Back to Work

Since the most recent Financial Crisis, government entities have struggled to understand why the unemployment numbers have been so slow to recover.  The Federal Reserve will tell you it is because of contractionary fiscal policy.  Policy makers don't have a clue and most Americans blame the top 1%, but my personal belief has been that, as a country, we are experiencing a period of adjustment.  The structure of our economy is changing.  This article from the Huffington Post about November job growth gives some insight as to how.

Author Josh Boak looks at 5 trends in our current economy affecting job creation and employment.  He does not explicitly agree with the opinions I shared above, but much of what he says seems to agree.  The 5 trends are: Holiday Shopping, Death of Factories Greatly Exaggerated, Grayer Workers, Stagnant Pay at the Bottom, and Long-Term Unemployed.  A quick overview is as follows: Holiday Shopping always causes a bump in the employment numbers, but this year it's not in retail.  Shipping and distribution firms added nearly 20% more jobs than brick-and-mortar retailers did.  Online shopping is changing the mix.  Death of Factories is Greatly Exaggerated points out that factories are hiring and have once again cracked 2009 employment levels.  The average factory worker is averaging over 4 hours of overtime per week. Grayer Workers (65 and older) experience unemployment of only 4.7% whereas unemployment for adults in general is at 7%.  Since November 2012, the number of senior citizens seeking or holding jobs has increased by half a million.  Stagnant Pay at the Bottom is occurring mostly in the hospitality industry.  Restaurants and Hotels have accounted for 16% of new job creation in the last year, but have only had to raise wages by 15 cents an hour to do so.  Leisure sectors have actually experienced a pay decrease of 3 cents per hour.  Finally, Long-term Unemployed (half a year or more) are having a harder time finding a job than those that have been out of job for a shorter period.  Firms seem hesitant to hire those without recent work experience.

Although job creation is occurring, it's a little different from what what many expect.  Some industries decline as others thrive.  The demographics in the work force are changing.  Those hurting the most are having the hardest time finding a job.  Any adjustment comes with growing pains and this one is no different.

What the Most Recent Job Report Means to the Economy

The December 6th job report came out even better than the markets had anticipated.  This article by El-Erian describes that the net monthly job creation came in at 203,000 which is approximately 20,000 better than was anticipated.  Also worth noting is that the new jobs did not emerge from any particular sector but instead came from almost every industry.  This means that unemployment is back down to where it was in November of 2008.  In addition to there being more jobs, the article reports that average earnings and hours worked grew as well.

With those facts now stated, let's explore what the job market means for the economy in general.  There are a couple of key areas directly impacted by the labor market.  First is Main Street.  By Main Street we're essentially referring to everything other than Wall Street.  This primarily would include individual investors but also includes the overall economy.  With higher employment rates and higher wages overall, individual investors are more able and willing to start investing their money in the markets again.  This naturally improves the overall status of the economy.

Not only does the higher employment rate help Main Street but it also has a major impact on Wall Street.  Wall Street consists basically of major corporations, executives, and financial institutions.  With the improved employment rate, companies become not only more able, but also more willing to invest in capital and other growth opportunities.  If we see similar improvements in future months, and if we really see corporations starting to invest more in growth and capital, this could potentially open the door for the Fed to gradually normalize monetary policy.  Normalizing the policy has the potential to prevent market disruptions like those we saw last May-June and thus help further stabilize the financial and overall status of the economy.

Got Milk?

According to this article on Fox News, the price of milk could skyrocket and the supply to commercial markets would decline.  This is all in thanks to Congress getting involved in the dairy industry and passing a law many years ago that dictated how much dairy producers would be paid.  According to various people in the House and in Congress, it doesn't look very promising that this issue will be resolved in a timely manner.

If it isn't, the farm policy would revert back to an antiquated 1949 bill that mandated higher prices be paid by the government to dairy producers.  If this happens, it could set off a chain of events that results in higher prices for the government and ordinary shoppers.  By raising the price the government pays for dairy products, producers would be more likely to sell to the government instead of in commercial markets which would decrease the supply for the average consumer.

I am certainly not claiming to fully understand the whole process (and the economics behind it) of why the government gets involved in the pricing and production levels of various commodities, or lack there of (USDA), but I think it would be a better system if the government allowed the market to determine those things.  If the price of milk or corn began to increase greatly under the free market, then the demand would decrease and it would force the farmers to find new innovative ways to do things in a more cost effective manner in order to bring prices down and demand up.  Otherwise, consumers might go out and start buying substitutes for those products.

Amazon's Delivery by Drone

Amazon.com is in research and testing stages of delivering packages by drone, according to Amazon.com CEO Jeff Bezos and reported by CBS news.  The method, currently called 'Amazon Prime Air' initiates robotic electric powered helicopters that pick up packages from Amazon's fulfillment centers and deliver them to the purchaser's selected GPS coordinates autonomously in 30 minutes or less (see video below).

While it will be at least several years some time before your next purchase from Amazon is delivered to your home by drone, this product concept is enough to make FedEx, UPS and the like nervous.  Amazon sells over 300 products per second and much of their current distribution goes through the traditional channels.  Many future orders will use Amazon's own drone technology to for delivery, shifting the supply curve and resulting in a significant loss of revenue to the mainstream couriers.

FedEx, UPS, USPS will also be forced to invest large sums of money into their own drone platforms to stay competitive, due in part from online retailers wanting to offer the same fast delivery that Amazon will be able to offer and corporations and government wanting transportation of documents and other packages more timely.  In the long run, anticipate overall shipping costs to be reduced by drone technology, which will decrease the amount of local delivery trucks, fuel and employees.  This new innovation will also drive an increase in the overall demand of transportation companies as more products are delivered directly to homes and businesses through online purchases.

A Not So Crazy Black Friday

Every year thousands of people line up the day after thanksgiving to try and get a great deal on various merchandise.  This day has become known as "Black Friday".  Year after year people go out the night after eating their turkey dinner and stand in lines to save a few bucks.  I will admit that I have succumbed to the urge a few years and have been found among the heard searching for good deals.  Most people go out to purchase Christmas gifts for their families and friends and end up buying a bunch of other stuff that they don't really need.  Every year the crowds get bigger and the deals get better.  You would think that with a struggling economy it would force more and more people out into these massive crowds on black Friday to be able to afford the Christmas gifts that their children or spouses desperately want, however this year it was different.  According to the NY Times article Gloomy Numbers for Holiday Shopping's Big Weekend, sales were down $1.7 billion from last year.  There could be many different reasons for the decline in sales including more online shopping, earlier sales, low wages and economic difficulties, spacing out Christmas shopping expenses, etc.  It would make sense that people can no longer afford to drop hundreds of dollars all at once on gifts for the holidays so they spread it out instead.  We can see that as inflation continues to rise and wages stay stagnant that it become increasingly difficult for people to partake in the Black Friday nonsense.  I could be that none of this has anything to do with economics and that people are just wising up and realizing that its worth spending an extra 30 dollars for a toy than spending all night sitting in a store witnessing grown adults fight and bicker over petty little gifts just to save a buck.

Bye Bye, Birdie

With the holidays upon us, it is that time of year again when we give thanks for what we have, and indulge beyond our needs and our belts.  But according to a recent article in the Huffington Post, there might not be as much to indulge in.  Butterball, the largest Thanksgiving turkey provider, is struggling to produce enough big size fresh birds to accommodate our gluttonous day of gratitude.  Orders for fresh average size birds (around 16 pounds) were cut by 50%.  The company confirmed that there might be a nationwide shortage for the 88% of US households that celebrate Thanksgiving by carving into their favorite fresh poultry.  This shortage is apparently due to a decline in turkey weight gain, and it is possible it will create a shift in the supply curve and an increase in the price of Turkey.  However, while there may be a shortage of fresh turkeys, there are other substitutes goods available.  Butterball and other manufacturers have stated that the availability frozen turkeys has not been affected, just fresh large size birds.  So if you have a big family to feed this holiday season, be sure to prepare accordingly: either get your big bird while supplies last, buy frozen, or plan on getting a couple smaller birds instead.

Jobless and underemployed Americans

The United States unemployment rate is the same as it was four years ago. Sure it has decreased in the past couple years, but the issue is still problematic. It is startling to see that unemployment is still unchanged since 2009; in fact there are 2 million less people working at the start of 2013 as there were at the start of 2009. Due to the difficulty of finding a job, many Americans have simply given up looking.  According to Trading Economics, the United States unemployment rate is 7.3%, which does not include those who are settling for part-time work or who are underemployed.

We are told that the economy is getting better, but just last month (October 2013) the United States economy lost over 600,000 full-time jobs. Also, according to the Federal Poverty Line Guidelines, 1 out of 4 part-time workers are living below the poverty line. For instance, the poverty line for a house of 4 is $23,330. This is a growing issue and should be addressed by the leaders of this country.

Shopping, Before the Turkey Gets Cold.

The article “Shopping, Before the Turkey gets cold” by the New York Times is a good example of a game theory in practice.  First off, let’s note that we are discussing a the demand curve of Black Friday products.  Could the decision of retailers to open the Black Friday deals on Thanksgiving be due to a new market that’s available only on Thanksgiving?  Not likely because customers today would buy a flat screen TV on Thanksgiving or Black Friday.  My argument for retailers opening Black Friday deals early on Thanksgiving is a gaming strategy.  Retailers can take some of their competition’s demand briefly by offering similar goods at an earlier date and time.  This will increase that company’s demand briefly for those goods and benefit the company as more revenue is brought in.  Of course this negatively affects the competition.  Therefore the competitors will also open their Black Friday deals on Thanksgiving.  Thus, opening early on Thanksgiving becomes the new equilibrium for the Black Friday deals market.  Is it possible for both retailers to go back and open on Friday?  Yes, but because the companies have already crossed the Thanksgiving threshold once, they will be tempted to open early again, and hence repeat the cycle.  We will probably see more businesses follow this trend, it’s just sad that it has to be on Thanksgiving.     

Companies Dominating the Internet Market

Recently we studied economic markets that are oligopolies.  The firms in these markets offer similar products, have few firms competing in the market and are difficult to enter. An oligopoly market that came to mind while studying this subject was the cable internet market in the US. My husband worked at a company that marketed services for television, internet, phone, and security companies.  He said across the nation he dealt without about 13 total companies that supplied television and internet services.  While he didn’t deal with every single one, 13 is a very small number of companies across the US to provide these types of services.   

Michael Hiltzik wrote about this very issue in an article entitled, “Cable monopolies hurt consumers and the nation.”  The article discusses that between Comcast and Time Warner Cable, they effectively control roughly 40% of the internet market of the US.  The article went on to explain that Verizon had made an attempt to enter the media market with these two giants, but after less than a decade Verizon decided it did not have the cash to remain competitive and stopped expanding service.  If a company as large as Verizon can’t compete who can?  This clearly points to an oligopoly as two big firms control a large amount of the market share while the barrier to entry as with Verizon is difficult and costly.

The second thing I noticed in the article was how Time Warner and Comcast seemed to share similar price points.  For example it gave a quote on 10 megabit from either one of the companies hovering around $35 per month.  This again points to an oligopoly with companies in the market sharing similar price points. 

Over the last few years, one of the few large companies that are trying to enter the market is internet behemoth Google.  They have begun to roll out their fiber services in two cities in the US.  It will be interesting to see what if any effect Google can have on bringing competition back to the internet marketplace. 

SeaTac and Other Minimum Wage Talk

A highly contested initiative was placed onto SeaTac's ballot this year. The initiative started as a petition and finally distilled into Proposition One on the ballot. The aim of Proposition One was to raise the minimum wage to a "living wage" of $15 an hour. This is just one of many such initiative taking root in America, but is it for the best? The economic theory of supply and demand shows what ought to happen when price floors like this occur. The theory states that buyers of human resources will consume less if the price per hour rises. If this is the case we should see unemployment rise when initiatives like this are put in place. We should also see low-skilled workers being replaced by more productive, more skilled labor than the original labor force. In essence it is theorized that by raising the minimum wage to help low-skilled workers the ending effect is to actual economically hurt those in question. Will this be the case at SeaTac? Due to the very nature of SeaTac it may be that there will be no decrease in workers employed. As an airport they may be able to pass the new costs associated with the law onto consumers.

To help me answer this question I tried consulting multiple studies on the effects of raising the minimum wage. All the studies I found were like this one presented in The American Economic Review. The studies either concluded that there was no negative employment effects or that they could not determine the effect. I hope that the data for SeaTac is recorded and studied if this initiative passes. Perhaps it could lend more insight into this subject. For now we will have to wait for the votes to be finalized. According to The Seattle Times we have a few more days and possibly await a  recount before the vote is finalized.

Ticket Scalping

In one of our recent classes we discussed price discrimination and the topic of ticket scalping came up.  This was interesting because Professor Tufte said economist do not have a good answer on whether venues should or shouldn't allow this practice.

This past summer I was in San Diego with my wife. The main purpose was of our trip was to attend the San Diego Zoo on day 1 and Sea World on day 2. We were done at the zoo around 5:30 pm and decided to drive to Petco Park to watch the Padres play the Pirates where there was an abundance of tickets available. Our plan was to purchase $15 tickets for seats in right field but as we were walking from our car to the box office we found a ticket scalper and bought tickets from him. The tickets we purchased had a face value of $90 each and we bought 2 of them for $60 total. 

So what did Petco Park lose by my purchase of tickets from a third party? I purchased the $10 bottomless soda cup, $4 popcorn bucket, four $4 hotdogs, $25 dollar t-shirt for my wife, and a $30 hat for myself. Petco Park lost $30 on ticket sales and $30-$50 in additional purchases I would have made at the ball park had I not purchased $60 tickets from a third party.

Another example of third party ticket sales is from when I went to the Jimmy Buffet concert at MGM Grand in Las Vegas last month.  The concert was sold out and we had 2 extra tickets which we were able to resale.

What did MGM Grand and Jimmy Buffet lose? I would argue that MGM and Jimmy Buffet did not lose or gain on my resale of the tickets.  The venue had received their asking price for the 2 seats and therefore could not receive any additional income.

After these two experiences of third party ticket sales, the best answer I have is: it depends.  

JOBS - Not Steve, The $7.25 Kind

Nearly 48 million (15%) of American citizens are struggling to survive below the poverty line.  In 1938, the Fair Labor Standards Act was passed to stimulate the economy and lift Americans out of poverty.  Had the act taken inflation into consideration, minimum wage would now sit near $10.76 per hour.

There are many, but one reason the change has not occurred is a fear that those receiving the increase are teenagers or secondary providers.  Current 2013 statistics show that an estimated 84% of beneficiaries are over 20 years old - far from perfect, but not bad.

Worse yet, is the fear of an overall job loss.  Nobel Prize winning economist Paul Krugman stated that these negative effects would be minimal, referring to an increase in minimum wage.  If it is true that poorer individuals spend more of their income than do the wealthy out of necessity, an increase in wage should lead to increased consumer spending and growth.

With no added costs to tax payers, maybe it is time to help millions of full-time American workers out of poverty level incomes.

Cash for Clunkers was a Lemon

According to this recent article on Foxnews.com, the Cars Allowance Rebate System (CARS), also know as the "Cash for Clunkers" program, that was introduced by the government a few years ago has fallen quite short of its anticipated impact on the environment and to the economy.  The program offered an amount from $3,500 - 4,500 off the price of a new car if it had a higher fuel economy than the owner's current car to be traded in.

The government spent nearly $3 billion on this initiative only to find that the results were far less significant than expected.  Not only was the total emissions reduction not substantial, but the overall impact on the automotive industry and the economy as a whole was somewhat of a bust.  Further analysis of the CARS initiative shows that many of the sales of new cars were simply pulled forward from a future date in which the sale would have been made anyway.  So the demand curve for new cars would have shifted to the right in the short run, but then would have reverted back to the left in the long run which would have basically equaled the same net result without the program.

The article also discusses the impact of employment and job creation in the short-term, which according to the author, could have been realized through tax cuts to employers' and employees' payroll taxes.  If anything, we can see that billion dollar initiatives don't always have the long-term impact that they're touted to have at the time of implementation.

Ticket Prices for the World Series

The professional baseball league in the United States is currently in the championship round.  This round is known as the World Series.  To win the championship, a team needs to win four games before the other team wins four games.  This year, the St. Louis Cardinals and the Boston Red Sox are competing for the championship, and after four games, the series was tied 2-2.  Game 5 was played in St. Louis, where the Red Sox held on to an early lead and won the game.  Game 6 will be played in Boston, and the Red Sox now have a 3-2 advantage in the series, needing only one more game to clinch the championship.  I found an interesting article that discusses the rapid fluctuation in ticket prices for this upcoming game.  This article is entitled “Record prices for Game 6 tickets.”

According to the article, the price of the lowest class of seats increased by $275 from the beginning to the end of Game 5, due to the likelihood that Boston would win this game and then have the opportunity to finish the series in Game 6.  The most expensive seats that were sold in this frenzy were upwards of $24,000 per seat.  The opportunity to see a team win a championship has drastically changed the demand curve for ticket prices, which, according to the article, are now on par with the 2013 Super Bowl.  In this situation, the demand for baseball tickets is in the inelastic range, as a sharp increase in ticket prices has not decreased quantity demanded at nearly the same rate.  In a situation like this, is the price too high, or is a fan’s love of the game and/or team enough to overcome the much higher ticket prices?

Perhaps an important factor to consider is the supply side of this upcoming game.  The baseball stadium has fewer than 40,000 seats available (To compare, an average NFL stadium can hold roughly 70,000, according to a chart on the website “Stadiums of Pro Football”).  This restricted supply, has contributed to make the demand inelastic and cause record prices for a World Series game.  Another factor that would help is the secondary ticket sales market, which include individual scalpers and institutionally-aided sales though sites such as StubHub.  These secondary sales help to price-discriminate and consequently capture more consumer surplus.

Again, the upcoming game is Game 6.  If St. Louis were to win and force a Game 7 (which would also be in Boston), the ticket prices could be impacted even more.

Chinese Moviegoers Prefer Local Films to Hollywood's

     A recent article on Bloomberg Business Week titled “Chinese Moviegoers Prefer Local Films to Hollywood's” discusses three different market supply curves: theaters, local films, and foreign films.  As one could guess, theaters are compliments to both local and foreign films.  However, local and foreign films are substitutes.  The article noted that since 2008 theaters supplied to rural areas has tripled, hence shifting the market supply curve for theaters to the right.  Was this a smart move?  It appears so.  In 2013 alone there was a 45.8 percent increase in revenue and box office receipts.  This would mean the demand curve also shifted to the right for theaters.  The question then to ask would be, “Which market capitalized on this demand increase, local or foreign films?”  Of the 45.8 revenue increase in 2013, 42 percent was in local films while 3.8 percent was in foreign films. 

     Why did local films capitalize on so much of the new demand?  The author is underneath the opinion that the demand shift for local films is due in part to rural Chinese citizens preferring to view local films rather than foreign films.  This makes sense since local film makers understand their culture better than foreigners and can capitalize more on Chinese humor and culture while making their movies.  They also don’t have to deal with language barriers as do foreign films.  The author also indicates that any foreign films shown in China have to be approved by Chinese officials.  This could become a lengthy process and could create additional costs to Hollywood.  This bias by Chinese officials may also result in poorer quality movie than anticipated and could create lower demand for foreign films.

     The first sentence of the article also mentions that new regulation had taken effect in China that Chinese officials would now accept more foreign films into their country than before.  This new regulation has the potential of shifting the supply curve to the right for foreign films.  The question to ask would be, “Should Hollywood take advantage of this new regulation?”  To help answer that question Hollywood should find out if there would be a sufficient enough shift in the demand curve for foreign films to justify supplying more movies, or if they would supply more at a lower price.  With that being said, “What do you think?” 

             

Source: Palmeri, Christopher. Chinese Moviegoers Prefer Local Films to Hollywood’s. Bloomberg Business Week. Oct. 24, 2013. http://www.businessweek.com/articles/2013-10-24/chinese-moviegoers-prefer-local-films-to-hollywoods.

Shutdown is Latest Challenge for Small Firms

According to this article in the Wall Street Journal, the government shutdown is just one of many troublesome obstacles small firms have been faced with. With museum doors and park gates back open, and federal money for preschool programs flowing once again, one must remember to consider the long run repercussions of the two week federal hiatus, especially on the struggling small businesses of America. Budget cuts and market uncertainties are leading dropping revenues and ultimately layoffs, and in some cases, employees are voluntarily leaving in fear of the questionable future which makes it difficult to retain a talented and skilled workforce.

The SBA reported that there has been an 8% decline in contracts awarded to small firms from the federal government because they are consistently looking for a "lower price" rather than the best value when purchasing. Another trending disadvantage to small companies is increased competition among the number of firms allowed to bid on contracts and an increase in paperwork to prove compliance with the growing list of federal requirements. Ultimately the time and labor that is put in to preparing the proposals increased by more than 150 hours or the equivalent of 1-2 additional employees. This demonstrates that in the short and long run, average and total costs are increasing without the guarantee that the contracts will be fulfilled. This is encouraging layoffs of skilled employees, diminishing the quality of work, and requiring small firms to attempt to remain competitive by seeking work in the private sector and abroad.

Cheaper Sugar Sends Candy Makers Abroad

According to the Wall Street Journal, the U.S dropped sugar prices by 50% in the last two years but it is not enough for some domestic companies to continue productions of its sugary sweets at home. The beloved Jelly Belly Candy co. is a case in point. Jelly Bell only sells 20% of its sugary sweetness abroad but the company is expanding its foreign production in Thailand, the fourth largest sugar producer, in order to gain access to cheaper sugar. In addition to expanding foreign productions, the company had to increase the price of its candy over the last 10 years in order to account for the higher sugar prices in the U.S.

The U.S currently has a price floor on sugar and limits imports. The article states that “sugar users say the protections inflate wholesale prices, hurt profit margins and sap the competitiveness of U.S candy makers in the global market.” On the global scale, average sugar prices are nearly half the average price of U.S sugar. Defenders of the price policy say, “without the current U.S policy, 90% of the 142,000 sugar-growing and processing jobs in the U.S would be in danger…” With more companies choosing to expand their productions abroad, what will be the implications for the domestic sugar industry? And how will the U.S react?

Trick or Treat: The End of Chocolate

If you have a sweet tooth for chocolate, you may want to start stockpiling your favorite goodies. According to a recent NBC news article, raw material costs for a 3.5 ounce chocolate bar have risen 28% this year alone. This is partly due to adverse weather and agricultural regulations in West African countries where cocoa beans are produced, but also because of increases in the price for other ingredients such as milk powder. The theory of supply suggests the changes in these non-price determinants will cause an inward (left) shift in the supply curve, raising the price and possibly creating a shortage of the beloved confection.

Adding more concern to the pending worldwide chocolate crisis is the increase in demand from emerging markets. Forecasts predict a 21% increase in demand for chocolate in India by 2018, and an astonishing 45% increase in Russia by 2016. As the article states, "People are prepared to pay 70 pounds ($113) per kilogram (2.2 pounds) for chocolate." In order for consumers to continue indulging in their favorite sweet, producers may have to increase fillers and use imitation flavoring to contain costs. For those of us who will eat nothing but the best, we may find real chocolate becomes a luxury item, and a scarce one at that.  

The Economics of Solar Installations

When businesses provide consumers with a good or service they can unintentional enrich or hurt third parties. These unintentional economic boons and hardships are termed externalities. The energy market is no exception to this creating mostly negative externalities through pollution. More specifically this market creates a large portion of the world's CO2 output.

Most economists believe that the cost/benefit of these externalities should be placed upon those who take part in the transaction. The argument starts in how these externalities are placed upon the market. For example some suggest that through property rights pollution  can be controlled while others suggest direct taxation and others regulation. Each way has distinct strengths and weaknesses. Whether or not it is right the energy market's externalities have been mostly controlled through taxation and regulation for the past few decades.

The problem with externalities and placing them on a market is that it is sometimes difficult to ascertain an exact monetary amount. This is the case with the energy market. Scientists disagree on the effects of greenhouse gasses alone without even discussing the cost. With that in mind let's consider solar power. 

Solar power has long been lauded for its pollution free energy production; however, solar supplies less than half a percent of all US demand. This is due to solar's variability and cost. It is not economically viable when considering the buyer and seller alone. This could change if the externalities were completely placed on the energy market. In a recent scholarly article produced at Berkeley they discuss the current problems of solar as well as delve into the economics of solar energy. Here is the link: The Economics of Solar Electricity.

Whether or not these externalities are placed on the market may ultimately be a moot point. New technologies are being invented every year to tackle the price delta of solar vs. conventional. A recent power plant in Arizona uses the idea of concentrated photovoltaics (CPV) and removes the substrate from the equation. This plant uses parabolic mirrors to concentrate sunshine on oil that then heats either water or salt. The water powers a steam turbine while the salt holds the potential heat energy in reserve. The potential energy is used whenever output does not meet or exceed demand. This type of power plant solved the costly dilemma of having to have a reserve gas or coal plant for use during the night or when a cloud blocks out the sun. Here is NPR's article on that plant: In Ariz., A Solar Plant That Powers 70,000 Homes Day Or Night.

Will the Fed's Continue to Spend?

As successor of Ben Bernanke, chairman of the Federal Reserve, Janet Yellen is predicted to continue the Federal Reserve’s spending policies to keep the economy stable.  The Economist this month rendered a clear picture for the Federal Reserve’s plan going forward with respect to QE.  With government shutdown on our minds, this article has come in a timely manner.

The concept of QE is simple, bottom line- it pumps money into the US economy to help keep interest and unemployment rates low.  On the contrary, this adds to the deficit that the government has been griping about over the past couple of weeks.  Looking forward- Does the Federal Reserve necessarily need to keep to its current spending policy to lead the economy along or should they let the invisible hand guide the US markets course?