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Kiplinger Reports, Summarized
Bite-sized intelligence you should know. Read the precis or just the headlines. Gain fluency in several areas with little effort This economy just
can't seem to work up any momentum. Weak job gains in May, the
third consecutive month of underpowered employment growth will
continue to restrain any optimism among both businesses and consumers.
With little confidence that the economy here is picking up, and
continued concerns about financial meltdown and recession in Europe,
they're slow to spend and hire. GDP growth and accompanying job gains will remain muted this year:
An increase of about 2% in economic activity, with the second half
slightly better than the first. And roughly 2 million more employees
added to payrolls nationwide. That's not unexpected. As we have been cautioning for many
months now, the economy won't bounce back from a finance-triggered
recession with the same vigoras from other downturns. It's likely to
be 2014 before it feels like happy days again, with robust economic
growth, unemployment near 7% and a healthy housing market. Stock prices will improve, reflecting the strong corporate
fundamentals,once euro-panic dissipates, and we continue to expect
to end the year up 12% or so. Interest rates on 10-year Treasuries will float back to around
the 2% mark,after sinking to extraordinary lows. And come next
year, they'll head toward 2.5%,as a somewhat stronger U.S. economy
increases demand for credit and bids rates up. Odds are U.S. debt will
also lose some appeal as a safe haven as Congress wrangles with the
expiration of tax cuts, promised budget curbs and a looming federal
debt cap. Meanwhile, can the government do anything to speed up
improvement? Not really, much to President Obama's chagrin. The
Federal Reserve may opt for another round of quantitative easing, but
it won't help much. The only cure is time.
Changes in the way medical care is delivered and paid for are
here to stay, no matter how the Supreme Court rules on Obama's health
law in June. The reason: Health care costs have grown 2.4% a year faster than
GDP since 1970,squeezing government budgets and employer profit
margins. Rising insurance pricesare also making health care
unaffordable for a fast-growing number of Americans. The changes include a focus on quality of care and more
consolidation:Hospitals acquiring medical practices, physician
groups merging and the like. At the same time, more employers are offering benefits to
domestic partners.Many hiring managers see them as worth the cost
to attract and retain top talent.
Every weekday JewishWorldReview.com publishes what many in the media and Washington consider "must-reading". In addition to INSPIRING stories, HUNDREDS of columnists and cartoonists regularly appear. Sign up for the daily update. It's free. Just click here. The top Senate GOPer, Mitch McConnell (KY), may have to fight
for his job -- especially if Republicans fail to win control of
the Senate in the fall elections. On paper, the GOP has an edge, with fewer seats to defend in
November than Democrats. But its candidates in some states aren't
strong, giving Democrats better prospects of staying in the majority
than they appeared to have as recently as three months ago. Don't expect Sen. Jim DeMint of South Carolina to lead a coup
attempt, though.He wants the job, but his hard-right views would
keep him from getting enough votes from Republican moderates to oust
McConnell as the chamber's minority leader. The most likely challenge
will come from within the GOP establishment's. John Thune (SD),
perhaps, or Sens. John Barrasso (WY) or Roy Blunt (MO).DeMint could
help ensure a successful leadership revolt by backing one of them.
U.S. commercial space-launch firms have a big rival on the
horizon: China.Though the nation lags Western countries in
developing space-launch technology,China plans to pour a lot of dough
over many years into a large national space effort.When up to speed,
it's sure to give Russia and private U.S. firms solid competitionfor
the business of launching communications, weather and other
satellites. Besides satellite launches, China also has aspirations to
explore space.Beijing wants to put a robotic rover on Mars a
decade or so from now, land humanson the moon around 2025 and send
space exploration probes to the outer reachesof the solar system. An
orbiting space station is on the drawing board as well.That would take
decades to accomplish, but few doubt that China is up to it.
No matter which party controls the Senate,
filibuster rules won't change.Parties in power now realize they'll
one day be in the minority again,so their members agree with parties
on the outs to stall bills with endless debates. With the Senate likely to be close to a 50-50 split after the Nov.
elections, it will be tougher for either side to find the 60 votes
needed to end debates.The result: A continued inability of Congress
to reach big compromisesnext year on tax reform, revamping entitlement
programs, health care and more. Neither Barack Obama nor Mitt Romney will be able to push an
agenda.Only public pressure is likely to bring about an end to the
gridlockthat has paralyzed Washington since the results of
elections two years ago...when Republicans won the House but Democrats
kept control of the Senate.Such pressure can -- and probably will --
happen. But, not very quickly.
Despite lawsuits and mounting concerns about serious
brain injuries, the National Football League will continue to fill
stadiums and prosper, which will be a relief for the countless
businesses that benefit from the pro game. Pro football owners will take the necessary steps to tone down
the violence while still keeping the sport interesting for even
the most die-hard fans of the game. Annual revenues of $9 billion give
owners plenty of incentive to reduce the risks and the fears that
could dissuade promising young athletes from taking up the sport.
No surprise that the NFL is already buying helmets for youth
programs.
Is the apartment building boom saturating the market for
rentals? Not yet -- at least not in most of the country. The trend
toward renting vs. owningwill continue through 2013, with the
homeownership rate sliding further downhill.After peaking at 69.2% in
2004, it's now at 65.4% and on its way toward the 64% markbefore it
levels off in early 2014. Job growth combined with little new
constructionwill keep apartment demand high in Portland, Ore.,
Louisville, Ky., Boston, Cleveland,Milwaukee, Los Angeles, San
Francisco, Oakland and San Jose, Calif., among others.Vacancy rates in
these cities are 4% or less. The national average rate is about
5%. But the D.C. metro area is nearing a turning point. A slew
of new unitswill come on line in 2013, just as a stronger economy
whets interest in home buying. Ditto, Cincinnati and San Diego,
where construction has also blossomed.Nationwide, apartment
completions will double this year, from 40,000 units to 80,000,and
then increase to 120,000 in 2013. But that's still below the
historical average.
More online purchases will be hit with sales taxes as
e-commerce thrivesand many states struggle to close big budget
deficits. The old sales tax model,in which states rely on consumers to
properly report what they owe, is unraveling. Driving the trend: Amazon.com, which now collects sales tax
from customersin five states where it has a physical presence:
Washington, Kansas, North Dakota, Kentucky and N.Y. It will phase in
sales tax for California, Nevada, Texas, Indiana, Tennessee, South
Carolina, Virginia and Pennsylvania by 2017. Other states are bound to follow suit with legislation
requiring tax collection.Eventually, Congress will settle the matter
in states' favor. Expect a billnext year giving states the green light
to levy tax on out-of-state Internet purchases.
Looking for a bright spot in a sluggish job market? Try
cybersecurity.The explosion of sensitive data and wireless devices
has opened firms upto a growing array of data threats, from hackers to
business rivals seeking an edge. Job listings for cybersecurity experts are at all-time highs and
sure to keep growing.The hiring surge will take place across all
industries as well as federal agencies.
Republicans are ready to compare the U.S. labor
market to Europe's, arguing that extended jobless benefits create a
permanent underclassof unemployable workers. The pitch is expected
to be part of the party's bidto block a new extension of the weekly
benefit, which is backed by Democrats.The GOP will say generous
benefits discourage people from looking for work. Democrats want to provide up to 99 weeks of unemployment
checks.That was the maximum before the GOP won a rollback to 73
weeks in FebruarySome Republicans will push for an even shorter payout
of benefits.The move, too risky before elections, will come in a
lame-duck sessionin late November or early December, along with fights
over the debt ceiling and tax cuts. The number of folks out of work for six months or more reached 7
million in 2010. It's dropping slowly, but some 3 million people
-- 2% of the labor force -- are likely to be out of work for the long
term even as the jobs picture brightens. Sign up for the daily JWR update. It's free. Just click here.
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© 2012, The Kiplinger Washington Editors, Inc. Distributed by Tribune Media Services. All rights reserved.
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