Energy and Environment News

Energy and Environment News

February 16, 2016

Top Stories

Oil.  Saudi Arabia, Russia, Qatar, Kuwait, and Venezuela agreed today to halt oil production increases as part of a larger coordinated attempt to boost prices.  The caveat to the agreement is that it depends on Iran, Iraq, and other big producers to also freeze production levels — a request that may prove too much to ask, and demonstrates OPEC’s limits.  WSJ

Oil.  Art Berman argues that the oil production freeze announced today by four OPEC members and Russia is a meaningless gesture that will result in nothing more than a temporary “head-fake” price increase.  Berman states that, while Russia’s involvement is significant, so is the lack of involvement from Iraq and Iran, given the two countries’ rapid oil production and export growth.  Forbes

Energy Policy.  In the wake of Justice Antonin Scalia’s death, Eduardo Porter asserts that the next Supreme Court Justice appointed will be crucial to shaping U.S. climate change policy.  The Court’s decision last week to delay implementation of the Clean Power Plan underscores just how politically vulnerable the United States’ emissions reductions pledges are; however, a shuffle in the court might help the administration’s market-based approach for reducing greenhouse gas emissions survive.  NY Times

U.S. Economic News

U.S. Economic News

U.S. Economic Indicators

The February Empire State Manufacturing Survey indicated that industrial activity in the New York region continued to decline, as the headline index edged up 3 points to -16.6, but remains firmly in negative territory.  The components for new orders and shipments fell, and the six-month outlook remained weak.  NY Fed Report

The NAHB Housing Market Index fell 3.0 points to 58 in February — slightly below forecasts, but well above the 50-point threshold indicating net positive builder sentiment.  The indexes for current sales conditions and buyer traffic declined 3.0 and 5.0 points to 65 and 39, respectively, while the index for sales expectations ticked up 1.0 point to 65.  NAHB Report

U.S. Economic News

According to new data released by the Federal Reserve Bank of New York, older Americans are carrying unprecedented debt loads as retirement-age baby boomers owe more on houses, cars, and even college loans compared to previous generations.  The average 65-year-old borrower has 47% more mortgage debt and 29% more auto debt than those in 2003 — a signal that debt may be reallocating from young people with historically weak repayment to retirement-aged consumers with historically strong repayment.  WSJ

Consumers now expect the lowest long-term inflation rate since the late 1970s (2.4%), which should help small wage gains translate into real income growth — and potentially increase spending.  The Federal Reserve’s inflation outlook depends on the degree to which these longer-run inflation expectations remain well-anchored, and many economists say that the central bank’s policymaking could be complicated by the fact that this “anchor” is now drifting lower.  WSJ

Energy and Environment News

Energy and Environment News

February 12, 2016

Top Stories

Energy Policy.  Canada, the United States, and Mexico unveiled a framework today to cooperate on clean energy development and initiatives to fight climate change.  As part of the deal, the three countries have agreed to form a centralized, web-based database for energy information sharing, in hopes that it will help lead to new progress in areas like emissions reduction and carbon capture.  WSJ

Energy Outlook. Michael Lynch argues that the global oil market remains severely glutted and that the inventory overhang will persist for months (possibly a year), even with a reduction in OPEC production.  As such, oil prices have not completely bottomed out and $20 a barrel remains a possibility between now and April — although prices are unlikely to stay there for long.  Forbes

Energy Education.  According to a new nationwide survey, although most science teachers in the U.S. spend some time on climate change in their courses, they have an insufficient grasp of the science, as well as political factors, that may be hindering effective teaching.  Teachers were found, on average, to spend just one to two hours on the subject over an academic year, often providing misinformation about climate change to students.  NY Times

U.S. Economic News

U.S. Economic News

U.S. Economic Indicators

Retail sales rose modestly by 0.2% in January after a similar increase in December (revised) — a sign that U.S. consumer spending may be regaining momentum, despite recent drops in stock prices.  Core sales — which exclude autos, gasoline, building materials, and food services — increased 0.6% on the month, after an unrevised 0.3% decline in December.  Census Bureau Report, Reuters

The University of Michigan Consumer Sentiment Index dropped 1.3 points to 90.7 in February and was down 4.7 points on the year.  The indexes for current conditions and consumer expectations fell 0.6 and 1.7 points this month, respectively.  Report

U.S. Economic News

A growing number of CEOs and economists see mounting risk of the U.S. tipping into a recession.  The Wall Street Journal’s monthly survey of economists shows that the expected odds of a recession in the next 12 months have doubled from a year ago to 21%, reflecting worries that the once-healthy U.S. economy will be dragged down by struggling foreign markets.  WSJ

U.S. worker productivity has been in a decade-long decline, leaving many economists wondering whether the government is simply measuring its data incorrectly — i.e., producing statistics that were fit for a 20th century economy of manufacturers, rather than a 21st century world of technological innovations.  According to a new working paper from the University of Chicago, this hypothesis does not add up; while intuitive and seemingly plausible, recalibrating for the latest advances still does not account for a, “substantial portion of the measured output lost to the productivity slowdown.”  WSJ

While negative interest rates were only a theoretical curiosity a decade ago, they are now the stated policy of some of the most powerful global central banks, including the European Central Bank and the Bank of Japan.  Neil Irwin addresses many of the unknowns surrounding these policies and their economic impact — outlining how negative rates work, whether they are effective policy tools, and the probability that the Federal Reserve will implement them in the United States.  NY Times

U.S. Economic News

U.S. Economic News

February 11, 2016

U.S. Economic Indicators

Jobless claims decreased 16,000 to 269,000 last week, suggesting that the labor market remains on solid footing despite slowing economic growth and a stock market rout.  The four-week moving average decreased 3,500 to 281,250.  DOL Report

U.S. Economic News

David Wessel of Brookings argues that policymakers and Federal Reserve officials could take a number of steps to enhance Congress’s capacity to hold the central bank accountable and to better explain to the public what the Fed is doing and why.  For example: (1) the Fed chair could testify four times a year on the monetary and economic outlook, now that Fed officials are updating their public projections quarterly; (2) only half of the 60 members of the House Financial Services Committee could be permitted to pose questions at each hearing, so that each member can get more than five minutes; and (3) the Fed, like other central banks, could commission outside reviews to assess how its staff makes forecasts and presents projections publicly.  Brookings

According to Nicole Bullock of the Financial Times, poor performance in the U.S. stock market is rooted in a global economic growth deficit and the perceived risk of a global recession.  Bearish investors are particularly concerned about the financial sector, given worries about the health European banking system, as well as falling expectations that the Fed will raise interest rates further this year. FT

Federal Reserve Chairwoman Janet Yellen suggested yesterday that the central bank could turn to negative interest rates in an economic downturn — despite legal, practical, and other uncertainties.  Testifying before Congress, Ms. Yellen said that it was unlikely that the Fed would need to cut rates anytime soon, but that officials are taking the idea seriously after watching efforts from other central banks overseas. WSJ

Third Way, a center-left think tank, argues that current proposals on both sides of the aisle regarding the federal minimum wage could be detrimental to the economy.  Rather than adjust one national income pay floor, the authors believe that the federal government should mandate regional minimum wages to boost low-wage workers’ incomes without harming employment in areas with a lower cost of living.  Third Way proposes a pay floor of $10.60 an hour for average-cost areas, for example, and would encourage cities and states to set rates above their prescribed federal tier. WSJ

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