Connie Prater – FoxBusiness.com

Credit card users can expect the most dramatic changes in credit terms, interest rates and fees in decades now that most major provisions of a new federal credit card law have gone into effect.

The new normal for credit cards is more transparency and easier-to-understand terms, but at a higher upfront cost. Credit card issuers and credit industry analysts say the credit card reform law makes credit cards more costly for all users and unaccessible for low-income families and people with bad credit. The law likely means the return of routine annual fees, fewer rewards cards and the possibility that credit card bills will be payable immediately rather than after a month-long grace period.

The new normal

President Obama signed the Credit CARD Act of 2009 into law May 22, 2009, following passage days earlier in the Senate and the House.

What does the credit card law mean for cardholders? Millions of credit card users will avoid retroactive interest rate increases on existing card balances and have more time to pay their monthly bills, greater advance notice of changes in credit card terms and the right to opt out of significant changes in terms on their accounts. That will take the surprise out of “gotcha” fine print and give consumers time to shop around for better deals if they don’t like the new terms. The requirements are being phased in. The first batch took effect Aug. 20, 2009, and the majority of provisions started on Feb. 22, 2010, while some begin on August 22, 2010.

The Fed just announced final rules for the third phase of the Credit CARD Act — which takes effect on August 22, 2010. Those rules say, among other things, that late payment fees will be capped at $25 in most cases. Also, if consumers exceed their spending limits, they can’t be charged more than the excess amount.

The law has fundamentally changed the way credit card issuers market, bill and advertise credit cards.

Here are the highlights of the credit card law:

To view the rest of this article go to What the new credit card law means for you

America’s baby boomers—those born between 1946 and 1964—face a problem that could weigh on the economy for years to come: The longer it takes for the economy to recover, the less money they’ll have to spend in retirement.

Policy makers have long worried that Americans aren’t saving enough for old age. And lately, current and prospective retirees have been hit on many fronts at once: They have less money, they earn less on what they have, their houses aren’t rising in value and the prospect of working longer to make up the shortfall has dimmed significantly in a lousy job market.

“We will have to learn to make do with a lot less in material things,” says Gary Snodgrass, a 63-year-old health-care consultant in Placerville, Calif. The financial crisis, he says, slashed his retirement savings 40% and the value of his house by about half.

Banks, home buyers and bond issuers are all benefiting as the U.S. Federal Reserve holds short-term interest rates near zero to support a recovery. But for many of the 36 million Americans who will turn 65 over the next decade—and even for the 45 million who have another decade to go— the resulting low bond yields, combined with a volatile stock market, are making a dire retirement picture look even worse.

Low yields present retirees with a difficult choice: Accept the lower income offered by safer bonds, or take the risk of staying in the stock market. Either way, their predicament could put a long-term damper on the consumer spending that typically drives U.S. growth.

“If these rates stay as low as they are, then a lot more people are going to be hurting,” says Jack Van Derhei, research director at the Employee Benefit Research Institute. The non-partisan outfit estimates that if current conditions persist, nearly three in five baby boomers will be at risk of running short of money in retirement. “There are going to be many luxury items that will simply have to be eliminated,” for retirees to make ends meet.

Despite the market’s rebound from the lows of 2009, nest eggs remain severely impaired. As of the first quarter of 2010, net household assets—homes, 401(k) plans, pension assets and other investments minus debts—stood at $54.6 trillion, down 18% from the end of 2007. That’s an average of about $171,000 per person, much of which is concentrated in the hands of the wealthiest.

At the same time, the return people can hope to earn on their assets has fallen, particularly for those who switch into bonds or annuities to guarantee a fixed income. The average yield on U.S. government, corporate and mortgage bonds stands at about 2.4%, while stock-market valuations suggest a long-term return of about 6%. At those levels of return, some 59% of people aged 56 to 62 will be at risk of not having enough money to cover basic living and health-care costs in retirement, estimates Mr. Van Derhei. If market returns are higher—8.9% for stocks and 6.3% for bonds—the picture isn’t a lot better: The percentage at risk falls to about 47%.

Before the recession hit, many economists assumed people would solve their retirement problems simply by staying in the work force longer. Now, “the recession has blown that idea out of the water,” says Alicia Munnell, director of the Center for Retirement Research at Boston College and co-author of a 2008 book that advocated working longer.

Older workers, who typically fared better than their younger counterparts in recessions, have been hit just as hard by layoffs this time around. As a result, the fraction of people 65 or older who are working has leveled off after a long period of growth. As of July, it stood at 15.9%, down from 16.3% in mid-2008.

For the rest of this article, go to the Wall Street Journal.

The Financial Impact on You of Renewable Energy

Some may wonder why we would be posting a story about renewable energy on a site that is dedicated to Investor Education for Main Street America. It is precisely because there is a huge financial impact on Main Street America if we continue down the current path of forcing the consumption of energy that is scarce, unreliable and expensive. Unfortunately, in the current environment in America, if you are to watch out for your own pocketbook, you have to engage with politicians – otherwise they will pick you pocket clean. Some would say this has always been the case. I say the problem has multiplied in recent years and citizens who want a financially secure and reasonable future must take action to reverse the direction this country is headed in regard to energy, environmentalism and “green jobs” (read temporary jobs). What follows is an analysis of potential new legislation that will cost us all dearly if enacted. Read on…

Renewable Energy: Free as the Wind?

The Senate Committee on Energy and Natural Resources met this morning and, among other things, discussed a national renewable electricity standard (RES). The RES, which mandates that a certain percentage of our nation’s electricity production come from wind, solar, biomass and other renewable energies, already passed out of committee but is likely to be a part of any energy agenda this year. A new Heritage Foundation study analyzing the costs of an RES finds that a national mandate for pricier, less reliable electricity would be harmful to American families, American businesses and the American economy.

Heritage analysis on Renewable Energy

The Heritage analysis models the effects of an RES that starts at 3 percent for 2012 and rises by 1.5 percent per year. This profile mandates a minimum of 15 percent renewable electricity by 2020, a minimum of 22.5 percent by 2025, and a minimum of 37.5 percent by 2035. It looks solely at onshore wind, which is currently the cheapest renewable energy source that can be scaled in significant fashion…

For the full article, go to Renewable Energy: Free as the Wind?

Christianity and Capitalism

by Richard Doster

It’s been a rough couple of years for free-market capitalism.

In Business as a Calling: Work and the Examined Life, theologian Michael Novak wonders if capitalism is “spiritually empty and corrosive of virtue.” The evidence, perhaps now more than at any time in the past 70 years, may tilt the scales in that direction.

In response to the recent turmoil, French president Nicolas Sarkozy has said, “Laissez-faire is finished. The all-powerful market that always knows best is finished.” And the Washington Post has declared, “The worst financial crisis since the Great Depression is claiming another casualty: American-style capitalism.”

Such a negative view of capitalism might perplex those in the Reformed-Calvinist community. According to David Hall and Matthew Burton, authors of Calvin and Commerce: The Transforming Power of Calvinism in Market Economies, it was John Calvin himself who laid the foundation for today’s market-based economy.

As Calvin’s theological heirs we know that economic decisions, like those in every category, stem from a worldview. They reflect our values and fundamental view of man, and while the Bible doesn’t prescribe a particular economic system it does, Hall and Burton tell us, provide a moral framework within which to make our choices. As Christians, our challenge is to recognize and—to the extent we’re able—create the system that fits best with what the Bible teaches.

So, in a fallen world that’s populated by sinful people, what realities should an economic system address? What good should it aspire to? And what truths—about God, man, and money—should be brought to bear? The answers could (and do) fill books. For now we’ll glance at six features of a realistic, healthy economic system.

For the rest of this article go to Can Christians Reclaim Capitalism? in byFaith Magazine.

April 1, 2010

by Bob Veres

Economic forecasters sometimes describe the investment markets as a leading indicator, which means that they believe returns can anticipate good or bad economic news.  Share prices fall when investors expect a recession, and rise when a recovery is expected–and last year’s stock market growth seems to fit that pattern.  The market rose last year harder and faster than anybody expected, and so too, later, did the U.S. economy.  On March 26, the U.S. Bureau of Economic Analysis reported that the U.S. gross domestic product increased at an annual rate of 5.6% in the fourth quarter of 2009, after a 2.2% increase in the third quarter.

Nobody knows how we, the community of investors, could have known, during the darkest hours of March 2009, that better economic times were around the corner.

The U.S. equity markets were generally higher across the board in the first quarter of 2010, which is a terrific contrast with where we were at this time last year.  Indeed, CNNMoney.com reported yesterday that the returns for the first three months of this year ranked among the best first quarter performances in more than a decade.

Wilshire Associates reports that the Wilshire 5000 total market index, the broadest indicator of U.S. stocks, was up 6.42% in the first quarter of this year.  Most of the action came in the month just ended.  The Wilshire index was actually slightly down for January and February, but March produced a 6.61% rise in the index.  The Russell 3000 index, another broad measure of U.S. stock returns, rose 5.94% for the first quarter of 2010, bolstered by a 6.30% return in March.

Wilshire’s U.S. large cap index rose 5.95% for the quarter, aided somewhat by a 6.36% return in March.  The Russell 1000 index rose 5.70% after gaining 6.14% in March.  The S&P 500 rose 4.9% for the quarter.

Wilshire’s Mid-Cap index was up 9.11% for the quarter; the Russell Midcap rose 8.67%.

Wilshire’s Small Cap 250 rose 9.00% in the first three months of the year, and the Russell 2000 returned 8.85% over the same period.

There are times when value stocks outpace growth and vice versa, but the results for this quarter were mixed, as, in fact, they were for most of last year.  The growth stocks in Wilshire’s large cap index were up 5.20% vs. 6.69% for value; Russell’s index data shows large cap growth gaining 4.65% vs. 6.78% for value.  Wilshire’s Mid-Cap showed 8.84% quarterly returns for growth and 7.90% for value; Russell’s numbers were 7.67% and 9.61% respectively.  Wilshire’s Small Cap Growth was up 8.97% while Small Cap Value offered the highest quarterly return at 11.80%.  Russell offered comparable figures: 7.61% for growth, 10.02% for value.  A generally rising tide–and signs of an improving economy–seems to have floated all boats.

All was not quite as positive on the international front, where stock returns of different countries seemed to be everywhere.  Alas, we missed the strong stock market rally in Estonia (up 44.7% through 3/25/10, according to the EmergInvest web site) and the 26% runup in Kenyan stocks in the first quarter.  But we also cleverly avoided the 32.2% drop in the Bermuda stock market in the first quarter (through 3/30).  Among the surprises: China’s A Shares Index dropped 2.6% while Japan was up 6.3% in the first three months of the year.

The EAFE index, the broadest measure of developing nations, reported a relatively calm-looking year-to-date return of 0.22% on the MSCI/Barra web site, and the Far East index was up a robust 6.29% for the quarter.  Emerging markets were up 2.11%.  Meanwhile, government deficit troubles in Greece, Spain and Ireland, and to a lesser extent in Italy cast a shadow over the European economies.  European stocks in the MSCI index were down 2.33% for the quarter.

All of these returns are in dollar terms, and it bears remembering that, due to the debt crises across Europe, the euro fell 6.23% vs. the dollar in the first three months of 2010–which means that in euro terms, to investors in Germany or France, the European markets are up nearly 4% so far this year.  If the euro strengthens against the dollar at some point in the future, foreign stock returns will be boosted accordingly.

Real estate continued a recovery that began in 2009 after two very difficult years.  The FTSE NAREIT Index, which is compiled by the National Association of Real Estate Investment Trusts, experienced a total return drop of 17.83% in 2007 and fell another 37.34% the following year.  But in 2009, the broad real estate index rose 27.45%, and recorded a 10.60% total return in the first quarter of this year.

Even bonds offered positive returns.  The Lehman U.S. Aggregate Bond index was up 1.64% for the first three months of 2010, and Treasury bonds started the year on a positive note.  Government bonds of 1-3 year maturity returned 0.93% on yields of 1.04%; 3-7 year Treasuries were up 1.24% for the quarter on yields of 2.52%.  10-20 year Treasuries were up 1.27% on 4.29% yields, while long Treasuries of more than 20 year maturities declined 0.51% on yields of 4.73%.

Commodities, as measured by the Dow Jones-UBS Commodity Index, were down 5.05% in the first quarter, but once again this overall trend masks a lot of varying performances.  Crude oil was up 3.44% for the quarter, gold was up 1.43%, but corn prices were down 19.43%.

Nobody knows whether this sunny investment climate will continue, or whether the strong market returns over the past 12 months will give way to a new bear market. However, one indicator suggests that we may not be walking blindly into another frightening meltdown like the one we all experienced in 2008 and the first two months of 2009.  The Chicago Board of Options Exchange measures volatility in the stock market by its VIX index–which is more precisely an expectation of volatility and risk over the next 30-day period, and is sometimes called Wall Street’s “fear gauge.”  On November 20, 2008, the VIX index hit a ten-year high of 80.86, according to data compiled by the IMCA-RC web site.  On March 23, 2010, the VIX index closing price stood at a more historically normal level of 16.35.

Thanks to a positive uptrend in March, this quarter’s market returns represent one of those unusual periods when just about everything went up.  Just a year ago, people were talking about the collapse of civilization, and six months ago there were worries that the economic stimulus package would not be enough to get the U.S. economy moving again–that the country was headed for a double-dip recession.

The economy won’t be fully recovered until jobs come back, and the recent stock market rises haven’t yet taken us back up to the levels before the Great Recession swept through like a hurricane.  But people who were nervously sitting on the sidelines over the past year, and the past quarter, missed out a nice rally.  Let’s hope it continues.

First quarter returns are higher than most others this decade: http://money.cnn.com/2010/03/31/markets/thebuzz/index.htm

Economic growth rate: http://www.bea.gov/newsreleases/national/gdp/gdpnewsrelease.htm

Wilshire Indices: http://www.wilshire.com/Indexes/calculator/

Russell index data: http://www.russell.com/indexes/data/daily_total_returns_us.asp

Bond returns: http://www.lehman.com/indices/dailyreturn.html

International indices: http://www.mscibarra.com/products/indices/international_equity_indices/performance.html

Dollar’s rise and fall: http://www.fxstreet.com/rates-charts/

VIX data: http://www.icmarc.org/xp/rc/marketview/chart/2010/

Global Stock Market index returns: http://www.emerginvest.com/WorldStockMarkets/Countries.html

NAREIT (Real Estate) data: http://www.reit.com/IndustryDataPerformance/FTSENAREITUSRealEstateIndexDailyReturn/tabid/77/Default.aspx

Commodities data: http://www.djindexes.com/ubs/?go=index-data

Unemployment data:  http://money.cnn.com/2010/03/31/news/economy/ADP_private_sector_payrolls/index.htm?postversion=2010033109

November’s numbers actually outperformed the 0.7% expected by many economists.

The positive performance came from improvements in the interest rate spread, building permits for residential homes, initial unemployment claims, and average weekly hours. These were more than enough to offset the negative contribution of supplier deliveries, and consumer expectations.

The six-month growth in the index has slowed somewhat in recent months — to 4.7 percent (about a 9.6 percent annual rate) in the period through November, but it remains substantially higher than the increase of 1.2 percent (a 2.4 percent annual rate) from November 2008 to May 2009. In addition, the strengths among the leading indicators have remained widespread in recent months.

All this indicates a positive economy into 2010 – although the general mood among economic forecasters remains tepid.

Larry P. Arnn, the twelfth president of Hillsdale College, received his B.A. from Arkansas State University and his M.A. and Ph.D. in government from the Claremont Graduate School. From 1977 to 1980, he also studied at the London School of Economics and at Worcester College, Oxford University, where he served as director of research for Martin Gilbert, the official biographer of Winston Churchill. From 1985 until his appointment as president of Hillsdale College in 2000, he was president of the Claremont Institute, an education and research organization based in Southern California. In 1996, he was the founding chairman of the California Civil Rights Initiative, the voter-approved ballot initiative that prohibited racial preferences in state employment, education, and contracting. He sits on the board of directors of several organizations, including the Heritage Foundation, the Army War College, and the Claremont Institute. He is the author of “Liberty and Learning: The Evolution of American Education.”

The following is adapted from speeches delivered in Indianapolis, Indiana, on September 24, and in Pocahontas, Arkansas, on October 19, 2009.

I HAVE BEEN ASKED TO talk today about education and economic development. The standard thing to say on this topic is that the former is vital to the latter. We live in the modern world, so we all have to be highly informed and highly skilled and understand the power of modern science. It is a task of the very first importance to train a workforce that will be able to compete in the global marketplace. That is the standard thing to say, and we hear it said often by education bureaucrats from the federal level on down. And of course it is perfectly true, as far as it goes. But there is more to be said.

The practical point of this standard thing to say is that America needs more technical education—more scientists and mathematicians. And of course we do need scientists and mathematicians. But I like to remind people when they say this that the word “technical” comes from the Greek word “techne,” which means “art.” And Aristotle points out that art is about making, and that the question of what one should make is always superior, in point of order and logic, to the question of how to make it.

What does this mean? Consider one of the greatest scientific achievements of the last century—the development of the atomic bomb. The question of whether to build an atomic bomb, and then the question of whether to drop it on Hiroshima and Nagasaki in order to end World War II without the need of invading and conquering the Japanese mainland, were more important questions—superior in order and logic—to the question of how to make the bomb. The brilliant physicists who accomplished the latter had immense technical training, but that training gave them no special knowledge about those more important questions. Or to put the point in a slightly different and more general way, a technical education can make a person wealthy and famous, but it does not teach that person what is best to do with wealth and fame.

So the first point I would make about education and economics is the importance of liberal arts education, which is the kind of education offered at Hillsdale College. Many think of liberal arts education as a broad education, but in fact it is a high education. We understand things to be arranged in a hierarchy. Hillsdale College has plenty of science and math majors, and our students go on to the very best graduate and professional schools. But whatever their majors, they learn the distinction I just made about questions of greater and lesser significance, and they study how to think about the very greatest ones.

The second point I want to make has to do with politics and education. The greatest example of economic development in human history was in the United States during the 19th century. At the beginning of that century, we were about five million people huddled along the East Coast. By the end of it we had grown at a rate of about 25 percent—much faster than China is growing today—and had settled an entire continent, largely without the help of modern science. To the question of how it was done, I think the short answer is the Homestead Act—the greatest piece of legislation I know. Signed by President Lincoln in 1862, the Homestead Act is short and beautiful—two qualities good legislation should have, and two qualities in which legislation today is utterly lacking.

What the Homestead Act did was to take the western land of the United States—surely one of the greatest assets ever held by any government in history—and give 160-acre plots to anyone with the backbone to live on them and work them. These plots of land were granted regardless of who someone was and with the certainty that no one settling on them could ever vote for this congressman or that. It is one of the greatest impartial acts of legislation in all of human history. It, and things like it, built America and the character of the people who spread across it.

How does this connect to my first point? It connects because the spirit of the Homestead Act, which led to unprecedented economic growth, could not be more different from the spirit of our legislation today. And the key to this difference is the difference between the education our leaders today have had, and the education students get at Hillsdale.

The principle that justified the Homestead Act has two parts, and both are found in the first 15 lines of the Declaration of Independence. The first is the idea of human equality—the idea that it does not matter what race or what family you come from, it only matters what you do—which has been the source of our greatest struggles in an attempt to live up to it. The second is the idea of the “Laws of Nature and of Nature’s God.” At Hillsdale College, we study the Declaration of Independence as the greatest thing of its kind. The signers of the Declaration were risking their lives. There is a beautiful passage at the end of it where they write, “we mutually pledge to each other our Lives, our Fortunes and our sacred Honor.” But the document begins in an opposite mood, because the cause they are willing to die for is not specifically about them at all: “When in the course of human events”—that means not our time, but any time—”it becomes necessary for one people”—that means not our people, but any people—and then this sentence goes on to speak of the “Laws of Nature and of Nature’s God,” laws true always and everywhere.

Understood comprehensively, the Declaration points us to an unalterable law of God, visible in nature, that man is inferior to God and superior to the beasts, such that it is unjust for one human being to rule any other without his consent. And it is this same understanding of human nature on which Madison rests his case in Federalist 51, in explaining why government is both necessary and must be limited:

. . . [W]hat is government itself but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself.

This is the understanding that animates legislation like the Homestead Act. And note the humility in it. America’s founders understood themselves to be bound and limited by something higher. And it is precisely this understanding that is missing among our political leadership today. Nearly 20 years ago now, when Clarence Thomas was testifying before the Senate Judiciary Committee during his confirmation hearings, several senators questioned him about the idea of natural law, which seemed to them a foreign and dangerous idea. And why would it seem that way?

These senators have been taught to understand government as a means by which they can do marvelous things, changing society for the better in countless and unlimited ways. And in this light, the old-fashioned idea of natural law—which, as we saw in the passage from Madison, leads to the idea of limited government—becomes simply an impediment to progress.

President Obama is an impressive man, and there is much good to be said about him. But he falls firmly into this newer school of thought. Let me read you a passage from his book, The Audacity of Hope:

Implicit in [the Constitution's] structure, in the very idea of ordered liberty, was a rejection of absolute truth, the infallibility of any idea or ideology or theology or “ism,” any tyrannical consistency that might lock future generations into a single, unalterable course. . . .

One can see immediately the practical results of this in the health care debate. Advocates of one of the latest plans are proud to place the cost at only $900 billion—apparently it takes $1 trillion to impress in this day and age! But consider that, in most of the plans that have advanced in the Congress, people making in the range of $30,000 to $80,000 a year will be forced to pay health insurance costs—or fines of about the same amount—that come to between ten and 20 percent of their income. They will be compelled to buy plans that have certain specific features. There will be an allocation of health care resources as part of the plan. And it will not be legal to buy or sell a plan that does not fit the criteria. Compare the spirit of this legislation with the spirit of the Homestead Act. There is a bullying spirit behind it. And that bullying spirit is becoming ever more pervasive.

The means are already in place for the federal government to control what people say in elections. As a recent example of how it tries this between elections, consider that Henry Waxman—a congressman of some power and influence—sent a letter in August to the CEOs of health care companies asking for schedules of all salaries above a certain amount, and of the conferences they had been to, and how much they cost, and who was there. Was it a coincidence that he wanted this information just as a health care debate was starting up? Could it be that he was trying to intimidate and silence potential opposition? One of the many “czars”—isn’t that an ominous word?—in the Obama administration is Cass Sunstein, the czar of regulatory policy. Mr. Sunstein is a very smart man—a law professor, like the president—but he is on record saying that speech rights should be redistributed by government bureaucrats much as wealth is redistributed through post-New Deal tax and entitlement policy. This is not supposed to be a country where there are czars dealing with things like speech. But it is such a country right now.

The economic policies being proposed these days are very bad. But the principles behind them are worse. They represent a return to the idea that the American Revolution repudiated—the idea that some are equipped by nature or training to manage the lives of others without their consent. I have been making the point lately that people are wrong who accuse the Obama administration of being socialist. I take the president at his word when he says that he has no desire to own the automobile companies. Instead, he wants to control them—and the rest of us as well—through a regulatory apparatus overseen by czars and bureaucrats. And again, his intentions are good. What is bad is the view underlying them of what human beings are. Rather than looking on us as equal beings with a set nature—such that none of us should rule another in the way that God rules man or man rules beast—our political leaders today have been taught to see us as material to be shaped and perfected by experts who have the proper technical training.

It has been close to 100 years now that the majority of people teaching in American colleges and universities have agreed with Woodrow Wilson, one of the founders of the Progressive movement and the first to write explicitly that the Declaration of Independence is obsolete, and that we need to liberate the Constitution from the Declaration’s restraints. This liberation leads to the idea of a “living Constitution,” characterized by constant change or progress. Absolute truth, to the extent that ordinary people still believe in it, obstructs change or progress—which is why President Obama refers to it, in the passage I read, as tyrannical. But if change or progress is the rule, who is to determine what version of change or progress is good? And the logical problem here—as any Hillsdale student could tell you—is that once you deny the existence of absolute truth, the definition of “good” becomes subjective and the only standard of behavior is what we want—”we,” in the political sense, meaning the government or bureaucracy. It reduces politics not to right, but to force. That is why there is this bullying spirit about our government today, and why so many Americans are worried.

It is time for that to stop, and there are two conditions for stopping it. The first is for the ordinary folk of the United States to see in this the despotism that it is, and to rise up and repudiate it. The second thing is longer term, but equally vital: It is to replace leaders who have bad educations with leaders who have good educations. This is our work at Hillsdale College. We aim to recover the meaning of the “Laws of Nature and of Nature’s God” and to place that meaning firmly in the minds and hearts of ambitious young men and women who have the courage to do something with that knowledge. And I swear that we shall not stop pursuing that task.

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Go here for archived issues of Imprimis and further information on Hillsdale College

The United States will avoid a “double dip” recession, with real gross-domestic-product growth topping 2% next year, according to Standard & Poor’s Corp.The research firm is estimating a 1.7% annualized growth rate in the fourth quarter, and a rate of 2.4% by the end of next year, Sam Stovall, S&P’s chief investment strategist, said in a conference call today.

The corporate earnings free-fall will end this year, and bottom lines should improve in 2010, Mr. Stovall said.

While many observers have been worried about lackluster revenue growth, Standard & Poor’s estimates 3% top-line growth this quarter, and an 8% revenue gain for U.S. public companies next year.

Mr. Stovall said that cyclical stocks tend to outperform as the economy recovers from a recession, a pattern that “tends to hold into the second year of a recovery.”

Standard & Poor’s is recommending an overweight to consumer cyclical, energy, industrials and technology stocks.

“Value tends to beat growth, and smaller-caps tend to trounce” larger-company stocks during a recovery, Mr. Stovall added.

SUMMARY: “The Great Recession is over,” according to NABE’s latest survey. “The survey found that the vast majority of business economists believe that the recession has ended but that the economic recovery is likely to be more moderate than those typically experienced following steep declines. The NABE panel upgraded the economic outlook for the next several quarters, compared with the previous survey,”said NABE President-elect Lynn Reaser, chief economist at Point Loma Nazarene University. “Following a sharp 6.4 percent (annual rate) contraction in the first quarter of this year and another 0.7 percent drop in the second quarter, NABE forecasters expect real GDP to rise at an above trend 2.9 percent rate in the second half. The more-than-three-year downturn in the housing market is very close to coming to an end, with substantial growth (from a low base) expected for next year. According to the survey, the key areas of concern involve the large increases in federal debt and unemployment rates that are expected to remain very high through next year. The unemployment rate is forecast to rise to 10 percent in the first quarter of next year and edge down to 9.5 percent by the end of 2010. Inflation is expected to remain contained throughout 2010. The good news is that this deep and long recession appears to be over, and with improving credit markets, the U.S. economy can return to solid growth next year without worry about rising inflation.”

He made the remarks as a string of positive economic news helped lift stock indexes to new highs for the year. Retail sales surged last month at the fastest pace in 3 1/2 years, reflecting a boost from the “cash for clunkers” auto trade-in program and a stronger-than-expected jump in back-to-school spending.

Mr. Bernanke stressed in off-the-cuff remarks to the Brookings Institution that while the signals are encouraging, growth is likely to be too slow to generate many jobs once recovery takes hold.

“Even though from a technical perspective the recession is very likely over at this point, it’s going to feel like a very weak economy for some time, as many people will still find that their job security and their employment status is not what they wish it was,” he said.

For the rest of the story, go to   Bernanke sees recession end, without jobs – Washington Times

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