Consumers appear to be keeping the economy afloat amid government cutbacks. That story from the Q1 2013 GDP numbers was corroborated by the 0.2 percent increase in consumer spending in March, which was matched by the 0.2 percent increase in income according to the Commerce Department.
The increase in spending for Q1 was the highest in two years, despite the drop in the payroll tax hike and disappointing numbers for retail sales. But the picture appears to be mixed.
Services drove the increase in spending rather than traditional shopping—likely because Americans were paying more than usual to heat their homes during an unseasonably cold March. – Read more at CNBC
GROWTH IN HEALTH SPENDING IS DOWN… BUT NOT FOR LONG Experts at the Kaiser Family Foundation predict that the slowdown in health care costs will end once the economy gets back on its feet. This is a big deal—since the increase in medical costs has been a prime source of projections of an exploding deficit after 2023. Kaiser predicts that health care spending will increase to an annual growth rate of 7 percent by the end of the decade. That’s compared to the record low of 3.9 percent annual growth between 2009 and 2011. - Read more at CNN Money
FED TO CONTINUE EASY MONEY POLICY Despite talk at their March policy meeting of easing up on its easy money policies, Federal Reserve governors and regional banks presidents are expected to continue their monthly $85 billion bond-buying program, since core inflation has fallen to 1.2 percent, well below the Fed’s target of 2 percent. - Read more at The Wall Street Journal
HERE ARE FOUR BUDGET CUTS CONGRESS LEFT UNFIXED Congress gave air traffic controllers and meat inspectors a break, but will they try to blunt sequestration’s impact on programs that are relied upon by the nation’s most vulnerable? - See four programs already hurt by the cuts here
RETIREES EXPLAIN WORKFORCE DECLINE “Americans are leaving the labor force in unprecedented numbers. But the trend has more to do with retiring baby boomers than frustrated job seekers abandoning their searches,” The Wall Street Journal's Ben Casselman writes, "The main reason is demographics: Americans are much more likely to work between the ages of 25 and 54 than when they are older or younger. But with the baby boomers aging, and many of their children now at least 16 years old but not yet into the prime of their working lives, it is the older and younger ends of the working-age population that are growing most quickly. Adjust for the changing population, and the 'missing' workforce shrinks to about 4.3 million. Moreover, even as young people make up more of the working-age population, they are becoming less likely to work." - Read more at The Wall Street Journal
CHICAGO BILLIONAIRE FOR COMMERCE SECRETARY President Obama is expected to appoint Penny Pritzker as Commerce secretary. Pritzker, a Chicago native and heir to the Hyatt hotel fortune, was the finance co-chair for Obama’s 2008 presidential campaign. Forbes named her the 271st richest American in January. Her personal fortune is worth an estimated $1.85 billion. - Read more at The Chicago Tribune
DID OBAMA’S CORPORATE TAX BREAK JUMPSTART THE ECONOMY? The Fiscal Times’ Josh Boak and Brianna Ehley write, “as part of his 2009 stimulus package, the president tried to jumpstart the economy for part of 2010 and 2011 by letting companies deduct the full cost of new computers, machinery and office equipment—what accountants call “bonus depreciation.” The plan halved the size of the deduction for 2012 and 2013, even though the results appear to be lackluster.” - Read more at The Fiscal Times