January Does Implementation of the Death Penalty lead to higher costs February Less Competition and Higher Hospital Costs March Millionaires Who Get Subsidies from the Affordable Care Act April The Unintended Obama Legacy May The NY Times and $15 Minimum Wage
Blog Topics 2014 blog topics for 2013 are at page bottom
January Will Lake Meade become another Aral Sea February Does Taxing the rich hurt the economy March The Cause of the Great Depression April Temporary Agricultural Subsidies lead to wealthy Farmers and Higher Prices May The Presidents Stance on Gun Control leads to Increased Gun Ownership June Is there really a Gender Pay Gap July Did the Supreme Court decision in Roe v. Wade lower the crime rate August Department of Education and wasted Money October The Financial Follies of the EPA November Social Security and Portfolio Diversification December The White House and Terrorism
Jobs Report June 2015 The economy created 223,000 jobs in June which was less than the expected 280,000. Even tho it was a disappointment, it was viewed in a favorable light by the stock market since it may be an indication to the Fed that the economy is overheating and there won't be a rate increase until next year. The unemployment rate,(U-3) dropped to 5.3%, the lowest in 7 years, but this was due in part to the labor force participation rate dropping to 62.6%. This is a function of baby boomers retiring and more people than ever being on welfare roles, 54 million. The long term unemployment rate (those unemployed for more than 26 weeks) once again dropped is 25.8% of the total unemployed. This has been dropping every month since the stoppage of long term unemployment benefits that lasted 99 months. The real unemployment rate, U-6, which includes marginally attached and part-time workers rose to 10.8%. Average hourly earnings remained steady at $24.95/ hour. The lowest unemployment rate by ethic group were Asians at 3.8% (high education and good work ethic) and the highest was amongst blacks, at 9.5% (lowest level of educational attainment amongst ethnic groups). The biggest increase of workers was in the health care industry which increased payrolls by 40,000.
How is the Dow Calculated
To calculate the DJIA, the sum of the prices of all 30 stocks is divided by a divisor, the Dow Divisor. The divisor is adjusted in case of stock splits, spinoffs or similar structural changes, to ensure that such events do not in themselves alter the numerical value of the DJIA. The current divisor is .1497. In other words add and subtract the movement of the Dow 30 and multiply by 6.68. The averages are named after Dow and his business associates, statistician Edward Jones and Charles Bergstresser.. It is an index that shows how 30 large publicly owned companies based in the United States have traded during a standard trading session in the stock market. It is the second oldest U.S. market index after the Dow Jones Transportation Average, which was also created by Dow.GE is the only stock that has been on the Dow since it's inception in 1896. You may be wondering then why it's not called the Dow Jones Bergstresser average. They didn't like the way Dow Jones & Bergstresser sounded, so they shortened it to Dow Jones & Co., and as a result, poor Charlie Bergstresser lost out on everlasting fame.
Make it 2 in a row for the Dow as it advanced 121 points to finish the day Wednesday at 17,751. After the FED released its statement at 2PM, there was 5 minutes of volatility as a result of different interpretations but the end result was a continuation of the status quo. The Federal Reserve kept rates unchanged and gave no hint of a rate hike coming in the next meeting. The decision on the rates was unanimous. Policymakers said the economy is expanding moderately and made no mention of recent volatility around Greece or China. The Fed's more positive appraisal of the economy leaves the door open for a possible rate hike at its next meeting in September.
In other news, the average age of vehicles on the road is 11.5 years; this is up from 9 years in 2000. This can be a function of the recession and the ever rising cost of cars, but it can also be a function of more reliable cars contributing to longevity. For instance, if I buy an American car today, I have an expectation that it will last 200,000+ miles (250,000+ if a Toyota, Honda, or Mercedes). In the 1970’s, if your vehicle reached 100,000 miles, that was a novelty
I haven’t written anything about the Iranian treaty but I’m beginning to cringe. There are no surprise inspections, as a matter of fact, the UN must give 24 days notice prior to an inspection. I suspect that this is ample time to hide anything that may contribute to Iran’s culpability. Also, if Iranians are partying in the streets of Iran over the treaty (remember, the government calls us the great Satan), how good can it really be for Americans.
Crude oil settled 81 cents higher at $48.79 a barrel. Earlier, oil briefly traded above $49 a barrel after the weekly crude inventories (released every Wednesday at 10 AM) showed a greater-than-expected decline. Gold settled down $3.60 at $1,092.60 an ounce. In the pre-market, oil is on the rise at $49.15/barrel, gold is down to $1085/oz and the price of a gallon of gas is down slightly again to $2.674
After 5 down days where the Dow dropped 760 points, the market recovered almost 200 points yesterday and is up 40 points in the pre-market today. Stabilization in the Chinese markets and an overbought condition contributed to the rise. After dropping 8.5% on Monday, the Shangai Composite dropped only 1.7% on Tuesday which was a positive signal to investors. The Fed started its 2 day FOMC (see FED speak) yesterday and it will culminate in a statement today that most analysts feel will add volatility to the market. Investors will be looking for clues as to when the FED will begin raising interest rates. Estimates range from September to mid summer 2016. The purpose of raising rates is to ward off inflation and put the brakes on the economy if it is overheating; with inflation relatively calm at 2%, and real GDP at 2-2.5%, I don't see the necessity for an increase anytime soon. The prior 40 year average on GDP is 3-3.5%, why then is it so low. Former FED chair Ben Bernanke said it well, there is a fiscal drag on the economy. This is a result of poor fiscal policy and a lack of economic/business acumen of this administration. Trading today is off on the right foot, particularly since the Shanghai index is up 3% in overnight trading (our overnight, their Wednesday). Shares in insurance company Assurant (AIZ) are up about 10% in extended trading after releasing better-than-expected quarterly results. And shares in Gilead Sciences (GILD) are up 4% premarket after its earnings beat expectations. Companies such as Anthem (ANTX), Altria (MO), Starz (STRZA) and Hilton Hotels (HLT) are reporting quarterly results ahead of the open. After being up yesterday, oil is down today trading at $47.72/barrel, gold is holding steady at $1095/oz and the price of a gallon of regular gas is down again to $2.686/gallon.
The Dow is down 120 points in the pre-market primarily as a result of weak markets first in Asia then Europe. The real perpetrator is China who's market was down 8% (that would be akin to the Dow dropping 1400 points) which is a result of fear selling and concern the the Chinese government is overstating growth and other key metrics. This follows 2 weeks of relative calm. The concern is that trouble in China -- the world's second largest economy -- will pull other major economies, like the U.S. down with it. Investors around the world went on high alert when China's stock market began to crumble in late June and early July, causing prices for oil, gold and copper to tumble. Chinese equities stabilized for a few weeks after massive government intervention but the rout resumed today. Foreign trade is the most direct link between the U.S. and China. Over the next two years, U.S.-China trade is projected to surpass U.S.-Canada trade as the largest in the world, according to State Street Global Advisors. Currently about 20% of all international trade is with China. According to CNN, "Investors should listen closely as companies with significant exposure to China detail their latest quarterly numbers. This week's earnings list includes American Express (AXP), Corning (GLW), DuPont (DD), Ford (F), Goodyear (GT), MasterCard (MA), Mondelez Internationa (MDLZ)l, Procter & Gamble (PG) and UPS (UPS)." One of the main causes of the commodities rout is decreased demand from China. Oil is down to $47.31/Barrel, gold is holding steady at $1098/oz and the price of a gallon of regular gas is down slightly to $2.71/gallon.
After this week, the Dow has established a new dubious record. On Thursday, the Dow Jones industrial average swung to a negative year-to-date return, the 21st such time it has moved to either side of breakeven for 2015. The only other time this occurred was in 1934 and 1994. However, beginning in 1995, the Dow was off to the races, reaching 12,000 before the 2000-2001 correction. While earnings are have been relatively good, there have been a number of storm clouds in the form of the Greek debt crisis, looming Fed rate increases and a bear market in China; as a result, over $100 billion in funds have left equity markets. From CNBC, "Trends in exchange-traded funds help paint a picture of where investors have looked for returns with the S&P 500 and Dow struggling and the tech-driven Nasdaq surging more than 8.5 percent." In the past 4 down days, the Dow has dropped from 18,100 to 17,569, still remaining in its trading range. Earnings affected the Dow this week with some pluses and negatives. 3M and Caterpillar dropped at least 3.6 percent after both cut their sales forecasts. Miner Freeport-McMoRan Inc. plunged 9.4 percent as metals prices continued to retreat. General Motors Co. jumped 4.2 percent as rising truck sales boosted profits. Amazon.com Inc. and Visa Inc. rallied in late trading after results beat estimates. Metal prices hit multi-year lows as weaker-than-expected data from China and the euro zone raised concerns about global growth while oil prices neared four-month lows trading at $47.97/barrel. Gold is down to &1098/oz and the price of a regular gallon of gasoline nationwide is down to 2.715/gallon, a 5 cent drop in 1 week.
The Dow dropped 181 points to finish the day at 17,919. The fall was a function of disappointing earnings from IBM and United Technologies. Those 2 stocks alone contributed to over 100 points of the fall (see above as to how the Dow is calculated). IBM's shares fell as much as 6.3 percent to $162.43, a day after the company's revenue fell for the 13th consecutive quarter.United Technologies fell as much as 7.9 percent to $101.78 and was the biggest loser on the Dow, after the company cut its full-year profit outlook. From USA today On Monday, the Nasdaq Composite touched a new intra-day high for the third straight day while the S&P 500 was just shy of its all-time high. While markets are at record highs, June-quarter earnings of S&P 500 companies are expected to dip 1.9 percent, according to Thomson Reuters data. Of the companies that have reported earnings so far, 70 percent have reported earnings above analyst expectations, above the 63 percent average beat rate since 1994. In the morning pre-market, the Dow is down another 70 points. Apple beat earnings but had lower guidance and is down 8 points. Investors are looking to next week’s Fed policy meeting for clues about possible timing, after Fed chair Janet Yellen last week said she expects to raise interest rates this year. Oil is holding just above $50 at $50.2/barrel, gold is at a 5 year low at $1088/oz and the price of a gallon of regular gas is down slightly again to $2.746/gallon. Commodities are down for 2 reasons, lower demand and excess supply. From CNN, China's slowdown is playing a huge role in the demand picture. Growth in the first half of 2015 slowed to the weakest level since 2009 -- and there's growing rumblings among investors that Beijing may be fudging the numbers. Many other emerging markets like Brazil and Russia are growing at a sluggish pace, too. So are developed economies like Europe and to a lesser extent the U.S. The International Monetary Fund recently downgraded its global growth forecast to 3.3%, the weakest pace since the financial crisis. "We're not going into a global recession, but there isn't a lot of growth out there either," said Michael Block, chief strategist at Rhino Trading Partners.
The Dow was up 18 points on Monday to finish the day at 18,100. This week will be all about earnings with about 130 Dow and S&P companies reporting. In the pre-market the Dow is down 35 points compliments of a disappointment in earnings from IBM (otherwise the Dow would be in the green). However, on the positive side, Wall Street bank Morgan Stanley (MS) and aviation giant Lockheed Martin (LMT) topping expectations, building on last week’s good start to the reporting season and Google’s big beat on Friday. Except for the Dow, all other indexes are in positive territory. From USA Today, "Wall Street will also be watching Greece again, where the situation appears to be stabilizing after a third bailout deal with creditors was struck last week and bridge loans arranged. Greek banks reopened today after being shuttered for three weeks, but daily and weekly withdrawal limits remain in place. Greece, with the help of a bridge loan, is also said to have made a key debt payment due today to the European Central Bank." Gold prices fell for an eighth straight session, falling to a fresh five-year low of $1.080 an ounce in early trading (so much for my stock pick of gold stocks), oil is holding steady at $50.13/barrel and the price of a gallon of regular gas is down very slightly to $2.751/gallon
In other news: If you're a fisherman you're aware of the fishing restrictions this year including the ban on cod. If you like to eat fish, you've noticed the high prices. Is man really over fishing or is it something else. My Jan 2013 blog addressed this. In the 70's there were 10,000 seals in the gulf of Maine, they became protected and now there numbers have swelled to between 200,000 to 300,00 in the Gulf of Maine alone. The average weight of a seal is 500 pounds and they eat up to 8% of their body weight/year, so do the math: 200,000 x 500 x.08 = 8,000,000 pounds of fish that seals are eating/day. Is it time to take them off the endangered/protected species list? Oh yea, let's not forget the great white sharks off of Cape Cod, also as a result of seals because that is one of their favorite foods.
The statistics concerning food stamps and social security disability payments will surprise you. Under the Obama administration the number of people on food stamps has increased by over 30% and the number of people on Social Security disability payments is up over 20%. The total number of people on food stamps is 46 million and the total on SS disability is 9 million for a total of over 55 million people. In case you haven't done the math, that's 1 out of every 6 people in the US and is approximately the population of Spain and Greece combined. SNAP, is the acronymn for Supplemental Nutrition Assistance Program, i.e., food stamps. In order to qualify for food stamps, you income must be below 130% of the poverty level; for a family of 4 that is $31,525. Under Obama, we have taken strides towards being a welfare.
In other news, the Dow finished the week down 34 points to finish at 18,086. What drove the Dow last week, and will this week is earnings. Google far exceeded expectations and gained over 92 points to finish close to 700. The June consumer price index, which measures prices pay for goods ranging from apparel to tech gadgets, rose 0.3% vs. May and was inline with expectations. Housing starts last month surpassed analyst projections, rising 9.8% to a seasonally adjusted 1.174 million units. Early in the profit reporting season, 72% of the 60 companies in the benchmark Standard & Poor's 500-stock index have topped expectations, which is better than the average "beat" rate of 63%, according to Thomson Reuters. Currently, earnings are expected to contract 1.7% in the second quarter, which, thanks to some solid beats, is better than the -3% growth estimated back on July 1. (USA Today)
Oil is slightly over $50/barrel, gold is down to $1132/oz and the price of a gallon of gas is down slightly to $2.756/gallon
The Dow was up 70 points on Thursday to close at 18,120 and continues to trade sideways in a range from 17,500 to 18,300. Wall Street got a lift from Europe, where the Greek parliament voted to approve austerity measures demanded by its eurozone creditors. The 'Yes' vote is the first step towards reopening negotiations with Europe to nail down the final terms of the 85 billion euro bailout deal and opens up much-needed funds. As of Friday morning, Greek banks are scheduled to open on Monday after being closed for 3 weeks restoring some form of financial normalty. Also contributing to the upward move of the Dow was positive earnings surprises from a number of bellweather companies. So far, nearly three out of four companies in the Standard & Poor's 500-stock index that have reported results have topped expectations, according to earnings-tracker Thomson Reuters. The Dow turned slightly positive in the pre-market from favorable economic news. New home starts advanced 9.8% last month which was greater than expected. Also in pre-market trading, oil is down to $50.51/barrel, the dollar is up against the euro, $1.09 = 1 Euro, gold is down to $1142/ounce and the price of a gallon of regular gas is down slightly to $2.763/gallon; you can take solace in the fact that California gas is $3.88/gallon (I hate how that state is run) and gas in Texas is $2.54/gallon (I love that state).
Just a note on the Iranian nuclear deal. Diplomacy is always favorable to war, but it was poor diplomacy that gave North Korea the nuclear bomb and I think the Iranian deal is poor diplomacy for two reasons. The 1st, is that the UN is allowed to do inspections, but only after a 24 day notice. Given a 24 day notice, you can hide an aircraft carrier; the 2nd reason is there was celebrating in the streets of Tehran over the deals. I don't recall any flash mobs in Boston when the deal was announced. Please don't misinterpret my feelings, I believe that most of Islam is a peaceful religion and I have many friends and students in both the Emirates and Saudi Arabia who are just as wary of Iran as I/we are.
After 4 days of gains, the Dow finished slightly lower today mainly as a result of comments by Janet Yellen while addressing Congress. Yellen told legislators that the Fed is on track to begin raising interest rates this year as the economy continues to improve. She also reiterated the rate hikes would be gradual and dependent on economic data.The Dow went from plus 40 to minus 3 to finish the day at 18,050. In Europe, Greece's left-wing government must push a deal from its creditors through the nation's parliament by Wednesday. European markets from Germany to France traded with little enthusiasm and were effectively on hold ahead of the vote and there is still a chance that the deal may not fly. Riot police were stationed outside of Greece's parliament building. Oil prices fell over 3% to finish the day at $51.29/barrel. This drop came as a result of a tentative deal with Iran that is highly criticized by Republicans, and yes, some democrats (about 10 in the Senate). Iran has 30 million barrels in storage and is capable of producing 2-4 million barrels/day. World oil usage is about 93 million barrels/day (supply about 93-95) and Iranian oil would add to the existing glut. You may be asking why gas prices have not fallen; gas is currently at $2.77/gallon. It is a combination of two reasons. The 1st I've mentioned before, demand has increased, but the second is because the number of refineries in the US has dropped from over 300 inn the early 1970's to slightly over 140 today, compliments of the EPA (a refinery hasn't been built since 1969). Granted, the current refineries have gotten larger and are more efficient, but we don't have the excess capacity that we had in the 70's (given an adequate supply of oil). Be happy the you don't live in California where gas is approaching $4/gallon. This is a function of all the extra additive that the state mandates and the refinery that produces that gas lost capacity because of a fire. Given that there is no world wide supply shock, I believe gas will decrease to the $2.5 range after labor day.
With all the talk of interest rate hikes, I've received a number of e-mails concerning an explanation of what interest rates are relevant to us as consumers. The Federal Funds Rate This is the interest rate that is followed most closely and affects all other short term interest rates. It is the rate that one bank charges another bank on an overnight loan and has a direct effect on the prime rate. The current rate is .25%. Prime Rate This is the rate that the larger banks charge their best customers on short term loans (under 3 months). Once the federal funds rate is changed, the prime rate is changed by, usually, the largest bank, JP Morgan-Chase, and all other banks follow. The prime rate is generally 3% higher than the Federal Funds rate. The current prime rate is 3.25%. This affects all other short term loans: HELOC's (Home Equity Line Of Credit), boat loans, car loans, etc. What it does not affect directly is the mortgage rate.
Yield on the 10 Year Government Bond The government finances it's deficit by borrowing money and it does this by issuing bonds that have a maturity value anywhere from 30 days to 30 years. Technically, Treasury bills are issued for terms less than a year.Treasury notes are issued in terms of 2, 3, 5, and 10 years and Treasury bonds are issued in terms of 30 years. The price of a bond is inversely related to its yield and the mortgage rate is usually 2-3% higher than the 10 year yield.
California Drought California is in the middle of a drought; it must be global warming or now the more politically correct term (spare me), climate change. In case you haven't noticed, the climate is always changing. It is in a constant state of flux. If you notice the chart above, California had a number of mega-droughts during the medieval ages and this was considerably worse than it is now. Oh yea, and probably the father of these climate alarmists were predicting an ice age in the 1960's (click on pictures below).
Obamacare Revised Costs
More on Obamacare In a recent survey by the New York FED on businesses, the median increase in healthcare premiums is expected to be 10%. More than a quarter of the manufacturing and service firms surveyed said they either have or will boost prices for goods and services "because of the effects that the ACA is having on your business." About 20 percent of respondents said they were reducing their number of workers and/or raising the share of part-time workers as a result of the ACA. His is in stark contrast to the presidents remarks earlier this year that healthcare costs are decreasing. Maybe CEO's were right when they said the president "Just doesn't get it".
Commentary on Minimum Wage
There is currently a debate in the state of NH on whether to increase the minimum wage to 8.25 from 7.25. The main argument is that it will help to alleviate poverty. That is clearly not the case. As you can see from the chart at the left, the poverty rate dropped dramatically in the 1960's. This was a function of great society legislation; specifically, increase in Social Security benefits in addition to the inception and implementation of Medicare and Medicaid. Since then, the poverty rate has fluctuated between 9-15% and is highly correlated with the unemployment rate. The vertical grey area's in the graph represent periods of recessions in the US. As can be expected, unemployment rises during recessions and peaks at the end (unemployment is said to be a lagging indicator). As you can also see from the chart, so too does the poverty rate. There is no indication whatsoever that the poverty rate is affected by increases in the minimum wage. Generally, this is quite the contrary. As can be evidenced from the below left chart, increases in minimum wage can contribute to unemployment and as we can infer from the above chart, as unemployment increases so to does poverty. If you look at NH, they have the lowest state poverty rate in the nation and it generally parallels the national unemployment rate. By raising the minimum wage, you increase business costs. As a result; businesses either pass these costs onto the consumer (in which case inflation nullifies any wage increase), substitute capital for labor, or simply go out of business. If you look at the chart below right, UAW (United Auto Workers) membership has decreased in the late 1970's from 1.5 million to 350,000 in 2009. The reason for this is simple. Detroit isn't making fewer cars, they are making more, but they have made their assembly lines more robotic and have substituted capital for labor, which became cheaper in the long run. This can also happen to those fast food workers who want a $15 minimum wage. There is currently a machine on the market that can make 300 burgers/hour. In other words, capital can be substituted for labor. Someone please e-mail me and explain how someone is better off unemployed at $8.25/hour as opposed to being gainfully employed at $7.25/hour
You cannot legislate equality. If you want to decrease poverty, implement policies to insure that higher levels of education is available to all.
The Congressional Budget Office predicted this week that more than 2 million people will leave the labor force because of Obamacare. Specifically, more people will leave the labor force or reduce their hours, to stay under the cap for federal subsidies. If you are a family of 4, and household income is under, WAIT FOR IT, $94,000, you are eligible for a federal subsidy. The number of part time/temporary workers has already increased by 35% since Obamacare was passed in 2010; and yes it will get worse, wait until 2015 when it becomes mandatory for businesses.
For a good laugh on Obamacare, go to this web site and watch this video; http://www.youtube.com/watch?v=qpa-5JdCnmo. It shows the president on 36 different occasions stating that if you like your healthcare plan you can keep it. Obviously there are 1 of two explanations for this misunderstanding. He was ill advised on the 2700 page, 4500 provision Affordable Care Act, or he knew about it and lied. According to a study by Forbes magazine, the ACA will increase premiums to men under 27 by 77%, 40 year olds, 37% and 64 year olds by 37%.
When Obamacare was 1st released, The Congressional Budget Office predicted that it would cost $900 billion over 3 years. At the time, I made a prediction to my students that I estimate the final cost would be closer to $3 trillion. Three years later, the CBO has raised it's estimate to $1.6 trillion. At this rate, we are on pace to reach the $3 trillion mark. www.healthcare.gov, the official website to sign up for Obamacare had an original cost of $100 million. That cost is now up to $292 million dollars and rising. If the government can't manage the costs on a web site, and these costs have trippled since it opened on October 1, how can it possible manage a 2700 page, 4500 provision bill. The words of Nancy Pelosi (see above) are acting as a harbinger of doom: "We have to pass the bill, so we can find out what's in it."
BLOG Topics 2013
January Do Protected Seals lead to Depleted Fish Stocks February Prohibition: Profits to Cartels & Increased Violence for Americans March Increased Minimum Wage & Extended benefits lead to Higher Unemployment April Ethanol from corn & Agflation May Cash for Clunkers lead to Higher Used Car Prices & Wasted Tax Dollars June The Affordable Care Act; Anything but Affordable Part 1 July The Affordable Care Act; The poster Child for False Advertising August Detroit: Higher Taxes + Liberal Benefits = Bankruptcy September No Keystone Pipeline leads to more pollution October Global Warming! Or is it Global Cooling! November Poverty & Benefits December Does Affirmative Action lead to Reverse Discrimination?
The United States has amongst the lowest savings rate for all technological nations. The iOMe challenge is a nationwide competition between Colleges where teams submit a 10,000 page essay on how Americans can improve their savings rates. In addition, teams must produce an approximate 60 second video which complements the essay. If you click on the iOMe logo above, it will take you to Bentley University's 2012 video submission. The faculty adviser for the challenge is John Tommasi and is offered during his Fall EC 351 course, Contemporary Issues in Economics. I'm pleased to announce that on February 15, Bentley was declared the winner of the iOMe video portion of the contest. Congrats to the team members and great job!
EC 3900 Energy Economics
EC 3900, Energy Economics and International Markets, is a 3 credit, Short Term Program, that is offered during Spring semester. After 7 weeks of lecture, the class takes a 10 day educational/cultural tour to France where 80% of their electricity is produced by nuclear power. During the 10 day trip, students travel to, and tour various nuclear facilities Last year's class visited; Marsailles, Aix en Provance, Lyons, Brest and 4 days in Paris.
If there were ever words that can strike fear into the hearts of any man women or child, it's: "I'm from the Government and I'm here to help". On a monthly basis my blog, from an economic standpoint, will explore government laws, decisions and actions, which while well intentioned, had inadvertent results that were either disastrous, or made a bad situation worse. It wouldn't surprise me if you reached the conclusion that congress does two things well, nothing and overreact; and you may ask yourself, do Congressional members vote for what is best for the economy, or what will get them re-elected.