Skip to main content
District
  1. Contact
  2. Individual Teacher Pages
  3. Levering, Sam
  4. Fiscal and Monetary, FED, GDP, Old Current Events

Fiscal and Monetary, FED, GDP, Old Current Events

  • Date Assigned: 08/25/2021
    Date Due: 08/31/2021

     

    I video college loans.American Dream 26 min

  • Date Assigned: 12/01/2019
    Date Due: 12/19/2019


    Please print these 2 outlines ASAP and bring it to class. 
     
    Read it and study it thoroughly--multiple times ASAP.  All of it  
     
    This information is on your final exam.  Be sure to learn the linkages especially well!

     

    FINAL EXAM FISCAL AND MONETARY POLICY READER. PRINT, HIGHLIGHT, READ ASAP!!! BRING TO CLASS EVERY DAY.

     

    vocab c. 16 final

  • Date Assigned: 12/01/2019
    Date Due: 12/19/2019

     

    REVIEW QUESTIONS TO PRINT AND KNOW FOR FINAL EXAM--FILL IN AND SCANTRON

  • 12/01/2019

    12/04/2019

    --Please read the following 2 current events.  Please then write a one-half to 3/4-page summary for each article (so I will get TWO  1/2 to 3/4 page summaries. Do one on the front and one on the back of the same sheet of paper).  DO NOT PRINT THE ARTICLES.  Just turn in your 2 summaries.  Please use language pertaining to Keynesianism, monetary policy, fiscal policy, structural reforms, GDP = C + I + G + Xn  (Xn = Net exports.  Remember  Exports increase a country's GDP).

    Article I -- South Korea

    https://www.bloomberg.com/news/articles/2019-10-23/south-korea-s-economy-grows-at-slower-pace-amid-export-slump

    South Korea’s Economy Slows as Trade War Drags on Investment

    By Sam Kim    Updated on  

    • Growth on track for worst performance since financial crisis

    • Export gains suggest global tech sector could be over worst​​​​​​​

      Gross domestic product increased 0.4% from the previous quarter, the Bank of Korea said in a statement, compared with an estimate by economists of 0.5%. From a year earlier, the economy expanded 2%, as projected in a Bloomberg survey.

    While exports rose in the quarter, improving from the sharp falls seen at the beginning of the year, the extended run of export weakness and doubts about the strength of overall growth are weighing on investment. Concerns over weakening investment provide another reason for the government and central bank to continue bolstering their support for the economy.

    Following the BOK’s rate cut last week to support prices and growth, Governor Lee Ju-yeol said the effects of the trade war would likely trim South Korea’s economic growth by 0.4 percentage point this year.

    That leaves the economy needing a sharp acceleration in the last three months of 2019 to stop growth from falling below 2%. An expansion of almost 1% in the fourth quarter will be needed to achieve that, with annual growth of 1.8% more likely, according to Cho Yong-gu, a fixed-income strategist at Shinyoung Securities.

    The improvement in exports, which grew 4.1% in real terms from the second quarter, indicates that weakness in the global tech sector may be over the worst. The BOK noted growth in semiconductor and car shipments compared with the previous three months.

    “There are some signs of a recovery in exports,” Cho said. “But the trade war has clearly taken a toll on shipments and falling exports have led to a slump in facilities investment.”

    If facilities investment hurt most in 1Q, construction is to blame for 3Q woes

    Governor Lee acknowledged the likelihood of growth falling below 2% in parliament after the release of the GDP data. With interest rates already at a record low Lee said the government’s fiscal policy had a role to play in boosting growth in the fourth quarter. Lee has said there’s no need for non-conventional policy support yet, though the central bank is looking at its options.

    Bank of Korea in Easing Mode Spurs Speculation QE May Be Needed

    President Moon Jae-in said earlier this week that an expansionary fiscal policy was essential over the coming year, given the economy’s “grave situation” amid the spread of trade protectionism.

    Still, some economists said the central bank would have to keep playing its part as the government ramps up spending to prop up growth and prices, which recently began to fall.

    “South Korea is where the world confirms the impact of the U.S.-China trade war on economic growth,” said Lee Sang-jae, chief economist for Eugene Investment & Securities. The problem for Korea is that because its small economy is so open to global trends, the power of fiscal policy is more limited than in other less export-reliant economies.

    “Deflationary trends are growing chronic and the BOK faces a choice like other global central banks to pursue an aggressive monetary policy,” he said.

    What Bloomberg’s Economists Say

    “South Korea’s stepped-up policy support failed to offset downward pressure on the economy in 3Q from the U.S.-China trade war. A drop in investment and drag from net exports weighed on growth, while consumption slowed. We expect more policy support to shield the economy from external risks -- with fiscal policy taking the lead as the Bank of Korea’s policy ammunition runs low.”
    --Justin Jimenez, Bloomberg Economics

    ----------------------------------------------------------------------------------------------------------------------------------------------

    Article 2:  Japan's economy:

     https://www.wsj.com/articles/japans-economy-grew-less-than-expected-in-third-quarter-11573691974

      

    <>Japan’s Economy Hits the Skids—and Things Are Likely to Get Worse

    U.S.-China trade dispute and Tokyo’s frictions with South Korea weighed on Japanese exports

    y 

    Megumi Fujikawa

    TOKYO—Japan’s economy grew at the slowest pace in a year as the U.S.-China trade dispute and Tokyo’s frictions with South Korea weighed on exports.

    Japan, the world’s third-largest economy after the U.S. and China, expanded at an annualized rate of 0.2% during the July-September quarter, following a 1.8% expansion in the previous quarter. It was the fourth straight quarter of growth but the slowest pace in a year.

    Economists said the slowdown in the global economy would pressure the Japanese economy in the current quarter, when consumption is also expected to soften owing to the impact of a sales tax increase on Oct. 1.

    Real exports fell 0.7% on quarter during July-September. Exports of goods were nearly flat, reflecting weakness in China, while service exports declined 4.4%—the biggest drop in seven years.

    Spending by tourists in Japan, which shows up as an export of services in the national accounts, suffered because Korean visitors fell by more than half after a clash between Seoul and Tokyo over World War II history and other issues.

    “These two factors are unlikely to improve dramatically,” said Mari Iwashita, chief market economist at Daiwa Securities. “It is difficult to expect any positive contribution from external demand in the 

    October-December period.”

    A powerful typhoon that hit a wide swath of the country in October is also likely to damp consumption in the quarter.

    Ms. Iwashita expects the Japanese economy to shrink by annualized 2.1% in the final quarter of 2019, although she forecasts a return to growth next year when the effects of the tax increase on consumption are likely to recede.

    The economy may also get support from a bigger-than-usual extra budget for the final months of the fiscal year, which ends in March, as well as spending for the year beginning April 2020. Last week, Prime Minister Shinzo Abe called for spending to rebuild areas hit by recent natural disasters. He also cited global risks such as the U.S.-China trade dispute.

    Neighbor's Pain: China's slowing growth has hurt Japan'seconomy.Japanese exports to China, change fromprevious yearSource: Japan Ministry of Finance

    “One of the biggest reasons why we are compiling an economic stimulus package is the slowdown in the global economy as developments around the world are affecting supply chains including Japan,” economy minister Yasutoshi Nishimura said Thursday. “We will keep in mind the possibility that growing global uncertainties might affect consumer sentiment.”

    The government will also pay close attention to the impact of the tax increase last month, but any negative effects should be smaller than the previous increase in April 2014, Mr. Nishimura said.

    Private consumption, which accounts for more than half of gross domestic product, increased slightly in the July-September quarter as consumers bought more durable goods such as air conditioners and daily necessities such as cosmetics. The national sales tax rose to 10% on Oct. 1 from 8%.

    Volatility in consumption was relatively limited because the government introduced measures to keep spending going after the tax increase. Food is exempt from the increase, and many stores are offering government-funded discount programs for purchases made with smartphone apps, credit cards or other noncash means.

  • Date Assigned: 10/01/2019
    Date Due: 10/04/2019


    Please read the following 2 current events on the slowing US economy.

    For each one, write a summary and/or give bullet points (3/4 page for each article; use front and back of college rule paper)

    I will collect from you the 1 page with 2 3/4 page summaries of the 2 articles this Friday

    Emphasize  GDP,  consumer spending, business investment, trade (exports), consumer sentiment, manufacturing, etc.  Also interest rates, value of dollar, inflation.

    2 GDP current events

  • Date Assigned: 11/30/2018
    Date Due: 12/20/2018


    article 1 about asset bubbles:  

    article 2:

    http://finance.yahoo.com/news/breaking-news--fed-announcement-on-interest-rates-154848233.html

    article 3 is below and is from class today

    Read this article to help with quiz and understand the Fed's decision Thursday:

    Is now time for a Fed rate hike? Here are 2 clashing views

    By CHRISTOPHER S. RUGABER and PAUL WISEMAN 1 hour ago

    WASHINGTON (AP) — For seven years — through political fights, Europe debt crises and market panic — investors could count on one thing: Short-term U.S. interest rates would stay locked near zero. Such was the will of the Federal Reserve, which remained wary of the economy's durability long after the gravest recession since the 1930s had ended.

    Now, with a vastly strengthened economy, the Fed is weighing whether to start phasing out the era of easy money on Thursday. It would be its first rate hike since 2006. Awaiting the decision, markets have been gripped by tension. Ask some economists, and they'll tell you now is the time for a hike. Not so soon, others say. Here's the case for a rate hike now — and the case for delaying it — as summarized by two AP reporters.

    — WHY THE FED SHOULD RAISE RATES NOW   By CHRISTOPHER S. RUGABER

    What's the Fed waiting for? The economy keeps expanding, and employers keep hiring: They've added . 12.6 million jobs since 2010 — far beyond the 8.7 million lost to the Great Recession. The unemployment rate is 5.1 percent. It hasn't been that low in seven years. Cars are flying off lots at the fastest pace since 2001.

    Home purchases have regained their pre-recession levels. Americans are flocking to trendy new eateries, lifting restaurant and bar sales a healthy 9 percent in the past year.

    "And here we are worrying about whether the economy could possibly withstand a quarter-point hike," says Paul Ashworth, an economist at Capital Economics, a forecasting firm.

    Critics argue that by continuing to pin the rate it controls at a record low long after the economic crisis has faded, the Fed remains oddly in a state of emergency. In 2008, when it first slashed its rate to near zero, the financial system was teetering. The economy was hemorrhaging jobs. Unemployment would soon hit 10 percent. Big banks and car companies needed bailouts.

    Since those dark days, individuals and companies have repaired their finances. They may no longer need ultra-low rates to borrow and spend. It's true that pay raises are still meager. And a lot of Americans have given up even looking for work — a trend that has artificially helped shrink the unemployment rate. But otherwise, many analysts note, today's economy is just the kind that the Fed would presumably want: Steady, sustainable growth that doesn't seem to have inflated bubbles in stocks or housing.

    So far. That might change if rates stay at zero much longer. Joseph Carson, U.S. economist at Alliance Bernstein, points out that higher stock and home prices have boosted Americans' wealth to a level equal to six times income. That's akin to levels reached at the peak of bubbles in stock prices (1999) and the housing market (2007).

    The bursting of those two bubbles triggered recessions. Modest rate hikes starting now could help avert another such disaster and actually prolong growth, Carson says. Some economists don't want the Fed to hike until paychecks start accelerating. Average hourly pay has risen just 2.2 percent in the past 12 months, below the 3.5 percent rate considered healthy. But sluggish pay increases may partly reflect lousy growth in worker productivity in the past five years. And there's probably little the Fed could do about how efficient workers are anyway.

    What about the stock market turbulence? Some analysts have pointed to that as a reason to delay a rate increase. Yet the market's woes may be due in part to uncertainty around the Fed's timetable for a hike. A rate increase would end the uncertainty. It might also reassure investors that the Fed is confident in the economy.

    Inflation does remain below the Fed's 2 percent target, having risen just 0.3 percent in the past 12 months, according to the central bank's preferred gauge. But advocates for a rate hike say that mostly reflects the plunge in energy prices in the second half of last year. Jeffery Lacker, president of the Federal Reserve Bank of Richmond, notes that since January, overall prices have risen at a 2.2 percent annual rate.

    Some economists who want the Fed to postpone a rate increase think a delay would allow the economy and pay growth to strengthen further. But a scant hike in the Fed's short term rate wouldn't likely weigh on growth. The Fed wouldn't be trying to rein in an overheating economy. It just wants to slowly withdraw the emergency aid it's supplied for seven years.

    "It's not like there will be no stimulus," Ashworth says. "There will be just slightly less stimulus than there was before."

    — WHY THE FED SHOULDN'T RATES NOW By PAUL WISEMAN

    Why put the economy at unnecessary risk? That's the fundamental argument against a Fed rate hike now: In light of fear about China's weakening economy and anxiety in financial markets, some analysts argue, why not play it safe until the picture brightens?

    The usual factors that compel a rate hike — signs of an overheated economy building inflation pressures, for example — are nowhere to be found. Not yet, anyway. Keeping the Fed's benchmark at record lows might further support borrowing, spending and growth.

    That's why Christine Lagarde, managing director of the International Monetary Fund, has implored the Fed to wait. "The economy would be better off with a rate hike in early 2016," Lagarde said in June.

    Lagarde and like-minded Fed watchers worry about the risk that a rate hike would prove premature — and end up damaging the economy. They feel that that risk outweighs the possibility that the Fed might wait too long to raise rates and cause inflation to rise too fast.

    Consider what happened when an impatient European Central Bank hiked rates in 2011, two years after a devastating downturn. The countries that share the euro currency tumbled back into recession. The ECB has since reversed course and begun pumping money into the European economy to try to revive growth. Might the Fed risk the same mistake?

    Nor is the inflation bogeyman in sight. The Fed's favored measure of price levels rose a barely visible 0.3 percent in July from a year earlier — or 1.2 percent, if you exclude volatile food and energy prices. That's well below the Fed's 2 percent target. "We simply don't have inflation," says Sung Won Sohn, an economist at California State University Channel Islands. "There's little prospect it's going to approach 2 percent anytime soon."

    A Fed rate is hike is supposed slow an overheating economy. Though the U.S. economy is fairly healthy, it's hardly booming. American employers have added an average 212,000 jobs a month so far this year — solid but down from last year's average of nearly 260,000. The unemployment rate has reached a seven-year low of 5.1 percent, but that's partly because an unusually large proportion of Americans have stopped looking for work and are no longer counted among the jobless. Hourly pay growth remains meager.

    Troubles abroad give the Fed even more reason for caution, say opponents of a rate hike. The Chinese economy has been slowing at a worrisome rate. Even though China's official reports still show enviable growth — 7 percent from April through June from a year earlier — its economic statistics are widely regarded as inflated. Many China watchers fear that actual economic growth is far worse.

    Skepticism intensified after Chinese authorities caught the world by surprise last month by devaluing their yuan currency. Beijing insisted the move was just meant to catch up to market signals that the yuan was overvalued. But the move also seemed to suggest desperation — a bid to give Chinese exporters a price edge and juice an economy that must be worse than anyone realizes.

    China's diminished appetite for foreign commodities has hurt developing economies — from Brazil to Nigeria — that depend on Chinese demand for raw materials. The IMF has warned that China's slowdown appears to be causing damage beyond its borders.

    Which doesn't exactly brighten the outlook for the U.S. economy. If our economy is really so healthy, why aren't wages rising significantly? And if the U.S. economy is still less than robust, is there any compelling reason for the Fed to hike now?

    "Are we at full employment?" Harvard University economist Kenneth Rogoff says. "We don't know. We've gone through a storm, and we don't quite know where the ship is."

  • Date Assigned: 11/30/2018
    Date Due: 12/20/2018


    Please read the following 2 articles.  Regarding the Larry Summers article please write each of the 11 tweets the author posted on why to NOT raise interest rates.  After each one, elaborate on what you learned in class regarding and agree or disagree with them (This will be at least side of a sheet of paper).

    http://finance.yahoo.com/news/larry-summers-tweet-fed-argument-112216082.html

    With the 2nd article, please write a one page summary on why the Fed left rates unchanged and other statistics facts relating to the upcoming forecasts of economic growth, etc.   Also, write whether you think the Fed should have raised rates or left them unchanged and why.  1 page summary.

    Here's the second article link 

    http://www.bloomberg.com/news/articles/2016-09-21/fed-leaves-rates-unchanged-signals-2016-hike-still-likely

  • Date Assigned: 11/30/2016
    Date Due: 12/19/2017


    Please print these 2 outlines ASAP and bring it to class. 
     
    Read it and study it thoroughly--multiple times ASAP.  All of it  
     
    This information is on your final exam.  Be sure to learn the linkages especially well!
     
     
    FINAL EXAM FISCAL AND MONETARY POLICY READER. PRINT, HIGHLIGHT, READ ASAP!!! BRING TO CLASS EVERY DAY.

     

    vocab c. 16 final

  • Date Assigned: 12/07/2016
    Date Due: 12/19/2016


    more vocab words on the final exam:

     

    More Vocab for Gov Final

  • Date Assigned: 09/13/2016
    Date Due: 09/22/2016


    Here is a copy of the in class handout we are reading this week. 

     

    monetary fiscal policy

  • 12/04/2015

    12/07/2015

    Do NOT print these 3 current events!!!   Read the 3 articles I've attached (or have below on this page).  Then give a 3/4 page summary for each of the 3.  Use linkages in them here and there.  Mention upside risks, GDP, inflation targets, etc.  Be thorough and try to use language that we've discussed in class to help you better prepare for upcoming final exam.

    3 current events to be summarized

    Solid jobs report all but guarantees Fed rate hike; now the question is: How fast?  LAT, 12/4/15

    The solid November jobs report released Friday shifts the big economic question from when will the Federal Reserve raise a key interest rate to how quickly will it go up.  Economists said the solid 211,000 net new jobs added last month makes a long anticipated increase in the benchmark federal funds rate this month virtually a done deal.

    The central bank’s policymaking Federal Open Market Committee hasn’t raised the rate in nearly a decade, and it’s been near zero since late 2008 in an effort to stimulate the economy. Now they have the reason to have it.  Yellen has said the Fed would raise the rate gradually to avoid shocking the economy. The first move is expected to be just a 0.25-percentage-point increase, and Fed policymakers could wait until June to nudge it up by that amount again.

    Gad Levanon, director of macroeconomic and labor market research at the Conference Board said the strong jobs report could lead the Fed to move more quickly.  “It’s moving the discussion toward what’s next because unless we have some catastrophe in the markets in the coming week, it’s a done deal in terms of [a rate hike in] December," he said.  “If job growth continued to be 200,000 per month, I think the fed funds rate will be higher than 1% a year from now.”

    Investors were encouraged by the strong jobs report. The Dow Jones industrial average shot up about 250 points in early trading. That followed a 252-point decline on Thursday, after new stimulus measures from the European Central Bank fell short of expectations.

    Friday’s jobs report exceeded expectations. Economists had forecast a gain of about 190,000 net new jobs.  The unemployment rate held steady at 5% in November, the lowest level in more than seven years, and it did so for good reasons. About 273,000 people joined the labor force last month, lifting the closely watched participation rate up a bit to 62.5%, though still an historically low level.

    Wages continued to move up. Average hourly earnings rose 4 cents to $25.25.  For the 12 months ended Nov. 30, hourly wages are up 2.3%, well above the low inflation rate.

    The Labor Department revised up job growth for September and October by a combined 35,000. The revisions put October job growth at 298,000, the best month since last year.  Some of October’s growth was the economy making up for a lackluster August and September, when job growth was well below 200,000 a month.  Job growth has averaged 218,000 the past three months -- and for the 12 months ended Nov. 30, the labor market has added an average of 237,000 net new positions.  Beth Ann Bovino, chief U.S. economist at Standard & Poor’s Ratings Services, said that if the economy continues to strengthen as she expects, the federal funds rate could be increased to about 1.25% by the end of next year.

    “The Fed has indicated that that a rate hike is all but ensured after their December meeting,” she said. “We believe today’s strong payrolls report, indicating more jobs with bigger paychecks, will give them that extra push they needed to pull the trigger at their ... meeting in December.”

    The strong housing market was a big factor in November’s job gains. Construction companies added 46,000 net new jobs, the most in nearly two years.  Payrolls at restaurants and bars increased by 32,000, while retailers added 31,000 net new positions and healthcare providers added 24,000. 

    But manufacturers continued to be hurt by the strong dollar, which makes U.S. goods more expensive abroad. The sector lost 1,000 net jobs in November, the third decline in four months.  A big factor is the loss of mining jobs because of the drop in oil prices. That sector lost 11,000 jobs in November and has shed 123,000 positions this year.

    “The manufacturing sector continues to struggle,” said Chad Moutray, chief economist for the National Assn. of Manufacturers.  “Our exports are down pretty significantly so far this year. Part of that is the dollar and part of it is that many of our key trading powers are not growing as fast as we like,” he said, noting slowing economies in Europe and Asia.

    A Fed interest rate increase in December shouldn’t hurt the industry because it’s been assumed to be coming soon, Moutray said.  But the pace of rate hikes could be a factor if the global economy doesn’t improve.  “In general, manufacturers are nervous about the Fed raising rates,” he said.  “The real guessing game is not so much the first increase but when is the second increase?” Moutray said. “How aggressive is the Fed going to be next year in raising rates?”

    Downplaying risk of recession, Yellen indicates an interest rate hike is coming this month, LAT, 12/4/15

     One by one, lawmakers bombarded Federal Reserve Chairwoman Janet L. Yellen with reasons to hold off on raising a key interest rate for the first time in nearly a decade: slow wage growth, the strong dollar, recession fears and recent attacks in Paris and San Bernardino.

    Yellen downplayed each one of them Thursday. She didn't definitively indicate that Fed policymakers would nudge up the benchmark rate when they meet Dec. 15-16, but Yellen solidified the expectations of analysts who now see it as a near certainty.  “It sure sounds to me like she's seen what she's looking for” in the recovery, said Gus Faucher, senior economist at PNC Financial Services Group. “If anybody's surprised the Fed raises rates in two weeks, they haven't been paying attention.”

    Although Yellen said the U.S. economy has “recovered substantially since the Great Recession,” she acknowledged risks, including slower global growth and outbreaks of domestic or international violence.  But she said one reason to raise the so-called federal funds rate, which affects terms for consumer and business loans, is so the Fed has the flexibility to lower it if those risks cause the economy to falter in the future.

    The federal funds rate has been near zero since December 2008 in an attempt to boost economic growth during the Great Recession and its aftermath. The Fed began lowering the rate in 2007 from 5.25% as the economy slowed.  A rate increase “will be a testament … to how far our economy has come in recovering from the effects of the financial crisis and the Great Recession,” Yellen said during a hearing by Congress' Joint Economic Committee.  “In that sense, it is a day that I expect we all are looking forward to,” she said. 

    But several lawmakers peppered her with worries about the state of the U.S. economy and concerns that the Fed was moving in a different direction than the European Central Bank, which announced new stimulus measures Thursday.

    Sen. Dan Coats (R-Ind.), the committee's chairman, asked Yellen whether “coordinated terrorist attacks or just an acceleration of the kind of violence we're seeing — mass shootings and so forth” could have a negative effect on the economy by causing people to hold back on spending or fear going to a mall to shop.

    Yellen said the Fed watches those risks “very carefully.”  “I would not say that I see a significant effect at this point, although certainly in the aftermath of the financial crisis, we've seen rather cautious behavior on the part of households and firms,” she said.

    She promised that the Fed would move cautiously, inching the interest rate up slowly. Some analysts have predicted the Fed could wait as long as six months after the first 0.25 percentage point increase to enact another one.

    But Yellen warned that Fed policymakers couldn't wait too long because there are “well-documented lags in the effect of monetary policy” on the broader economy. The longer the Fed waits, the faster it might have to raise rates, which could harm the economy, she said.  “Such an abrupt tightening would risk disrupting financial markets and perhaps even inadvertently push the economy into a recession,” Yellen said.

    She downplayed the short-term risk of a U.S. recession, discounting a Citigroup report this week that there was a 65% chance that would happen next year.  “I can't put a number on the risk of a recession, but I absolutely wouldn't see it as anything approaching 65%,” Yellen said.

    Based on history, the economy is well past due for a recession after expanding for more than six years. But the sluggish pace of economic growth has helped stave off circumstances, like a housing bubble or overextended consumers, that would trigger a downturn, said Faucher, the economist.  “The flip side of the disappointing recovery means we can continue at this pace for a while longer without creating the conditions for a recession,” he said, putting the risk at 15% next year.

    Wages also are forecast to increase, continuing what Yellen said was “tentative evidence” of a trend that would push low inflation closer to the Fed's 2% annual target.  But she indicated that a weaker-than-expected report might not be enough to wait on a rate hike.  “We need to be looking at underlying trends in the data and not over-weighting any number,” Yellen said.

    -----------------------------    Article 3 below

    ECB expands stimulus, but not as much as expected   Associated Press, 12/4/15

    The European Central Bank cut a key interest rate and extended its stimulus program to bolster the 19-country eurozone economy — but the actions underwhelmed investors, who pushed stocks sharply lower.

    The main move by the ECB was to cut the interest rate on deposits from commercial banks from minus 0.2 percent to minus 0.3 percent.  That is intended to push banks to lend by imposing a penalty on the cash they park at the central bank. Many in the markets, however, had predicted a bigger cut to minus 0.4 percent.  And alongside other measures, ECB President Mario Draghi said the bank will extend the duration of its bond-buying program, which aims to make borrowing cheaper for businesses and consumers.

    The program, which was due to run at least through September 2016, is now intended to run until March 2017 or beyond if necessary. Because the monthly cap of 60 billion euros in bond purchases was maintained, that will increase the overall size of the 1.1 trillion euro ($1.2 trillion) program by 360 billion euros.

    "Today's decisions were taken in order to secure a return of inflation rates towards levels that are below, but close to, 2 percent and thereby to anchor medium-term inflation expectations," Draghi told reporters at a news conference.

    The ECB, the chief monetary authority for the countries that use the shared euro currency, also:

    — expanded the kinds of bonds it would buy, to include those issued by regional authorities.

    — said it would re-invest principal payments on the bonds it has bought. This is an important step that means the eventual maturing of the bonds will not reduce the level of monetary stimulus over coming months and years.

    The actions were not enough, however, to satisfy markets, which had expected significantly more.  Having spent most of the day higher, European stock markets plunged. Germany's DAX was down a whopping 3 percent while the CAC-40 in France slid 2.6 percent.

    "This has been a huge failure from the ECB," said James Hughes, chief market analyst at GKFX. "Much more was expected."  Draghi said the decisions were not unanimous but that there was a very large majority in favor of the moves. He said the deposit rate cut was "adequate."  "I don't think our communication was wrong," he said. "I think these measures need time to be fully appreciated."

    Analyst Carsten Brzeski at ING-DiBa said stimulus skeptics may have had more clout than expected during Thursday's meeting of the 25-member governing council. "The ECB's decision to deliver only a very bare minimum of additional monetary stimulus indicates that the hawks at the ECB are stronger than many market participants had thought," he said.

    ECB Board member Jens Weidmann, who also heads Germany's national central bank, has spoken out recently, saying that existing measures need time to work and that the outlook for the economy was not that bad.

    The ECB wants to raise annual inflation toward its goal of just under 2 percent as part of its legal mandate to maintain price stability.  Draghi said there are "continued downside risks" to the inflation outlook. The ECB trimmed its forecasts for inflation next year, to 1 percent from 1.1 percent previously, and for 2017 to 1.6 percent from 1.7 percent.  "The persistence of low inflation rates reflects sizeable economic slack weighing on domestic price pressures and headwinds from the external environment," Draghi said.

    Low inflation can help consumers by making their euros go farther. But it is a sign of weak demand, and can lead to chronic stagnation if people begin anticipating flat or falling prices in purchasing decisions and wage agreements.

    Weak inflation of the sort prevalent in the eurozone makes it harder for the currency union's indebted members, such as Greece, to reduce their burdens and to bring their business costs down relative to their eurozone trade partners — a necessary step in their economy recovery.

    The eurozone economy as a whole grew by a moderate 0.3 percent in the third quarter, while unemployment is falling but only gradually from high levels.  Draghi said the economic recovery should proceed but that it "continues to be dampened by subdued growth prospects in emerging markets and moderate global trade, the necessary balance sheet adjustments in a number of sectors and the sluggish pace of implementation of structural reforms."  The ECB's current policy path contrasts with that of the U.S. Federal Reserve, which has ended its own bond purchase program and is expected to start raising interest rates from near zero at its next meeting Dec. 16.

  • Date Assigned: 11/29/2015
    Date Due: 12/02/2015


    Please print the following 3 current events on world economies.  Highlight the key information and then write summaries for the 3 articles.  In your summaries, be sure to emphasize GDP, monetary and fiscal policy.  What are the governments/central banks doing and with what intent.  How might their policies help their economies.

    Write the following lengths:

    a 1 page summary on the Latin American Economies

    a 3/4 page summary on China's economy

    a 1/2 page summary on Colombia's economy

     

    3 current events

  • Date Assigned: 09/13/2015
    Date Due: 09/15/2015


    Please click on the 2 links below.  Print both articles (please save paper and ink--copy/paste text into a word document and make font size 10 or 12).

    You will read the articles, highlight them in and then turn them in.  For each article, you will write a 1 page summary (so turn in 2 full sides of info) of the articles.  Emphasize the benefits and costs of raising interest rates this week.  Pay attention to the US and overseas situation, the value of the dollar, unemployment, inflation, GDP.

    THESE ARE DUE TUESDAY.  WE ARE HAVING A QUIZ ON THIS MATERIAL THURDAY.  BE THOROUGH AND TAKE THIS ASSIGNMENT SERIOUSLY.

    http://www.economist.com/news/leaders/21664137-fed-should-wait-until-inflation-closer-target-raising-rates-false-start

    http://finance.yahoo.com/news/fed-dominate-week-central-bank-091806552.html

  • Date Assigned: 09/13/2015
    Date Due: 09/15/2015


    Please print these outlines immediately, read them, and bring to class Monday.  (Tuesday at the latest).

     We will go over these Monday.

     

     Economy 1 outlines

  • Date Assigned: 09/01/2015
    Date Due: 09/08/2015

    4 current events

    Please click on the above link.  There are 4 current events in a word document.  Please read all 4 articles (you do not need to print/highlight them)--one at a time.  Please write a one-third to one-half page summary for each article.  Be sure to focus on numbers, causes of problems and/or policy issues.  Remember, GDP = consumer spending + business investment + government spending + net exports.  Mention numbers and categories of spending in your summaries.

  • Date Assigned: 11/30/2014
    Date Due: 12/04/2014


    Please print the 3 articles below (scratch paper, smaller fontsize), highlight them, and then write a 3/4 page on Brazil, then 1/2 page each on India and Italy.
     
    Be sure to emphasize GDP = C + I + G + Xn  and what's up or down. Also emphasize monetary policy and fiscal policy.
    Emphasize trade as well.
     
     
    India, 2014
     
    http://www.rttnews.com/2419141/oecd-structural-reforms-to-raise-india-s-growth.aspx
      
    Italy, 2011 - present
     
    http://www.businessweek.com/magazine/italys-labor-pains-11162011.html

  • Date Assigned: 12/02/2014
    Date Due: 12/03/2014


    Please print the 2 articles below (scratch paper, smaller fontsize), highlight them, and then write a 1 and 1/2 page+ summary combining the two articles. 
     
    Be sure to emphasize GDP = C + I + G + Xn  and what's up or down.  Also emphasize monetary policy and fiscal policy and how trade is important.
    Please print the 2 articles below (scratch paper, smaller fontsize), highlight them, and then write a 1 and 1/2 page+ summary combining the two articles. 
     
    Be sure to emphasize GDP = C + I + G + Xn  and what's up or down.  Also emphasize monetary policy and fiscal policy and how trade is important.
     
    US, 2014
     
    http://blogs.wsj.com/briefly/2014/10/30/third-quarter-gdp-the-numbers/
     
    http://finance.yahoo.com/news/global-economy-creaking-euro-zone-113415404.html


    orphans: 2; text-align: left; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-text-stroke-width: 0px; background-color: #FFFFFF; text-decoration-style: initial; text-decoration-color: initial;"> 

    US, 2014
     
    http://blogs.wsj.com/briefly/2014/10/30/third-quarter-gdp-the-numbers/

    http://finance.yahoo.com/news/global-economy-creaking-euro-zone-113415404.html

  • Date Assigned: 09/12/2014
    Date Due: 09/17/2014


    Read these--it will be very useful for your quiz next week.
     
    https://finance.yahoo.com/news/fed-drop-considerable-time-next-184918051.html
     
    http://www.latimes.com/business/la-fi-fed-economy-20130917,0,2961669.story
     
     
    http://www.cnbc.com/id/101039110?__source=yahoo%7Cfinance%7Cheadline%7Cheadline%7Cstory&par=yahoo&doc=101039110%7CWhy%20a%20US%20recovery%20may%20sen
     
     
    http://finance.yahoo.com/news/heres-watch-wednesday-fed-192818376.html

  • Date Assigned: 09/26/2013
    Date Due: 10/09/2013


    Please answer the following questions from the following pages. 
    They are due on the day of the test.
     
    C. 5, section 5:      p. 142:  4
     
    C. 6, section 1:      p. 150:  4
     
    C. 7, section 3:      p. 202:  1, 4
     
    C. 8, section 1:      p. 213:  1,2,3,4
     
    C. 8, section 2:      p. 221:  1,3
     
    C. 8, section 3:      p. 230:  2,3
     
    C. 9, section 1:      p 240:  2,3,4
     
    C. 9, section 2:      p. 247:  1, 2, 3
     
    C. 9, section 3:      p. 254:  1,2,3,4

  • Date Assigned: 09/26/2013
    Date Due: 10/09/2013


    Please click on the link below to see the key vocabulary, pages, and sections for the Chapters 5-9 test


    C. 5-9 key Vocab and pages

  • Date Assigned: 09/26/2013
    Date Due: 10/09/2013

     

    c. 5-9 outline

  • Date Assigned: 09/26/2013
    Date Due: 10/09/2013

  • Date Assigned: 09/26/2013
    Date Due: 10/09/2013

    Chapters 5 - 9

  • Date Assigned: 12/08/2011
    Date Due: 12/12/2011


    Please read the following 3 articles.   The first is on Italy (continue onto page 2 on the web). 
     
    The 2nd article is on the current discussion about extending the US payroll taxcut. 
     
    The 3rd is on the China Bubble.
     
    Then, write a 3/4 page-to-one page summary for each of the 3 articles. 
     
    THIS IS DUE MONDAY.
     
     
    Italy economy article
     
    http://www.businessweek.com/magazine/italys-labor-pains-11162011.html
    ​​​​​​​ 
      
    tax cut article in US
     
    http://finance.yahoo.com/news/case-ending-payroll-tax-cut-183110012.html