Posts by Rick Newman
- Rick Newman at The Exchange1 day ago
“America’s claims to being a democratic society are seriously threatened.” That’s the startling claim in a provocative new study by Martin Gilens of Princeton University and Benjamin I. Page of Northwestern University. Many of us like to believe that popular opinion influences policymakers, at least indirectly. But that doesn’t seem to be the case. “The general public has little or no independent influence” on policymaking, the two political scientists found. Instead, Gilens and Page found that “economic elites” have a “quite substantial, highly significant, independent impact on policy.” Groups representing business interests are the next most powerful influence on policymakers. Sometimes, those two groups are aligned on an issue—they both tend to prefer low taxes, for instance--which generates the highest likelihood of government action. The complex study examined 1,779 public policy issues between 1981 and 2002, including the policy preferences of middle-income people, the wealthy, and interest groups such as lobbying organizations, unions, and membership associations like AARP. The researchers then isolated instances when a policy change actually took place, to figure out who, essentially, got their way.
- Rick Newman at Daily Ticker1 day ago
Here’s one part of the economy you don’t have to worry about: luxury car sales.
The auto industry has gradually recovered from the wipeout that occurred in 2009, when sales plummeted. But the luxury segment has left most mainstream models in the dust.
Mercedes, BMW and Audi all notched record U.S. sales in 2013. The same pace continues this year, so far.
“There are a lot of people out there who can afford luxury goods,” Steve Cannon, president and CEO of Mercedes-Benz USA, tells me in the video above. “The wealth that has really been there, but been planted on the sidelines, is finding its way into the market.”
Cannon says three factors are fueling the boom in luxury goods. First is the stock market, which is jittery this year but still up 17% during the last 12 months and 114% during the last five years. The housing recovery, though incomplete, has helped many home owners regain much of the equity lost during the housing bust. And with an overall improvement in the economy, consumers are feeling more confident and more willing to spend.
- Rick Newman at The Exchange2 days ago
You can point out how rich the 1% are, or pound home how hard it is to keep up these days. But whatever you do, don’t act like there’s a “recovery.”
That’s the advice from a prominent public-policy firm to Democratic politicians running for reelection this year. Democracy Corps, founded by Democratic strategists James Carville and Stan Greenberg, recently conducted a series of polls to determine how candidates can best connect with voters as they campaign for the 2014 midterm elections in November. The results show just how disheartened many Americans are about their economic prospects, even though the recovery is technically entering its fifth year.
By some measures, the economy is getting back to normal. The unemployment rate is down from a peak of 10% in 2010 to 6.7% today. In aggregate, Americans have regained all the wealth lost during the twin housing and stock-market busts, and then some. After six years of extraordinary intervention, the Federal Reserve is beginning to back away from the super-easy monetary policies it adopted to nurse the economy through dark times.
- Rick Newman at Daily Ticker2 days ago
General Motors (GM) CEO Mary Barra has the unenviable challenge of explaining why a safety recall involving 2.6 million vehicles and at least 13 deaths took more than a decade to get underway. Her subordinates have a different but equally important job: To keep moving the metal.
GM’s sales have held up so far this year despite the worsening controversy over the safety recall, but that may be about to change. Data from research firm YouGov BrandIndex shows that GM’s reputation has deteriorated steadily during the last two months, as the recall has expanded and Congressional investigators have begun to scrutinize it. The same goes for Chevrolet, GM’s biggest division, which has also suffered a sharp drop in the “buzz score” BrandIndex calculates, wich is based on consumer polling. More people now say they have a negative image of Chevy than a positive image.
- Rick Newman at The Exchange4 days 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 Exchange5 days 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 Exchange10 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 Ticker10 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 Exchange11 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 Exchange12 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.