Insight & Thought Leadership on the Global Economy

He really has the ability to put aside any pre-existing agenda and just talk facts to almost everybody — Barney Frank, U.S. Representative for Massachusetts’s 4th Congressional District

Assessing the Economic Impact of Sandy

A Moody’s Analytics conference call assessing the economic impact of Superstorm Sandy was held on November 1st.

Here is a very brief synopsis of the call:

Hurricane Sandy interrupted millions of lives, cutting power and forcing businesses and financial markets to close, but its economic impact should prove temporary. The property damage and lost economic output will likely rank it among the most costly U.S. natural disasters. Fortunately, major facilities such as sea and airports, rail and road systems, oil refineries and cell towers appear not to have been significantly damaged.

The lost economic output will likely be made up over the coming weeks. Rebuilding, financed by insurance and government aid, will support more activity through the rest of 2012. The affected area is relatively affluent and most households and businesses are insured.

Economic output in the region between Greater New York City and Washington DC totals about $2 trillion per year, just about 13% of national GDP. At 250 working days per year, daily output in the region is worth about $8 billion. Two days of lost output and the resulting multipliers cost the economy about $20 billion. If the property damage totals about $30 billion and half is repaired and rebuilt by the end of December, there will be only a small negative impact on fourth quarter GDP. Rebuilding will continue into next year and lift GDP by a small amount in the first quarter.

Nevertheless, the storm will make weekly and monthly economic data more volatile. Expect dips in October retail and vehicle sales, unemployment insurance claims, and industrial production, but these will rebound by December. Homebuilding and residential repair will rise noticeably. Restaurant and casino sales will be hurt, but grocery stores will gain. General merchandise stores will lose business, but online retailing should get a boost.

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Predicting the BLS Employment # With ADP Payroll Transactions


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Are the Rich Taxed Enough

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CNN Interview On September Jobs #

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Zandi Interviews Joe Stiglitz On His New Book

Nobel Prize-winning economist Joseph Stiglitz was in town this week, talking up his new book, The Price of Inequality. Mark Zandi interviewed Stiglitz at the Free Library of Philadelphia, which has made a podcast of the talk available.

Listen to the interview here: http://libwww.freelibrary.org/authorevents/podcast.cfm?podcastID=1018

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Yes, stimulus was the right move

[This article originally appeared in the Philadelphia Inquirer Sept. 23, 2012]

The following is a synopsis of themes discussed in my new book, “Paying the Price,” published this month by FT Press.

Question: Did the federal fiscal stimulus succeed or fail as an antidote to the Great Recession?

Answer: It succeeded. The temporary tax cuts and government spending increases launched in 2008 and 2009 were aimed at ending the recession and jump-starting an economic recovery. They did that. There were several rounds of stimulus, beginning with tax rebates sent out in the Bush administration’s final days, but the stimulus most people remember is the American Recovery and Reinvestment Act. Worth nearly $800 billion, this legislation was passed in February 2009, just weeks after President Obama took office. The recession officially ended in June of that year and job growth resumed in February 2010. This was no accident. Continue reading

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Even If You Are All Powerful, The Economy is Hard to Fix

Mark Zandi visits with NPR to discuss how to fix the economy with the Moody’s Analytics U.S. macroeconomic model. View the Full Article and Listen to the Podcast.

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The One Housing Solution Left: Mass Mortgage Refinancing

[This article originally appeared in the New York Times August 12, 2012 and was authored by Joseph Stiglitz and Mark Zandi ]

MORE than four million Americans have lost their homes since the housing bubble began bursting six years ago. An additional 3.5 million homeowners are in the foreclosure process or are so delinquent on payments that they will be soon. With 13.5 million homeowners underwater — they owe more than their home is now worth — the odds are high that many millions more will lose their homes. Continue reading

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Raising Taxes on High Earners is Sound Policy

[This article originally appeared in the Philadelphia Inquirer July 30, 2012]

Unless Washington acts, we all will pay more in taxes next year. Few think that’s a good idea, but there is little consensus on how to change it. President Obama has proposed freezing tax rates for everyone making less than $250,000 a year. His GOP opponent, Mitt Romney, wants not only to include high-income households in the freeze, but also to cut rates further. Who is right? Continue reading

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Greece Could Decide Fate of U.S. Economy

[This article originally appeared in the Philadelphia Inquirer May 27, 2012]

Will Greece exit the eurozone? Hard to believe, but the answer to this question could determine the fate of the U.S. economy this year. Global investors have been driving stock prices down, as odds rise that Greece will quit the European currency union. Continue reading

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