More economists think interest rates are too high
12 hours 1 minute ago
A growing number of economists think interest rates are too high, according to data released Monday.
The National Association of Business Economists (NABE)'s February 2024 Economic Policy Survey found that 21% of analysts believe the Federal Reserve's interest rates are “too restrictive.” This compares to a response rate of 14% the last two times the group of economists was asked the question.
The Fed has kept the key federal funds rate at a 22-year high since July. The Fed has maintained a range of 5.25% to 5.50% to combat inflation, making borrowing costs high. Monetary policy becomes tight or restrictive when interest rates are raised to suppress consumption.
According to NABE, this is the third highest percentage of economists who think policy is too restrictive in the past 20 years.
When Colombia taxed wealth, the wealthy began moving their assets around.
13 hours 54 minutes ago
How can the government ensure that the super-rich pay their fair share of taxes? One old and hotly debated idea is to make sure that the wealthy pay not just their income, but what they already have. Imposing a wealth tax to ensure that people pay for.
Proponents of the U.S. wealth tax argue that under the current system, the ultra-wealthy pay less in taxes than the working class. Even billionaires complain about this disparity, with Warren Buffett once famously pointing out that he was paid a lower tax rate than his secretary.
President Joe Biden proposed a version of a wealth tax in 2022 that would require people with assets of $100 million or more to pay at least 20% income tax, but the idea did not become law.
But what actually happens when we try to tax the wealth of the wealthy? Researchers at the University of California, Los Angeles and the Colombian government have found that the government has implemented a series of tax law reforms, including the imposition of a temporary wealth tax. We analyzed what happened in Colombia between 2003 and 2014.
A report released Monday by the National Bureau of Economic Research found that wealthy people quickly began hiding large amounts of assets to avoid paying taxes, and continued to do so even after the wealth tax expired. did.
As soon as the interim wealth tax was imposed, the wealthy began overstating their debts, undervaluing their stock holdings, and moving their assets to overseas tax havens, reducing tax revenues by up to 20%, said UCLA's Juliana.・Londoño Velez and Javier said: The discovery was made by Avila Mahecha of the Colombian Tax Office.
As a result, if governments want to impose a wealth tax, they need to make sure they can track all the assets they are trying to tax, and ensure that assets cannot be easily shuffled into tax havens.
“It will be important to strengthen tax authorities' information about taxpayers' wealth,” the researchers wrote.
What Tuesday's CPI report means for the economy
15 hours 21 minutes ago
Forecasters hope Tuesday's report on inflation will bring the Federal Reserve closer to the confidence it has been seeking.
The consumer price index (CPI) is expected to rise at the lowest annualized rate in nearly three years in January, according to a survey of economists conducted by Dow Jones News and Newspapers. wall street journal.
This and other inflation reports in the coming months could be key in determining when and how fast the Fed will cut its benchmark interest rate. Federal Reserve Chairman Jerome Powell said he and other Fed policymakers want more “confidence” that inflation is under control before cutting interest rates.
“We believe part of the confidence the Fed is seeking comes from the disinflationary mix,” Bank of America economists said Monday. “Markets will also be watching its composition as it will inform the Fed's decisions on when to cut rates and increase inflation going forward.”
Read more about what Tuesday's report means for the economy here.
Consumers will continue to spend in 2024, according to NRF report
17 hours 20 minutes ago
Early indicators show that consumers will maintain their spending habits through 2024, with sales increasing again in January.
Core retail sales, which exclude volatile auto, gasoline and restaurant sales, rose 3.2% in January from a year earlier, according to a CNBC/National Retail Foundation report released Monday. That's better than the 2.4% year-on-year sales increase in December measured by the report.
Retail sales increased in six of the nine categories tracked by NRF, including health, clothing and groceries.
“January sales continued the strong December retail sales performance, which is great after a record-breaking holiday season,” said NRF President and CEO Matthew Shea. Ta.
The report comes ahead of Thursday's U.S. retail sales figures released by the Census Bureau, with economists looking to see whether consumers again exceed spending expectations.
From the perspective of Main Street, the economy is improving.
17 hours 44 minutes ago
As high inflation continues to subside, households' views on their personal finances and the economy are brightening.
Several optimistic indicators on the economy and personal finances brightened the outlook in January, according to the New York Fed's monthly survey of 1,300 households. Most people said their financial situation was better after November 2021 than a year ago. Additionally, the median expected inflation rate three years from now fell to 3.03%, the lowest level since March 2020.
The survey is the latest in a series of polls showing people's views on the economy are brightening as the high inflation of the past few years subsides. Sentiment is more in line with hard data showing that the economy and households are generally in good shape.
Despite the positive outlook, people had a gloomy view of some aspects of the labor market. Even if you lose your current job, the average chance of finding another job within the next three months is 54.2%, the lowest since September 2021. Recent government statistics on the labor market are mixed, with companies continuing to hire at high levels. Many people have canceled job offers in recent months, but the pace is fast.