Subject: Recession in 2014?

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Economic growth
NEW RESEARCH — Recession in 2014? John Makin: “There exists a high probability, tied to the shape of past expansions, of a recession beginning in early 2014.” Key takeaways: • Economic indicators and long-term business cycle patterns suggest that the United States may be in another recession by early 2014. • Two post–financial crisis economic swoons have been curbed with easy money and fiscal stimulus, but flat retail sales, slowing employment growth, and a faltering housing sector may prevent these strategies from working again. • To prolong the expansion, Congress and the Fed should enact near-term fiscal stimulus, lower tax rates and broaden the tax base, deregulate the financial sector, and focus on maintaining low and stable inflation. Health care spending slows, but not because of Obamacare. Joseph Antos: “It’s the economy, stupid. Millions of people lost their jobs during the deep recession that ended in 2009, and many of them still don’t have work. Without a job and the health insurance that comes with it, it’s difficult to pay for health care.”

Obama’s speaking tour continues
Obama addresses the middle class, neglects the poor. Arthur Brooks: “We have a robust and growing economy for high-income Americans. Those at the bottom see few prospects for growth and little reason for optimism. Nevertheless, a 2013 analysis by researcher Mark M. Gray at Georgetown University found that Mr. Obama mentions the poor less than any president in decades.” Facts conflict with “middle-out” economics. James Pethokoukis: “According to Obama, the only lasting effects of the Reagan “neoliberal” revolution are stagnant middle-class wages, extreme income inequality, and reduced income mobility. . . . Time for a fact check.”

Financial reform
Harsh words for Corker-Warner bill. Edward Pinto: “The bill instead should be called the Government Mortgage Complex Act. It solidifies the federal government‘s grip on the mortgage market and combines crony capitalism for industry supporters and crony socialism for community advocates by providing billions in revenue for each.” The Consumer Financial Protection Bureau turns two. Alex Pollock: “The CFPB has attracted a large staff already numbering over 1,200. . . . Over 60 percent of the CFPB’s employees make salaries of $100,000 or more . . . [and it is] in the process of preparing luxuriously renovated new headquarters. What a surprise all of this is when there are no congressional controls on their budget or congressional oversight!”

NEW RESEARCH — Single-sex classrooms and student outcomes. Michael Strain: “[My study] finds evidence that the offering of single-sex mathematics courses is associated with lower performance on end-of-grade math exams, and finds no evidence that the offering of single-sex reading scores increases performance on reading exams.” Would you benefit from immigration reform? Depends on your education. Andrew Biggs: “Highschool dropouts lose over 3 percent of earnings, because immigrants, their new competitors, are on average not well educated. Those with high-school diplomas and some college education receive small gains, while college grads and post-grads experience small losses, because of competition with higherskilled immigrants.” If only college students knew. Edward Conard: “Growth is constrained in two ways. It is constrained by the amount of properly trained talent, which is needed to produce innovation. And it is constrained by this talent’s willingness to take the entrepreneurial risks critical to commercializing innovation. Given those constraints, it is hard to believe humanities degree programs are the best way to train America’s most talented students.”

In other news
How to get out of the-chicken-or-the-egg job problem. Stan Veuger: “You know the complaint: ‘I'm trying to find a job, but everywhere I look I see experience required. How am I supposed to accumulate experience if I need experience to gain experience?’ I've heard the story twice this week alone. It is of particular importance during what is still a slow recovery, with high rates of unemployment and, especially, youth unemployment.” PRESENTATIONS — International Conference on Collateral Risk. This conference — held this week and cosponsored by the Collateral Risk Network, Robinson College of Business at Georgia State University, and AEI — focused on housing cycles and their domestic and international systemic impact. It featured presentations from housing leaders across the country, including AEI’s own Edward Pinto, Alex Pollock, and Stephen Oliner.

Mark your calendar
8.02 July employment report released 8.02 Congress leaves for recess 9.06 Congress returns from recess

Beach reading
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