Will Venezuela"s New Floating Exchange Rate Curb Inflation?

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Will Venezuela"s New Floating Exchange Rate Curb Inflation?

Child poverty rate in US is appalling

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Child poverty rate in US is appalling

February Payrolls 175K, Beat Expectations Of 149K, Unemployment Rate Rises To 6.7%

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February Payrolls 175K, Beat Expectations Of 149K, Unemployment Rate Rises To 6.7%

Fed"s low rate vow not too high a price to pay for taper: Fisher

Fed"s low rate vow not too high a price to pay for taper: Fisher
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By Ann Saphir

DALLAS Tue Jan 14, 2014 2:50pm EST

DALLAS Jan 14 (Reuters) – The Federal Reserve’s promise last month to keep rates near zero until after unemployment falls to 6.5 percent was part of the horse-trading on policy that also resulted in a decision to begin paring the Fed’s bond-buying program, a top Fed official suggested on Tuesday.

“I didn’t find the 6.5 percent, or well past 6.5 percent, to be too high a price to pay for that cutback of $ 10 billion,” Dallas Federal Reserve Bank President Richard Fisher told reporters after a speech here.

The Fed in December decided to cut its bond-buying program to $ 75 billion a month from $ 85 billion. It also said it would keep rates low until well past the time unemployment falls to 6.5 percent. It registered 6.7 percent in December.

“I’m not uncomfortable with statement that was issued, but I think we need to discuss this further,” Fisher said.

Reuters: Bonds News

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Fed banks split in December on what to do with discount rate

Fed banks split in December on what to do with discount rate
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Minneapolis Federal Reserve Bank President Narayana Kocherlakota speaks at a macro-finance conference hosted by the Boston Federal Reserve Bank and Boston University in Boston, Massachusetts November 30, 2012.

Credit: Reuters/Brian Snyder

Reuters: Economic News

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China benchmark money rate opens sharply lower

China benchmark money rate opens sharply lower
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SHANGHAI Sun Dec 22, 2013 8:25pm EST

SHANGHAI Dec 23 (Reuters) – China’s benchmark short-term money rate opened sharply lower on Monday after it hit its highest level since the June cash crunch on Friday.

The central bank announced on Friday it had injected 300 billion yuan ($ 49.41 billion) via short-term liquidity operations (SLO) during Dec. 18-20.

The seven-day bond repurchase agreement was quoted at 5.57 percent at open, down sharply from 7.60 percent at market close Friday. ($ 1 = 6.0713 Chinese yuan) (Reporting by Chen Yixin and Kazunori Takada)

Reuters: Financial Services and Real Estate

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Fed could delay rate hikes with inflation "floor": Fed study

Fed could delay rate hikes with inflation "floor": Fed study
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By Ann Saphir

SAN FRANCISCO Wed Dec 4, 2013 2:18pm EST

An eagle tops the U.S. Federal Reserve building’s facade in Washington, July 31, 2013.

Credit: Reuters/Jonathan Ernst

SAN FRANCISCO (Reuters) – The Federal Reserve could bolster its commitment to ultra-low interest rates by ruling out a rate hike until inflation heads closer to its 2-percent goal, according to research published Wednesday by the Cleveland Fed.

The study plunges the usually low-profile regional Fed into one of the most pressing debates among U.S. central bankers: how best to keep market rates from rising to potentially growth-sapping levels once the Fed begins to withdraw its massive monetary stimulus.

Fed policymakers fret that when they begin to reduce their $ 85-billion-a-month bond-buying program, investors will conclude that rate hikes are not far behind, and will push up market rates farther and faster than the Fed believes is healthy for the economy.

Policymakers are therefore keen to find ways to convince markets they are serious about keeping rates low for a long time.

Wednesday’s research may add weight to arguments for adopting a so-called inflation floor. Edward Knotek II, who co-authored the study with fellow Cleveland Fed researcher Saeed Zaman, said he believes they are among the first to publish a study assessing the benefits of an inflation floor.

The study shows not just that a floor can delay the likely timing of the Fed’s rate hike, but also that “the choice of the floor matters,” he said in an interview.

Adopting an inflation floor of 1.75 percent, a promise that the Fed will not even consider raising rates until inflation is projected to breach that level, would likely delay any rate hike until the first quarter of 2016, the research showed.

An inflation floor of 1.5 percent would likely keep the Fed from raising rates only until the second quarter of 2015.

By contrast, the Fed’s current pledge to defer any rate hike until either the unemployment rate falls to at least 6.5 percent or inflation threatens to rise above 2.5 percent could result in rates rising as early as the first quarter of 2015, according to the research published Wednesday.

That’s earlier than a number of Fed officials believe is either likely or desirable.

Cleveland Fed chief Sandra Pianalto, who has announced plans to retire early next year, has not herself publicly embraced an inflation floor.

But the idea has a “few” supporters at the Fed, minutes of the central bank’s October meeting show, including most vocally St. Louis Fed chief James Bullard.

Asked about an inflation floor in September, Fed Chair Ben Bernanke said that it was “one possibility.”

Fed policymakers next meet in about two weeks.

Other policy options aimed at underscoring the Fed’s commitment to low rates include lowering the unemployment threshold for considering a rate hike to at least 6 percent and lowering the interest paid to banks on their excess reserves.

The chiefs of the Minneapolis and Chicago Feds have strongly supported the first idea; the latter has the backing of San Francisco Fed President John Williams.

More popular among policymakers, the October Fed meeting minutes suggested, is to leave the thresholds be and to instead offer qualitative guidance to markets about what conditions would prompt it to raise rates.

Providing such details, San Francisco Fed’s Williams told Reuters on Tuesday, would reassure investors rates will stay low for a long time even after the Fed stops buying bonds.

(Reporting by Ann Saphir; Editing by Chizu Nomiyama)

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Fed wrestled in Oct. with conveying rate policy

Fed wrestled in Oct. with conveying rate policy

WASHINGTON (AP) — The Federal Reserve wrestled at its October meeting with how to assure investors that even after it started to pull back on its economic stimulus, it still intends to keep its keep short-term rate near record lows.
Business Headlines

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Fed"s message of no rate hike until 2015 is sinking in: study

Fed"s message of no rate hike until 2015 is sinking in: study
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By Ann Saphir

SAN FRANCISCO Mon Nov 18, 2013 1:02pm EST

A general view of the U.S. Federal Reserve building as the morning sky breaks over Washington, July 31, 2013.

Credit: Reuters/Jonathan Ernst

SAN FRANCISCO (Reuters) – The Federal Reserve has effectively communicated its commitment to ultra-easy policy, so that economists and traders correctly understand that interest rates will likely stay near zero until “sometime in 2015,” according to a Fed study published on Monday.

The paper, published in the latest Economic Letter from the Federal Reserve Bank of San Francisco, looks in detail at data through late May. At that time, the researchers said, investors and economists expected a first Fed rate hike around mid-2015, based on economist surveys and Treasury yields interpreted in light of near-zero rates.

Although the paper does not explicitly say so, the decline in market rates since May — when Fed Chairman Bernanke offered a timeline for the end of the Fed’s massive bond-buying program that now sees too aggressive — suggests that traders may now see the Fed’s first rate hike as coming even later.

Convincing the public that the U.S. central bank will keep rates low for a long time is a key pillar of the Fed’s super-easy monetary policy, which seeks to stoke investment and hiring by keeping borrowing costs down.

Economist surveys and U.S. Treasury yields both show that most are buying the idea that low rates are here to stay for quite a while, the paper said.

“Our estimates suggest that the (Fed)’s forward guidance has been effective in pushing out the expected liftoff horizon, which has contributed to lower interest rates, easing financial conditions and adding stimulus to the economy,” wrote San Francisco Fed economist Michael Bauer and the bank’s research director Glenn Rudebusch.

“Recent estimates of policy liftoff generally suggest the first funds rate hike will occur sometime in 2015.”

The authors cautioned that reading expected future rate rises in the Treasury yield curve requires more finesse than simply looking at the first point on the graph where Treasury yields suggest rates could rise.

Reading the yield curve in such a simple way “will generally underestimate the time until liftoff” based on the Fed’s own forecasts and those of economists, the authors said, because near-zero short-term rates distort the curve as a reading of the most likely timing of a rate hike.

A case in point: In May 2013, a simple reading of the yield curve would have suggested the first Fed rate hike as coming in September 2014 — more than six months earlier than could be concluded using the authors’ own model of interpreting forward rates.

“Interpreted correctly, both the survey and market measures of policy liftoff appear generally consistent with the (Fed)’s formal guidance,” they wrote.

The Fed does not in its formal statement provide a date for when it expects to begin to raise rates. It does publish forecasts from Fed policymakers, the majority of whom see rates first rising in 2015.

Exactly when in 2015 is still an open question. And on that score, the San Francisco Fed researchers are silent.

(Reporting by Ann Saphir; Editing by Leslie Adler)

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Energy bills have risen at EIGHT times the rate of average earnings

Energy bills have risen at EIGHT times the rate of average earnings
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By Adam Uren

PUBLISHED: 10:18 EST, 17 November 2013 | UPDATED: 10:50 EST, 17 November 2013

Energy bills have risen at a rate eight times higher than average earnings over the past three years, according to Citizens Advice.

The charity has found that the ‘Big Six’ suppliers have increased their gas and electricity prices by on average 36 per cent since October 2010, during which time earnings have risen by a measly 4.4 per cent.

Prices have also easily outstripped the rate of inflation as well, almost four times the 10.2 per cent increase in the last three years.

Rise: Energy bills have risen by 36 per cent in the last three years.

Energy firms have shown no sign of putting a stopper on rises either, with recent announcements seeing rises of up to 10.4 per cent set to come in this winter, and Citizens Advice fears that people are racking up serious debts to pay for their winter energy bills.

Chief executive Gillian Guy said: ‘Enormous escalations in energy prices are creating a desperate situation in many households.

‘People find they do not have enough money coming in to pay for everyday essentials as increases in daily costs are outstripping low rises in earnings.

‘As we head into winter, and the latest price rises begin to kick in, more and more people are likely to reach crisis point as they struggle to heat their homes and feed their families.

‘People should not have to get into debt in order to have a warm home.  Energy companies and the Government need to look at how they can reduce the pressure energy bills are putting on people’s finances.’

Energy providers have been attempting to pin the blame for rising costs on green taxes levied by the Government, but energy secretary Ed Davey told the Mail on Sunday today he feels these firms may be ‘too profitable’.

The Big Six of British Gas, E.On, SSE, npower, EDF Energy and Scottish Power were hauled before a committee of MPs last month to explain their margins, and people are increasingly being encouraged to switch their energy plans to smaller and cheaper suppliers.

Citizens Advice said that 28 per cent of people who seek help with an energy problem also have a debt issue, with half of these in debt to their energy suppliers, while others have card or personal loan debts.

Ms Guy thinks green levies on energy companies should instead be raised via taxation to make it fairer on those struggling to stay afloat.

She said: ‘It’s absolutely essential that families on low incomes and pensioners get the necessary help to stay warm so I urge the Government not to cut the support that is currently available.

‘Levies are adding an unfair financial burden to poorer households.  Paying for these costs through taxation would be a much fairer approach and would avoid low income households funding.’

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Govt. Workers’ Unemployment Rate 66 Percent Better Than National Unemployment Rate

Ali Meyer
CNSNews.com
November 8, 2013

Government workers have an unemployment rate of 4.4 percent, which is 66 percent better than the national unemployment rate of 7.3 percent, according to the latest data produced by the Bureau of Labor Statistics (BLS).

The unemployment rate increased in October compared to September, when it was 3.9 percent, but improved overall since its peak in 2013 when it stood at 5.3 percent in July.

Since Obama has entered office, the unemployment rate for government workers has changed little. The average unemployment rate for government workers in 2009 stood at 3.6 percent, and it has risen to 4.4 percent since then.

Full story here.

This article was posted: Friday, November 8, 2013 at 12:28 pm

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Govt. Workers’ Unemployment Rate 66 Percent Better Than National Unemployment Rate

Florida Woman’s Insurance Rate Increases 10X Under Obamacare

Daniel Halper
The Weekly Standard
October 28, 2013

Americans are losing their insurance plans and being “offered” more expensive plans in return.

One Florida woman is going from paying $ 54 a month to $ 591 under Obamacare, CBS reports:

“For many, their introduction to the Affordable Care Act has been negative: A broken website, and now cancellation notices from insurance companies, followed by sticker shock over higher prices for the new plans,” says a CBS reporter. “It’s directly at odds from repeated assurances from the president.”

Obama is quoted as saying, “If you like your insurance plan, you will keep it. No one will be able to take that away from you.”

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This article was posted: Monday, October 28, 2013 at 9:45 am

Tags: domestic news, economics, healthcare

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Infowars

Florida Woman’s Insurance Rate Increases 10X Under Obamacare

Teen Birth Rate Hits Historic Low

(AP) – After falling four years in a row, US births may finally be leveling off. The number of babies born last year—a little shy of 4 million—is only a few hundred less than the number in 2011, according to a government report released today. That suggests that lately, fewer couples may be scared away from having children because of the economy or other factors, some experts say. Among the signs of a possible turning point: The birth rate for women in their early 30s inched up for the first time since 2007.

“We may be on level course or potentially even see a rise” in birth trends in the near future, says a statistician with the CDC. Some are a bit more pessimistic. “The decline has slowed down, but it’s still a decline,” says a birth-trends expert. (The all-time high was more than 4.3 million in 2007.) One decline that’s being welcomed: Birth rates for teen moms have been falling since 1991 and hit yet another historic low: 305,000 births last year—less than half the 645,000 in 1970. The teen birth rate has been cut in half since 1991, says a rep for the National Campaign to Prevent Teen and Unplanned Pregnancy; he called it a “stunning turnaround.”

Health from Newser

Teen Birth Rate Hits Historic Low

UK inflation rate falls to 2.8%

13 August 2013
Last updated at 05:45 ET

The rate of consumer prices index (CPI) inflation fell to 2.8% in July, down from 2.9% in June, according to the Office for National Statistics (ONS).

The Bank of England’s target for CPI inflation is 2%.

The drop in the rate of inflation came from lower air fares, discounting by clothing retailers and a reduction in the cost of leisure and cultural goods.

The rate of retail prices index (RPI) inflation also fell, to 3.1%, from 3.3% in June.

The RPI index is used to calculate many pensions, as well as inflation-linked government bonds. It is calculated differently, as it includes some housing costs and other items not included in CPI. It is typically higher than the CPI measure.

RPI is also used to calculate changes to rail ticket prices. Regulated fares – those that the government controls – will go up by inflation, as measured by the RPI for July, plus 1%.

The rail fare increase will come into effect in January.

‘Close to market expectations’

Clothing and footwear costs fell by 3.2%, as lower prices from summer sales took effect. In 2012, the fall from June to July was smaller, as retailers discounted earlier, following poor weather.

The cost of long-haul air fares rose at a slower rate than last year, which provided a large downward contribution to transport costs.

However, this was partially offset by rising petrol and diesel prices. They increased by an average of 0.7p and 0.4p per litre respectively between June and July, compared with a fall during the same period in 2012.

“Essentially, both the CPI and RPI reports are very close to market expectations,” said Investec’s Philip Shaw.

“On the CPI, the figures do suggest that the downtrend in inflation is in place and we think that there is a reasonable chance that inflation will be at the 2% target in spring next year.”

IHS’s chief European economist, Howard Archer said: “Looking ahead, CPI may yet touch 3% in the near term, given difficult near-term base effects and recently firmer oil prices.

“It should start heading gradually down towards the end of the year. Much will clearly depend on oil price developments.”

Inflation has remained above the Bank of England’s 2% target since December 2009. It reached a 14-month high in June 2013.

If the rate were to rise above 3%, the Bank of England governor, Mark Carney, would be required to write a letter of explanation to the Chancellor, George Osborne.

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UK inflation rate falls to 2.8%

U.S. Added 175,000 Jobs in May; Jobless Rate Rises to 7.6%

Justin Sullivan/Getty Images

Job applicants at a career fair at City College of San Francisco last month.

American employers added 175,000 jobs in May, almost exactly the average of job growth over the last 12 months, the Labor Department reported Friday, while the unemployment rate ticked up to 7.6 percent.

Source: Bureau of Labor Statistics

The latest numbers come after a string of other disappointing economic indicators.

“In general, the economy is just puttering along,” said Joshua Shapiro, chief United States economist with MFR Inc., a consulting firm. “Companies can get by without hiring people, so they do.”

Consumers themselves have been pretty upbeat nonetheless, according to recent polling data.

In a New York Times/CBS News poll conducted May 31 to June 4, 39 percent of respondents said that the condition of the economy was very or fairly good, the highest share saying this since President Obama took office and even since the recession officially began in December 2007.

Nearly half of respondents – 46 percent — rated the job market in their area as very or fairly good, with a third saying that they think their local job markets will improve over the next year. (The poll has a margin of sampling error of plus or minus three percentage points.)

Some of this optimism likely has to do with rising home and stock market values, which make consumers feel wealthier. Given the positive outlook among consumers, economists are not sure what is dragging on the economy, particularly given how well the housing market seems to be doing.

Unusual weather patterns – the mild winter and cold spring — may have played a role in business activity and when employers hired. The across-the-board federal spending cuts that officially began March 1 — known as the sequester — could also be hurting the private sector, although it is hard to tell how much.

“Any negative news is going to be blamed on the sequester, which I think is becoming a bit of an excuse at this point,” said Joseph A. LaVorgna, chief United States economist at Deutsche Bank. “It’s a factor, but it’s not as big as people believe it is.”

The federal government lost 14,000 jobs in May, and the spending cuts probably also had effects in the private sector, as laid-off or furloughed government workers had less money to spend at their local businesses.

In addition to causing layoffs, the sequester could also be affecting those who already have lost their jobs by trimming social safety net services like Meals on Wheels and job training programs. Almost every state has cut its unemployment insurance benefits as a result of the sequester, according to the National Employment Law Project, a labor-oriented research and advocacy organization. Some states, like Florida and Maine, are cutting the weeks for which jobless workers will continue receiving benefits, and others, like Illinois, are reducing the size of the weekly benefit checks (in Illinois, the cut was 16.8 percent). Some states, like Washington and Idaho, are also laying off employees who work in the labor agencies that help workers apply for benefits and find jobs.

North Carolina is ending its federally funded extended unemployment benefits on July 1 because reductions in its state benefits left it ineligible for the federal money.

“I’m having a hard time finding somebody who will give a 50-year-old with a few health problems a chance,” said Dwayne Fields of Goldsboro, N.C. He was let go from his warehouse manager job of 12 years last October for “poor job performance” after he told his boss about some health problems, including a diagnosis of cardiomyopathy, hypertension and sleep apnea. He said he has since gotten treatment that has put him back into good working shape, but no one responds to his job applications. And his $ 212 weekly jobless benefit checks are about to end.

“I’m probably too old to flip burgers and deliver pizzas,” he said. “But if worse comes to worst I’ll do it. I’ve got an old lady and a 11-year-old kid to support.”

NYT > Global Home

U.S. Added 175,000 Jobs in May; Jobless Rate Rises to 7.6%

US economy grew at modest 2.4 pct. rate in Q1

In this March 1, 2013 photo, a crane removes a container from a ship at the Port of Baltimore’s Seagirt Marine Terminal in Baltimore. The government reports on the U.S. trade deficit for March, Thursday, May 2, 2013. (AP Photo/Patrick Semansky)

In this March 1, 2013 photo, a crane removes a container from a ship at the Port of Baltimore’s Seagirt Marine Terminal in Baltimore. The government reports on the U.S. trade deficit for March, Thursday, May 2, 2013. (AP Photo/Patrick Semansky)

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WASHINGTON (AP) — The U.S. economy grew at a modest 2.4 percent annual rate from January through March, slightly slower than initially estimated. Consumer spending was stronger than first thought, but businesses restocked more slowly and state and local government spending cuts were deeper.

The Commerce Department said Thursday that economic growth in the first quarter was only marginally below the 2.5 percent annual rate the government had estimated last month. That’s still much faster than the 0.4 percent growth during the October-December quarter.

Most economists think growth is slowing to around a 2 percent annual rate in the April-June quarter as the economy adjusts to federal spending cuts, higher taxes and further global weakness. Still, many say the decline may not be as severe as once thought. That’s because solid hiring, surging home prices and record stock gains should keep consumers spending.

Jennifer Lee, senior economist at BMO Capital Markets, said the small revision to first-quarter growth supported her view that the economy will grow a moderate 2.2 percent for the year, the same as last year.

Still, Lee expects growth to improve to 3.2 percent in 2014, as the job market accelerates and consumers grow more confident in the economy.

Consumer spending accounts for 70 percent of economic activity as measured by the gross domestic product. GDP is the economy’s total output of goods and services, from haircuts and computers to trucks and aircraft carriers.

The government’s second look at first-quarter growth showed that consumer spending roared ahead at a 3.4 percent annual rate. That’s the fastest spending growth in more than two years and even stronger than the 3.2 percent rate estimated last month.

Healthy consumer spending shows many Americans are shrugging off an increase this year in Social Security taxes that has reduced most paychecks.

And more consumer demand could also prompt businesses to restock at a faster rate later this year. Business inventories grew in the first quarter but at a slightly slower pace than first estimated. That was a key reason for the small revision.

A big reason that consumers have been able to withstand the higher taxes is the job market has improved. Employers have added an average of 208,000 jobs a month since November. That’s well above the monthly average of 138,000 during the previous six months.

Surging stock prices and steady home-price increases have also allowed Americans to regain the $ 16 trillion in wealth they lost to the Great Recession. Higher wealth tends to embolden people to spend more. Some economists have said the increase in home prices alone could boost consumer spending enough to offset a Social Security tax increase.

The weakest area of the economy continues to be government spending, which fell for the 10th time in the last 11 quarters. The 4.9 percent rate of decline was even larger than first estimated, reflecting further drops in defense spending and weaker activity at the state and local level.

Economists were puzzled by the steeper decline at the state and local level. Spending among those governments fell in the first quarter at an annual rate of 2.4 percent — double the initial estimate and the biggest quarterly drop in two years.

And with the federal government furloughing workers and trimming other spending to meet the mandates of the sequester, government activity will be a drag on growth for the rest of the year.

“The fiscal squeeze will continue for the rest of the year,” said Paul Ashworth, chief U.S. economist at Capital Economics. Still, Ashworth doesn’t see economic growth slowing very much in the current quarter. He projects growth in the April-June quarter to come in at a rate between 2 percent and 2.5 percent.

The housing recovery continued to add to growth at the start of the year. Home construction, one of the economy’s top performers, grew at an annual rate of 12.1 percent in the first quarter, its third consecutive quarter of double-digit growth.

Businesses, however, reduced the pace of their investment in equipment and computer software. That slowed to a growth rate of 4.6 percent in the first quarter, down from growth of 11.8 percent in the fourth quarter.

Associated Press

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Business Headlines

US economy grew at modest 2.4 pct. rate in Q1

The US Murder Rate Is on Track to Be Lowest in a Century

This is fairly preliminary data, but Rick Nevin reports that if current trends keep up, we’ll end 2013 with the murder rate in America at its lowest rate in over a century.

• America’s Real Criminal Element: Lead



• Is There Lead In Your House?



• An Interview With Pioneering Toxicologist Howard Mielke



• How Dangerous Is the Lead in Bullets?



• Does Lead Paint Produce More Crime Too?



• How Your Water Company May Be Poisoning Your Kids

More MoJo coverage of the dangers of lead.

Analytically speaking, murder is an especially interesting crime because we have pretty good homicide statistics going all the way back to 1900. Most other crimes have only been tracked since about 1960. And if you look at the murder rate in the chart below (the red line), you see that it follows an odd double-hump pattern: rising in the first third of the century, reaching a peak around 1930; then declining until about 1960; then rising again, reaching a second peak around 1990. It’s been dropping ever since then.

This is the exact same pattern we see in lead ingestion among small children, offset by 21 years (the black line). Lead exposure rises in the late 1800s, during the heyday of lead paint, reaching a peak around 1910; then declines through World War II; and then begins rising again during our postwar love affair with big cars that burned high-octane leaded gasoline. Lead finally enters its final decline in the mid-70s when we begin the switch to unleaded gasoline.

This is powerful evidence in favor of the theory that lead exposure in childhood produces higher rates of violent crime in adulthood. It’s one thing to have two simple curves that match up well. That could just be a coincidence. But to have two unusual double-humped curves that match up well is highly unlikely unless there really is an association. Put that together with all the statistical evidence from other countries; plus the prospective studies that have tracked lead exposure in individual children from birth; plus the MRI scans showing the actual locations of brain damage in adults who were exposed to lead as children—put all that together and you have a pretty compelling set of evidence. Lead exposure doesn’t just lower IQs and hurt educational development. It also increases violent tendencies later in life. If we want less crime 20 years from now, the best thing we can do today is clean up the last of our lead.

Politics | Mother Jones

The US Murder Rate Is on Track to Be Lowest in a Century

New Jersey income tax collections up, jobless rate down in April

Thu May 16, 2013 5:39pm EDT

(Reuters) – New Jersey’s unemployment rate dropped to 8.7 percent in April and personal income tax collections rose 29.1 percent to $ 2.23 billion from the same month last April, state data show.

The revenue increase, along with the third consecutive monthly decline in the jobless rate, are good news for New Jersey’s economy, which has struggled to recover from the recession.

So far this fiscal year, New Jersey has taken in $ 9.6 billion in personal income tax revenue, 12.8 percent greater than the same period last year, state Treasury Department numbers showed on Thursday.

Total revenues were up 20 percent in April compared with the same month last year and up 6.9 percent for the fiscal year-to-date to $ 20.7 billion.

New Jersey’s rise in April personal income tax collections was about on par with a Thomson Reuters sampling of other U.S. states, which had a median 24.4 percent increase, excluding California’s dramatic 74 percent spike.

Across the country, however, the improvements might not continue as a still-shaky economy, tax cuts in some states and federal budget woes could depress revenue growth.

The good news also comes with another hitch: The surge stems in part from taxpayers who pushed income ahead into 2012 to avoid federal tax hikes that took effect in January, according to the report this month from the Rockefeller Institute of Government, an independent research group in Albany, New York.

“The temptation will be (for states) to treat it as recurring revenue available to support ongoing spending, or available for tax cuts,” wrote the report’s authors, Don Boyd and Lucy Dadayan. “Caution is in order.”

In New Jersey, Christie has renewed pressure on state Democrats to implement a tax cut, similar to one they prevented last year because the state’s revenues had not improved enough.

(Reporting by Hilary Russ. Editing by Andre Grenon)

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Reuters: Economic News

New Jersey income tax collections up, jobless rate down in April