by Calculated Risk on 9/09/2011 12:14:00 AM

Here is the fact sheet for The American Jobs Act

Some of the major proposals (total is around $450 billion):

1) Payroll tax cuts (approx $240 billion):

• Cutting payroll taxes in half for 160 million workers next year: The President’s plan will expand the payroll tax cut passed last year to cut workers payroll taxes in half in 2012 ...

• Cutting the payroll tax in half for 98 percent of businesses: The President’s plan will cut in half the taxes paid by businesses on their first $5 million in payroll ...

2) Schools and teachers / aid to states (approx $60 billion):

• Preventing up to 280,000 teacher layoffs, while keeping cops and firefighters on the job.

• Modernizing at least 35,000 public schools across the country,supporting new science labs, Internet-ready classrooms and renovations at schools across the country, in rural and urban areas.

3) Other infrastructure ($75 billion)

4) Extend unemployment insurance benefits ($49 billion).

5) Helping More Americans Refinance Mortgages (there are no details yet). "The President has instructed his economic team to work with Fannie Mae and Freddie Mac, their regulator the FHFA, major lenders and industry leaders to remove the barriers that exist in the current refinancing program (HARP) to help more borrowers benefit from today’s historically low interest rates."

More from Ezra Klein: What’s in the president’s jobs plan, and what comes next

by Calculated Risk on 9/08/2011 07:55:00 PM

From economist Tom Lawler: While normally I don’t put out an “early read” on existing home sales this early – mainly because not enough realtor associations/boards/MLS have released their stats to get a “good” national read – the reports that have come in so far suggest to me that existing home sales in August rebounded from July on a seasonally adjusted basis.

Last August the NAR estimated that existing home sales ran at a SAAR of 4.24 million. This August, of course, there was one more business day than last August, and this month’s seasonal factor will probably be 1.5%-2.0% higher than last August’s. The NAR estimated that July existing home sales – which came in south of “consensus,” and below what past pending home sales indices would have suggested (though it was right on top of my regional tracking) – ran at a SAAR of 4.67 million. A “flat” reading for seasonally adjusted existing home sales for August, then, would imply a YOY gain in NSA sales in the 11.8% to 12.3% range.

Incoming data, in my view, suggest a national YOY gain well above that – probably in the 16.8% range or so, which would imply that the NAR’s existing home sales estimate for August will probably come in at a seasonally adjusted annual rate of around 4.87 million, a gain from July of about 4.3%, and I think there may be more upside than downside risk to that forecast.

Click on graph for larger image in graph gallery.

Such an increase, by the way, is not broadly inconsistent with the latest pending home sales index, which showed a mild decline in July. After all, the gains in previous months didn’t show up in similar gains in closed sales, suggesting either (a) increased cancellations; (b) increased delays from contract to closing; or (c) a combination of both. Right now, the correct answer appears to be “c.” (August reflects Lawler forecast).

by Calculated Risk on 9/08/2011 06:40:00 PM

Here are some excerpts (via the WSJ):

I am sending this Congress a plan that you should pass right away. It’s called the American Jobs Act. There should be nothing controversial about this piece of legislation. Everything in here is the kind of proposal that’s been supported by both Democrats and Republicans – including many who sit here tonight. And everything in this bill will be paid for. Everything.

The purpose of the American Jobs Act is simple: to put more people back to work and more money in the pockets of those who are working. It will create more jobs for construction workers, more jobs for teachers, more jobs for veterans, and more jobs for the long-term unemployed. It will provide a tax break for companies who hire new workers, and it will cut payroll taxes in half for every working American and every small business. It will provide a jolt to an economy that has stalled, and give companies confidence that if they invest and hire, there will be customers for their products and services. You should pass this jobs plan right away.

Cut payroll taxes in half? I'll be looking for details.

by Calculated Risk on 9/08/2011 04:48:00 PM

The Greek 2 year yield is at 55%!

From the WSJ: Greece's Recession Deepens

Greece's economy sank deeper into recession in the second quarter than previously forecast, with gross domestic product contracting by 7.3% on the year. ...

Plunging domestic consumption was mostly responsible for the steep contraction rate ... With consumers bracing for the implementation of further austerity measures, promised in exchange for a fresh bailout to Greece ... Data showed Thursday that Greece's unemployment fell to 16% in June from 16.6% in May, but remained sharply above the rate of 11.6% a year earlier.

Perhaps the headline should read "Greece's Depression Deepens".

And there is more austerity to come, from the WSJ: Greek Officials Scramble to Find More Cuts

Greece's Socialist government is scrambling to cut public spending after receiving stark ultimatums from euro-zone governments that further rescue money will be withheld if Athens doesn't deliver on promises to reduce its budget deficit.

The government now is looking at unprecedented public-sector layoffs and cuts in civil-service perks ...

Without the aid, Greece is expected to run out of money within weeks, say senior Greek government officials.

The beatings will continue until morale improves.

by Calculated Risk on 9/08/2011 01:30:00 PM

Note: Bernanke did not discuss monetary policy options.

From Fed Chairman Ben Bernanke: The U.S. Economic Outlook. Excerpts on inflation:

The Outlook for Inflation
Let me turn now from the outlook for growth to the outlook for inflation. Prices of many commodities, notably oil, increased sharply earlier this year. Higher gasoline and food prices translated directly into increased inflation for consumers, and in some cases producers of other goods and services were able to pass through their higher costs to their customers as well. In addition, the global supply disruptions associated with the disaster in Japan put upward pressure on motor vehicle prices. As a result of these influences, inflation picked up significantly; over the first half of this year, the price index for personal consumption expenditures rose at an annual rate of about 3-1/2 percent, compared with an average of less than 1-1/2 percent over the preceding two years.

However, inflation is expected to moderate in the coming quarters as these transitory influences wane. In particular, the prices of oil and many other commodities have either leveled off or have come down from their highs. Meanwhile, the step-up in automobile production should reduce pressure on car prices. Importantly, we see little indication that the higher rate of inflation experienced so far this year has become ingrained in the economy. Longer-term inflation expectations have remained stable according to the indicators we monitor, such as the measure of households' longer-term expectations from the Thompson Reuters/University of Michigan survey, the 10-year inflation projections of professional forecasters, and the five-year-forward measure of inflation compensation derived from yields of inflation-protected Treasury securities. In addition to the stability of longer-term inflation expectations, the substantial amount of resource slack that exists in U.S. labor and product markets should continue to have a moderating influence on inflationary pressures. Notably, because of ongoing weakness in labor demand over the course of the recovery, nominal wage increases have been roughly offset by productivity gains, leaving the level of unit labor costs close to where it had stood at the onset of the recession. Given the large share of labor costs in the production costs of most firms, subdued unit labor costs should be an important restraining influence on inflation.

Bernanke is arguing inflation is not currently a problem - and that suggests the Fed will take action at the September meeting.