Secondary Sources: Global Growth, Housing and Recovery, Stimulus Spending
–Global Growth: The Economist looks at the outlook for growth around the world for 2012. “Libya’s economy will grow faster than any other in 2012, according to the Economist Intelligence Unit’s forecasts, boosted by reconstruction following the fall of Muammar Qaddafi’s regime. The surge is a bounce-back from an even more precipitous slump while war raged. In Iraq, post-conflict chaos has delayed recovery but performance in 2012 may mark the start of something new. Mongolia is enjoying a mining boom and will benefit from investment in that sector; Angola and Niger will gain from relatively high commodity prices. China will continue to experience robust growth; this is fortunate since demand generated by the world’s second-largest economy will counteract some of the drag from the rich world. As for the fastest shrinkers, Europe’s economies feature prominently, as they remain embroiled in the Euro crisis. But Sudan will suffer the heaviest economic contraction, having lost three quarters of its oil reserves to South Sudan when that country seceded in July.”
–Housing Won’t Lead: Ed Glaeser says don’t count on housing to lead the recovery. ” It is a popular mantra, even among some economists, that the economy cannot recover until the housing market does, but I can’t imagine how either economic theory or history justifies that connection. Housing prices remained at 1991-crash levels through most of the good years of the mid-1990s. There is a tendency to spend some housing wealth, but that wealth isn’t the only driver of consumer demand. The current drop in the unemployment rate wasn’t produced by rising housing prices, and a sustained recovery depends far more on the fate of banks in Frankfurt than on home values in Atlanta. The biggest gift of the housing bust, however, should be wisdom. We should learn the folly of bribing Americans, through the home-mortgage interest deduction and the implicit subsidies offered by Freddie Mac and Fannie Mae, to borrow as much as possible to bet on the vagaries of housing prices.”
–Stimulus Spending: Doug Elmendorf says on the Congressional Budget Office’s director’s blog that actual stimulus spending is pretty close to CBO’s original estimate. ” Through September 2011, 78 percent of the expected total spending through 2019 has been recorded. As CBO expected, spending started relatively slowly in fiscal year 2009, with $114 billion in outlays stemming from ARRA that year. The peak effect of the legislation was in 2010, when outlays totaled $235 billion; about $145 billion was spent in 2011. ARRA spending began to wane in late 2010. The slowdown continued during 2011, as the law’s assistance to states through the Medicaid program ended and as assistance in the form of unemployment compensation and refundable tax credits declined. (Subsequent legislation extended some benefits to the unemployed and aid to states for Medicaid, but it also limited the duration of benefit increases in SNAP; the effects of such changes are not included in this analysis.)”
–Housing Won’t Lead: Ed Glaeser says don’t count on housing to lead the recovery. ” It is a popular mantra, even among some economists, that the economy cannot recover until the housing market does, but I can’t imagine how either economic theory or history justifies that connection. Housing prices remained at 1991-crash levels through most of the good years of the mid-1990s. There is a tendency to spend some housing wealth, but that wealth isn’t the only driver of consumer demand. The current drop in the unemployment rate wasn’t produced by rising housing prices, and a sustained recovery depends far more on the fate of banks in Frankfurt than on home values in Atlanta. The biggest gift of the housing bust, however, should be wisdom. We should learn the folly of bribing Americans, through the home-mortgage interest deduction and the implicit subsidies offered by Freddie Mac and Fannie Mae, to borrow as much as possible to bet on the vagaries of housing prices.”
–Stimulus Spending: Doug Elmendorf says on the Congressional Budget Office’s director’s blog that actual stimulus spending is pretty close to CBO’s original estimate. ” Through September 2011, 78 percent of the expected total spending through 2019 has been recorded. As CBO expected, spending started relatively slowly in fiscal year 2009, with $114 billion in outlays stemming from ARRA that year. The peak effect of the legislation was in 2010, when outlays totaled $235 billion; about $145 billion was spent in 2011. ARRA spending began to wane in late 2010. The slowdown continued during 2011, as the law’s assistance to states through the Medicaid program ended and as assistance in the form of unemployment compensation and refundable tax credits declined. (Subsequent legislation extended some benefits to the unemployed and aid to states for Medicaid, but it also limited the duration of benefit increases in SNAP; the effects of such changes are not included in this analysis.)”
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