Posts by Rick Newman
- Rick Newman at The Exchange18 hrs ago
You can be excused for thinking economists are crazy. With food prices rising, how can they be worried inflation is too low?
The latest data confirm what many consumers already know: Certain types of food are getting considerably more expensive, with beef prices up 7.4% during the past year and eggs up 9.9%. The household pain doesn’t end there: Electricity costs rose 5.3% during the past 12 months and natural gas soared by 16.4%. The typical paycheck, meanwhile, has risen by just 2% or so.
Economists aren’t particularly worried about rising prices, however. Food and energy prices are notoriously volatile, and they’ve risen largely because of temporary factors. A bigger concern: Prices that are barely rising or falling, which can signal pernicious stagnation or worse.
- Rick Newman at The Exchange1 day ago
Taxes get no respect. Everybody hates paying them, and Americans think roughly half their tax money gets wasted. No wonder the Internal Revenue Service is less popular than poison ivy.
As Americans finalize their 2013 income tax returns, however, there’s some upbeat news about taxes. Government tax receipts have soared during the past 18 months, putting Washington on sounder financial footing and easing strains in many state capitals. Higher tax rates have a bit to do with that, but a bigger factor is the improving economy and the 2.9 million people who have gone back to work since the end of 2012.
Federal revenue from individual income taxes in fiscal year 2013 (which ended last September) rose by 16%, to $1.3 trillion. For the first half of fiscal 2014, tax receipts are up another 6% or so, according to the Congressional Budget Office. The agency estimates such revenue will rise by about 5% for all of 2014, and by nearly 12% in 2015.
- Rick Newman at The Exchange6 days ago
OMIGOD! What if your high school senior doesn’t get into a top college? Ruin and damnation!!!
That seems to be the fear of many parents these days, judging by the latest trends in college applications. The New York Times reports that, with the latest batch of college acceptance letters freshly mailed, elite universities such as Stanford, Harvard and Duke are rejecting more applicants than ever. Even ace high school students may find it impossible to get into a top university, if only because of overwhelming numbers. It’s as if the 1% are walling off the compound so infiltrators can no longer get in.
- Rick Newman at Daily Ticker7 days ago
“We will be fully transparent,” General Motors (GM) CEO Mary Barra promised when she testified before Congress in early April. She might have added—just not yet.
GM’s recall woes have now worsened, with the government’s auto-safety regulator blasting the company for stonewalling in its response to 107 questions the government asked about the 2.6 million vehicles GM has recalled for faulty ignition switches. GM says the problem has been linked to at least 13 deaths. The biggest question is why GM waited so long to recall the vehicles, given that it knew of the problem at least a decade ago. Given GM’s incomplete answers, the government is fining the automaker $7,000 a day indefinitely, and the Justice Dept. could end up pressing criminal charges.
- Rick Newman at The Exchange7 days ago
Here’s something the White House probably didn’t see coming: It turns out the Affordable Care Act, President Obama’s big health-reform effort, could affect the cost of other types of insurance. And unlike several unwelcome surprises that have undermined support for the ACA, this development might save consumers a few bucks.
The biggest open question about Obamacare, as the ACA is known, is how it will change the market for medical care and the health of people newly covered by insurance. But Obamacare is also likely to change the market for other types of insurance as well, with researchers just beginning to probe how that might play out.
A new study by the nonprofit Rand Corp. finds Obamacare is likely to lower the cost of auto insurance and worker’s compensation plans, while raising the cost of medical malpractice coverage for doctors and other healthcare providers. The connection between Obamacare and other types of insurance might not seem obvious, but it’s intuitive once you think about how insurance works.
A meaningful drop
- Rick Newman at The Exchange8 days ago
This headline ought to trigger a double-take: “GM SUVs ace challenging crash test.” What? That GM? Isn’t it an incompetent corporate villain and overall menace to society?
Actually, it’s not. General Motors (GM) is clearly in a spot of trouble, on account of flawed ignition switches that should have been recalled long ago but weren’t, leading to at least 13 deaths in fatal accidents and an unknown number of injuries. GM screwed up badly, especially since fixing the problem involving about 2.6 million Chevrolet Cobalts and other vehicles that have now been recalled would have been relatively cheap and easy — especially compared with the $3 billion or more the problem may now cost GM.
- Rick Newman at The Exchange9 days ago
The Supreme Court’s latest ruling on political contributions is likely to gives rich donors even more sway over national elections, intensifying the troubling influence of money in politics.
Overlooked amid the populist howling, however, is the impact the so-called McCutcheon decision is likely to have on business interests and the lobbyists who do their bidding in Washington, D.C. The ruling abolished limits on the total amount of money individuals can donate to candidates and political organizations, which gives wealthy donors — frequently business owners or executives — the freedom to donate to as many friendly candidates and causes as they like.
“Corporations will be able to give far in excess of what they give now, through their executive employees,” says Sheila Krumholz, executive director of the nonprofit Center for Responsive Politics. “We’ll see this across all industries.”
- Rick Newman at The Exchange11 days ago
The housing bust finally ended last year, with prices bottoming out and buyers starting to inch off the sidelines.
As in much of the economy, however, there’s a housing recovery for some but not for others. Wealthy buyers, you won’t be surprised to hear, are getting great deals on fancy homes — including vacation properties — which is fueling a boom in higher-priced homes. But at the lower end of the market, buyers remain scarce and sales are tumbling. “The housing market is still far from normal,” Bank of America Merrill Lynch economist Michelle Meyer wrote in a recent research note. “There is still a historically low share of first-time homebuyers.”
The housing recovery seemed to be enduring and widespread until last summer, when overall sales began to fall. That was right around the time that mortgage rates jumped. Combined with rising home prices, affordability suddenly declined. Sales of existing homes (which account for about 90% of all sales) have generally been falling ever since, as this chart shows:
- Rick Newman at The Exchange13 days ago
Far from it. In reality, recalls have become a common part of the car-ownership experience and a sign that the safety system is working as it’s supposed to. There are more recalls than there used to be, in general, yet highway safety and the quality of cars have both improved considerably in recent years. “A recall notice should provide peace of mind,” says Ed Kim, vice president of industry analysis at forecasting firm AutoPacific. “It means the manufacturer or the government or both have decided there’s a defect in the vehicle and want to make sure it never causes an issue.”
- Rick Newman at The Exchange14 days ago
You know just about everything that went wrong with Obamacare during its first six months. In fact, it’s hard to think of a public program that has ever generated worse headlines.
A brief recap: The Obamacare website, which was built on the cheap with paper clips and rubber bands, sputtered right up through March 31, the last official day of open enrollment. President Obama’s claim that if you like your health insurance, you can keep it earned him the Politifact Lie of the Year award. And the White House postponed so many Obamacare deadlines that inside the Beltway, stores ran out of whiteboard erasers.