John Irons's Blog


Economic News, Data and Analysis

Slow growth in Net worth

Looks like the housing market is driving any increases. Overall, not very encouraging…
Update: Here is the Fed’s report.

Fed wealth survey: How do you stack up? – Feb. 23, 2006
Debt, lower wages clip net worth growth
A Federal Reserve survey finds slowest increase in Americans’ net worth in over a decade.
By Jeanne Sahadi, senior writer
February 23, 2006: 12:26 PM EST
NEW YORK ( – Americans’ net worth grew between 2001 and 2004, but not nearly as strongly as it did between 1998 and 2001, according to the Federal Reserve’s triennial Survey of Consumer Finances released Thursday.
The big reason: while household assets increased, thanks largely to increased home ownership and higher housing prices, debts – especially home debt — rose considerably more.

Filed under: Economy

GDP 1.1 percent annual rate in Q:4

This is not very good.
I suspect the slowdown is due to rising energy prices and higher interest rates.
Consumer spending fell back to a 1.1 percent growth rate matching the overall GDP number — the drop appears to be driven by a 17.5 percent annual rate decline in durable goods.

Brakes on the economy? GDP slows to 1.1% growth rate in 4Q – Jan. 27, 2006
GDP posts smallest gain in 3 years
Far less growth than forecasts in the fourth quarter, as economy manages only 1.1% annual rate gain.
By Chris Isidore, senior writer
January 27, 2006: 11:39 AM EST
NEW YORK ( – The nation’s economy grew at its slowest pace in three years in the fourth quarter, according to the government’s gross domestic product report Friday, which came in far weaker than economists’ forecasts.
The broad measure of the nation’s economic activity showed an annual growth rate of 1.1 percent in the fourth quarter, down from the 4.1 percent growth rate in the final reading of third-quarter growth. Economists surveyed by had forecast a 2.8 percent growth rate in the fourth quarter.

Filed under: Economics, Economy

No clue

No clue…

Katrina’s Cost May Test GOP Harmony
Congressional Republicans from across the ideological spectrum yesterday rejected the White House’s open-wallet approach to rebuilding the Gulf Coast, a sign that the lockstep GOP discipline that George W. Bush has enjoyed for most of his presidency is eroding on Capitol Hill.
Trying to allay mounting concerns, White House budget director Joshua B. Bolten met with Republican senators for an hour after their regular Tuesday lunch. Senators emerged to say they were annoyed by the lack of concrete ideas for paying the Hurricane Katrina bill.
“Very entertaining,” Sen. John McCain (R-Ariz.) said sarcastically as he left the session. “I haven’t heard any specifics from the administration.”
“At least give us some idea” of how to cover the cost, said Sen. Conrad Burns (R-Mont.), who is facing reelection in 2006. “We owe that to the American taxpayer.”
The pushback on Katrina aid, which the White House is also confronting among House Republicans, represents the loudest and most widespread dissent Bush has faced from his own party since it took full control of Congress in 2002. As polls show the president’s approval numbers falling, there is growing concern among lawmakers that GOP margins in Congress could shrink next year, and even rank-and-file Republicans are complaining that Bush is shirking the difficult budget decisions that must accompany the rebuilding bonanza.

Filed under: Economics, Economy, Fiscal Policy

Rebuilding on the Cheap

It’s not just New Orleans’ homes and buildings that will have to be rebuilt — the economy will have to be rebuilt as well.
Do we relly want to start off by lowering wages? Don’t workers in New Orleans deserve to be treated fairly?

Bush allows Katrina contractors to pay below prevailing wage – Sep. 11, 2005
Bush lifts wage rules for Katrina
President signs executive order allowing contractors to pay below prevailing wage in affected areas.
September 11, 2005: 11:59 AM EDT
WASHINGTON (Reuters) – President Bush issued an executive order Thursday allowing federal contractors rebuilding in the aftermath of Hurricane Katrina to pay below the prevailing wage.
In a notice to Congress, Bush said the hurricane had caused “a national emergency” that permits him to take such action under the 1931 Davis-Bacon Act in ravaged areas of Alabama, Florida, Louisiana and Mississippi.
The Davis-Bacon law requires federal contractors to pay workers at least the prevailing wages in the area where the work is conducted. It applies to federally funded construction projects such as highways and bridges.
Bush’s executive order suspends the requirements of the Davis-Bacon law for designated areas hit by the storm.

Filed under: Economy

Note: For future reference

Critical U.S. Supply Line Is Disrupted
Ben S. Bernanke, chairman of President Bush’s Council of Economic Advisers, acknowledged that the hurricane will cause economic distress but predicted in an interview on CNBC yesterday that those effects will not be long-lasting. “My guess is though that as long as we find that the energy impact is only temporary, and there is no permanent damage to the infrastructure . . . the effects in the overall economy will be fairly modest,” Bernanke said.

Filed under: Economy

Income and Poverty Census Report

Income and poverty data are out today. Not encouraging.
Full data
Quick take:
Overall: Median incomes declined by about $100 (but not statistically significant).
Median incomes for those 65 years or younger fell by about $600 (and was statistically significant).
Of most concern is that declines in the earnings for full-time, year-round workers. For men, median incomes fell by about $1,000, and for women over $300. (also, statistically significant).
Poverty rates increased from 12.5 percent to 12.7 percent. There were broad-based increases in poverty across the spectrum.
Shares of income in the midle 3 quintiles declined, while incomes in the highest quntile increased.
Number of those without health insurance increased by about 860,000.

Filed under: Data, Economics, Economy

GDP Revised Down 2001-2004

The BEA released revisions to the last few years of GDP data… the results are not good. Looks like we lost about 0.3 percentage points compared to where we thought we were.

News Release: Gross Domestic Product
For 2001-2004, real GDP grew at an average annual rate of 2.8 percent, 0.3 percentage point less than in the previously published estimates. The average annual rate of growth of real GDP from 2001:IV to 2005:I is 3.3 percent, 0.2 percentage point less than in the previously published estimates. Revisions to year-to-year growth rates were small.
Revisions to 2002-2004 estimates
The percent change from the preceding year in real GDP was revised down for all 3 years: From 1.9 percent to 1.6 percent for 2002, from 3.0 percent to 2.7 percent for 2003, and from 4.4 percent to 4.2 percent for 2004.

Here are the revisions…

Click for large image…

Filed under: Economics, Economy

Slow growth

Looks like job growth is still weak… just 146,000 job increase… just about equal to population growth.

June job growth increases but falls short of forecasts – Jul. 8, 2005
The Labor Department’s monthly employment report showed 146,000 jobs added to payrolls in June, up from the revised 104,000 jobs added in May. But economists surveyed by had forecast a net gain of 195,000 jobs last month.
Still the unemployment rate, which is based on a different survey, fell to 5 percent from 5.1 percent in May. Economists had forecast the rate would remain unchanged at 5.1 percent.
The unemployment rate is the lowest it has been since September 2001, the month of the 9/11 terrorist attack.
The average hourly wage edged up 3 cents to $16.06. That was in line with the forecasts of economists and lifted the hourly wages 2.7 percent over the last 12 months. Consumer prices are up about 2.8 percent in the 12 months ending in May, according to an earlier Labor Department report, meaning that the average hourly worker is narrowly losing ground in his or her paycheck.

Filed under: Economy

Tax Plan

American Prospect Online – ViewPrint
A Tax Plan for Progressives
T@P A simpler and fairer tax code — one that rewards the hard work of the American middle class — can be good policy and smart politics.
By John S. Irons and John Podesta
Issue Date: 06.06.05
For four years President Bush has touted his tax cuts as an economic cure-all, but middle-income workers have instead watched helplessly as the tiny tax cut they received has gone to pay for higher property taxes, tuition increases, and exploding medical costs. While the conservatives’ tax initiatives have wreaked havoc on people barely living on their paychecks, wealthy taxpayers have enjoyed ever-higher incomes taxed at stunningly lower rates. Furthermore, Bush’s tax cuts have wrecked public services and undermined prospects for long-term economic growth.
Progressives share a responsibility to not only oppose the conservative tax program but to offer a sensible alternative: reform to make our tax system fair, simple, and fiscally responsible. We need to see to it that middle-class Americans get the relief they need, and that our nation has the wherewithal to make the investments it must…

Filed under: Economics, Economy

Medicaid and the budget

It looks like the budget resolution might be out of conference and on the floor in the House/ Senate on Thursday/Friday. They are reportedly still working out some of the details, but it looks like they may have reached a deal. The budget reportedly includes $70 billion in tax cuts protected under reconciliation, and $40.5 billion in savings from mandatory programs.
On Medicaid:

  • The House voted yesterday overwhelmingly (348-72) to instruct the conference to remove Medicaid cuts.
  • Before passage, the Senate passed 52-48 an amendment to remove Medicaid cuts.
    (See this article)

However, the last I have heard the conference agreement will still include $10 billion in Medicaid cuts.
We have a calculator here which will determine the state impact based on various federal cuts (this is also the webpage with the full analysis.)
For more: Worse Than No Budget
[Update: Looks like there may be a final sticking point on the Medicaid cuts, unclear what the outcome will be.]

Filed under: Economy