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  • Global Economy Worsening, But America is on Top

    With President Obama making controversial moves on several fronts this month, it is tempting to go all politics this week. The president is threatening to grant defacto amnesty to five or six million illegal aliens, via Executive Order, even though he knows this is unpopular among the American people. It’s as if he’s in full denial regarding the landslide midterm election results.

    In addition, he signed a controversial climate deal with China that will hurt the US economy and allows China to continue building more coal-fired power plants and increase emissions annually until 2030. Obama and the media hailed it as one of his landmark accomplishments. It wasn’t.

    At the Asian summit he attended last week, Mr. Obama pledged to give $3 billion of US taxpayer money to emerging countries to help them work toward clean energy and tackle climate change. Hopefully, Congress will block that pledge.

    And if you missed it, Obama announced last week that he wants the federal government to regulate the Internet. That would be a disaster! More details as we go along today.

    But rather than devote the entire E-Letter to politics, let’s start with a new report on the slowing global economy. According to the latest survey from Bloomberg, the global economy is in the worst position in two years. Fears of deflation are growing in Europe and elsewhere.

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  • The US Economy - Back To The Slow Lane Again

    Late last year, President Obama predicted that 2014 would see“breakout growth” in the US economy. His optimism was not completely unwarranted since the economy grew by a healthy 4.1% (annual rate) in the 3Q of last year, driven largely by an unexpected surge in inventory rebuilding. Then in late January, the Commerce Department reported that the economy grew by a better than expected 3.2% in the 4Q.

    A 4.1% jump in GDP in the 3Q followed by an above-trend 3.2% in the 4Q gave some forecasters, including President Obama, reason to predict that our anemic economy might finally be out of the doldrums. That was until last Friday’s second estimate of 4Q GDP, which was revised significantly lower to only 2.4%. That’s our lead topic for today, along with a look at some other recent economic reports that raise cause for concern.

    Finally, we will look at some professional analysis of President Obama’s plans to significantly downsize our military in the next few years. If Obama and defense secretary Chuck Hagel get their way, the Army will be reduced to its lowest level in 75 years. Hopefully, Congress will stand up for our military, but in any event, you need to know what this president wants to do. Be sure to read the latest military intelligence analysis from LIGNET which appears later on.

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  • US Savings Rate Falling Again – Here Comes "MyRA"

    Today we weave together several different topics that are all connected in one way or another. We begin with the US savings rate which is trending lower once again. From 1975 to 2007, the savings rate fell to an all-time low of 2.4%. While it jumped up briefly after the 2008 financial crisis, it is now moving lower yet again.

    In an effort to boost the US savings rate, especially for lower income groups, President Obama introduced a new type of starter retirement account for Americans of modest means that he called the MyRA, which stands for “My Retirement Account” and rhymes with IRA.

    While the new MyRA may be well intentioned, it is fraught with problems – most notably that it can only be invested in government securities that have yielded paltry returns over the last decade or longer. And when inflation rises, MyRAs are sure to be a big disappointment. I’ll tell you why as we go along today.

    Next, the recent Congressional Budget Office report, with its economic projections over the next 10 years, contained several troubling findings that the mainstream media and politicians in Washington deliberately didn’t tell you about. I’ll tell you why below.

    Finally, the president recently told a series of whoppers following the CBO’s latest report that claims Obamacare will cost 2.5 million jobs over the next decade. He lied, misrepresented and completely contradicted several key statements he has made in the past. Obama easily hit a new high in his presidency for deception.  You really need to read this!

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  • Will 39% Hike in Minimum Wage Tank The Economy?

    President Obama called for a whopping 39% increase in the minimum wage from $7.25 to $10.10 per hour last Thursday. There is already a bill working its way through in the Senate to do the same thing. If this legislation passes, the minimum wage will be increased 95 cents each year for the next three years starting this year, to bring it to $10.10 by 2015.

    Many argue that this will be a huge job killer and could thrust the economy back into a recession. However, some of the critics I’ve read don’t consider that the 39% increase in the minimum wage will be phased in over three years. Supporters of the wage hike argue that the seemingly huge increase merely restores the purchasing power for the low-paid workers in America. We’ll look into both arguments today.

    Before we get to that controversial topic, let’s take a look at last Friday’s surprising unemployment report, last Thursday’s better than expected GDP report and the continued slide in consumer confidence.

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  • America is Turning Into a "Part-Time Nation"

    Part-time work accounted for a whopping 77% of the jobs the US economy created from January through July, according to household survey data from the Bureau of Labor Statistics. Last year during the same time period, part-time jobs were only 53% of the total versus 47% full-time jobs. This trend toward part-time, low paying jobs is accelerating rapidly.

    A rising number of companies are citing healthcare reform as the reason for the growing part-time workforce. As a result, the US labor pool is rapidly restructuring toward “29-ers” – employees working just under the 30-hour full-time threshold. This meteoric increase in part-time versus full-time new jobs has been happening since 2009.

    Next, we look at the latest clues as to when the Fed will start to “taper” its monthly bond and mortgage purchases. The minutes from the Fed’s July 30-31 policy meeting indicated that a growing number of FOMC members are leaning toward reducing purchases before year-end. But we still don’t know when Bernanke & Co. will pull the trigger.

    Finally, in my blog last Thursday, I wrote about a new study which found that, in at least 35 US states, a person on welfare can get more cash benefits than a person working 40 hours a week at the minimum wage. In some states, a whole lot more than the minimum wage. Today, we explore this dangerous trend and why we have a record number of Americans on welfare.

    But first let’s take a quick look at the latest economic reports and what’s ahead this week.

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  • Economy Rolling Over, Obama Scandals Multiply

    There’s a lot to cover today, starting with last Friday’s unemployment report that was hailed by the media and the stock markets. But after looking into the data, I will argue that the report was lackluster at best. From there we’ll look at why the big picture economic outlook is becoming worrisome. We’ll drill down into the data only to conclude that the economy may be rolling over to the downside.

    And we’ll end with some thoughts on the Obama administration’s defense of the growing scandals. The Obama defense, as usual, is that this is nothing different from what George W. Bush did when he was in office. That story is wearing very thin, especially now that we’re five years into Obama’s presidency. The truth is, this is much worse! Plus, we’ll look at some new revelations that further suggest it was President Obama himself who caused the IRS to target conservative groups.

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  • Obama Claims We Don’t Have A Spending Problem

    Most of the forecasters I subscribe to expect economic growth to average only 1-2% in the first half of 2013. Most believe that 4Q GDP fell sharply from the 3.1% rate in the 3Q of last year, largely due to fears about the fiscal cliff. They also expect growth to improve modestly in the second half of this year to 2% or slightly higher. That’s not too optimistic.

    One reason is that the end of the payroll tax holiday on December 31 means that workers’ pay went down by 2% on January 1, thus adding more headwinds to the economy this year. A person earning $50,000 a year before taxes, for example, will pay an additional $1,000 or more to the government this year.

    Add to that the fact that we are sure to have another nasty debt ceiling battle next month, which will once again be unsettling to consumers who drive the economy. We all remember the fiasco in the summer of 2011 when the Dow plunged over 2,000 points. For these reasons and others, at least the first half of 2013 could be very dicey.

    Actually there are three debt battles – the so called “trifecta” – that lie ahead. In addition to the debt ceiling battle, there is also the sequester/automatic spending cuts on March 1 and the “continuing resolution” to fund the government in the absence of a formal budget passed by Congress. That happens in late March. We will look at all three of these upcoming battles below.

    Today we’ll also touch on the pork-laden fiscal cliff bill that passed on New Year’s Day. And we will ponder the question of whether the US has a “spending problem” or a “taxing problem.” Let’s start with this last one first.

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  • On The Economy & Capitalism vs. Socialism

    Today we look at a Pew Research Center survey that polled Americans for their feelings about capitalism versus socialism. The survey included all races, different ages and various income groups. I think it’s safe to say, this survey will SHOCK YOU!

    But before that, let’s take a quick look at the latest economic reports and the consensus view for Thursday’s 3Q GDP report. There is also news that Americans are more optimistic about the economy now than they have been in a decade – but are they really?

    And finally, did you know that the United Nations is planning to hijack the Internet? The UN wants to control the World Wide Web. And it could happen as early as next week. You need to know about this.

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  • Are We Headed Over the "Fiscal Cliff"? Maybe So

    We begin today with some obligatory comments about the election and how we got it wrong. Obviously, I am very discouraged with the outcome of the election. The main mistake Spencer and I made (and others including Gallup, Rasmussen, Pew, Rove, Morris, etc., etc.) in our pre-election analysis was to significantly underestimate the turnout rates among Democrats. The widely-held view that Democrats were unenthused and wouldn’t turn out to vote, as suggested by numerous pollsters, was simply wrong.

    We also we mistakenly believed that the 2008 surge in black, Latino, and young voter turnout would recede in 2012 to “normal” levels, as did most of the major pollsters noted in the previous paragraph. That didn't happen. These high levels of minority and young voter participation are apparently here to stay. Unfortunately, Obama won both the popular vote and the Electoral College comfortably. Following those opening comments, we turn our attention to the so-called "fiscal cliff" that is upon us.

    I'm sure you have heard about the fiscal cliff, but today I will present you with the details, including how much it will affect the economy and how much it will cost you (based on your income level). I will also explain why I think the odds are greater that we will fall off the fiscal cliff this time. Given his election victory, I don't see President Obama willing to compromise much if at all.

    If we do fall off the cliff, a new recession is very likely to happen next year, and that will almost certainly be bearish for stocks. Thus, the stakes are very high in this soon to be knock-down, drag-out!

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  • Will America Be Greece in Four Years?

    The US national debt topped $16 trillion last week, and it was almost as if no one paid attention. At the rate we are going, the national debt will top $20 trillion just four years from now in 2016. Despite four years of trillion-dollar budget deficits, the US economy remains stagnant with sub-2% growth in GDP – the worst post-recession recovery since the Great Depression.

    You would think that our leaders in both parties would figure out that trillion-dollar deficits are NOT the answer, and that they are the problem. This is not really a political issue, because both parties in Washington have been guilty of spending us into oblivion. The difference is, now we're talking about trillions, not billions.

    Last week, I read a great article in Forbes on what to do about the economy. I wish I had written it myself. But since I didn’t, I have reprinted it for you today. The author really tackles what it will take to turn our economy around. Not surprisingly, the author's suggested solution does not in any way look like President Obama's economic policies.

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  • The Worst Decade for America’s Middle Class

    We begin today by looking at a new demographic study from the Pew Research Center which contains some stark findings about the American middle class. The study concludes that the last 10 years have been the “worst decade in modern history” for the middle class. A lot of the findings will surprise you.

    From there we look at some new projections from the Congressional Budget Office which warn what will happen if we fall off the “fiscal cliff.” The CBO predicts that the US will fall back into recession early next year if the automatic tax increases and mandatory spending cuts occur at the end of this year.

    Next, the minutes from the Fed’s July 31/August 1 policy meeting (just released last week) revealed that the FOMC is indeed considering QE3, and an announcement may be forthcoming at the next meeting on September 12-13.

    Finally, I will share my thoughts with you on the new documentary movie, “2016: Obama’s America.” I saw Dinesh D’Souza’s film over the weekend and am very glad I did – I learned some things I did not know. More comments appear at the end of today’s letter.

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  • Obama’s Decision: Millions More on the Dole

    In 1996, President Clinton and the Republican-controlled Congress passed sweeping new welfare reforms. In doing so, they included strict regulations that required welfare recipients to work (or actively look for work). And they made it clear that "work" did not include such things as bed rest, exercise or personal past-times. The welfare rolls plummeted in the years following 1996, and the program was hailed a great bipartisan accomplishment.

    But on July 12, President Obama’s Health and Human Services Department issued an administrative order to the states that reverses the work requirements contained in the welfare law. Many believe this action is illegal, and it will almost certainly be litigated in the courts. But in the meantime, this order guts the work requirement in the 1996 welfare reform law and will allow millions more Americans to qualify for welfare benefits.

    On another note, the number of Americans going onto Social Security Disability Insurance in the 2Q of this year greatly outpaced the number of new jobs created in the economy for the first time. By April of this year there were a total of 10.8 million on disability, the highest ever. Likewise, there are more Americans than ever before on food stamps - 46.4 million as of March. Ditto for the number of Americans living in poverty - an estimated 15.7% of the population.

    These are very depressing numbers. The media tells us that this is all because of the weak economic recovery and continued high unemployment. The weak economy is certainly a big part of the problem, but could there be other factors involved? Could it be that the current administration in Washington wants more Americans to be dependent on the government? I will address this question at the end of today's wide-ranging E-Letter.

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  • Best Critique of Obama I’ve Ever Read

    The holidays sneaked up on me faster than usual this year, what with a couple of extra business projects that required a lot more time than I expected over the last few months. Given a number of year-end deadlines, I have elected to reprint an excellent article today by Peter Ferrara that is perhaps the best critique of President Obama that I have ever read. If you are an Obama fan, you probably don’t want to read this; on the other hand, maybe you should.

    Ferrara succinctly examines Obama’s upbringing, his early professional life, his liberal ideology, his ascendency into politics, his becoming President of the United States and his policies since occupying the White House. This is a very interesting and insightful read, especially in light of the challenging economic and financial times we find ourselves in.

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  • CEOs More Negative on the Economy & Jobs

    We begin today with the latest results from the Business Roundtable survey which goes out to 140 top CEOs around the country each quarter. The 3Q survey found that more than double the number of CEOs plan on layoffs just ahead than in the 2Q. The CEO Economic Outlook Index fell for the second quarter in a row to the lowest level since late 2009.

    Following that discussion, we look at the latest economic reports. While there were a few encouraging spots, most of the reports indicate that the economy is slowing down. Consumer confidence remains in the tank. Last Friday, the Economic Cycle Research Institute (ECRI) declared that a new recession has begun. That news sent stocks sharply lower yesterday - what else is new?

    Next, we move on to President Obama's $450 billion jobs bill. Few people know it, but this bill would allow unemployed people applying for jobs to sue those employers if they are turned away because they've been unemployed for a while. I'm not for job discrimination of any kind, but this is ridiculous. Fortunately, the jobs bill is "dead-on-arrival" in the Congress.

    In closing, I will update you on the wildfire epidemic here in Texas. Thanks to all who have called or e-mailed to check on us!

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  • Obama’s Jobs Speech, The Economy & The Fed

    Once again this week, there is a lot of news to cover. We begin with my thoughts on President Obama’s latest “jobs” speech in which he asked for yet another almost $450 billion in stimulus which he said is “paid for.” That all depends on Congress passing a litany of new tax increases that Obama announced yesterday. This guy just never learns! Obama’s latest jobs plan is just a part of a carefully crafted political re-election strategy that he can use regardless of whether or not Congress passes his American Jobs Act.

    Following that discussion, we will look at the latest economic reports, including the dreadful August unemployment report. Next, we will move on to the latest news from the Fed and what the FOMC may be up to at its upcoming monetary policy meeting on September 20-21.

    Most importantly, I will also announce today that I have started a BLOG. At the end of this E-Letter, I will give you more details. Many people have encouraged me to start a blog, but until now I have resisted. I have recently changed my mind, and you can access my new blog at www.garydhalbert.com. I will be covering a lot of different topics and I trust you will like what you see. If so, I hope you will subscribe and join in the discussions and let me know.

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