WSJ Article Reviews

WSJ ARTICLE REVIEWS 9

WSJArticle Reviews

WSJArticle Reviews

Article1

U.S.Unemployment Claims Rise, but Strong Job Growth Still Seen,

BenLeubsdorf. February 5, 2015.

RetrievedFrom, http://on.wsj.com/1KIlveF

UNEMPLOYMENT

Thepurpose of the article by Ben Leubsdorfis to illustrate that employers are still hiring despite the claimsthat there is an increase in the unemployment levels. Ben wrote thearticle in response to the claims that unemployment levels had risenduring the month of January 2015. Therefore, Ben writes to describethe claims, but to propose that there was still solid job growthdespite the unemployment rise. In the article, Ben reports thestatistics from the Labor Department shows that an increase in theunemployment rate for the month of January as reported I the lastweek of the month.

Accordingto Ben (2015), the strong growth in jobs is marked by the indicatorsof employers hiring. The fact that some employers are hiring signalsconfidence for the year 2015 in regard to the availability of jobs.This signal shows that the current opening of new jobs by employersmay persist for the entire year, despite the surging unemploymentlevels. This may be a continuation of the level of jobless claimsthat have been lower than 320,000 since May of 2014 and below the300,000 mark since the end of year 2014 (Ben, 2015).

Thejustification for this prediction by the author is the macroeconomicrecord for the last year and the practical hiring by employerscurrently. According to Ben (2015), 2014 had recorded decreasinglevels of unemployment with December being the highlight. The rate ofunemployment recorded in December 2014 at 5.6% was a reduction from6.7% recorded the previous year (Ben, 2015). At the same time, theDecember 2014 rate was the lowest in the country since 1999. Informedof these facts, the author is rational to assert that there is strongjob growth for the year. This shows that the purpose of the articleis consistent with the past macroeconomic record and the currentindicators for the future of unemployment in the country.

Article2

Inflationexpectations pick up in the U.S. and Europe,

MinZeng. May4, 2015.

RetrievedFrom, http://on.wsj.com/1KIb5vJ

INFLATION

Thepurpose of this article by Min Zeng is to express that theexpectations for inflation are going up. Zeng (2015) reports, thatthe measures of inflation expectations that are recorded in Europeand the United States have reached their highest levels since themonth of December 2014. According to Zeng (2015), the expectationsare fueled up by the rebound in the prices of oil. The Europeancentral bank and the Federal Reserve have tracked the inflationmeasures since December 2014 to note the expected rise. Therefore,the expected increase in inflation signals changes in the Fed in itsplans to the monetary policy.

Thechanges in the inflation rates have always presented challenges inthe setting of the interest rates. For instance, the low inflationrates have complicated the efforts of the Fed to raise interest rate,which has not been done since 2006 (Zeng, 2015). Therefore, the Fedofficials expect to see the creation of more jobs before they liftthe benchmark borrowing costs. As a result of the expectation of therise in inflation measures, the demand for the inflation-protectedsecurities by the United States Treasury has increased over time.

Atthe same time, the demand for the regular government bonds in theUnited States has reduced. As a result, the yields of the bonds havebeen rising. Therefore, the shape of the yield curve has steepened tosignal a healthier economy. In the European Union, the consumer priceis stabilized and economic prospects improved. In addition, theprogram of buying ECB-bond is expected to lift the economic growthand reduce the deflationary pressures (Zeng, 2015). This means thatthe theory is expectation of a rise in inflationary pressures.Through the observation of the macroeconomic data that relates tointerest rates and inflation, the author is rational to make theconclusions of the increase in the expectations of inflation in theUnited States and the euro zone.

Article3

TheDollars and Sense of Delaying Social Security,

KarenDamato. Apr16, 2015.

RetrievedFrom,http://blogs.wsj.com/totalreturn/2015/04/16/the-dollars-and-sense-of-delaying-social-security/?KEYWORDS=social+security#&ampmod=wsj_valettop_email

SOCIAL SECURITY

Thepurpose of this article by Karen Damato is to explore the primaryreasons for delaying the payment of the social security byindividuals. Karen explores the varied reasons why people considertaking the social security benefits as a lump sum or as a stream ofpayments. Damato (2015) explores the article by Michael Kitches toassert her points that social security benefits are valued as anasset for a person in the household balance sheets. According toDamato (2015), the social security benefits are valuable to peopleand should be considered as assets in the personal portfolio.

Damato(2015) reports that social security benefits are a unique type of anasset that can be hedged against risks in terms of retirement. Thiscapability is not associated with the traditional portfolios. Inaddition, the social security benefits have the ability of delayingthe benefits for as long as possible. The delaying of the paymentsfor the social security is beneficial because it gives thebeneficiary a higher amount in future. This is because the paymentsattract delayed retirement credits that lead to the receipt of biggermonthly payments to the beneficiary in the future. However, thefuture payments are considered for the effect of inflation, thoughfactoring in the value of money.

Thedeferment f the payments of the social security benefits is considersthe time value of money by determining the present value of the cashpayment series in the future. Through the use of the time period ofthe deferment, the size of the payment and the discounting rate, theamount of the expected cash payments can be quantified. However, theamount paid varies with the life expectancy set by the state Damato(2015) notes that the social security benefits from a highly valuedasset and a unique one that allows deferment of payments and hedgingof risks. This makes it one of the reasons for delaying receipt ofsocial security benefits.

Article4

Should Monetary Policy Be RunBy a Formula?

RobertLitan. Apr30, 2015.

RetrievedFrom,http://blogs.wsj.com/washwire/2015/04/30/should-monetary-policy-be-run-by-a-formula/?KEYWORDS=monetary+policy&ampmod=wsj_valettop_email

MONETARY POLICY

Thepurpose of this article by Robert Litan is to explore the debateabout the approach that the Federal Reserve should adopt when settingthe monetary policy of the country. The debate involves the use ofrules and formula for monetary policy on one side, and theconsideration of the discretion to the state of the economy on theother. According to Litan (2015), the debate is still valid in themodern day despite being an issue that was discussed several yearsago. Litan (2015) notes, that even if the Fed did not adopt arule-based approach proposed by Milton Friedman, the debate is validfor the current economy.

Thedebate is validated by the current discussions of whether to enshrineinto law the “Taylor Rule” or not. According to Litan (2015), theTaylor rule proposes the use of a formula to determine the federalfunds rate and so control the sale and purchase of governmentsecurities. According to Litan (2015), the legislation, if passed,could help people to judge what the Fed will be doing in certaincases. This is because the proposal gives a way of auditing orquestioning the actions of the fed, which is not welcome by theinstitution.

Thedebate of rule-based policy against the discretionary policy gives avalidity of the article by highlight the two sides and theirimplications. The use of the discretion is rational because the Fedalways seeks to implement policies that respond to the economicstatus of the country. This explains why the former Fed chairman BenBarnanke rebuked the proposal by Taylor as devastating andimpractical. The policy would put the Fed in a situation that wouldmake it unable to respond to the economic situations facing thecountry at certain times.

Article5

Zero National Debt? Not LongAgo, Budget Forecasters Planned for It

JoshZambrun. Feb4, 2015.

RetrievedFrom,http://blogs.wsj.com/economics/2015/02/04/zero-national-debt-not-long-ago-budget-forecasters-planned-for-it/?KEYWORDS=national+debt&ampmod=wsj_valettop_email

NATIONAL DEBT

Thepurpose of the article by JoshZambrun is to explore the failures by the United States budgetaryplanning to achieve the zero national debt tat was forecast duringthe Bill Clinton and George Bush rules. According to Zambrun (2015),the budget by forecasters in bill Clinton’s government projectedthat the United States would be out of debt by the end of the firstdecade of the current century. The same was forecast by the GeorgeBush government, which planned for a zero budget by the year 2011.However, the government in both of the two regimes failed thisbecause the national budgets had neither surpluses nor zero debts.

Onthe failure side, the actual national debt has been rising since theturn of the millennium and is at the all time high at $13 trillion(Zambrun,2015).This is in the contrary of the plans of the previous governments toreduce the national debt and have balanced budgets. The economy didnot even improve even with these budgetary plans and forecasts. Forexample, after the budget by the Bush administration, the economyplunged into recession in 2007. Despite the recession, thegovernments continued to spend over the years.

Thecountry has failed repeatedly to achieve budgetary targets because ofthe high spending by the government in various departments. Theincreased spending beyond the ability of the economy to finance leadsto budget deficits. The budget deficits lead to borrowing by thegovernment to finance the budget, so as to achieve the political,social and economic targets. For instance, the constant increase inexpenditure by the department of defense is approved by thepresidency and the congress. As a result, the national debt has beenon the rise and no efforts have been implemented by the previousregimes to reduce runaway debt.

References

Damato,K. (2015).TheDollars and Sense of Delaying Social Security.Retrieved From,http://blogs.wsj.com/totalreturn/2015/04/16/the-dollars-and-sense-of-delaying-social-security/?KEYWORDS=social+security#&ampmod=wsj_valettop_email&gtMay 5, 2015

Leubsdorf,B. (2015). U.S.Unemployment Claims Rise, but Strong Job Growth Still Seen.Retrieved From, &lthttp://on.wsj.com/1KIlveF&gt May 5, 2015

Litan,R. (2015). ShouldMonetary Policy Be Run By a Formula?Retrieved From,&lthttp://blogs.wsj.com/washwire/2015/04/30/should-monetary-policy-be-run-by-a-formula/?KEYWORDS=monetary+policy&ampmod=wsj_valettop_email&gtMay 5, 2015

Zambrun,J. (2015). ZeroNational Debt? Not Long Ago, Budget Forecasters Planned for It.Retrieved From,&lthttp://blogs.wsj.com/economics/2015/02/04/zero-national-debt-not-long-ago-budget-forecasters-planned-for-it/?KEYWORDS=national+debt&ampmod=wsj_valettop_email&gtMay 5, 2015

Zeng,M. (2015). Inflationexpectations pick up in U.S. and Europe.Retrieved From, &lthttp://on.wsj.com/1KIb5vJ&gtMay5, 2015