Econintersect: Here are some of the headlines we found to help you start your day. For more headlines see our afternoon feature for GEI members, What We Read Today, which has many more headlines and a number of article discussions to keep you abreast of what we have found interesting.
U.S. data points to firming economy, inflation (Reuters) Underlying U.S. inflation increased more than expected in February as rents and medical costs maintained their upward trend, which could keep the Federal Reserve on course to gradually raise interest rates this year. Other data on Wednesday showed the housing market continuing to strengthen last month and manufacturing stabilizing. The Fed kept interest rates unchanged on Wednesday, but acknowledged that inflation "picked up in recent months". For a different take on the data see Econintersect Economic Releases, February 2016 CPI: Inflation Moderatesby Doug Short and Steven Hansen.
GOP budget clears panel, but trouble awaits (The Hill) The House budget panel easily cleared its 2017 spending blueprint on Wednesday evening, despite a conservative rebellion that still threatens the bill's fate. All but two Republicans on the House Budget Committee voted to send the bill to the floor, where it is likely doomed because of resistance from fiscal hawks in the House Freedom Caucus. The final vote was 20 to 16, with all Democrats opposed. Without support from the 40-member House Freedom Caucus, the trillion-dollar budget proposal will come up short on the House floor. The House GOP can only afford to lose 28 votes to ensure a bill's passage without Democratic support. Econintersect: A dysfunctional Republican party is working within a dysfunctional U.S. House which is within a dysfunctional U.S. Congress which is ... within a nested house of horrors.
What's in Store for the Real Economy (Wolf Street) The Census Bureau announced today that total business sales in January did what they'd been doing relentlessly for the past one-and-a-half years: they fell! This time by 1.1% from a year ago, to $1.296 trillion, and by 5% from their peak in July 2014. They're now back where they'd been in January 2013. Sales are adjusted for seasonal and trading-day differences, but not for price changes. And since January 2013, the consumer price index rose 2.8%! Wolf Richter says this is why the US economy has looked so crummy.
New York's Plaza Hotel Up for Sale in Foreclosure Auction (Bloomberg) New York's Plaza Hotel is poised to go on the auction block next month, potentially ending two years of uncertainty over ownership of the storied property off Central Park. Billionaire brothers David and Simon Reuben hold the mortgage on the five-star hotel and are reported to have scheduled a foreclosure auction for April 26. The Reubens bought the loan from Bank of China Ltd. after a default by the property's current majority owner, Sahara India Pariwar, last year. Sahara is controlled by Subrata Roy, who was imprisoned in India in early 2014 for defrauding investors.
Some States Are Losing Jobs. Most Aren't. (Reuters) North Dakota, a hotbed of the now-cooled fracking boom, lost 21,100 jobs from January 2015 through January 2016. That's a 4.5% decline, by far the worst performance of any state over the past year, according to payroll employment numbers released this week. Employment in the state is up by a lot since the nation's jobs recovery began in early 2010, though - see first graph below. Some other states, mostly energy producers, have also lost jobs. But many other states are doing fine - see second graph below.
Budget 2016: Spotlight on Osborne over deficit target (BBC News) Mr Osborne told MPs he was still on course to eliminate the deficit by 2020, by making extra spending cuts. But BBC political correspondent Alex Forsyth said independent analysts were warning this could be "very difficult" and saying the chancellor was "shuffling money around" to meet his self-imposed rules. Econintersect: Very difficult is an understatement. Keeping an economy growing by government giving it less and less money can only happen if there is an external positive balance of payments - the current account balance - (will not happen); or there is an increase in private sector debt (already one of the highest ratios to GDP in the world). As is so common elsewhere throughout the world, British politicians do not understand accounting. See also next article.
"The country is now expected to be less well off for years, to grow more slowly, even if ahead of our rivals."
Exports fall on weak demand (The Hindu) Exports shrunk for the fifteenth consecutive month as shipments in February fell 5.7% year-on-year to $20.7 billion owing to weak overseas demand, including in large markets such as the European Union. Trade deficit narrowed to $6.5 billion, the lowest since September 2013. Decline in commodity prices and fall in imports of gold and petroleum products contributed to the narrowing of the trade deficit.
Kuroda Says Minus 0.5% Rate Is Theoretically Possible for Japan (Bloomberg) The Bank of Japan has quite a lot of room to cut its key interest rate further and theoretically it could go to minus 0.5%t, Governor Haruhiko Kuroda said in parliament Wednesday. While the BOJ kept policy unchanged on Tuesday, Kuroda underscored in a press conference a readiness to move on any of three fronts: a reduction in the present minus 0.1%, an acceleration in boosting the monetary base or an expansion in purchases of riskier assets.
Stiglitz to Abe: Don't Raise Japan's Sales Tax, Stimulate Growth (Bloomberg) Nobel-prize winner Joseph Stiglitz urged Japanese Prime Minister Shinzo Abe not to raise the nation's sales tax next year as planned, instead encouraging the premier to consider other forms of taxation that could stimulate the world's third-largest economy. Stiglitz recommended imposing taxes that would stimulate investment, such as a carbon tax, or lowering taxes for companies that invest and raising them for companies that don't.
'China's economy will not suffer a hard landing' (Business Insider) China's Premier Li Keqiang defended the country's economic policies on Wednesday, repeating well-worn lines that there was more opportunity than risk and vowing there would be no hard landing for the world's second-largest economy if the government presses ahead with reforms. China will cut red tape for businesses, work to reduce corporate debt, improve financial regulation and ensure no mass layoffs will result as it restructures heavy industries such as coal and steel, Li said at a news conference on Wednesday at the end of the annual meeting of parliament.
More than 12 punished for mistaken Afghan hospital attack (Associated Press) More than a dozen U.S. military personnel have been disciplined - but face no criminal charges - for mistakes that led to the bombing of a Doctors Without Borders hospital that killed 42 people in Afghanistan last year, U.S. defense officials say. The punishments, which have not been publicly announced, are largely administrative. But in some cases the actions, such as letters of reprimand, are tough enough to effectively end chances for further promotion. The military has previously said some personnel were suspended from their duties but has given no further details. The disciplined include both officers and enlisted personnel, but officials said none are generals.
Canada's New Hope (Bloomberg) Michael Bloomberg likes Justin Trudeau. Last year, Canadian voters elected the energetic and pragmatic young prime minister, who campaigned on a platform of inclusion and tolerance, focusing on the need to bring people together to solve problems, including pulling the country out of its economic doldrums. His youthful energy and optimism have inspired comparisons to John F. Kennedy, and like Kennedy, he is promising to cut middle-class taxes and tackle the biggest scientific challenge of his time, which today is climate change. Trudeau's commitment to fighting climate change coincides with his recognition that the Canadian economy has been too dependent on oil for too long. The good news for Trudeau is that the market shares his view, as local governments are proving.
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