Posts filed under “Taxes and Policy”

2/3rds Americans Say Recession is Likely

This morning, we are going to review an extremely negative public survey on the economy by Bloomberg/Los
Angeles Times
: Almost two-thirds of Americans say a
recession is likely in the next year and a majority believes the
economy is already faltering

Before we do that, I need to provide you with two caveats about recession forecasts:

Economists, as a group, have never correctly predicted a recession: They tend to be overly-optimistic as a profession. Some of it can be blamed on their employers, who tend to dislike negative sentiment as bad for business; Some of it can be blamed on the tools of profession, which are not particularly well suited for determining contractions in advance.

• The public, as a group, predicts many recessions that never occur. People internalize and over-emphasize their own tensions, stresses, worries etc. and extrapolate these out toward the economy. The old joke is they predicted 9 of the past 4 recessions.

I laid out my views on forecasting years ago in a column titled "The
Folly of Forecasting

What is the value of these surveys? Sentiment and psychology, handicapping the political races, and getting an early feel for potential market impacting legislation.

What factors are worth noting?

-Almost 2/3es of Americans say a
recession is likely in the next year;
-A majority believes the
economy is already faltering
-65% (versus 29%) expect a
-51% say the economy is
doing poorly; 46% say it is doing well;
- This is the gloomiest view since February 2003, and a significant shift from June 2007, when 57% percent said it was doing well.

Tax Policy:
-Two in
three say they haven’t benefited from the Bush tax cuts;
-A majority of Americans say they would tolerate higher
taxes — if it paid for universal health care;

Universal Health Care
-60% said they would be willing to
repeal tax cuts to help pay for a health-care program that
insures all Americans;
-Most of the highest income group polled, those in households
earning more than $100,000, support it.
-More than 80% of Democrats say they like the plan; most Republicans oppose it. -Independent voters also support universal health care;
-52% vs 36% favored health and
education spending as a better economic stimulus than tax cuts.   

Taxing Investment Income
-Less than 50% say investment income should be taxed at the
same rate as wages.
-16% say
investment income tax rates should be raised; slightly more
favor keeping rates the same

Subprime mortgage
-Some respondents want Federal authorities to
help delinquent homeowners refi loans; -Others say
we need new regulations;
-28% say the market should be allowed to correct itself.   

Federal Reserve

-38% percent approve how Ben Bernanke is handling his job;
-In March 2007, Bernanke had a 50% approval rating 


Fascinating stuff; Go read the full piece . . .

Americans Turn Negative on Economy, Expect Recession, Poll Says
Matthew Benjamin
Bloomberg, Oct. 25 2007

Category: Economy, Psychology, Taxes and Policy

Crude Oil above $92

Category: Commodities, Currency, Economy, Federal Reserve, Inflation, Taxes and Policy

Blog Watch: The State Department

Category: Taxes and Policy, Weblogs

Can Housing Be “Rescued?”

Category: Credit, Data Analysis, Real Estate, Taxes and Policy

Mortgage Resets? Try Chapter 13 Bankruptcy!

Fascinating front page WSJ article today, titled More Debtors Use Bankruptcy To Keep Homes. It seems that Chapter 13 filings are gaining in popularity. Why? Because they halt foreclosure proceedings: “Last month, as the nation’s housing slump continued, consumer bankruptcy filings increased almost 23% from a year earlier – representing nearly 69,000 people — according…Read More

Category: Credit, Economy, Psychology, Real Estate, Taxes and Policy

No Free Lunch: Ongoing Ramifications of an Easy Fed

Category: Commodities, Currency, Federal Reserve, Inflation, Taxes and Policy

Global Taxes as a Percentage of GDP

Category: Economy, Taxes and Policy

Real World Consequences of Core Inflation Focus

Category: Federal Reserve, Financial Press, Inflation, Taxes and Policy

Ease of Doing Business by Country

Category: Data Analysis, Politics, Taxes and Policy

The Economic Far Right & the G.O.P.

Category: Economy, Politics, Psychology, Taxes and Policy