Quarterly And Yearly GDP Growth Rates Do Not Accurately Predict Following Year's GDP Growth Rate: S&P Index Is A Bettter Economic Forecaster Than Past GDP Growth Number

From The Wall Street Journal, "The Stock Market Beats GDP as an Economic Bellwether: The initial quarterly numbers are usually wrong—and they're poor predictors of future economic growth." by Edward Lazear:

The government's initial estimate of the previous quarter's GDP, the "advance" estimate, is followed by revisions in the two subsequent months, called the "preliminary" and "final" estimate. The "final" estimate is often revised again in subsequent months and years to yield the actual GDP number. It is quite common for there to be significant differences between the actual GDP number and the initial estimate.

The average quarter between 1996 and 2012 experienced growth at an annualized rate of 2.4%. In 26 of the 67 quarters that I analyzed, the advance estimate the BEA missed the actual rate of growth (reported much later) by at least 1.2 percentage points—half the actual average growth rate. In nine of those quarters, the initial GDP estimate was off by more than the average growth rate itself, e.g., off by more than 2.4 percentage points.***In fact, there is no clear statistical relation of a given quarter's GDP growth to the growth rate during the following year. A good leading indicator should at least predict whether the future will be better or worse than average. But knowing where the current quarter's GDP growth rate is relative to its historic average predicts correctly where next year's GDP growth rate will be relative to its historic average only 61% of the time. This is not much better than a coin toss. The longer run view is no better. Last year's growth rate does not predict with any statistical reliability next year's growth rate.

Market indexes are better predictors of GDP growth. My analysis of 1996-2012 shows that the performance of the S&P 500 relative to its average predicts the performance of the economy in the next year relative to its average a full three-fourths of the time.

Indeed, knowing the current quarter's GDP growth rate adds almost nothing to the predictive power of the quarterly change in S&P 500. For the purposes of predicting next year's GDP growth, we are better off ignoring the current quarter's growth rate altogether.

For every additional 80-point quarterly change in the S&P 500—which is the average quarterly change (up or down) during the period I studied—the market predicts about one-half percentage point of additional GDP growth during the subsequent year with statistical reliability. (Here, statistical reliability means that the correlation between future GDP and the S&P 500 could have arisen from pure luck with a probability of less than 3-in-100.)

In Countries With Greater Income Inequality, People At All Income Levels Are Happier

From Columbia Ideas at Work, "Does Inequality Make You Happier? New research shows that the relationship between income inequality and life satisfaction is not as simple as it seems" by Paul Ingram, Kravis Professor of Business at Columbia Business School:

The assumption is widespread in Western countries: income equality is bad. Policymakers from across the political spectrum often base their arguments on this idea, and in recent years it has become embedded in our cultural consciousness. But the relationship between income inequality and happiness turns out to be complicated, and often surprising. As new research by Professor Paul Ingram and Columbia Business School doctoral candidate Ivana Katic shows, people at all income levels are happier, on average, in countries with greater income inequality.

Slow Long-Term Growth US Economy Means Longer Working Years And Many Fewer Future Retirees

From Bloomberg, "Don't Grade the Economy on a Curve" by Megan McArdle:

To take just one example, think about retirement savings. If the economy is going to grow at 3 percent a year, then you can pour a relatively modest 15 percent of your income into savings and probably retire in comfort. But if it is going to grow at 0 percent, then stocks won’t deliver much in the way of aggregate returns, so you need to save more like 40 percent of your income, if you want to enjoy a retirement that’s now often almost as long as your working life.

People do not realize that that when they put a fairly small percentage of their income into a retirement account, they’re banking on a pretty steady growth rate. It just doesn’t occur to them, because economic growth has been going on for so long that it feels like a law of nature, not something that’s highly contingent.

From Bureau of Economic Analysis, "GROSS DOMESTIC PRODUCT: SECOND QUARTER 2013 (ADVANCE ESTIMATE):"

Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 1.7 percent in the second quarter of 2013 (that is, from the first quarter to the second quarter), according to the "advance" estimate released by the Bureau of Economic Analysis. In the first quarter, real GDP increased 1.1 percent (revised [downward]).

New York State Facing $2 Billion Plus Budget Gaps For Next Several Years Warns State Comptroller DiNapoli: Full Report

From The Journal News, lohud.com, "DiNapoli warns of growing state budget gaps" by Joseph Spector, Albany Bureau Chief:

New York could face rising budget gaps if the economy doesn't improve and the state lets some taxes expire as planned, Comptroller Thomas DiNapoli said in a report Tuesday.

The state's five-year fiscal outlook expects budget gaps of $2 billion next fiscal year and $2.9 billion in the two subsequent years. DiNapoli warned that the budget gaps could be as high as $6 billion if the state's revenue and spending projections aren't met.

"The use of non-recurring or temporary resources to meet recurring expenses exacerbates the structural deficit, making future budgeting more difficult," the report said.

NYS Comptroller's report is available as a PDF and embedded below.

NYS Comptroller Report on Fiscal Year 2013-14

Many Early Detected "Cancers" Are Not Fatal, Not Cancerous And Not Malignant: Top Cancer Scientists Call For Restricting "Cancer" Use As A Diagnostic Term

From The New York Times, "Scientists Seek to Rein In Diagnoses of Cancer" by Tara Parker-Pope:

A group of experts advising the nation’s premier cancer research institution has recommended sweeping changes in the approach to cancer detection and treatment, including changes in the very definition of cancer and eliminating the word entirely from some common diagnoses.

The recommendations, from a working group of the National Cancer Institute, were published on Monday in the Journal of the American Medical Association. They say, for instance, that some premalignant conditions, like one that affects the breast called ductal carcinoma in situ, which many doctors agree is not cancer, should be renamed to exclude the word carcinoma so that patients are less frightened and less likely to seek what may be unneeded and potentially harmful treatments that can include the surgical removal of the breast.

The group, which includes some of the top scientists in cancer research, also suggested that many lesions detected during breast, prostate, thyroid, lung and other cancer screenings should not be called cancer at all but should instead be reclassified as IDLE conditions, which stands for “indolent lesions of epithelial origin.”***"We need a 21st-century definition of cancer instead of a 19th-century definition of cancer, which is what we’ve been using," said Dr. Otis W. Brawley, the chief medical officer for the American Cancer Society, who was not directly involved in the report.

The impetus behind the call for change is a growing concern among doctors, scientists and patient advocates that hundreds of thousands of men and women are undergoing needless and sometimes disfiguring and harmful treatments for premalignant and cancerous lesions that are so slow growing they are unlikely to ever cause harm.

The advent of highly sensitive screening technology in recent years has increased the likelihood of finding these so-called incidentalomas — the name given to incidental findings detected during medical scans that most likely would never cause a problem. However, once doctors and patients are aware a lesion exists, they typically feel compelled to biopsy, treat and remove it, often at great physical and psychological pain and risk to the patient. The issue is often referred to as overdiagnosis, and the resulting unnecessary procedures to which patients are subjected is called overtreatment.

Officials at the National Cancer Institute say overdiagnosis is a major public health concern and a priority of the agency. "We’re still having trouble convincing people that the things that get found as a consequence of mammography and P.S.A. testing and other screening devices are not always malignancies in the classical sense that will kill you,” said Dr. Harold Varmus, the Nobel Prize-winning director of the National Cancer Institute. “Just as the general public is catching up to this idea, there are scientists who are catching up, too."

Older People Are Healhty Until A Year Or Two Before Death

From "People are remaining healthier later in life" on ScienceBlog:

A new study, conducted by David Cutler, the Otto Eckstein Professor of Applied Economics, shows that, even as life expectancy has increased over the past two decades, people have become increasingly healthier later in life.

"With the exception of the year or two just before death, people are healthier than they used to be," Cutler said. "Effectively, the period of time in which we're in poor health is being compressed until just before the end of life. So where we used to see people who are very, very sick for the final six or seven years of their life, that's now far less common. People are living to older ages and we are adding healthy years, not debilitated ones."

The study results are based on data collected between 1991 and 2009 from nearly 90,000 individuals who responded to the Medicare Current Beneficiary Survey (MCBS). Cutler reported these findings in work with Mary Beth Landrum of Harvard Medical School and Kaushik Ghosh of the National Bureau of Economic Research.

Almost All Americans Approve Of Marriage Between Blacks And Whites

From Gallup, "In U.S., 87% Approve of Black-White Marriage, vs. 4% in 1958: Ninety-six percent of blacks, 84% of whites approve" by Frank Newport:

87% of Americans now favor marriage between blacks and whites, up from 4% in 1958.

Source: Gallup

Internet Has Increased Domestic Music Listening Over Foreign Music

From The Economist, Free exchange, "Face the music" by C W:

From the 1960s to the 1980s, the proportion of domestic music fell sharply: Italians were listening to relatively less Italian music and relatively more American music. By 1985, consumers spent as much time listening to foreign bands as they did domestic groups. But from the low point of the mid-1980s the picture changed. We have now reached a level of domestic consumption not seen for 50 years, with 70% of listening time devoted to domestic tunes. People increasingly seem to prefer domestic repertoire to foreign fare.

Why is this? Improved communication networks make a big—and counterintuitive—difference. People might assume that the internet would make consumers’ music choices more global. But the spread of the internet has actually enabled the dissemination of local music within countries more than it has increased the availability and consumption of foreign music.

Copy Of USDOJ Insider Trading Criminal Indictment Against SAC Capital Advisors

Copy of US criminal indictment and grand jury charges against SAC Capital Advisors for insider trading embedded below. The indictment is also available on USDOJ website. Also, SEC civil charges against Steven Cohen are here.

USDOJ Criminal Indictment Against SAC For Insider Trading by Milton Recht

American Companies' Share Of US Workers Declining: Hiring More Workers Abroad

From The New York Times, Economix, "The Multinational Equation on Jobs" by Catherine Rampell:

As for American multinational companies (like Ford, which Mr. Obama cited), their employment in the United States actually stayed flat from 2009 to 2011 while they hired in large numbers abroad. From 2009 to 2011, domestic employment at these American companies was 22.9 million, while the number of employees abroad rose to 11.7 million from 10.8 million.

As a result, the share of employment at these American companies that is based at home has been shrinking, to 66.3 percent in 2011 from 79 percent in 1989:

Source: Source: Bureau of Economic Analysis.

Soutce: The New York Times

US Median Real (Inflation Adjusted) Household Income Is 5% Lower Than In June 2009

From The Wall Street journal, "The Inequality President: The rich have done fine under Obamanomics, not so the middle class:"

Each month the consultants at Sentier Research crunch the numbers from the Census Bureau's Current Population Survey and estimate the trend in median annual household income adjusted for inflation. In its May 2013 report, Sentier put the figure at $51,500, essentially unchanged from $51,671 a year earlier.

Source: The Wall Street Journal

And that's the good news. The bad news is that median real household income is $2,718, or 5%, lower than the $54,218 median in June 2009 when the recession officially ended. Median incomes typically fall during recessions. But the striking fact of the Obama economy is that median real household income has fallen even during the recovery.

While the declines have stabilized over the last two years, incomes are still far below the previous peak located by Sentier of $56,280 in January 2008.

NYC Owes $88 Billion For Retiree Health Care: 15 Times As Much As Detroit Owes

From City Journal, "What New York Should Learn from Detroit: The Motor City’s bankruptcy proves that even big cities are not too big to fail." by Nicole Gelinas:

New York, after all, is doing well compared with many other cities. The time to act is now. But act New York must: the city’s obligations dwarf even Detroit’s. Consider the $5.7 billion Detroit owes for retiree health care. New York owes $88.2 billion—or $20 billion more than Detroit when adjusted for population—and the city has no money squirreled away for this purpose. Or consider pensions: New York owed pensioners $69.9 billion more than it set aside as of last year’s annual report. Adjusted for population, that’s $28 billion more than Detroit owes. New York’s bondholder debt stands at $77.3 billion, about $34 billion less than Detroit when adjusted for the population difference. That means there’s still time, but bondholders should remember that Detroit kept borrowing until it was too late to maintain the illusion that the city could afford its retirement benefits. Now both creditors and pensioners will suffer.

New York should heed another stark indicator. Detroit can’t balance its annual budget because it must spend one-third of its revenues on health, retirement benefits, and debt. New York’s budget has run an operating deficit six of the past seven years (with the shortfalls covered by pre-2008 surpluses). These deficits exist because New York also spent a third of the budget on health, retirement benefits, and debt.

NYS Fracking Moratorium Five Years Old: Despite Safe Fracking Across Its Border In PA And Despite DOE And EPA Studies Finding Fracking Safe

New York State, particularly Governor Andrew Cuomo, continues to allow its upstate residents and economy to suffer by bowing to NYC metro area liberal and environmental political groups who oppose fracking, despite all the studies and real world evidence that it can occur safely.

From The Journal News, "Five years later, fracking pause still in place" by Jon Campbell:

Tuesday marks the five-year anniversary of the state’s official move to put large-scale hydrofracking permit applications on hold, a period of time opponents of the technique say speaks to their strength and advocates say points to a display of political indecision.

The Joint Landowners Coalition of New York, a statewide group of pro-drilling landowners, is hosting a news conference in Binghamton to mark the anniversary. A five-year delay is “ridiculous” and landowners are “fed up,” the group wrote in a memo to local organizations.

Many environmental and anti-fracking groups, citing the potential for damage to water supplies and community character, have called on the state to either ban shale-gas drilling or implement a lengthier moratorium.

Then Gov. David Paterson officially put high-volume fracking on pause in New York on July 23, 2008, when he ordered the Department of Environmental Conservation to conduct an in-depth environmental review of the technique and craft permitting guidelines.

Fiscal And Monetary Policy Uncertainty Increased Unemployment By 1.3 Percent, From 6.5 To 7.8 Percent At End Of 2012: Fed Reserve Bank Of San Francisco

From Federal Reserve Bank of San Francisco Economic Letter, "Uncertainty and the Slow Labor Market Recovery" by Sylvain Leduc and Zheng Liu:

The U.S. labor market has recovered more slowly following the Great Recession than after previous recessions. Historically, the unemployment rate tends to fall as job openings increase, a relationship represented graphically by the Beveridge curve. However, even though the number of job openings in the economy has been rising during the recovery, the unemployment rate has remained stubbornly high. As a result, as Figure 1 shows, the Beveridge curve has shifted away from its historical pattern. There are now more jobless workers for a given number of job openings than in the decade before the downturn.

Sources: Job Openings and Labor Turnover Survey (JOLTS), Daly et al. (2012),and authors’ calculations. Federal Reserve Bank of San Francisco

***We present evidence that heightened uncertainty about economic policy during the recovery made businesses more reluctant to hire workers. When uncertainty rises, businesses become more hesitant to hire. They reduce recruiting efforts by raising hiring standards, increasing the number of interviews, or simply not filling vacancies. For instance, some businesses may interview candidates multiple times and end up deciding to postpone hiring altogether (see Rampell 2013).

Our results suggest that heightened policy uncertainty accounts for as much as two-thirds of the recent shift in the Beveridge curve. We estimate that uncertainty pushed the unemployment rate 1.3 percentage points higher by late 2012 than it would have been based on trends from the decade before the downturn. Without elevated uncertainty, unemployment would have been roughly 6.5% at the end of 2012, instead of the actual 7.8%.***In an uncertain economic environment, businesses reduce their recruiting intensity. This means that job seekers are less likely to be successful in finding work, even though posted job vacancies increase.

Most Americans Prefer Traditonal Books To Electronic Book Devices

From Rasmussen Reports, "75% Prefer Traditional Book to Electronic Reading Device:"

Three-out-of-four Americans still prefer a traditional book over an electronic book-reading device and continue to reads books that way.

A new Rasmussen Reports national telephone survey finds that 75% of American Adults would rather read a book in a traditional print format than on an electronic book-reading device like a Kindle.

Full Text Of SEC Charges Against Steven Cohen

From the SEC press release, "SEC Charges Steven A. Cohen With Failing to Supervise Portfolio Managers and Prevent Insider Trading:"

Washington D.C., July 19, 2013 — The Securities and Exchange Commission today announced charges against hedge fund adviser Steven A. Cohen for failing to supervise two senior employees and prevent them from insider trading under his watch.

The SEC’s Division of Enforcement alleges that Cohen received highly suspicious information that should have caused any reasonable hedge fund manager to investigate the basis for trades made by two portfolio managers who reported to him – Mathew Martoma and Michael Steinberg. Cohen ignored the red flags and allowed Martoma and Steinberg to execute the trades. Instead of scrutinizing their conduct, Cohen praised Steinberg for his role in the suspicious trading and rewarded Martoma with a $9 million bonus for his work. Cohen’s hedge funds earned profits and avoided losses of more than $275 million as a result of the illegal trades.

Full text of SEC Administraive Proceeding Order instituting proceedings against Steven A Cohen below and on SEC site. USDOJ insider trading criminal charges against SAC are here.

Steven a Cohen SEC Administrative Hearing Order

Study Finds Facebook Photos Not Useful For Judging Prospective Employees

From TIME, "Employers: Facebook Party Pics Don’t Always Reflect Employees’ Bad Judgment" by Maia Szalavitz:

While recent concerns about employers plumbing social media for information about both current and potential employees have led many users to adjust their privacy settings and posting habits, a new study found that college students who posted images of themselves [on Facebook] enjoying a drink or two, or even using drugs were just as responsible and hard-working as those who did not advertise their partying.

"People high in conscientiousness were just as likely to post about chugging beer or doing drugs as someone who was low in conscientiousness," says the study’s lead author William Stoughton, a doctoral candidate at North Carolina State University.

Those who posted drinking and drug images were also more likely to be extraverted than people who didn’t— another trait that many employers find appealing, since it involves being sociable, friendly and enthusiastic, all useful for occupations that require interacting with others.

So by screening out candidates who show drinking and drug use on social media, "You might be throwing out the very people you want," says another of the study’s co-authors Lori Foster Thompson, an associate professor of psychology at North Carolina State.

Department Of Energy Study Finds Fracking Does NOT Pollute Drinking Water

From CBS News, "Study finds fracking chemicals didn't pollute water: AP" by The Associated Press:

A landmark federal study on hydraulic fracturing, or fracking, shows no evidence that chemicals from the natural gas drilling process moved up to contaminate drinking water aquifers at a western Pennsylvania drilling site, the Department of Energy told The Associated Press.

After a year of monitoring, the researchers found that the chemical-laced fluids used to free gas trapped deep below the surface stayed thousands of feet below the shallower areas that supply drinking water, geologist Richard Hammack said.

Big Box Retailers Join Walmart In Opposing Washington DC Fair Wage Law Which Applies Only To Large Square Foot Stores And Exempts Unionized Stores

From Washington Business Journal, "Major retailers urge Gray veto of living wage bill, threaten to table expansion plans" by Michael Neibauer:

A half-dozen major retailers have signed a letter to D.C. Mayor Vincent Gray urging him to veto the large retailer living wage bill, threatening to "revisit" expansion plans if the legislation is enacted.

Top executives with The Home Depot Inc., Target Corp., AutoZone Inc., Lowe's Cos. Inc., Walgreen Co. and Macy's Inc. "respectfully" requested that Gray kill the measure, which would force all retailers with 75,000 square feet, whose parent company's grosses at least $1 billion a year, to pay their employees $12.50 an hour, net of benefits.***The legislation, adopted last week by the D.C. Council, exempts unionized stores, including Giant and Safeway. Wal-Mart, which was planning to open six D.C. stores, is the obvious target of the bill, but this letter suggests other, major retailers are equally concerned about its effects.***The letter from the six retailers further states, "Given the geographic location of the District market, access to District consumers is not necessarily dependent on establishing multiple storefronts within the city boundaries. The unintended consequence of this legislation will continue to drive consumers outside of the city, where they are already spending more than a billion dollars annually on retail options available in the suburbs of Maryland and Virginia."

At Best, Artificial Intelligence Computer Programs As Smart As 4 Year Old With Learning Difficulties

From University of Illinois at Chicago, "Computer smart as a 4-year-old" by Jeanne Galatzer-Levy:

Artificial and natural knowledge researchers at the University of Illinois at Chicago have IQ-tested one of the best available artificial intelligence systems to see how intelligent it really is.

Turns out–it’s about as smart as the average 4-year-old, they will report July 17 at the U.S. Artificial Intelligence Conference in Bellevue, Wash.***But unlike most children, the machine’s scores were very uneven across different portions of the test. “If a child had scores that varied this much, it might be a symptom that something was wrong,” said Robert Sloan, professor and head of computer science at UIC, and one of the study’s authors.