Slow 2nd quarter to drag on economic growth

U.S. economic growth in the second quarter will be far weaker than previously expected and it will prevent the pace of growth from exceeding last year’s 2.4 percent, according to a forecast by a group of U.S. business economists.

Growth is expected to accelerate significantly in the third quarter, but “sluggish” conditions in the first three months of the year will persist into the second quarter and drag down average growth for the year, a survey by the National Association for Business Economists said Monday.

The survey of 47 economists from companies, trade associations and academia was conducted from May 8 to May 20.

A growing number of economists in the survey believe that the Federal Reserve will begin raising interest rates in the third quarter. Many had expected a second-quarter increase until the year started off so slowly.

The labor market will improve at a slower rate also, according to the survey, but job growth will remain “robust.” Economists now believe payrolls will grow by 217,000 per month in 2015, down from an earlier forecast of 251,000. Last year the economy added 260,000 jobs per month on average.

A stronger U.S. dollar is hampering growth by making U.S. goods more expensive overseas, and slower growth in China is also taking a toll on the U.S. economy, according to the survey.

The group’s forecast for U.S. economic growth in 2015 fell to 2.4 percent, from 3.1 percent in March.

The Federal Reserve also has revised its expectations for growth after a difficult winter. It expects economic growth for the year to average between 2.3 percent and 2.7 percent, down from a range of 2.6 percent to 3.0 percent it projected in December.

Still, the survey pointed to a number of positive economic indicators despite what it described as a “disappointing” start to 2015. The NABE panel expects consumer spending, residential investment and government expenditures to increase at a faster pace in both 2015 and 2016 compared with last year.

Paul Volcker warns on health of US state finances

Paul Volcker, former chairman of the Federal Reserve, has warned that US states rely on faulty practices to balance their budgets, masking the true nature of their finances and leading to poor policy making.

While states have returned to better health after the depths of the financial crisis and recession of the last decade, many remain under “heavy pressure,” with overall tax revenues, adjusted for inflation, barely recovered from their pre-recession peaks.

Paul Volcker, former chairman of the Federal Reserve.

“The continued fiscal stress is tempting states to continue, and even intensify, budgeting and accounting practices that obscure their true financial position, shift current costs on to future generations, and push off the need to make hard choices on spending priorities and revenue practices,” Mr Volcker said in a report released on Monday by the Volcker Alliance, a government reform group he founded in 2013.

Mounting fiscal stress in Illinois, Detroit’s bankruptcy and the financial troubles coming to a head in Puerto Rico demonstrate the importance of developing better financial policies, the report said.

“There are problems hidden by a lack of truth and integrity” in state budgeting, Mr Volcker said.

He questioned how better reporting might have changed the situations in Greece or Puerto Rico.

At issue is that all but one state – Vermont – are required to balance their budgets annually but no common definition of a balanced budget exits.

That left room for short-term “sleight of hand” – to create the appearance that spending did not exceed revenue, the report said.

Techniques include shifting the timing of receipts and expenditures across years, borrowing long-term to pay for current bills, using non-recurring revenues to cover recurring costs and delaying funding of pension and healthcare retirement benefits.

Budget gimmicks set states on a path of continually searching for ways to plug successive budget gaps.

“The never-ending sense of crisis leads to stop-and-go funding of vital programmes and stifles the need for serious discussions about policy,” the report said.

In particular, the Alliance critiqued the budget practices of three states. Triple-A-rated Virginia, though not perfect, has the best methods, New Jersey is a serious offender and California falls somewhere in the middle, having improved significantly in recent years.

To balance its budget, New Jersey has relied on borrowing and manoeuvres, including shifting money intended for other programmes to its general fund.

With the report, the alliance aims to lay the groundwork for future research extending to the 50 states and to build a common approach toward responsible budget practices.

The hope is that by shining a light on these practices, it will make it harder for states to engage in these “shenanigans” and “fess up to the problem,” Mr Volcker said.

The municipal bond market where states and local governments raise money does not fully reflect shoddy state budgeting, Mr Volcker said.

“There is a hidden agreement between issuer and buyer – neither has had an interest in exposing it,” he said. “If we expose all of this stuff the hope is that spreads will appropriately widen.”

Wholesale inventories up 0.4% in April, versus expectations for 0.2% gain

U.S. wholesale inventories rose more than expected in April as stabilizing oil prices helped lift sales by the most in more than a year, giving wholesalers an incentive to accumulate more stocks.

The Commerce Department said on Tuesday wholesale inventories increased 0.4 percent. Stocks at wholesalers were revised to show a 0.2 percent rise in March instead of the previously reported 0.1 percent gain.

Economists polled by Reuters had forecast wholesale inventories rising 0.2 percent in April.

Inventories are a key component of gross domestic product changes. The component of wholesale inventories that goes into the calculation of GDP—wholesale stocks excluding autos—rose 0.2 percent, suggesting inventories will probably be a modest boost to growth in the second quarter.

Sales at wholesalers surged 1.6 percent in April, the largest rise since March of last year. Sales had been weak since last August, in part due to the negative impact of lower oil prices on the value of petroleum goods sales.

That had led to an accumulation of inventory, leaving wholesalers with little appetite to buy more merchandise.

At April’s sales pace it would take 1.29 months to clear shelves, down from 1.30 months in March.

An inventory-to-sales ratio that high usually means an unwanted inventory build-up, which would require businesses to liquidate stocks.

That would weigh on manufacturing and economic growth.

Some economists, however, caution against reading too much into the elevated inventory-to-sales ratio, given the role that oil prices have played in depressing the value of petroleum goods sales.

Still, they expect an inventory drawdown in the quarters ahead, which is one of the reasons for less upbeat second-quarter GDP growth estimates. Inventories added a third of a percentage point to first-quarter GDP. Petroleum sales jumped 4.9 percent in April.

US small business confidence rises to five-month high

U.S. small business confidence increased to a five-month high in May with owners expecting a solid improvement in profits, which bodes well for the economy’s prospects in the months ahead.

The National Federation of Independent Business said on Tuesday its Small Business Optimism Index rose 1.4 points to 98.3, the highest reading since December. About 616 businesses took part in the survey.

The upbeat confidence survey added to robust May employment and automobile sales reports that have suggested the economy was gaining momentum after a slow start to the second quarter. Gross domestic product contracted in the first quarter.

“It appears that the small business sector has finally attained a normal level of activity which will hopefully keep the economy moving forward,” the NFIB said in a statement.

Eight of the index’s 10 components rose last month. Sales expectations, which fell in April, declined again. Owners’ views about spending on capital weakened slightly, while their attitudes toward increasing inventories were unchanged.

Despite the gloom about sales, business owners were quite bullish about earnings. A gauge of profits surged nine points in May, accounting for more than half of the gain in the index.

There was a solid increase in the number of owners who said now was a good time to expand and a marginal rise in those saying inventories were too low. More owners said they were experiencing difficulties finding workers for open positions.

Over 80 percent of those hiring or trying to hire in May reported few or no qualified applicants, a sign that the labor market is tightening rapidly.

The survey showed that while inflation pressures are mild, they have potential to pick up. The share of owners raising prices rose four points to 6 percent in May. About 17 percent of owners plan price hikes over the next few months.

On the other hand, businesses are raising wages for workers. Twenty-five percent of owners said they had increased compensation. About 14 percent plan to raise compensation in the coming months.

“The reported gains in compensation are still in the range typical of an economy with reasonable growth, and labor market conditions are tightening, which will put further upward pressure on compensation,” the NFIB said.

State incentives: Business boon or corporate welfare?

New York is a big state with a long history of doing things big. That is especially true when it comes to subsidizing business.

According to the watchdog group Good Jobs First, the Empire State has awarded nearly 72,000 subsidies to corporations, mostly since 2007, worth $22.6 billion. That is more than any other state and nearly twice the amount of its nearest competitor, Washington state.

Start-Up NY

New York is not shy about its generosity. The state’s economic development arm, Empire State Development, lists as its mission the promotion of a “vigorous and growing” state economy “through the efficient use of loans, grants, tax credits, real estate development, marketing and other forms of assistance.”

The “efficient” part is the subject of plenty of debate in New York and every other state. For now, it seems the subsidies—and the businesses that receive them—are winning.

“This is the dark side of the war among the states,” said Good Jobs First Executive Director Greg LeRoy, who has been tracking the subsidies for more than 30 years. And he added that things are not getting any brighter.

While the number of deals sought by businesses began declining before the Great Recession and remains depressed, the assistance being offered by states is going up. The result, LeRoy said, is that a relatively small number of companies have increasing leverage, and “they’re taking it to the bank.”

That is especially evident when it comes to what Good Jobs First calls “megadeals,” worth $75 million or more. Since 2008, the group said, the number of giant awards per year has more than doubled from the previous decade. They include the record $8.7 billion that Washington state awarded to Boeing in 2013.

“[Subsidies are] the dark side of the war among the states.”-Greg LeRoy, executive director of Good Jobs First

Are the subsidies making the states that award them any more competitive?

“Very marginally,” said LeRoy noting that state and local taxes—which the majority of deals target—make up less than 2 percent of business costs.

Workers are the new weapon in the battle for business.

“Incentives rarely work or can rarely make a difference,” he said. Even when they seem to be working, the effect is often short-lived.

Read MoreState House to the White House? How the governors stack up

In New York’s case, the subsidy figures are so large because they include billions of dollars in free or discounted power from the state’s utilities. The state agreed to provide $5.6 billion in electricity discounts over 30 years to Alcoa in exchange for a $600 million investment in one plant and an agreement to preserve at least 900 jobs at the facility. But New York found that, as is the case in many such agreements, this one was built on shifting sands.

After the company began laying off workers elsewhere as part of a nationwide cost-cutting plan last year, the state sweetened the pot with more electricity discounts, described at the time by Gov. Andrew Cuomo as a move to avoid layoffs.

“This agreement … applies firm job commitments that Alcoa must adhere to for its continued use of some of the lowest-cost electricity in the country,” Cuomo said in a statement March 31, 2014. Alcoa has stayed put—for now.

The great debate heats up

LeRoy said it is no coincidence that some states that are most generous with subsidies are also facing budget issues. In New Jersey, Gov. Chris Christie has awarded more than $5 billion in subsidies—including half a dozen deals that were worth more than $200 million apiece. State officials have defended the incentives as a way to attract investment and save and create jobs. But this year, the state suffered its ninth credit downgrade since the governor took office.

Even states that have tried to back away from subsidies are finding it is not as simple as it may seem.

Soon after taking office in 2011, Michigan Gov. Rick Snyder called for an end to some of the state’s most generous incentives.

“Let’s stop the tax credits—and realize in many cases that the only reason they’re in the tax code is because someone had more political power,” he said that year.

But the state agreed to continue to honor credits it had previously granted, some dating back to 1995. The result: Four years after the credits ended, Michigan taxpayers are still on the hook for nearly $9.4 billion, state officials say.

Other states have been trying to move away from subsidies by pursuing what are known as “sector strategies”—a big buzz phrase these days in economic development circles.

The idea is to target a state’s existing strengths, like a big concentration of health-care professionals, and build on that. Money that might be spent on incentives to lure a specific company might instead be spent on enhanced training programs and facilities to lure multiple companies to the region.

But while economic development professionals may be pushing the idea, LeRoy said, “They have to answer to elected officials who want to cut ribbons.”

Because of that, and because businesses are happy to take any subsidies they can get, the war of incentives is unlikely to end anytime soon.

US job openings tick up in April

Workers assemble Jeep Wranglers at the Chrysler Toledo North Assembly Plant in Toledo, Ohio.

Workers assemble Jeep Wranglers at the Chrysler Toledo North Assembly Plant in Toledo, Ohio.

The U.S. labor market added 5.4 million job openings in April, slightly higher than the previous month, the U.S. Bureau of Labor Statistics reported Tuesday. (Tweet this)

April’s numbers were up from 5 million job openings in March. The job openings rate for April was 3.7 percent, which was an increase for total private and essentially unchanged for government.

This is the highest monthly reading since the series began in December 2000, reports the government agency.

The number of jobs increased over the 12 months ending in April for total nonfarm, total private, and government. The largest increases were seen in the professional and business services and in health care and social assistance. Job openings decreased over the year in mining and logging and in arts and entertainment.

April hires came in at 5 million, little changed from March. The hires rate was 3.5 percent in April.

There were 4.9 million total separations in April, also little changed from the previous month. The separations rate was 3.5 percent. Separations includes quits, layoffs and discharges, and is also known as turnover.

US import prices up as petroleum posts big gains

The NYK Joanna container ship sits docked at the Dante B. Fascell Port of Miami-Dade County in Miami, Florida.

The NYK Joanna container ship sits docked at the Dante B. Fascell Port of Miami-Dade County in Miami, Florida.

A surge in the cost of petroleum boosted U.S. import prices in May after 10 straight months of declines, but a strong dollar continued to curb underlying imported inflation pressures.

The Labor Department said on Thursday import prices increased 1.3 percent last month, the largest gain since March 2012, after sliding by a revised 0.2 percent in April.

Economists polled by Reuters had forecast import prices rising 0.8 percent after a previously reported 0.3 percent drop in April. In the 12 months through May prices fell 9.6 percent.

 

Last month, imported petroleum prices surged 12.7 percent percent, the biggest increase since June 2009, after increasing 1.8 percent in April.

Import prices excluding petroleum were unchanged in May. The dollar, which has gained about 13.2 percent against the currencies of the United States’ main trading partners since June, is dampening underlying imported inflation pressures.

Imported food prices rose 0.3 percent after declining 1.0 percent in April.

The report also showed export prices rose 0.6 percent last month, the biggest gain since March 2014, after falling 0.7 percent in April. Export prices declined 5.9 percent in the 12 months through May.

US business inventories post largest gain in nearly a year

n employee moves inventory at the warehouse of the new Goya Foods Inc. headquarters and distribution facility in Jersey City, New Jersey.

U.S. business inventories recorded their biggest increase in nearly a year in April, which could see economists raise their second-quarter growth estimates. (Tweet this)

The Commerce Department said on Thursday business inventories rose 0.4 percent, the largest gain since May 2014, after edging up 0.1 percent in March.

Economists polled by Reuters had forecast inventories rising only 0.2 percent in April.

Inventories are a key component of gross domestic product. Retail inventories excluding autos, which go into the calculation of GDP, rose a solid 0.6 percent in April. That was the biggest increase since November 2013 and followed a 0.1 percent gain in March.

That will likely boost GDP growth expectations for the second quarter.

The government last month estimated that GDP contracted at a 0.7 percent annual pace in the first quarter. However, upbeat healthcare spending and stronger-than-previously reported March retail sales, construction spending, trade and wholesale inventory data suggest the economy probably did not contract.

In April, business sales increased 0.6 percent after a similar rise in March.

At April’s sales pace, it would take 1.36 months for businesses to clear shelves – a relatively high ratio that suggests limited scope for businesses to aggressively accumulate stocks. The ratio was unchanged from March.

Apply the Home improvement Tips to get the elegant look on the home

It doesn’t matter if you have got purchase the freshly engineered house, or owning your own place gets out the house improvement scratch in America all. Here  are ten tips of recommendation to assist, flip your residence into the higher home.

Have a plan

One if the unhealthy stuff you will perform once it involves home enhancements is to start the project while not the most data like value materials, style and time as realistically as doable from the bargain. Nothing is priced quite having to change horses within the center as an example, you wish to maneuver the icebox in different places or ought to change the tile choices. Utilize style equipments to conceive the project and embody a healthy buffer to its slow and financial budget to report for predictable surprises.

http://slashstartups.com/wp-content/uploads/2015/02/3d-dining-room-interior-design-studio-uk-1024x768.jpg

Save cash on your home improvement project

The real estate mumbai tends to save huge cash on the one home improvement project, the additional we’ve left for all different ones we want to try and do. Knowing the renovating comes can provide the foremost bash for your cash, apprehend that element of the project. You will be able to indulge or withhold to pay additional for the items that  are onerous to relocate, like a vessel, however stint on the valve. As an example, or pay additional on the skilled vary if you are gourmand cook and save on the inventive tiles and flooring that appear as if superior materials.

Set your contractor

About as essential as sleuthing an ideal medical practitioner and sleuthing the right therapist: finding an accountable contractor or the maintenance man. Horror stories of the house owners being tricked by the home building contractors are having the work done thus carelessly that its value 1000s of greenbacks to reconstructions offer the shudders. Opt for your contractors fastidiously whereas reconstruction or renovating your home.

Realize cash for home improvement

Most of the house enhancements for not purchase themselves. If you cannot have enough cash to finance the project in whole with money, apprehend the varied ways in which you will be able to finance your house improvement while not setting your house at the downside. Likewise, if you recognize the excellence between tax breaks you get for home improvement or repairs, you will be able to engineer the right deductions at the tax time and take some quantity back from the project. Similarly, if you are providing personal mortgage insurance, home improvement maximizes the worth of your house might assist you to get rid of that value, that though it doesn’t increase the funds for the project, will lower your housing expenses overall.

Get the proper tools

You cannot truly enhance your house a lot with your hands; you will want a multi tool at least. Prepare your chest with the necessary tools for any tiny repair or giant repair, like elementary plumbing tools. Don’t forget your Smartphone, it would be the right DIY tool in your kit, and once all else fails, there’s an adhesive tape.

Realize inspiration for your next home project

Interest is your companion, homeowners. You must notice the inspiration for the second home project. It ought to be pretty neat, as a result of you recognize project photos, value estimation and therefore the contractors also. You must not leave the house you already reside.

Hone your home improvement skills

Large comes or tiny, doubtless all folks might position to grasp some necessary home repair skills. Perceive the bob villa worthy skills and facilitate individuals at constant time by serving in or through the free clinics. Address the good reading books and decides to begin comes too. If you’re stocked with the project, then iOS app fountain can link you to home improvement professionals to answer the queries for five dollars.

Plan to DIY or not

Even if you are the weekend soldier with a well reserved workshop, not all the house improvement comes  are applicable to try and do yourself. Apprehend your restrictions, begin very little if you are a starter, so keep calm and DIY on if you want. One will enhance the house by knowing the most recent tips for home improvement and how the design of the on top of tips for higher improvement.

Trade Deficit Narrows as Services Exports Hit Record High

Trade Gap

The U.S. trade deficit narrowed in April on a drop in imports, which surged in March following the end of a West Coast ports labor dispute, while companies picked up their hiring in May after a pullback the previous month.

The data supported the notion the U.S. economy has recovered somewhat from a first-quarter contraction and bolstered expectations the Federal Reserve may consider raising interest rates later this year.

Economists cautioned that a second-quarter economic rebound remains modest due to a strong dollar, a recent rise in oil costs and sluggish demand abroad.

“The takeaway for now is that the massive drag from trade activity is beginning to unwind, though this sector is likely to remain a modest drag on activity this quarter on account of the strong dollar, higher energy prices and weak global demand,” said Millan Mulraine, deputy head of U.S. strategy at TD Securities.

The Commerce Department said Wednesday the trade gap narrowed to $40.9 billion from March’s revised deficit of $50.6 billion. The March deficit was previously reported at $51.4 billion.

The 19.2 percent drop in the April trade deficit was the largest decrease since early 2009.

Analysts polled by Reuters had forecast the trade deficit falling to $44 billion.

Imports fell 3.3 percent to $230.8 billion as West Coast ports, a key entry point for goods to and from Asia, cleared a backlog created by a labor dispute that was settled earlier this year.

Exports increased 1 percent to $189.9 billion in April. A stronger U.S. dollar has in recent months made U.S. goods and services less affordable abroad.

Exports of U.S. services edged up to $60.9 billion, the highest ever recorded.

The April petroleum deficit stood at $6.8 billion, the lowest since March 2002.

Improved Hiring

Meanwhile, private employers added 201,000 jobs in May, the most since January, payrolls processor ADP said Wednesday.

That was in line with analyst forecasts and higher than a revised 165,000 jobs in April, which were the fewest since January 2014.

U.S. stock indexes were trading higher after the data, while prices for U.S. Treasuries fell. The dollar was weaker against a basket of currencies.

The ADP data came ahead of the U.S. Labor Department’s more comprehensive non-farm payrolls report Friday, which includes both public and private-sector employment.

Economists polled by Reuters are looking for total U.S. employment to have grown by 225,000 jobs in May, largely in line with April’s 223,000 increase. The unemployment rate is seen holding at a near seven-year low of 5.4 percent.