It’s déjà vu all
over again!
Last year,
pundits and analysts tried to discern when the Federal Reserve might begin to
end quantitative easing by reading economic tea leaves. For months, bad economic
news proved to be good news for stock markets. This year, investors are seeking
signs which might indicate when the Fed will begin to raise interest rates and,
once again, bad news has become good news. Last week’s weaker-than-expected
unemployment report helped push U.S. stock markets higher, according to Reuters, because it was interpreted to
mean the Fed would not raise rates soon.
The week before, the
Commerce Department announced household spending slowed during July. Consumer
spending was up just 3.2 percent annualized through mid-summer which is the
smallest increase in spending in five years. As it turns out, spending fell
because Americans are saving more. During July, households set aside 5.7
percent of income, on average. While that’s good news with respect to American
households’ financial security, it’s not such good news for U.S. gross domestic
product, according to Barron’s:
“Unfortunately
for the U.S. economy, a penny saved is not a penny earned. While the decision
by Americans to cut back on their profligate ways isn't necessarily a bad thing
– it was spending beyond our means that helped spur the Great Recession in the
first place – it's only consumer spending, not saving, that counts when
computing gross domestic product. So when consumers spent less in July than
they did in June, it caused economists to ratchet down their third-quarter
economic-growth forecasts which now sit below 3 percent.”
Some experts say
slower growth is good news because economic expansion may last longer. While that’s
all well and good, Robert Shiller, Sterling Professor of Economics at Yale,
suggested in The New York Times that U.S. stock markets are looking a little pricey
by some measures. He suspects the reason investors remain interested in buying highly-priced
shares may ultimately be found, “…in the realm of sociology and social
psychology – in phenomena like irrational exuberance, which, eventually, has
always faded before.”
if you live in the United States, No matter where you
reside, you are NOT in the top 10 when it comes to
the world’s most ‘livable’ cities. The Economist Intelligence Unit’s Global Liveability Ranking and Report was
published in August 2014. It relies on 30 factors such as safety, healthcare,
educational resources, infrastructure, and environment to determine which of
140 cities around the world are the most livable. The burgs which top the
rankings tend to be “mid-sized cities in wealthier countries with relatively
low population density.” They include:
1.
Melbourne, Australia
2.
Vienna, Austria
3.
Vancouver, Canada
4.
Toronto, Canada
5.
Adelaide, Australia
6.
Calgary, Canada
7.
Sydney, Australia
8.
Helsinki, Finland
9.
Perth, Australia
10.
Auckland, New Zealand
The names on that list
haven’t changed since 2011; however, the average global livability rating has
fallen 0.7 percent since 2009. The change is due to a decline in stability and
safety (down 1.3 percent) among other things. More than 50 of the cities
surveyed have seen their ratings move lower during the past five years. This
year, the cities that ranked worst for livability included Damascus, Syria;
Dhaka, Bangladesh; Port Moresby, Papua New Guinea; Lagos, Nigeria; and Karachi,
Pakistan.
The good news for Americans
is Washington D.C., Los Angeles, and New York City remain relatively highly
ranked and haven’t experienced any change in their livability rankings. None of
these is the most livable city in the United States, though. The top honor, here
at home, goes to Honolulu (26th) followed by Pittsburgh (30th).
Weekly Focus – Think About It
“If you want your
children to turn out well, spend twice as much time with them, and half as much
money.”
--Abigail Van
Buren, American advice columnist
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