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Results 101–150
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Fiscal Policy: The Same Old Drag
by Milton Ezrati of Lord Abbett,
Among the many fears shared by investors, concerns over fiscal drag have recently risen. Though no one yet can know the specifics of Washington's coming compromises, these will no doubt impose the anticipated tax hikes or spending cuts, and these will indeed hold back the pace of economic growth. Still, it would be a mistake to anticipate too much of a shock. The country, after all, has suffered fiscal drag for some years now. Even with failure in Washington, a moderation in cutbacks at the state and local level should allow government overall to offer the economy a measure of relief.
Taxes: Living Off the VAT of the Land?
by Milton Ezrati of Lord Abbett,
The country has renewed its conversation about the way it should tax itself, whether to rely on income taxes or replace them with sales taxes. This latest buzz springs from plans by several Republican governors to reduce or eliminate their state income taxes. It has extended to talk about change at the federal level, including speculation about the introduction of a value-added tax (VAT) in addition to existing federal income taxes. Similar proposals surfaced in the 1990s and earlier in this century.
Economic Insights: Signs of a Solid 2013 for Stocks
by Milton Ezrati of Lord Abbett,
Yield spreads versus bonds indicate that stock valuations have considerable upside. Earlier in this recovery, when earnings were growing very strongly, consensus concerns about equities cited the danger of an earnings slowdown. Those expressing this concern pointed out, that such a slowdown would occur inevitably as the recovery matured, especially with economic growth proceeding at such a subpar rate. What seems to have escaped notice is that the slowdown already occurred in 2012 and that the stock market offered good returns despite it.
"Frack and Slack" Put U.S. Trade in the Black?
by Milton Ezrati of Lord Abbett,
Could it be that the U.S. trade balance is headed into the black? At first blush, the prospect looks dubious. This country's trade deficit has drifted deeper into the red for so many decades now that few can even conceive of lasting improvement. Even so, that is what seems to be in prospect.
Economic Insights: Is Capital Spending Spent?
by Milton Ezrati of Lord Abbett,
Once an area of considerable relative strength, business spending on capital goods has weakened of late. When the spending pickup began earlier in this recovery, utilization rates of existing facilities were so low that many expressed surprise. Only little of the spending went for increased capacity, of coursemost of it aimed at labor-saving equipment. But though this concentration held back the pace of hiring, it did contribute to economic growth. Now, however, it looks as though this surge has run its course, and the capital spending sector, too, has fallen into the slow slog.
Housing Recovery - A Dose of Realty Reality
by Milton Ezrati of Lord Abbett,
Media and the investment community have made much of recent good news on housing. Certainly, the recent upturn in sales, building, and real estate prices is welcome. But if the 1980's housing bust is any guide, popular references to strength and imminent recovery grossly overstate. That older experience suggests that health in the sector will return only slowly. Residential real estate may well have turned a corner, but major gains and price recovery will likely wait for some time.
Same Old Samba for Brazil
by Milton Ezrati of Lord Abbett,
The old saw for the last 80-plus years puts Brazil perpetually on the verge of becoming the next economic powerhouse, but never quite making it. It is easy to see the potential. The nation is large; rich in natural resources and arable land; has a sizable, active population; and has well-developed trade relations in the Americas, with Europe, and with Africa. Brazil has failed to realize its potential less for economic reasons than because of misguided government policies.
The "Fiscal Cliff" and the Election
by Milton Ezrati of Lord Abbett,
The fiscal cliff looms large. It should. Unless Washington does something, the 2013 budget will face a sudden and automatic fiscal restraint. The shock would almost certainly drive this economy's already enfeebled recovery into recession. It is an alarming prospect, to be sure, but still, likelihoods suggest that even this partisan Congress will steer clear of such a "cliff."
QE3Back to the Future
by Milton Ezrati of Lord Abbett,
The broad scope and open-ended nature of the Federal Reserve's third round of quantitative easing raises questions about what exactly Fed chairman Ben Bernanke has in mind. Some insight, remarkably, emerges from a speech he gave in November 2002 to the National Economists Club in Washington, D.C., when he was simply a Fed board member. Taking his cue then from fears of a Japanese-style deflation, he laid out a path for monetary stimulus in an extreme situation, outlining nontraditional policy tools that have since become common.
Municipal Finance - Some Positive Signs
by Milton Ezrati of Lord Abbett,
State and local government finances remain precarious. The degree of trouble varies from place to place, of course, but generally it will take decades for states and cities to put their finances in anything like good order. It is, in fact, a good bet that no middle-aged person today will live to see such an event.
Double Dip? Doubtful
by Milton Ezrati of Lord Abbett,
The flow of economic news is hardly encouraging. Jobs growth remains disappointing. Recent readings on consumer spending and business activity show weakness as well. If the picture of the housing market has improved a bit, it still hardly portrays strength. Talk of an imminent recessionary dip has become common, for the third time now in as many years. While some recent economic reports have been discouraging, underlying fundamentals do not point to a return to recession.
Japan's Tax Hike Could Prove Costly
by Milton Ezrati of Lord Abbett,
Japan has been here before, and the outcome was far from pleasant. Yet it seems the wheels are in motion. The country will double its national sales tax, from 5% to 10%. Justified as a way to help the country deal with its precarious fiscal situation, the move has raised serious concerns. This kind of a tax hike, applied for much the same reason, has been widely blamed for the country's destructive late-1990s' recession.
The Euro's Survival Requires German Engineering
by Milton Ezrati of Lord Abbett,
As Europe's paymaster, Berlin faces a tricky task: promoting austerity among economically stressed peripheral nations but not too much. In Europe's seemingly endless debt negotiations, Berlin would seem to hold all the cards. It is, after all, Europe's largest economy, its most powerful, and its most financially sound. But in reality, Berlins options are highly constrained and require a remarkably delicate policy balance.
China's Economy - A Great Wall of Worry?
by Milton Ezrati of Lord Abbett,
The population of China bears seems to keep growing. This already large colony of doomsayers can point to any number of legitimate troubles facing China today, and they glibly do so, from slowing exports growth to an aging population, from real estate excesses to a moribund consumer sector. Bears think China is in for a "hard landing," but their pessimism is overdone. Here's why.
The Surprising U.S. Consumer
by Milton Ezrati of Lord Abbett,
Pessimists take note: Despite lackluster jobs data, the consumer is in better shape than many think. Amid the country's diverse economic problems, it is easy to look at the dark side of everything. However much material there is on that unattractive side of the ledger, people should not lose sight of the positive developments. Especially where the American consumer is concerned, matters, if still far from universally robust, have improved markedly during the last four years.
Economic Insights: U.S. Exports: A Lower Gear, but Still Cruising
by Milton Ezrati of Lord Abbett,
The growth of exports at times has added as much as two percentage points to the overall pace of the economys expansion and is a major reason why American manufacturing has staged a comeback in recent years - a renaissance some have called it. But of late, with the dollar rising against both the euro and the yen, and with growth overseas slowing or, in Europes case, falling, questions have arisen about the sustainability of U.S. export strength.
Economic Insights: U.S. Exports - A Lower Gear, but Still Cruising
by Milton Ezrati of Lord Abbett,
Amid a rising dollar and sluggish global economies, exports should continue to bolster U.S. growth, although the pace will slow. Exports have remained one of the few consistent bright spots in this otherwise subpar economic recovery. The growth of exports at times has added as much as two percentage points to the overall pace of the economys expansion and is a major reason why American manufacturing has staged a comeback in recent yearsa renaissance some have called it.
The Fiscal Cliff -Thelma and Louise Remake Unlikely
by Milton Ezrati of Lord Abbett,
Unlike the cinematic outlaws, Congress will likely avoid a year-end plunge into the chasm of economic peril. The CBO report identifies eight elements of this looming fiscal drag: five automatic tax hikes and three automatic spending cuts. It estimates their total impact for fiscal 2013 at $607 billion, or some 4.0% of the countrys gross domestic product (GDP), and enough to turn positive growth negative.
Health Care - Will the Supremes Keep Us Hangin On?
by Milton Ezrati of Lord Abbett,
As of this writing, the Supreme Court has yet to announce its decision on Obamacare. It has not even announced when it will reveal its decision. Still, if much about the Courts conclusion remains a mystery, two things about it are fairly clear: 1) the Court will almost surely hand down something complex, and 2) whatever it decides, uncertainty will continue to plague business and investment decision making.
Europe - Will the Greek Election Shift German Direction?
by Milton Ezrati of Lord Abbett,
As the Europeans meet and speak and summit, it becomes ever clearer just how intense and complex matters have become. Greece will determine, later this month, whether it will stay in the eurozone or perhaps even the European Union (EU). In or out, Europe and Greece will have to cope with the aftermath of the decision. Even as Greek questions remain open, an even broader drama has grown around recent proposals for the union to issue eurozone bonds that would draw on the generalized credit of all members in common.
Economic Insights: Japan - Glimmers Amid the Gloom
by Milton Ezrati of Lord Abbett,
Japan still looks troubled. To be sure, the economy recorded a surprisingly strong 4.1% annualized real gross domestic product (GDP) growth in the first quarter. Much of that growth, though, was due to government spending. Otherwise, the flow of news still points to the same tepid growth that has troubled Japan for more than 20 years now. Four of the last six quarters have shown real declines, including last years fourth quarter. This once-powerful exporter faces a deficit on its balance of international payments, while spring data releases show industrial production in decline.
Economic Insights: Tax ReformFact or Fantasy?
by Milton Ezrati of Lord Abbett,
Despite the Washington divide, the prospects for tax reform are stronger than you might think. The budget debate in Washington goes on, highly partisan and seemingly with little prospect for compromise, much less progress. Even after Novembers election, probabilities suggest that neither party nor group of budget partisans will gain enough power to move fiscal matters in a concerted direction. Still, for all the prospect of impasse, tax reform remains a possibility.
Economic Insights: Europe - Drama or Tragedy?
by Milton Ezrati of Lord Abbett,
The drama never ends. The past few weeks have seen another sudden change in the eurozones political-economic complexion. Four or five weeks ago, the Continent seemed to have established a fairly firm consensus for fiscal austerity. Since then, the government in the Netherlands has fallen over the austerity question, and elections in France, Greece, and elsewhere have all but quashed any such conviction. Street protests in Athens, Madrid, and elsewhere have also spoken to the breadth of anti-austerity sentiment. Are Europes current leaders up to the task of fiscal reform?
Economic Insights: Consumer SpendingBack in the Black
by Milton Ezrati of Lord Abbett,
Since late 2011, measures of consumption show acceleration in virtually all categories. In one sense, this is good news for the economy, as it will push the pace of overall growth and, ultimately, prompt more hiring, which in itself will reinforce spending growth. But this new trend raises longer-term concerns. More liberal consumer spending can only take the economy so far. Because heightened levels of consumption will limit households abilities to make needed improvements in their finances, any effort to boost outlays too far too fast would only threaten pinched finances at a later date.
Economic Insights: Earnings GrowthIs It Enough?
by Milton Ezrati of Lord Abbett,
After two-plus years of exceeding expectations, earnings this year seem poised to reflect the plodding nature of this economic recovery. In 2010 and 2011, even as the real economy managed only a paltry 2.4% average annual rate of expansion, the earnings of S&P 500 companies soared, rising more than 47% in 2010 and almost 20% in 2011. This year, the slow fundamentals will surely assert themselves. There is nothing ominous in the pattern. It is, after all, well-established historically that earnings should come into line with slower-growing revenues in this, the third year of economic recovery.
A Wake-up Call on the Economy
by Milton Ezrati of Lord Abbett,
Economic statistics seem at times to have their own ebb and flow, sometimes overstating and sometimes understating the underlying fundamentals. Sadly, these often meaningless data variations can create false feelings about economic possibilitiesenthusiasm, when the statistical flow leans toward the strong side, or despair, when it leans on the soft side. Investors, in particular, succumb to such swings in attitude, but, to a lesser extent, so do businesspeople. So, it was with a string of insupportably good numbers late in 2011 and earlier this year.
Chinas Growing Pains
by Milton Ezrati of Lord Abbett,
Among all the fears discussed in the financial community these days, worries over Chinas expansion loom large. The government in Beijing has revised down its growth expectations to 78% a year from the former breakneck pace of 1012%. Private groups, such as the American Chamber of Commerce in China, have made similar downward adjustments in their expectations. Though there is good reason to anticipate a slowdown in the pace of Chinese growth, it would be a mistake to exaggerate the risks, and especially to do so by drawing easy parallels to Americas real estate debacle.
Results 101–150
of 257 found.
