wall street journal

GDP Expanded at 4.2% Rate in Second Quarter
Corporate Profits Also Surged, Rising 6% from the First Quarter to an Annual Rate of $1.840 Trillion
Ben Leubsdorf. August 28, 2014. Retrieved from http://online.wsj.com/articles/gdp-expanded-at-4-2-rate-in-second-quarter-1409229416Gross Domestic Product
The purpose of Mr. Leubsdorf’s article was to explain how the current GDP exceeded prior expectations. Ben went into great detail about the encouraging direction of not only the GDP but also of unemployment. The overall feeling of the article was that though “The worst recession since the Great Depression ended in June 2009, but the recovery has been slow and halting. The second-quarter rebound assuaged worries about a prolonged slowdown following the first quarter's stumble”. Though these current numbers are encouraging Mr. Leubsdorf warns that this current acceleration is not likely to be sustained.
Summary
The estimate of the current GDP back in December was 2.8% to 3.2%, and was then downgraded in June to 2.1% to 2.3%. The actual growth of 4.2% was a welcome surprise to economists as was the 200,000 jobs added in 6 consecutive months. Ben attributes this to consumer purchasing growth in items such as new cars as well as businesses spending on new buildings and equipment.
The unintended consequence to this information could be a positive one in which it creates consumer confidence and furthers this steady incline of GDP numbers. Though the growth is at this point slow, it is heading the right direction. Climbing out of the 2007 recession has been at times compared to climbing out of a sand pit, the current numbers can be seen as encouraging.
U.S. Jobs Report: 288,000 Positions Added
Unemployment Falls to 6.1% as Prior Months' Gains Revised Upward
Jonathan House. July 4, 2014. Retrieved from http://online.wsj.com/articles/u-s-jobs-report-unemployment-falls-to-6-1-as-288-000-positions-added-1404390904Unemployment The purpose of Jonathan House’s article was to discuss the current unemployment rate and what that means for the future of jobs in our country. Jonathan spoke on the fact that the steady decline in unemployment is an encouraging sign pointing to an ever repairing economy. He goes on to mention that President Obama has said “the economy has built momentum”, the president noted that the U.S. has ‘done better than the vast majority of other countries" since the 2008 financial crisis, but called for acts of "economic patriotism" he said would help boost growth, such as increasing the federal minimum wage’”.
Summary
Currently unemployment is at 6.3% and is expected to be at or very near % by the end of 2014. There were 288,000 jobs added in June 2014. There have been steady increases in retail and construction jobs. Though there hasn’t been a notable increase in higher wage earning position we should still be encouraged by this news.
The unintended consequence of the reduced rate of unemployment could be discouragement of those who have been actively seeking employment and yet remain unemployed. Many people in this economy have taken part-time work because they were unable to secure a full-time position.
Treasury to Pay down Debt for First Time in Six Years
Jeffrey Sparshott. April 29, 2013. Retrieved from http://online.wsj.com/news/articles/SB10001424127887323798104578453290294756574 National Debt
The purpose of this article was to discuss the national debt and the current plans of the treasury department to pay it down. Mr. Sparshott explains that the treasury department will begin paying on the national debt for the first time in six years and that the ability to begin repayment is attributed to “higher tax rates for wealthier households and higher payroll taxes, as well as the impact of wage increases and delays in paying individual income-tax refunds”. Despite this news, Jeffrey feels that this will be a short lived situation because it is predicted that the treasury department is expected to “borrow a net $223 billion in the July-to-September period. And the budget deficit will likely hit $845 billion in the fiscal year ending Sept. 30”. Though even with this the deficit is currently down to 845 billion which is down from over a trillion.
Summary
Higher taxes for the wealthiest American’s have enabled the treasury department to begin paying off past debts and despite predicted additional borrowing in the coming quarters we can expect to see a steady reduction in the national deficit. A possible unintended consequence to this could be that wealthy American’s might begin sending their money and business overseas to avoid the tax penalties.
An Annuity Plan Called Social Security
Deferring Benefits Can Yield a Significant Advantage
Carolyn Greer. September 29, 2013. Retrieved from http://online.wsj.com/news/articles/SB10001424052702303342104579097183009704484Social Security
The purpose of this article is to discuss smart ways to use social security benefits and the reasons for using them. Ms. Greer advises that current retirees of 67 years of age should tap into their 401K and IRA savings and defer their social security benefits until 70. She advises this because “for every year you defer past that, up to age 70, your Social Security benefits will rise by 6% to 8%”.
Summary

Though younger individuals may be concerned that their social security is an unstable future and may very well be a bankrupt institution, current retirees or those approaching retirement can feel very secure. The social security age will inevitably rise to 70 in the near future and the future of social security is yet to be seen but by taking a leap and using a portion of retirement funds upfront and waiting on the social security benefits retirees can reap great dividends. CFO Chris Jones says “For average Americans approaching retirement with modest retirement-plan balances, he says, "by far the most advantageous thing you can do with that money in today's world is to defer your Social Security start date, even if you can only afford to do it for a couple of years”. An unintended consequence of this could be that people could begin routinely following this advice and find themselves in a financial pickle if social security does in fact go bankrupt.
U.S. to Take Over AIG in $85 Billion Bailout; Central Banks Inject Cash as Credit Dries Up
Emergency Loan Effectively Gives Government Control of Insurer; Historic Move Would Cap 10 Days That Reshaped U.S. Finance
Matthew Karnitschnig,
Deborah Solomon,
Liam Pleven and
Jon E. Hilsenrath. September 16, 2014. Retrieved from http://online.wsj.com/articles/SB122156561931242905Federal Reserve
The purpose of this article is to discuss the US effort to take over AIG. The writers go into the 85 billion dollar bailout and how this gives the US government control over the issuer. The authors state that the “$85 billion deal signaled the intensity of its concerns about the danger a collapse could pose to the financial system.” They further went on to say that “The step marks a dramatic turnabout for the federal government, which had been strongly resisting overtures from AIG for an emergency loan or some intervention that would prevent the insurer from falling into bankruptcy.”
Summary
The US government bailed out AIG because it was seen as too big to fail. The fall-out of this company being allowed to fail could have catastrophic consequences on the US economy. The bail out of AIG occurred shortly after Lehman Brothers and holdings were denied assistance. The unintended consequence of this action was a reduction in the value of the US dollar. The articles authors stated that the “$62 billion Primary Fund from the Reserve, a New York money-market firm, said it "broke the buck" -- that is, its net asset value fell below the $1-a-share level that funds like this must maintain. Breaking the buck is an extremely rare occurrence. The fund was pinched by investments in bonds issued by now collapsing Lehman Brothers.” This is a mounting concern, however the negative result was less damaging than the alternative according to the treasury department.