Posts by Rick Newman

  • Government won’t bring back prosperity. Here’s what will

    Rick Newman at Yahoo Finance 21 hrs ago

    Raise taxes. Cut taxes. Spend more. Spend less. These are the basic ideas in Washington for how to revive the middle class and restore American prosperity. As everybody knows, Republican and Democratic ideas basically cancel each other out, which is why Washington doesn’t accomplish much these days.

    Are you expecting a breakthrough? Neither am I. That’s why I explored ways ordinary Americans can restore their own prosperity—and stop waiting for a feckless government to do it—in my new book Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom .

    Simply accepting the full burden of self-improvement -- instead of assuming the government or the company or somebody else should point you toward prosperity, and maybe chauffer you there -- can be a remarkably liberating way to reclaim financial independence. Your financial destiny is too important to entrust to somebody else — especially those jokers in Washington.

  • Middle-class families are finally earning more

    Rick Newman at Yahoo Finance 2 days ago

    An important measure of household income rose in December by the largest amount in nearly 8 years, signaling a long-overdue rebound in family earning power.

    Data from Sentier Research show that median household income in December rose 3.3% from the year before, the strongest year-over-year reading since October, 2006. Since those numbers are adjusted for inflation, they suggest the typical family is finally starting to get ahead, after a brutal recession and halting recovery. “We’re still not back to where we were, but incomes are coming back,” says Gordon Green of Sentier. “It’s a healthy sign.”

    Stagnant incomes have been the biggest shortcoming in a recovery that still doesn’t feel like it to many people. Jobs have returned, with employers creating nearly 3 million new openings in 2014. But many new jobs pay less than those lost during the recession, which ran from 2007 to 2009. And wages for people who have jobs have been rising by less than 2% per year, which is roughly even with inflation.

  • Time for IBM to shrink — again

    Rick Newman at Yahoo Finance 2 days ago

    Something’s afoot at Big Blue. The question is whether it’s monumental or just significant.

    Influential tech blogger Robert Cringely wrote recently that IBM (IBM) was preparing to lay off 26% of its workforce as part of a huge restructuring effort called Project Chrome. Since IBM employs about 430,000 people worldwide, that would amount to an astonishing 112,000 pink slips. No U.S. company has ever laid off that many people. The closest was a massive downsizing in 1993 by… IBM, which cost 60,000 people their jobs. During the near-depression in 2008 and 2009, the worst firings tallied 50,000 jobs at Citigroup (C) and 47,000 at General Motors (GM).

    Rick Newman’s latest book is Liberty for All: A Manifesto for Reclaiming Financial and Political Freedom. Follow him on Twitter: @rickjnewman.

  • These taxes are going up, sooner or later

    Rick Newman at Yahoo Finance 5 days ago

    There’s supposedly no reason to worry about the latest tax hikes proposed by President Obama, since there’s little chance Congress will pass them. But Obama’s plan is a blueprint of sorts for what’s going to happen when federal coffers finally run dry and there’s no choice but to raise taxes—including some that will inevitably hit the middle class.

    Budget softies argue there’s no need to worry about a federal money crunch now, since Washington’s annual deficit is falling, the economy’s picking up, and the Treasury can still borrow at remarkably low rates. All true. But barring an economic miracle, the coming crunch is a matter of simple math. The soaring cost of entitlement programs is already crowding out other types of spending, and the mass retirement of the baby boomers is going to drain Social Security and Medicare for good, if nothing changes.

  • Don’t blame Obamacare if your health insurance premium went up

    Rick Newman at Yahoo Finance 6 days ago

    The rising cost of healthcare is a big budget-buster for many families, and a lot of them fault the Affordable Care Act for straining their finances. But the controversial healthcare law appears to be getting far more blame than it deserves.

    New analysis by the Commonwealth Fund examines data explaining the biggest increases in healthcare premiums for certain plans, and essentially lets Obamacare, as the ACA is known, off the hook. The study found that rising medical costs are the biggest cause of higher insurance premiums — which has been the case for years. About 30% of insurers didn’t cite any cost increase linked to Obamacare. Among the other 70%, new taxes and fees associated with the ACA -- and that started in 2014 -- accounted for about one-third of premium increases. But many of those fees will decline and some will phase out altogether.

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  • Obama’s new tax plan shows what a mess the tax code already is

    Rick Newman at Yahoo Finance 7 days ago

    President Obama and many other poobahs in Washington, D.C., say it’s essential to simplify the U.S. tax code. But for now, it’s necessary to complicate it.

    Obama’s tax proposals for 2015 include a new “second earner” tax credit, an expansion of the earned-income tax credit, new tax incentives to help cover child-care expenses, and several provisions meant to make higher education more affordable. Economists say they’re generally sensible ideas, yet they’d make the burden of filing a tax return even more onerous than it already is. “The IRS would have to figure out how to put all these pieces onto a two-sided EZ tax form,” says Roberton Williams of the nonpartisan Urban Institute. “There’s nothing ‘EZ’ about this.”

    Obama claims his tax plan would simplify a few minor parts of the tax code, by consolidating the number of education tax credits, for instance. Yet Republicans say they’ll never agree to tax hikes on the wealthy-- which Obama wants to offset the cost of his tax cuts for the middle class--that could total more than $30 billion per year. So Americans may be spared any further tax complexity, for now.

  • Obama declares victory on the economy--prematurely

    Rick Newman at Yahoo Finance 8 days ago

    President George W. Bush famously stood before a “Mission Accomplished” banner in 2003, when U.S. forces still faced many bloody battles in Iraq. Could President Obama be making the same sort of mistake by describing the economy as healed and insisting that the “shadow of crisis has passed?”

    For the first time in his presidency, Obama spoke in victorious terms when describing the economy during his 2015 State of the Union address to Congress. He described 2014 as a “breakthrough year for America” and said, “We have risen from recession freer to write our own future than any other nation on Earth.”

    Obama’s facts are generally correct. It’s true, as he pointed out in the SOTU address, that job growth in 2014 was the strongest since 1999—which was a boom year for the U.S. economy. His short list of accomplishments—“a growing economy, shrinking deficits, bustling industry, booming energy production”—are all legitimate.

  • How the middle class has fragmented under Obama

    Rick Newman at Yahoo Finance 8 days ago

    When President Obama delivered his first State of the Union address in 2009, 53% of Americans considered themselves middle class. Six years later, just 44% of Americans define themselves that way.

    It’s no secret working Americans have been under duress for more than a decade, as wages stagnate, computers and robots displace human workers and wealth becomes concentrated among an alarmingly small portion of the population. Obama has promoted policies meant to help the middle class throughout his six years in office, yet the problem today is quite different than when he started the job in 2009—and it’s not clear Obama fully grasps the change.

    The middle class itself, however, has changed notably during the relatively short time Obama has been in office, as the chart below shows. The portion of Americans who consider themselves middle class has dropped (as has the portion considering themselves upper class), while the ranks who call themselves lower class have swelled.

    Percentage of adults self-identifying as each social class:

  • Buick, for once, has the hottest new car in Detroit

    Rick Newman at Yahoo Finance 12 days ago

    Cram a lot of horsepower under the hood of a car and strap on some comically large tires, and auto critics will drool over it -- even if sales are likely to be limited to Silicon Valley royalty and a few oil sheikhs.

    That’s why the new Ford GT and Acura NSX supercars have dominated media coverage of this year’s Detroit auto show. But the most important car at the show may be one that got far less attention: the Buick Avenir sedan.

    [Get the Latest Market Data and News with the Yahoo Finance App]

    Rick Newman’s latest book is Rebounders: How Winners Pivot From Setback To Success . Follow him on Twitter: @rickjnewman.

  • How Obama lost the middle class

    Rick Newman at Yahoo Finance 13 days ago

    A gradually improving economy—and plunging gas prices--have finally brought President Obama a modest boost in his long-depressed job-approval rating. But the voters who are least impressed with Obama are the middle-income Americans every politician needs to succeed—and the very people whose interests Obama claims to be fighting for.

    The latest poll numbers from Gallup put Obama’s approval rating at 46%, the highest reading since the summer of 2013. But there are telling disparities among income groups that help explain why Obama’s Democratic party lost control of both houses of Congress during the last two midterm elections, and why Obama may be able to accomplish little during his last two years in office.

    A breakdown of the numbers since 2009 shows that the president has enjoyed higher support among low earners than among middle earners for all but four weeks of his presidency, as this chart illustrates: