Articles from 12/30/07 to 01/05/08

To stimulate or not to stimulate is the question before policymakers now. President Bush has suggested he may announce a stimulus plan for the economy in his State of the Union address, January 28th. Chamber of Commerce economist Martin Regalia says the most important thing the President can do is to make the tax cuts that are set to expire in 2010 permanent. And he supports broad tax cuts in marginal rates for individuals and businesses. But many democrats say that’s no stimulus. They want something short term that will put money into people’s pockets who will spend it.

With all the talk about economic slowdown and Washington stimulus packages, you should understand that there's an economic debate underlying the discussion. Basically, most professional economists are very skeptical that any stimulus can make it through Congress and into enactment -- and your pocket -- in time to make a difference.

If we're already in a recession, it might be over by the time the politicans act. So, the argument goes, Congress and the President shouldn't do much; let the Federal Reserve handle it.

Frankly, I have never seen Congress recognize and act in time to head off or even ease the pain of a recession.

It took me sometime today to grasp why so many economists were sounding alarm bells about the December employment report. Generally, when we cover stories about the government's monthly data on the job market, most of the discussion is about the number of jobs that are created. Up 200,000 is a good month…less than 100,000 new jobs added to payrolls is definitely not.

This month, even with the paltry 18,000 jobs created, the focus was on the unemployment rate. It now stands at 5 percent. Economists and other Wall Street experts were freaking out…not because 5 percent is so bad. By historical standards its still pretty good. (In fact the jobless rate was in the double digits in the 1980s recession.) They are in a tizzy because the unemployment rate has surged to 5 percent from 4.4 percent in the last year. Such a large net change suggests the economy may already be contracting.

Last month, employment posted its smallest increase in over four years last month as the housing downturn continued to take its toll, while the jobless rate hit a two-year high, indicating a weak finish for the U.S. economy in 2007. In tonight's program, Suzanne Pratt will have analysis on today's Labor Department report and the chances of the economy sliding into a recession.

President Bush is meeting with his top economic advisers on drafting a possible package to stimulate the economy. Stephanie Dhue takes a look at what the president plans to do in light of today's employment report. Washington Bureau Chief Darren Gersh sits down with White House Chief Economic Adviser Ed Lazear to get details on the administration's plan and what options the president is considering. And, tonight's Market Monitor says 2008 is a time for guarded optimism. He's Richard Steinberg, President of Steinberg Global Asset Managment.

Many people spend hours pouring over company reports and analyzing economic trends before picking their investments. Imagine deciding whether to be bullish or bearish soley on how the market fares the first 5 trading days of the year. I’m not recommending that strategy -- to be sure. But many of January’s indicators have worked surprisingly well, historically speaking.

In today's report, I look at the first five trading days in January, The January Barometer, and the January Effect. But I don’t mention the Santa Claus rally, which is notable because it ends today. Jeff Hirsch, Editor in Chief of the Stock Traders Almanac, thinks it’s actually pretty telling.

He said his father Yale Hirsch discovered the phenomenon in 1972 and coined the phrase “If Santa Claus should fail to call, bears may come to Broad & Wall.”

It seems the inevitable has finally happened to the U.S. auto industry. Since the beginning of the decade, analysts have predicted year after year a decline in annual sales. And, year after year the companies were able to delay that fate. That is until now.

Analysts are still tallying the figures, but it looks like U.S. vehicle sales for 2007 will come in at around 16.1 million units. That is the lowest figure since 1998. Sales are expected to sink by another half-million units next year.

How were GM, Ford, and Chrysler able to delay the inevitable for so long? Incentives. Zero percent financing and rebates pulled people into showrooms even when they didn't need or couldn't afford a new car or truck. Now, after years of over-indulging on cheap credit and deals, many consumers are saying "No more. " Does this remind you of the housing industry?

The 2008 Election kicks off in earnest today with the Iowa caucuses. Both Democrats and Republicans are stressing the election's importance. Tonight, Susie Gharib talks with political analyst Tom Gallagher, Director at the International Investment & Strategy Group. Crude oil futures have traded over $100 a barrel for the second consecutive day. Tonight, Erika Miller takes a look at the January Barometer. It's a Wall Street adage that says January's trading dictates the market's direction for the rest of the year.

Here is what economist Jared Bernstein calls the "dirty little secret" of politics: Presidents don't create jobs. Sure, they talk about it. They take credit for it. Remember Bill Clinton promising to create 10 million new jobs. Remember how he took credit for that?

And Presidents take the blame for losing jobs. If you doubt that, just think back to the first President Bush and the recession that began on his watch in July of 1990. The more historically minded might be inclined to go back to Herbert Hoover.

If presidents don't create jobs, it is not quite right to say they have no impact on jobs. Just getting fiscal policy right and avoiding a big mistake – which is harder than it seems -- can set the right policy climate for job creation. There's no getting around the right prescription for creating jobs: Lower the price of creating a new job. How to do that? Way one is to cut taxes on job creators and jobs. That means lowering corporate taxes, the taxes on investment, and the taxes associated with hiring people. You know which party is for that. Hint, they like elephants.

On the first trading day of the year, we've seen a first. Oil prices have traded above $100 a barrel. Meantime, stock prices on Wall Street are much lower. The market is battling two familiar concerns today -- economic weakness and rising oil prices. Anchor Susie Gharib will interview Lehman Brothers Equity Strategist Simeon Hyman about the outlook for 2008.

On the eve of the Iowa Caucus, polls released today show Barack Obama ahead in the Democratic race. Tonight, we'll talk with his economic adviser Austan Goolsbee about Obama's policy ideas. Washington Bureau Chief Darren Gersh will look at which presidential candidate is best able to create jobs. In tonight's Money File... How much help should at-risk homeowners get from the government? Eric Schurenberg, Managing Editor at Money Magazine has some answers.

Remember “That Was The Week That Was?” (If you do, you can’t be young, because it was a TV series aired in the 1960s!) In case your memory doesn’t extend back that far, TW3 was a zany program that took a satirical look at the past week’s news events…something like a weekly version of today’s “The Daily Show,” but with a larger cast of characters.

The reason I bring this up is I’m currently putting together NBR’s annual “Investment Review and Preview” special, which will air on New Year’s Day. It has required me to go back and review the business highlights of 2007. And while I wasn’t looking for humor in the news…it struck me that anyone searching for material for a standup comedy act could have a field day with any of the following

In the U.S., bus travel has become almost a relic of the past. When was the last time you hopped aboard a Greyhound for a trip across the country or to a neighboring city? For most of us, it's easier and faster to fly or drive ourselves.

But, it seems bus travel could be poised for a comeback. DePaul University's Chaddick Institute for Metropolitan Development has been researching bus travel in the U.S. over the past half-century. Drawing on arrivals and departures from several American cities, the Institute found those cities lost about thirty percent of their scheduled intercity bus service between 1960 and 1980. They lost more than sixty percent of their remaining service between 1980 and 2005.

But, something interesting happened in early 2006. People started riding the bus again.

It's the last trading day of 2007. Many investors are saying good bye and good riddance to this turbulent year for stocks. The major indices did finish with gains, but not quite the strong finishes we've seen in years past. In tonight's program, Erika Miller looks ahead to what the various economic reports out later this week and they effect analysts predict they'll have on the beginning of the 2008 markets.

NASA has released its survey of pilots. The report is very cryptic, and the agency previously withheld a lot of the information over concerns that it would upset travelers and hurt airline profits. The reason: the friendly skies may not be very safe. The report shows near-collisions and runway interference occur a lot more than people think. (The report cost more than 11 million dollars.) These days, many Americans are choosing not to fly -- and they're leaving the driving to bus companies. Diane Eastabrook shows us how Megabus is helping to turn things around for the entire bus industry. Plus, tonight's commentator has some advice for fixing problems in the housing market. He's Glenn Hubbard, Dean of the Columbia Graduate School of Business, and Former Chairman of the White House Council of Economic Advisers.

And finally (and most importantly) HAPPY NEW YEAR!