KeNo's Housing and Economic Portal: Wednesday May 20 Housing and Economic stories

TOP STORIES:

America's Future Got $7 Trillion Worse Since the Financial Crisis - (www.bloomberg.com) Still feeling uncomfortable about that tax bill you owed last month? Think about it this way: If you didn't pay it, America's fiscal future would look even worse than it does now, six years out from the financial crisis. Driven by higher interest costs, Social Security and Medicare for baby boomers, as well as tax cuts made permanent in 2012, the federal debt held by the public is expected to hit $40 trillion in 2035, according to calculations by the Committee for a Responsible Federal Budget based on Congressional Budget Office estimates. Back in 2009, soon after President Barack Obama took office, the forecast for the 2035 burden was at least $7 trillion lower.

Case of the Vanishing Worker - WSJ - (online.wsj.com) Unemployment rate is falling in industrial Midwest as residents move away, retire or give up on finding a job. By one key gauge of economic health, this industrial city three hours south of Chicago is well on the way to recovery. Hit hard by the recession, when its unemployment rate topped 14%, Decatur over the past year has seen one of the swiftest declines in joblessness in the country, with the rate dropping to 7% in March from 10.2% a year earlier. But look closer, and this city of 75,000 resembles many communities across the industrial Midwest, where the unemployment rate is falling fast in part because workers are disappearing: moving away, retiring or no longer looking for a job. “In cases like that, the unemployment rate makes things look better than they really are,” said Karl Kuykendall, U.S. regional economist at IHS Global Insight. In terms of overall economic growth, he said, “a decline in population and workforce is devastating.”

New fears in the Canadian oil patch - (www.cnbc.com) Swift political change is bringing uncertainty to Canada's largest oil producing province. Rachel Notley, the Alberta leader of the New Democratic Party, was elected last week as premier of the province, putting a halt to 44 years of rule by the more business-friendly Progressive Conservative Association of Alberta. Throughout her campaign, Notley vowed to increase corporate taxes to 12 percent from 10 percent and to review Alberta's "royalty fees" for the energy industry—the cut of revenue that Alberta and the central Canadian government take in exchange for giving oil companies the right to extract oil. (Tweet This). Most of Alberta's mineral rights—81 percent—are claimed by the province, rather than the government in Ottawa. Large oil companies in Alberta are more worried about a royalty review than a corporate tax increase at this point, said Andrew Leach, an associate professor at the University of Alberta School of Business. "I think right now probably the royalty review (is the bigger concern), because the risk is higher," he said. "The uncertainty is much greater."

The $900 Billion Influx That’s Wreaking Havoc in U.S. Bills - (www.bloomberg.com) For all the anxiety over the global selloff in bonds, the big worry in money markets is the havoc being created by a dearth of U.S. Treasury bills. The magnitude of the problem was on display last week, when not even the Treasury Department’s surprise announcement to boost sales could do much to lift bill rates. Over the past two weeks, some of those rates have turned negative, reaching levels last seen during the financial crisis. With supply at multi-decade lows, investors are signaling alarm as regulations intended to shore up banks and prevent a run on money-market funds exacerbate the bill shortfall. JPMorgan Chase & Co. expects an extra $900 billion of demand for government securities during the next 18 months, putting pressure on a sizable chunk of the $1.4 trillion bill market.

Spanish Bonds Fall With Italy’s as Greece Fights Default Risk - (www.bloomberg.com) Spanish and Italian government bonds fell for the first time in three days as concern Greece’s negotiations with its creditors will fail to prevent it running out of money prompted a flight out of euro-area debt markets. The region’s finance ministers met in Brussels Monday and welcomed the progress Greece has made while demanding more work before funds can be released, according to two officials who asked not to be named because the talks were private. On Tuesday, Greece must pay about 750 million euros ($836 million) to the International Monetary Fund. Italy is set to auction as much as 7 billion euros of debt due between 2018 and 2046 on May 13. Germany’s bonds declined. “Tomorrow there’s the IMF payments, with some officials saying we will make the deadline and some others saying it will be tough,” said Mathias Van Der Jeugt, a fixed-income strategist at KBC Bank NV in Brussels. “For the periphery, some spread-widening is possible. There’s also some supply coming up for Italy and that’s also a factor that could weigh on BTPs,” he said, referring to Italian government bonds.

OTHER STORIES: