The number of international travelers is soaring. Many travelers need different currency as they arrive in new countries. In the past, travelers using an ATM, credit or debit card were simply charged for purchases and withdrawals in whatever currency the locals used. For example, U.S. travelers to France were charged in Euros when they used their credit card in Paris.
Recently, instead of being simply charged in the local currency many travelers are being asked if they want to pay in their home currency. Companies offering the service call it “dynamic currency conversion.” For example, some U.S. travelers to France are now asked if they want to complete transactions in dollars.
The change is occurring because ATMs and credit card terminals now have the ability to check where a card was issued. Then international travelers can be asked whether they want to use their home currency for their transactions. The question seems innocuous, but agreeing to use your home currency in a foreign land can inflate the cost of every purchase. Continue reading
President Donald Trump on July 10 nominated Randal Quarles to be one of the seven governors of the Federal Reserve System, the central bank of the United States.
Before I get to Quarles and his qualifications, it’s important to understand the Fed and what it does. Its decisions are vital to every person on the planet who borrows or lends money (pretty much everybody) since it has enormous influence over global interest rates. Its board of governors also influences most other aspects of the global financial system, from regulating banks to how money is wired around the world. Continue reading
The 4th of July is a day for many people of parades, barbeque and of course fireworks. The tradition got its start when the founding fathers met in Philadelphia to write and sign the Declaration of Independence. The day after the Continental Congress voted for independence, John Adams, the future U.S. president, wrote to his wife Abigail. At the end of his letter he stated that Independence day
“ought to be solemnized with pomp and parade, with shews, games, sports, guns, bells, bonfires and illuminations from one end of this continent to the other from this time forward forever more.”
One year later in 1777 Philadelphia had fireworks, which Adams called “illuminations,” plus a parade commemorating Independence Day. Since the 4th is so closely associated with fireworks here are four key points to talk about between explosions. Continue reading
Eating fast food is frequently blamed for damaging our health. It is not the healthiest type of meal since it is typically high in fat and salt. Because of this some government officials have considered regulating parts of the fast food industry to improve public health and reduce health inequalities across society.
Regulating fast food locations to improve health among low income Americans rests partly on a key assumption: that fast food is primarily eaten by poor people, who cannot afford nutritious but more expensive food. Mark Bittman in the New York Times, summed it up nicely: “The ‘fact’ that junk food is cheaper than real food has become a reflexive part of how we explain why so many Americans are overweight, particularly those with lower incomes.”
Our recently published research examined this assumption by looking at who eats fast food using a large nationwide random sample. What we found surprised us. The poor don’t eat the most fast food. Instead, the middle class do. Moreover, the difference between the proportion of rich people and poor people who eat fast food was quite small. It seems when you ask people if they ate at a fast food restaurant like McDonalds, Kentucky Fried Chicken or Taco Bell last week, the majority of rich, poor and middle class said “yes.” Continue reading
A few months ago newspapers in Columbus and Dayton trumpted stories with headlines like “More People Moving Out of Ohio.” Both stories relied on data from large moving companies. While data from United Van Lines and Atlas Van Lines is interesting, relying on moving companies for migration information presents a biased view of migration. Continue reading
John H. Thompson, the director of the U.S. Census Bureau, just resigned amid a funding fight over the 2020 Census. Since it comes at the same time that the president fired the director of the FBI, why should anyone care about the resignation of just another Washington “bean counter”?
This bean counter, whose name is likely unfamiliar to the vast majority of Americans, is actually one of the most important people in determining whether Democrats or Republicans control Congress. The census has a significant impact on political representation and how federal money is distributed. Moreover, how hard the director fights for more funding helps determine the accuracy of the census. Continue reading
President Donald Trump has long been known for his fondness for superlatives when describing his projects and policies. His administration’s proposal for a tax cut is certainly no exception. In a recent interview with the Associated Press he declared: “It will be bigger, I believe, than any tax cut ever. Maybe the biggest tax cut we’ve ever had!”
Americans just got their first taste of some of the details of his tax overhaul. Treasury Secretary Steve Mnuchin repeated his boss’ boast about the tax cut’s size and said it would slash the top corporate rate to 15 percent from 35 percent. It would also simplify individual income rates and reduce them a little, while doubling the standard deduction and eliminating certain itemized deductions.
In assessing whether his cuts might be the biggest ever, many pundits have pointed to President Ronald Reagan’s tax overhaul in 1981, which reduced government revenue by 2.9 percent of GDP.
But was that really the biggest U.S. tax cut ever? Hardly. In fact, we have to go back almost 150 years – immediately after the Civil War and the beginning of the income tax – to find the American whopper of tax cuts. Put simply, it would be very hard for Trump to exceed that cut. Continue reading
In both 2014 and 2015 I wrote about the cost of going to the Prom. I found the results surprising. The cost of going to the prom from 1998 to 2015 was going up much slower than the cost of inflation. The findings appeared in outlets like the Washington Post, US News and The Conversation. It is now two years later.
What has happened since 2015 to the cost of attending the prom? Continue reading
It is almost April 15th; the time many people in the U.S. file their income taxes. Shocking as it may seem, personal income taxes don’t provide most of the federal government’s revenue. Since World War II personal income taxes have consistently provided less than half of all the money taken in by Washington.
Just as shocking has been the change in the source of federal revenues over time. The official statistics show in the 1940s and 1950s corporations picked up a major share of supporting the federal government. Today, it is taxes on workers. Social security and Medicare taxes are now four times more important in providing revenue for the government than they were in the mid-1940s. Continue reading
The Federal Reserve is expected to lift short-term interest rates at the close of its two-day meeting today and signal that more hikes are to come over the course of the year.
Numerous commentators have focused on who is hurt by rising rates, particularly those with lots of floating rate debt, such as a credit card balance, or anyone in need of a loan.
Not everyone, however, is negatively affected by rising rates. There are some individuals and businesses cheering the Fed on as it pushes up rates, including savers, people traveling abroad and foreign exporters and businesses with large cash balances.
When President Donald Trump formally announced his Cabinet, one of the surprises was that the list of 24 Cabinet-level officials did not include the chair of the Council of Economic Advisers (CEA). There is no formal requirement that an economic adviser be part of the Cabinet. However, Barack Obama started a new trend by appointing the last four council chairs as part of his Cabinet. Being part of the Cabinet is important because it ensures economic as well as political considerations are part of presidential decisions.
Not only has the position now been eliminated from Cabinet meetings, but the council’s website has also been turned off. Only archival versions from past administrations remain. This apparent sign of disrespect for the role of the CEA, along with the fact that President Trump has yet to actually nominate a council chair, has caused some to worry that he won’t be getting much economic advice from actual economists. A website that takes bets on who will fill various posts in Trump’s Cabinet suggests he may not even fill the position.
The Dow Jones Industrial Average just broke 20,000 for the first time. Traders and investors cheered this historic high of the world’s most famous stock market index, which is composed of 30 of the biggest and best-performing American companies and is frequently used as a barometer of the strength of the economy.
However, it’s hardly a surprise that the Dow hit this particular milestone. It and other major stock indexes like the Standard & Poor’s 500 have two key features that ensure that they will continually rise and break new zero-filled records: They ignore inflation and are heavily curated. Continue reading
The recent presidential campaign reminded us that the U.S. is one of only a handful of countries that doesn’t require companies to provide paid maternity leave. Maternity leave is important. One of the key reasons is because medical researchers have shown overwhelmingly positive effects when parents are able to spend time with their newborn children.
My outlook for 2017 and beyond is that the U.S. economy will likely see another recession. Yes, the economic picture currently looks wonderful. The Dow and S&P 500 are at record levels. Unemployment is well below 5 percent of the labor force. Inflation is still tame. The U.S. dollar is strong.
The U.S. economy has grown dramatically over the long-run. GDP has increased by one-third since the beginning of the 21st century, even after adjusting for inflation.
However, capitalist economies do not simply grow steadily larger. Instead, their long-term growth is periodically punctured by downturns. Continue reading
Black Friday is hyped as one of the biggest in-store shopping days of the year, with stores trumpeting giant sales and even bigger advertising campaigns. Some pundits claim that Black Friday is dying and is no longer relevant. However, the National Retail Federation issued a strong denunciation of these articles and declared that Black Friday is “far from gone.” Which is the true story? Is Black Friday dying or still relevant? Continue reading
Research into a phenomenon known as the “presidential puzzle” has shown that the stock market performs better under Democrats than Republican presidents. Does that mean it’s time to sell all of your investments now that Donald Trump has won? Continue reading
Halloween is here, the night every year when children dress up in costumes and go “trick or treating.” On the surface, that activity appears to be a relatively benign one. What could be more innocent than cute youngsters collecting sweets?
Halloween, however, is actually one of our only holidays based on extortion. When children scream “trick or treat,” they are essentially demanding candy in exchange for not doing a prank or something else that is nasty. Continue reading
Have you ever pulled out your camera or phone in a museum or historic place and suddenly found a staff person telling you “no photographs”? I was in London recently and it happened repeatedly in places like Westminster Abbey, Buckingham Palace and Parliament. The no-photos policy is not limited to just England but is a worldwide phenomenon. Visitors cannot take photos in places like the Sistine Chapel in Rome, the Van Gogh Museum in Amsterdam or inside Thomas Jefferson’s Monticello home.
Each year in September, the U.S. Census Bureau releases a report showing how income and poverty have changed over time. The most recent report, which came out on Sept. 13, was filled with great news. Compared with the previous year, average inflation adjusted income soared 5.2 percent. The U.S. poverty rate fell 1.2 percentage points, resulting in 3.5 million fewer people living in poverty. Even the number of people without health insurance fell by 4 million people in the past year.
While these statistics got the headline attention they deserve, there is one piece of great news in the report that hasn’t attracted as much attention but is just as important. The gap between women’s and men’s earnings shrank to a new record low. The median woman working a full-time year-round job now earns 80 percent of the median earnings given to men working full-time. Continue reading
Labor Day is a U.S. national holiday held the first Monday every September. Unlike most U.S. holidays, it is a strange celebration without rituals, except for shopping and barbecuing. For most people it simply marks the last weekend of summer and the start of the school year.
The holiday’s founders in the late 1800s envisioned something very different from what the day has become. The founders were looking for two things: a means of unifying union workers and a reduction in work time. Continue reading