Blog Posts by Aaron Task

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Is the U.S. economy heading for another 'Spring Swoon'? That's the question a lot of economists are wondering -- and worrying about -- ahead of Friday's critical April jobs report.

Thursday brought another round of economic data confirming the economy is downshifting, the big question is how fast.

Most troubling, ISM manufacturing fell to 53.5 in April, below expectations and its lowest level since December.

"'Respondents' comments affirm the slowing rate of growth," the Institute of Supply Management said in a release accompanying the report. "In addition, they remain concerned about rising fuel costs and the impact on shipping, transportation and petroleum-based product costs."

The ISM data follows the weaker-than-expected report on first-quarter GDP, and the most recent reports on durable goods, ADP payrolls and auto sales, which all disappointed.

On the other hand, gasoline prices have fallen for two-straight weeks, the ISM services data was

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Contrary to popular belief, the 'American Dream' is neither dead nor dying, according to American Enterprise Institute scholar Charles Murray.

"If you're talented in this country, there's never been a better time to be alive," Murray declares at the Milken Institute Global Conference. "They'll identify you, you'll be shipped to the best schools, even if you don't have any money and no matter your race. In that sense, the American Dream isn't dead."

However, there is a downside to this intense focus on finding and nurturing the 'best and the brightest,' according to Murray. The American Dream may be alive for individuals but the American "civic culture" is dying as the nation splinters into a two-class society.

Over time, the "churning" of talent slows down and creates a new generation of upper class citizens, Murray observes. "The talented kid from Podunk goes to Harvard Law, gets wealthy and marries a woman sitting across from him at the negotiating table. Their kids are squarely in the upper class and "likely to remain so."

Murray's concern is that while the father in this hypothetical scenario has a childhood connection to "Main Street America," his children will have a very different experience. "A lot of kids in the second or third generation in this upper middle class life haven't a clue what life is like in ordinary America."

Murray examines these trends and their implications in his latest book: Coming Apart: The State of White America.

Stabilizing the housing market and reforming Fannie Mae and Freddie Mac are two of the great challenges confronting U.S. policymakers.

Sen. Bob Corker (R-Tenn.) has a plan for what he believes will kill two birds with one stone.

Late last year, Sen. Corker introduced a bill, The Residential Mortgage Market Privatization and Standardization Act, designed to "unwind" Fannie Mae and Freddie Mac -- effectively ending the housing market's reliance on government guarantees.

"Three years after the bailout of Fannie Mae and Freddie Mac, we are no closer to transitioning them off government life support than we were the day in 2008 when they came under direct government control," Sen. Corker wrote in a Washington Post op-ed last year. "This is unacceptable."

In a nutshell, his plan calls for lowering Fannie Mae and Freddie Mac guarantees on mortgage-backed securities by 10% per year for 10 years.

At the Milken Institute Global Conference in LA, Corker tells me his proposal is a starting point but that he's having a very hard time finding anyone on the other side of the aisle to negotiate with; six months after it was introduced there has yet to be a hearing on his bill.

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Dallas Fed President Richard Fisher has a message for Congress: "They have to do their part; we've done ours."

Last week's disappointing data reports (first-quarter GDP, April durable goods and weekly jobless claims) as well as Monday's weaker-than-expected Chicago PMI and Dallas Fed survey and Tuesday's construction spending data reinforced concerns about the U.S. economy weakening in springtime, just as it did in 2010 and 2011.

That's a risk says Fisher, but it's not his baseline scenario. "Growth is more anemic than any of us would want but it's positive," he says in the accompanying video, taped at the Milken Institute Global Conference.

Regardless, Fisher won't support additional Fed stimulus "unless truly horrific data were the come forward."

This should come as no surprise for those who've been watching and listening to President Fisher in recent years. He is not a voting member of the FOMC this year but dissented last year when he was and continues to oppose additional monetary stimulus. (See: "We've Done Our Job": Why Dallas Fed President Fisher Opposes More Action

"If you want the bottom line: what we do is necessary but not sufficient," he says. "Unless you have right fiscal and regulatory policy, and of course demand, all the amount of monetary policy in the world isn't going to do the trick."

This week's market action can be summed up like this: Bad news is good news...don't fight the Fed.

Stocks were on track for their best week in a month despite a string of disappointing news out of the U.S. and Europe, a trend evident again on Friday.

The Dow was up 30 points in recent trading, despite -- or maybe because of -- a disappointing report on first-quarter U.S. GDP, rising bond yields in Italy and an unexpected increase in unemployment in Spain, which also got hit by a sovereign debt downgrade from S&P.

"The market looks at weakness and turmoil and says 'more LTRO or something like it in Europe...the Fed on hold [and] will stretch it out longer,'" explains David Kotok, chairman and CIO of Cumberland Advisors. "Every time there's a shock, it means there will be more global QE. That's what markets celebrate."

'Celebrate' may be a strong word but the market has certainly proven resilient to the latest bad news out of Europe, which today featured Spanish unemployment rising to

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After tightening their wallets in recent years, many Americans are giving in to the urge to splurge, judging by recent retail sales data.

With the caveat that it's never a good idea to spend money you don't have -- or go into debt for that "retail therapy" -- Jack Otter, executive editor of CBS Moneywatch breaks down what's worth spending the extra money for in his new book, Worth It...Not Worth It?

In the accompanying video, Otter and I discuss several choices millions of Americans encounter in their everyday lives, such as:

Is It Worth Paying More for Organic? Setting aside other issues such as sustainable farming and the 'locovore' movement, Otter says there's a handy rule of thumb when it comes to organic produce: If it has a peel, it's not worth the additional price.

Conversely, the USDA has identified 12 fruits and vegetables that have the most pesticide residue: peaches apples, bell peppers, celery, nectarines, strawberries, cherries, pears, imported grapes, spinach lettuce and potatoes.

When it comes to these "dirty dozen" items, Otter says paying more for organic is well worth the cost.

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For the third consecutive week, jobless claims were higher than expected and above 380,000, another sign the economy's first-quarter momentum is waning.

The four-week moving average for jobless claims is now 382,000, the highest since early January.

The trend bodes poorly for next Friday's April employment report and other recent data points, such as Wednesday's grim durable goods data, have many economists fearing a repeat of the spring of 2010 and 2011, when economic activity came to an abrupt halt.

But the economy is "doing pretty much exactly what [it] should be doing," says Barry Ritholtz, CEO of Fusion IQ and author of The Big Picture blog. "This is what you should expect following the sort of stock market, real estate, credit collapse we saw."

Citing the work of economists Carmen Reinhart and Ken Rogoff, Ritholtz says this kind of "meander along, bumble along...just on the verge of stall speed" type economy should last 7 to 10 years. With

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As expected, the Federal Reserve left rates unchanged at its policy meeting Wednesday, reiterating its pledge to keep rates at "exceptionally low levels...at least through late 2014."

The Fed did make some slight tweaks to its outlook from its statement in March.

Most notably, the Fed said strains in global financial markets "pose significant downside risks to the economic outlook" versus having declared them to be "easing" in March.

The Fed also declared that inflation has "picked up somewhat" versus being "subdued" last month and slightly upgraded its outlook on housing, citing "some signs of improvement." (See: The American Dream Of Buying A Home May Be Over: Karl Case)

Ahead of Ben Bernanke's press conference and the Fed's release of its latest economic forecast, I discussed these implications of the Fed's statement with former Richmond Fed President Al Broaddus and Robert Brusca, chief economist at FAO Economics.

Broaddus and Brusca agree the