Posts by Rick Newman

  • Needed in 2015: Middle-class wealth gains

    Rick Newman at Yahoo Finance 4 hrs ago

    If the economy really bounces back next year, we’ll know because ordinary people will feel it—for the first time in years.

    So far, we’ve had a five-and-a-half-year recovery that has mainly benefited the wealthy, while the middle class waits for relief to trickle down. The latest evidence of this hardening economic segregation is a Pew Research study showing the wealth gap between the rich and the rest hit the widest levels on record in 2013, the last year for which data is available. The gap probably widened further in 2014, since the stock market performed well—benefiting those lucky enough to have such investments—while housing sputtered and the typical family struggled just to keep up with inflation.

    Pew found that upper-income families had a median net worth of $639,400, compared with $96,500 for a middle-income family. That’s a ratio of 6.6 to 1. In 2010, the ratio was 6.2, and back in 1983 it was a mere 3.4. Those numbers are consistent with worsening income inequality and middle-class living standards that have been stagnant fore more than a decade.

  • Another Obamacare disaster that hasn’t happened

    Rick Newman at Yahoo Finance 3 days ago

    Many grim developments -- both real and imagined -- have been blamed on the Affordable Care Act, also known as Obamacare. But the ACA continues to be less disruptive than its toughest critics predicted.

    One big concern has been the eventual demise of the employer-based healthcare system, which is how 55% of nonelderly Americansget their coverage. But in its first full year of operation, the ACA has had virtually no affect on this core pillar of the U.S. health system, according to a new study published online by the journal Health Affairs.

    In the study, researchers at the Urban Institute analyzed the percentage of companies offering insurance, the percentage of employees accepting it and the ultimate coverage rates during two different time frames: June 2013 and September 2014. Since the ACA went info effect Jan. 1 of this year, that provides before-and-after snapshots.

    Here’s a summary of the numbers for nonelderly workers:

  • How Obama (and Bush) helped drive down oil prices

    Rick Newman at Yahoo Finance 4 days ago

    Few people foresaw the nearly 50% plunge in oil prices this year. But the forces reshaping the oil market have been aligning for nearly a decade, with part of the impetus coming from Washington.

    In 2007, Congress passed the Energy Independence and Security Act, which President George W. Bush promptly signed. The EISA raised federal mileage requirements for passenger cars for the first time since 1990, in an effort to reduce U.S. gas consumption and make America less dependent on foreign oil.

    The new rules required automakers to achieve average fuel economy of 35 miles per gallon among all the new vehicles in their fleet by model year 2020 -- up sharply from a requirement of 27.5 MPG for cars and 22.2 MPG for light trucks (pickups and SUVs) at the time.

    Overall, the MPG improvements have been working, with lower U.S. oil and gas consumption achieved, as this chart shows:

  • By canning "The Interview," Sony is encouraging terrorists

    Rick Newman at Yahoo Finance 5 days ago

    My fellow Americans—

    Seriously? You’re going to let North Korean hooligans manipulate you into boycotting a movie they don’t want you to see? You’re going to cower before a bogus threat of “terrorism” that exists only because provocateurs suspect Americans will stay home at the mere hint of trouble?

    How about you don’t. How about you demand that Sony release its self-censored film, The Interview,  which the studio planned to debut on December 25 but has now mothballed because of punkish threats from anonymous saboteurs. And if theaters choose not to show it, how about we all rush the entire movie industry until studio executives and theater owners show some fortitude.

    That merciless response may entail a vast cyber attack on Sony that began earlier this month and has left the studio in a state of chaos.

    North Korea hasn’t claimed responsibility, but the CIA has now reportedly linked the hacking attack to North Korea--an impressive achievement for a nation that can’t even keep the lights on.

  • 10 people who lost big in 2014

    Rick Newman at Yahoo Finance 6 days ago

    If your investment returns in 2014 tracked the stock market, you’d be up a respectable 8% for the year so far. If you bet big on one of several high-flying IPOs, such as Alibaba (BABA), GoPro (GPRO) or Lending Club (LC), you did a lot better.

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

    But big personalities tend to take big risks, and sometimes they end up a lot worse off than the average Joe. Here are 10 people who lost big in 2014:

    Harold Hamm

    Jeff Bezos

    Vince McMahon

    Ray Rice

    Mark Karpeles

    Mikhail Prokhorov

    Vladimir Putin

    Steve Wynn

    John Mackey

    The Whole Foods (WFM) CEO earns just $1 per year in salary, plus a bonus, if it applies. This year, it may not. The grocery chain's stock is down 16%, which hurts Mackey along with other shareholders. He owns nearly 1 million shares of Whole Foods, more than any other individual, with the value of his stake down by an estimated $10 million this year.

    Courtney Love

  • Americans are becoming satisfied with less

    Rick Newman at Yahoo Finance 10 days ago

    Big news! Consumer sentiment has roared back to prerecession levels, which means the U.S. economy is …. nowhere near pre-recession levels, actually.

    The University of Michigan sentiment index rose to 93.8 in December, which is the best reading since January 2007, when it hit 96.9. Following the 2008 financial meltdown, it fell as low as 55.3. Yet headlines about confidence approaching an 8-year high convey the false impression that all the damage from the recession has been repaired.

    It hasn’t. The real story may be that Americans have gradually adjusted their expectations downward and are now satisfied with less. Here are a few key data points showing how far behind we still are:

    Number of full-time employees in the U.S. workforce, in 1000s

    S&P/Case-Shiller national home price index

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

  • The worst executive screw-ups of 2014

    Rick Newman at Yahoo Finance 11 days ago

    The nuts were served without asking.

    This indignity compelled Heather Cho, a Korean Air Lines vice president, to order a departing jetliner back to the gate at New York’s John F. Kennedy airport earlier this month, and boot a flight attendant off the plane. The airline’s policy is to ask first-class passengers if they want nuts, then serve them on a plate if nuts are desired. But on Cho’s flight, the Korean Air flight attendant handed out bags of nuts—not plated—without bothering to ask if anybody wanted them. Some bosses might have corrected the oversight quietly, out of sight. But Cho opted for a grandiose display of authority that delayed a flight with 250 passengers. When the story went public and the inevitable outcry materialized, Cho—the wealthy daughter of the airline’s chairman—apologized and resigned.

    Michael Jeffries

    Emil Michael

    Patrick Henry

    David Tovar

    Desmond Hague

    Justin Mateen

    Rakesh Agrawal

    Tom Perkins

    Donald Sterling

    Gurbaksh Chahal 

    Dov Charney

  • This one uberskill will always keep you employed

    Rick Newman at Yahoo Finance 12 days ago

    Everybody wants a highly rewarding job in a recession-proof field. But the labor market changes constantly and a safe job today can be an endangered one tomorrow.

    There’s one vital skill, however, that transcends many jobs and fields and may be every worker’s best shot at financial security. Schools don’t usually teach it, and employers don’t usually mention it in job postings. Yet it will help you get hired, outperform your peers, find the best opportunities and stay a step or two ahead of the computers, robots and other machines that are making many jobs obsolete.

    The skill is conceptualization: the ability to see how the elements of an abstract whole fit together and to identify problems that need to be addressed before others do.

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

    Auto mechanic. The job today involves the use of electronics to diagnose and address problems, yet it still requires human-powered logic to sort out puzzles data can only hint at. Plus, cars these days rely on numerous computerized gizmos that require new skills to understand and care for.

  • China’s economy is now bigger than America's? So what

    Rick Newman at Yahoo Finance 17 days ago

    This news has been getting a lot of attention lately: China’s economy is now larger than America’s, if you exclude exchange rates and other factors. And even if measured the most conventional way -- using total GDP -- China’s economy is bound to outgrow America’s eventually, since the Middle Kingdom has three times the population of the United States and a rapidly swelling consumer class.

    China has become Americans’ favorite bogeyman, even more than Russia and its sinister leader, Vladimir Putin. To many people, the rise of China is synonymous with America’s decline. For the last four years, more than half of people polled have told Gallup that China is the world’s most powerful economy, with just 32% saying the U.S. is tops in the latest survey. In 2000, 65% named America most powerful, with Japan second, at 16%. Only 10% named China as No. 1 back then.

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

  • The federal deficit is down—but it won’t last

    Rick Newman at Yahoo Finance 17 days ago

    There’s been an unexpected truce in the Washington budget battles. But the government’s borrowing binge is poised to accelerate again soon, with a resumption of hostilities inside the Beltway all but certain.

    The government’s budget deficit dropped to $483 billion for the 2014 fiscal year, which ended in September. That’s just 2.8% of GDP, while the deficit historically has averaged about 3.1% of GDP. That’s a huge improvement compared with 2009, when the deficit hit an astonishing record high of $1.4 trillion, or nearly 10% of GDP. The improving budget picture has subdued critics of federal borrowing and neutralized threats to shut down the government over improvident spending.

    But much of the improvement in the government’s finances is due to temporary factors that will lapse, according to new analysis from the Federal Reserve Bank of Kansas City. The bank’s researchers cite four reasons the budget relief won’t last: