defies conventional wisdom.

“I am, of course, talking about pundits who prize themselves for their centrism.”

“Pundit centrism in modern America is a strange thing. It’s not about policy … What defines the cult is, instead, the insistence that the parties are symmetric, that they are equally extreme, and that the responsible, virtuous position is always somewhere in between.”

“The trouble is that this isn’t remotely true. Democrats constitute a normal political party, with some spread between its left and right wings, but in general espousing moderate positions. The GOP, on the other hand, is a deeply radical faction; even its supposed moderates are moderate only in tone, not in policy positions, and its base is motivated by anger against Others.”

“On one side, they can’t admit the moderation of the Democrats … On the other side, they have had to invent an imaginary GOP that bears little resemblance to the real thing. This means being continually surprised by the radicalism of the base. It also means a determination to see various Republicans as Serious, Honest Conservatives — SHCs? — whom the centrists know, just know, have to exist.”

Clinton Refuses to Take a Position on Keystone XL

National Journal: “Hillary Clinton wants to wait until she wins the White House before taking a stand on the controversial Keystone XL pipeline.”

“At a town hall in New Hampshire on Tuesday, Clinton responded to a question from the audience asking if she would sign a bill approving the pipeline by saying that she would not ‘second guess’ President Obama’s decision. Should the issue still be alive in January 2017, however, then Clinton will say what her position is.”

“That answer is sure to rile environmentalists, who have made opposition to the controversial pipeline that would ship oil from Canada to the Gulf Coast a political litmus test.”

Chris Cillizza: “Look. When you are running for president — whether or not you served in the current administration — you are going to be asked to take positions on issues that the current president is dealing with. As long as we hold elections that begin two years (or more) before the current president is set to leave office, that’s going to be a thing candidates need to contend with. If Clinton’s position is that she can’t take a public stance on any issue that has some sort of pending business before this White House, then she’s not going to be able to take a position on, well, anything.”