Counterparties: The state of the economy, restated

By Ben Walsh
September 27, 2012

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Are you better off than you were 24 hours ago? The US labor market is, according to the Bureau of Labor Statistics.

The BLS released revised employment data that shows the US added 386,000 more jobs from January to March than previously thought. That variation, 0.3% of total nonfarm jobs, is exactly average: “the annual benchmark revisions over the last 10 years have averaged plus or minus three-tenths of one percent of total nonfarm employment”. This revision won’t be the last: another will be released in February 2013, covering all of 2012. But as Bill McBride at Calculated Risk notes, the preliminary revision we got today is usually “pretty close to the final benchmark estimate”.

US GDP for the second quarter of 2012 was also restated today. The Commerce Department announced the economy grew at a rate of 1.3% in the second quarter, a downward revision from the previously announced 1.7%, and below the first quarter’s 2%. The single biggest revision was in drought-hit farm inventories, and economists at Morgan Stanley expect agricultural output to “continue to be a drag on growth in the second half” of the year. The bad news, says the WSJ’s Paul Vigna, with a stall-speed economy, ”is that it’s exposed, and liable to be knocked over by any sort of exogenous shock” like the euro crisis, or a diplomatic crisis with Iran or China.

Today’s jobs revision was immediately pulled into the narrative of whether or not President Obama can claim net positive job creation since he took office (now, barring further revision, he can). As Jared Bernstein writes, that doesn’t change the fact that “we’re still way behind where we need to be to tighten up the job market”. And the GDP numbers show that growth is “still a slog”. – Ben Walsh

On to today’s links:

Why “it’s good to be a mortgage originator right now” – Sober Look

The value of the revolving door: political appointees and the stock market – Vox EU

Tax Arcana
How Romney used the gift tax to avoid millions in taxes with an “I Dig It” trust – Bloomberg
A record 1 in 5 households, and 40% under 35 years old, owe student debt - Pew Social Trends

New Normal
Lending is booming in Cedar Rapids, for some reason – WSJ
“For three years in a row, more people have been convicted of immigration offenses than of any other type of federal crime” - Chris Kirkham

EU Mess
Spain announces 40 billion euros in budget cuts and plans to draw down pension reserves to “cover some treasury needs” – WSJ

Popular Myths
“Meritocracy, at least as normally understood, does not exist and probably cannot exist in a free market” – Stumbling and Mumbling

The United States is way behind the rest of the world in cracking down on high-frequency trading – NYT

North Korea has secretly sold more than 2 tons of gold to China to make up for a currency shortage – China Post

What the new NYT public editor reads – Atlantic Wire
“Social ad units” or no, the Web media economic model is still broken – David Pakman

1,000-plus Nigerian women stranded at the Saudi airport because they weren’t accompanied by men – Raw Story

Bring back Build America Bonds – Bloomberg

“Tech plays a role in structuring” the divide between rich and poor – Alexis Madrigal


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Wasn’t somebody suggesting that Romney wouldn’t be passing along more than $10M per kid when he dies? Seems he has a Family Trust worth $100M in addition to the $250M that is still “his”. The Family Trust can apparently be distributed free of estate tax, for $20M per child from that alone.

It isn’t about Romney. He isn’t doing anything illegal or uncommon. This is about how the 1% rape the rest of us and dodge most of what they nominally owe in taxes. But heck, rules are for the little people, not the wealthy. Right?

Posted by TFF | Report as abusive

TFF: You are probably right that he has arranged things so he can leave quite a bit to each of his five? kids. But families with more than one or two heirs usually find that the original capital dissipates in a couple of generations due to feckless behavior, luxury living, lack of motivation and so on and so forth. The Rockefeller wealth, the DuPont wealth, the Kennedy wealth and many others don’t stand up very well to the wear and tear of time. The heirs are very comfortable, but nothing like the first generation. Trust fund kids are not often wealth creators.

Posted by Chris08 | Report as abusive

Chris08, all the more reason why we need to work to close the gaps in the inheritance laws. Raising the estate tax is futile when somebody can push $100M through loopholes.

Posted by TFF | Report as abusive

Chris08, Romeny would like ensure that the estate tax remains as easy to manipulate as it is now… and Obama is closing in on it. It almost seems Romney is running for the rich to save their loopholes and keep their taqxes low, rather than to represent the people.

TFF is not making a flippant comment and is right, not just probably right. It is likely his grandkids might benefit more though, as his kids are doing just fine on their own. (on their own meaning, with the help of Mormon and business contacts)

Tax Arcana
How Romney used the gift tax to avoid millions in taxes with an “I Dig It” trust – Bloomberg

Posted by youniquelikeme | Report as abusive

The state of the U. S. economy can be described with one word, “fear”. The average citizen’s real income has dropped and his/her insecurity and fear has risen. The result has been anemic demand in general and almost no demand for long term consumption items like houses. A similar situation exists for businesses as they hoard cash and invest only cautiously. Consumers will go out to dinner and pay for their expensive cell phone bills but don’t have the confidence to make lifetime investments. Until our leaders put us on a sustainable path, the fear will be holding back the recovery.

Posted by Anonymous | Report as abusive

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