usta in Portland
Daily Driver
News items that have zero sex appeal and are not the 'scandalette-of-the-day' and won't make the news cycle due to being boring but are nevertheless likley to impact our lives.
1) The CPI (Consumer Price Index) has suddenly become an object of interest with Obama suggesting an alternative 'inflation' metric as a part of his 'negotiating' position with congressional Republicans over entitlelment reform. He has proposed using an index called 'chained CPI' which has the advantage of recognizing that when prices go up consumers shop for cheaper products. This is both logical and also happens to be the case. Yet another index the PCE (Personal Consumption Expenditure Index) takes this idea a step further by including costs like co-payments on medical insurance and savings like free checking accounts. Now, the interesting thing that has happened is that for years prior to the financial crisis and recession these idices tracked one another fairly closely, but starting in 2008 they began to disengage, which means that there are now three different numbers describing inflation with CPI showing one thing, chained CPI showing something else (although pretty close) and PCE showing a distinctly lower number-in fact a troubling number. Who cares? Right? Well maybe we all should if we considered how much spending is based on the CPI and the fact that Obama is now suggesting an alternative.
2) A recent study attempted to reconcile an anomoly in the current economic data which indicates that the rate of unemployment and the levels of consumer debt and consumer spending don't really line up. The data on spending and debt are consistent with an unemployment rate of 5.5% not 7.8%. The prime suspect in this is the 'grey economy' or casual economy supported mostly by unreported cash transactions. The implications are many but for taxation they are obvious. Of course a good implication is that the overall economy is doing better than the standard numbers indicate.
3) It's no secret that America has the most expensive health care and largest health industry in the world. It currently accounts for 17.8% of GDP (military spending by comparison acounts for about 4% and change) and by 2020, 1 in 7 jobs will be in direct health care provision. Less known is that unlike virtually every other industry in the country, health care has seen a decline in productivity for the past 5 years. It is an intrinsically low productivity sort of service industry but declines are very disturbing. Adding insult to injury in this regard, health care is the only major sector of the economy where unions are making headway. In fact union membership and collective bargaining in health care is increasing at a rate not seen in any industry in 70 years. This implies that one of the avenues of restraining health costs through labor cost stabilization may be getting closed. Economically and politically this could prove to be a slowly exploding bomb.
1) The CPI (Consumer Price Index) has suddenly become an object of interest with Obama suggesting an alternative 'inflation' metric as a part of his 'negotiating' position with congressional Republicans over entitlelment reform. He has proposed using an index called 'chained CPI' which has the advantage of recognizing that when prices go up consumers shop for cheaper products. This is both logical and also happens to be the case. Yet another index the PCE (Personal Consumption Expenditure Index) takes this idea a step further by including costs like co-payments on medical insurance and savings like free checking accounts. Now, the interesting thing that has happened is that for years prior to the financial crisis and recession these idices tracked one another fairly closely, but starting in 2008 they began to disengage, which means that there are now three different numbers describing inflation with CPI showing one thing, chained CPI showing something else (although pretty close) and PCE showing a distinctly lower number-in fact a troubling number. Who cares? Right? Well maybe we all should if we considered how much spending is based on the CPI and the fact that Obama is now suggesting an alternative.
2) A recent study attempted to reconcile an anomoly in the current economic data which indicates that the rate of unemployment and the levels of consumer debt and consumer spending don't really line up. The data on spending and debt are consistent with an unemployment rate of 5.5% not 7.8%. The prime suspect in this is the 'grey economy' or casual economy supported mostly by unreported cash transactions. The implications are many but for taxation they are obvious. Of course a good implication is that the overall economy is doing better than the standard numbers indicate.
3) It's no secret that America has the most expensive health care and largest health industry in the world. It currently accounts for 17.8% of GDP (military spending by comparison acounts for about 4% and change) and by 2020, 1 in 7 jobs will be in direct health care provision. Less known is that unlike virtually every other industry in the country, health care has seen a decline in productivity for the past 5 years. It is an intrinsically low productivity sort of service industry but declines are very disturbing. Adding insult to injury in this regard, health care is the only major sector of the economy where unions are making headway. In fact union membership and collective bargaining in health care is increasing at a rate not seen in any industry in 70 years. This implies that one of the avenues of restraining health costs through labor cost stabilization may be getting closed. Economically and politically this could prove to be a slowly exploding bomb.
The room was silent and I don't know if any more questions were aired! Healthcare is the main driver in the recent drive to go union with out 'craft' this time. Our out of pocket annual family 'deductible' is around $10k now.