From: James Carroll <j.carroll.xxxxxxx@clintonglobalinitiative.

org> Date: 22 April 2013 08:20:32 EST Subject: Econ Digest 4/15-4/22 (Earth Day Edition) ECONOMIC NEWS DIGEST: 4/15-4/22 (Earth Day Edition) WEEK IN SHORT Weekly jobless claims +4,000. Monthly regional and state unemployment little changed. Average hourly earnings +0.2% from Feb to March. Reinhart-Rogoff were wrong about the dangers of public debt. NUMBERS In the week ended April 13, applications for unemployment insurance payments +4,000 to 352,000 The four-week moving average, which normally provides a better indication of the underlying trend +2,750 to 361,250. [DOL release via IBTimes, 4/18] Regional and state unemployment rates little changed in March. National jobless rate was little changed from February at 7.6% ... 0.6% lower than in March 2012. ... Largest over-the-month increases in employment: Florida (+32,700), California (+25,500). Largest decreases: Ohio (-20,400), Illinois (-17,800). Largest over-the-month percentage increases: Utah (+0.5%), Florida & Wyoming (+0.4% each). Largest percentage declines: Delaware (-0.7%), Kentucky (-0.5%). Largest over-the-year percentage increases: North Dakota (+4.4%) and Utah (+4.2%). Only over-the year percentage decrease: Pennsylvania (-0.1%). ... [T]he West continued to have the highest regional unemployment rate (8.3%), the South again had the lowest rate (7.2%) ... Nevada had the highest unemployment rate among the states (9.7%). The next highest: Illinois (9.5%), California & Mississippi (9.4% each). ... North Dakota again had the lowest rate (3.3%). [BLS, 4/19] Median weekly earnings of the nations 102.6 million full-time wage and salary workers were $773 in Q1 2013 (not seasonally adjusted*) ... 0.5% higher than a year earlier, compared with +1.7% in the Consumer Price Index over the same period ... On a not seasonally adjusted basis, women who usually worked full time had earnings of $704, or 81.2% of men's $867 ... Black men working at full-time jobs earned $666, or 75% of the median for white men ($888) Overall, earnings of Hispanics who worked full time ($575) were lower than those of blacks ($622), whites ($802), and Asians ($951) ... Among men, those age 45 to 54 and 55 to 64 had the highest earnings ($1,015 and $983, respectively). Usual weekly earnings were highest for women age 35 to 64 ($757 age 35 to 44, $758 age 45 to 54, and $771 age 55 to 64) Workers age 16 to 24 had the lowest median weekly earnings ($459) ... Full-time workers age 25 and over without a high school diploma earned $457, compared with $651 for high school graduates (no college) and $1,189 for those holding at least a bachelor's degree. Among college graduates with advanced degrees (professional or master's degree and above), the highest earning 10% of male workers made $3,844 or more per week, compared with $2,301 or more for their female counterparts. [BLS, 4/17] Of the 3.2 million age 16 to 24 who graduated from high school between January and October 2012, about 2.1 million (66.2%) were enrolled in college in October, little different from October 2011 (68.3%) 71.3% for young women and 61.3% for young men Between October 2011 and October 2012, 370,000 young people dropped out of high school In October 2012, 16.1 million age 16 to 24 were not enrolled in school. The unemployment rate (16.5%) for this cohort was essentially unchanged from October 2011. [BLS, 4/17] The Consumer Price Index for All Urban Consumers (CPI-U) -0.2% in March on a seasonally adjusted basis ... Over the last 12 months, all items index +1.5% before seasonal adjustment. All items seasonally adjusted decrease was primarily due to -4.4% in the gasoline index. Electircity

and fuel oil declined, energy index -2.6% in March, after +5.4% February. The food index was unchanged, with food at home declining slightly. [BLS, 4/16] Real average hourly earnings for all employees +0.2% from February to March, seasonally adjusted. Increase stems from unchanged average hourly earnings & -0.2% CPI-U ... Real average weekly earnings +0.5% over the month due to the increase in real average hourly earnings & +0.3% average workweek. [BLS, 4/16] Haitis economy is projected to grow by 6.5% in 2013, according to the IMFs latest World Economic Outlook. [CaribJournal, 4/16] In 2011, 46% of NYC residents were making less than 150% of the poverty level, a rise of more than 3 percentage points since the national recession ended. [NYT, 4/21] CEOs make 354 times the average worker, according to the AFL-CIO in 2012, earned average of $12.3 million compared to $34,645. [Yahoo, 4/16] SEQUESTER UPDATE Sequester is hitting small businesses the hardest (Politico, 4/16) Megagovernment contractors like Lockheed Martin and Boeing are so huge that even a 10% cut wont force them to take the kind of extreme measures that small operation would, small-business advocates say ... SBA Administrator Karen Mills said [in February] sequestration would cut its loan subsidies by $16.7 million ... [and] each subsidy dollar is used to guarantee an average of $51 worth of loans for small businesses ... eliminating ... support for 22,600 jobs in manufacturing, food services, hospitality and other industries, which are still struggling to recover. Airline Groups Fight Sequester Cuts (WSJ, 4/19) Industry trade group Airlines for America said it filed a motion seeking a stay to halt the FAA's plan to [require] controllers to take one day off without pay for every 10 work days. The legal action was joined by the Regional Airline Association, a trade group representing commuter carriers, and the Air Line Pilots Association, a large union This week the agency warned that as many as 6,700 flights a day at 13 of the biggest airports could be delayed [on the ground] or slowed while en route, so as not to overwhelm the fewer controllers on duty. U.S. POLICY Data shift to lift US economy 3% (FT, 4/21) The US economy will officially become 3% bigger in July as part of a shake-up that will see government statistics take into account 21st century components such as film royalties and spending on R&D ... Billions of dollars of intangible assets will enter the GDP of the worlds largest economy in a revision aimed at capturing the changing nature of US output ... The changes will affect everything from the measured GDP of different states to the stability of the inflation measure targeted by the Fed ... adding a country as big as Belgium to the estimated size of the world economy. TRENDS Part-Time Work Becomes Full-Time Wait for Better Job (NYT, 4/19) 30 straight months of job growth provide little solace for millions of people looking for more work and greater income. In March, 7.6 million Americans who want more hours were stuck in part-time jobs, about the same as a year earlier and 3 million more than there were when the recession began at the end of 2007. These almost invisible underemployed workers do not count toward the standard jobless rate of 7.6%. [I]nvoluntary part-timers as well as people who work but have stopped looking [stand] at 13.8%. Homebuilder Confidence in U.S. Unexpectedly Dropped in April(Bloomberg, 4/15) Confidence unexpectedly fell in April for a third month, restrained by rising costs for materials and financing restrictions the National Association of Home Builders/Wells Fargo index of builder confidence dropped to 42, the lowest since October, from 44 in March Economists projected 45 Readings below 50 mean more respondents said conditions were poor.

New signs of life arise in Las Vegas (LA Times, 4/21) Unemployment is down [metro area: to 9.8% from 12.1% a year ago], construction projects are resuming, and tourism is back up [T]here's a guarded hope in the air. Commodities Join Global Stocks Falling in Week as Gold Drops 7%(Bloomberg, 4/19) Chinas weakening economic expansion and slowing earnings growth in the U.S. sent copper into a bear market and gold to the biggest weekly drop in a year and a half, while global stocks fell the most in 10 months. Banks pull back from risky regions (FT, 4/21) Some of the worlds biggest banks are pulling back from selected operations in fast-growing markets in the Middle East and parts of Asia, fearing they may fall foul of tightening rule on antimoney laundering [Citigroup, JPMorgan, StandChart, HSBC]. Goldman Sachs Tops Profit Estimates, Blankfein Notes Constraints(Forbes, 4/16) The investment bank earned $4.29 per share [$2.2 billion] up from $3.92 a year ago and better than the consensus call for $3.88. Revenue of $10.1 billion was also above expectations, but Chairman and CEO Lloyd Blankfein [cautioned] that the potential for macro-economic instability was felt in the quarter and constrained overall corporate and investor activity." Investment banking revenue grew 36% to $1.6 billion, while net revenues in the firms Fixed Income, Currency & Commodity business fell 7% to $3.2 billion. Equities revenue fell 15% to $1.9 billion. Morgan Stanley hit by slow trading (FT, 4/18) Revenues fell to $8.5bn in Q1 2013 compared with $8.9bn Q1 2012 The whole of Wall Street has endured the same phenomenon this year However, Morgan Stanley suffers from a perennially weak fixed income trading division. Bank of America struggles to recover from bad loans (FT, 4/17) The second-biggest US bank by assets reported increased net income of $2.6bn [but] a decline in revenue at its consumer, mortgage and investment banking divisions and also disappointed on expenses. The shares closed down 4.9 per cent at $11.68, their biggest fall in five months, after declining as much as 6%. Overall revenue, excluding one-off items, fell 8% to $23.8bn, shored up by an improved trading performance. Net income jumped from $653m to $2.6bn and earnings per share from 3 cents to 20 cents, below analysts estimates of about 22 cents. IMF warns on risks of excessive easing (FT, 4/17) Extraordinarily loose monetary policy risks sparking credit bubbles that threaten to tip the world back into financial crisis, the IMF warned ... In its global financial stability report, the fund cautioned that policy reforms were needed urgently to restore long-term health to the financial system before the long-term dangers of monetary stimulus materialised. Full IMF report. World Bank: Africas economic growth to outpace average (BBC, 4/15) Economic growth in sub-Saharan Africa should significantly outpace the global average over the next 3 years Higher commodities, increasing investment and a general pick-up in the world economy should all boost the continent's growth to more than 5% Global GDP was forecast to grow by an average of 2.4% this year. Foreign direct investment [in Africa] is forecast to reach $54bn a year by 2015 The Bank's provisional figures showed the proportion of Africans living on less than $1.25 a day fell from 58% to 48.5% between 1996 and 2010. U.S. becomes Japan's top export market (FT, 4/18) The US has supplanted China as the top destination for Japanese exports for the first time since 2009 Japan on Thursday released trade data for the fiscal year through March, which showed that exports to the US rose 10& from a year earlier [to $116bn] while shipments to China slipped 9%. China local authority debt out of control (FT, 4/16) A senior Chinese auditor has warned that local government debt is out of control and could spark a bigger financial crisis than the US housing market crash ... The IMF, rating agencies and investment banks have all raised concerns about Chinese government debt ... Local

governments ... have used special purpose vehicles to circumvent [rules against directly raising debt], issuing bonds under the vehicles names to fund infrastructure projects. G-20 Gives Japan Stimulus Green Light as Yen Extends Fall (Bloomberg, 4/20) [F]inance chiefs and central bankers praised this months measures by the BOJ aimed at delivering 2% inflation within two years. They signaled Japans focus on supporting domestic demand was strong enough to allow them to ignore the side-effects on their own economies of a sliding yen. Argentinas New Debt Offer Rejected by Holdout Creditors (WSJ, 4/20) Holdout creditors on Friday rejected Argentinas proposal to pay them about 20 cents on every U.S. dollar of bonds they own, leaving a U.S. appeals court to decide how to enforce a ruling that may push Argentina into a new default ... The landmark case ... could also be seen as a precedent for sovereign restructurings around the world. High euro is crippling growth, says Oleg Deripaska (Telegraph, 4/21) The euro is trading at an inexplicably high rate to the dollar, preventing eurozone nations from finding growth, says Russian billionaire Oleg Deripaska. In Europe, Paid Permits for Pollution Are Fizzling (NYT, 4/21) Europe's carbon market, a pioneering effort to use markets to regulate greenhouse gases, is having a hard time staying upright. UK's George Osborne boosts funding for lending scheme before IMF visit(Guardian, 4/21) Chancellor George Osborne to beef up 80bn funding for lending scheme amid US calls for Britain to tone down austerity measures. Restyled as Real Estate Trusts, Varied Businesses Avoid Taxes (NYT, 4/21) A small but growing number of American corporations [private prisons, billboards and casinos] are declaring that they are not ordinary corporations at all. Instead, they say, they are special trusts that are typically exempt from paying federal taxes. Danes Rethink a Welfare State Ample to a Fault (NYT, 4/20) Denmark still has a coveted AAA bond rating [but t]he population is aging, and in many regions of the country people without jobs now outnumber those with them [One problem is] the proportion of Danes who are not participating in the work force dawdling university students, young pensioners or welfare recipients Denmark has among the highest marginal income-tax rates in the world, with the top bracket of 56.5% kicking in on incomes of more than about $80,000 [I]n exchange, the Danes get a cradle-to-grave safety net About 240,000 people roughly 9% of the potential work force have lifetime disability status; about 33,500 of them are under 40. The government has proposed ending that status for those under 40, unless they have a mental or physical condition that is so severe that it keeps them from working. ANALYSIS AND OPINION Researchers Finally Replicated Reinhart-Rogoff, and There Are Serious Problems (Roosevelt Institute, 4/16) In 2010, [Reinhart and Rogoff's] "main result [was] that median growth rates for countries with public debt over 90% of GDP are roughly 1% lower than otherwise; average (mean) growth rates are several percent lower" The Washington Post editorial board takes it as an economic consensus view [In fact, re-analysing Reinhart & Rogoff's raw data for the first time] "the average real GDP growth rate for countries carrying a public debt-to-GDP ratio of over 90% is actually 2.2%, not -0.1%" [I]t becomes quite clear that there's no magic number out there In fact, [the past] tells us that a larger deficit right now would help us greatly. Five or six days later The Jobless Trap (NYT/Paul Krugman, 4/21 online, 4/22 print) [T]he overriding fear driving economic policy has been debt hysteria After all, haven't economists provide that economic growth collapses once public debt exceeds 90% of G.D.P.? Well, the famous red line on debt, it turns out, was an artifact of dubious statistics, reinforced by bad arithmetic.

Budget Negotiating Chip Has Big Downside for Old and Poor (NYT, 4/19) The president has proposed slowing the rate at which benefits increase over time, a change that would ultimately hit the oldest of the old, often single women, many of whom have probably exhausted any other savings [and have] higher health costs little hope of working again and live without the support of a life partner. Here Comes the Next Hot Emerging Market: the U.S. (WSJ, 4/19) Antoine van Agtmael is arguably the founding father of ermeging-markets investing an evangelist for investing in parts of Africa, Asia, Latin America and other less-developed regions But he believes the U.S. is at the beginning of an industrial revitalization that most analysts have only begun to recognise. Over the past year, investors have pulled $22 billion from U.S. stock funds and added $338 billin to bond funds [T]hat exodus [may be] premature. And finally, you may have missed... Interactive: Inequality and NY's subway http://www.newyorker.com/sandbox/business/ subway.html *Explanation du jour The non-seasonally adjusted figure for unemployment went down 0.5 percentage point from February (8.1) to March (7.6). When seasonally adjusted (a statistical method of removing the seasonal component of a time series that is used when analyzing nonseasonal trends), those figures change to 7.7 and 7.6. The BLS does this because some economic trends like agricultural production and consumer consumption in the run up to Christmas have seasonal cycles So it is necessary to adjust the figures to take these into account, in order to understand underlying trends. Inexplicable commentary of the week ... Jos Vials, IMF head of financial stability: Spring has arrived to global financial markets where after very rainy days and threatening clouds, we are beginning to see some blue skies and more sunny days. [FT/IMF report, 4/17] TIME's 100 Most influential People in the World On the 5 U.S. covers: Rand Paul, Jay-Z, Pakistani education activist Malala Yousafzai, actress Jennifer Lawrence, and Space X founder Elon Musk Others: Barack Obama (on the list for the eighth time), Joe Biden, Chris Christie, Tom Coburn, Gabrielle Giffords, Kamala Harris, John Brennan, Valerie Jarrett, Elena Kagan and Susana Martinez. Writers include Hillary Clinton, Eric Cantor, Nancy Pelosi, Sarah Palin, Karl Rove, Michael Bloomberg, Henry Kissinger, George Tenet and Sandra Day O'Connor Returnees: Joe Biden, Chris Christie, Mario Draghi, Gabrielle Giffords, LeBron James, Xi Jinping, Kim Jong Un, Kate Middleton, Michelle Obama, Shonda Rhimes, Sheryl Sandberg, Aung San Suu Kyi, Justin Timberlake, Ren Zhengfei." Full list. Map: How 35 counties compare on child poverty (the U.S. is ranked 34th) (WaPo, 4/15) UPCOMING ATTRACTIONS Today, 4/22 9:45 AM Bloomberg takes NYC's first all-electric taxi, Rockefeller Center. POTUS hosts third WH Science Fair celebrating student winners of STEM competitions, followed by remarks on the importance of STEM education to the country's economic future. ACI Europe Airport Trading Conference and Exhibition in Hamburg, Germany. Tuesday, 4/23 That was quick 'Not for Turning' published, Vol. I of Charles Moores authorised biography of Margaret Thatcher. WEF holds Latin America conference in Lim, Peru (to April 25), 500 leaders. Wednesday, 4/24 Asean summit in Brunei (to April 25). Saturday, 4/27 POTUS, FLOTUS at WH Correspondents' Dinner.

Parliamentary election in Iceland, likely followed by conclusion of negotiation to join EU. Email your corrections, suggestions, comments. James Carroll CGI America Intern C LI NTO N G LO BAL I N ITIATI V E Tel: 212.xxx.xxxx | 917.xxx.xxxx j.carroll.xxxxxxx@clintonglobalinitiative.org