There Is Money For Municipal Worker Raises In NYC

Every time the subject of all those expired municipal union contracts comes up at the NY Post and other right wing media outlets, we hear how the city is broke, the city cannot afford raises for workers, employee benefit packages are turning NYC into Detroit blah blah blah.

But the reality is this:

Mayor-elect Bill de Blasio may be inheriting a city in better financial shape than he had expected.

New York will end the current fiscal year with a surplus of $2.4 billion — “$581 million more than projected by the Bloomberg administration,” according to a new fiscal forecast from the city Independent Budget Office released Thursday.

The budget office also projects a surplus of $1.9 billion for fiscal year 2015.

The extra money should ease the financial pressures faced by de Blasio, including a demand by the city’s unions — which have been working without contracts for as long as four years — for $7 billion in retroactive pay.

In addition, we learned the following about the national economy this week:

Boosting optimism for the new year ahead, the government announced Friday that the economy in the third quarter grew at its fastest rate in nearly two years and much better than previously estimated.

Higher consumer spending was largely responsible for the economy's annual growth rate of 4.1% from July through September, the Commerce Department said. Last month, it estimated a 3.6% rate.

In the second quarter the economy grew at a 2.5% annual pace.

The latest estimate of last quarter's gross domestic product — that's the value of all goods and services produced in the U.S. -- marked the first time since late 2011 that quarterly GDP growth exceeded 4%.

Last quarter's better-than-expected performance was spurred by consumers spending more over the summer on health care, recreation and other services.

The government says consumer spending grew at an annual rate of 2.0%, up from 1.6% in its previous estimate last month.

"The consumer is back in the game," exulted Chris Rupkey, chief financial economist of Bank of Tokyo-Mitsubishi UFJ, in a client note Friday. "Is this economic growth fast enough to put America back to work? The answer is, yes. The wheels of the economy are turning fast enough to bring down the unemployment rate further. "

Business investment also increased, growing at a 4.8% annual rate, 1.3 percentage points better than the government's earlier estimate.

The report sparked a rally on Wall Street, driving the Dow Jones industrial average up 0.3% and the Standard & Poor's 500 index 0.5% to new records.

Many economists predict fourth-quarter growth will not match last quarter's because the third quarter's large increase in business stockpiles won't be repeated in this period. But they're also optimistic about next year.

Friday's GDP report suggests that the U.S. economy entered the fourth quarter "with more momentum than had previously been thought to be the case," said Richard Moody, chief economist of Regions Financial Corp. "And we expect that momentum to build further in 2014."

A larger than expected budget surplus for NYC in 2014, a budget surplus for 2015 as well and the economy looking like it finally has started to turn around, with consumers and businesses both spending (which may mean even higher revenues than forecast)  - these are good signs for NYC, for the de Blasio administration and for municipal workers.

The Posties and other benefits scolds may say NYC is heading the way of Detroit because of municipal worker contracts and benefits, but it's just not true.

And if the economy continues at a 3%-4% growth pace for the next few quarters, as some analysts say it might, there will be money for workers' raises, no matter how sad that will make Bloomberg or Murdoch or the pension trolls at Gotham Schools.

How's That Economic Data Looking, Obama?

Barack Obama has a data fetish.

Outside of smoking cigarettes and playing basketball with Arne Duncan, there is nothing in this world Barack Obama likes better than looking over some data.

There has been a lot of economic data released this week that shows how well or not-so-well Obama has been doing as a steward of the nation's economy.

Let's take a look at some of that data:

More bad news hit the U.S. economy Friday as the Commerce Department released a revised forecast of economic growth that shows a decline to 1.6%.

The second-quarter numbers were initially forecasted to be 2.4%.

The economy grew at 3.7% rate in the first quarter.

This comes as Wall Street closed below 10,000 Thursday, a first since the beginning of July.

The dismal data has led to fears the country is headed for another recession.

"The economy is going to limp along for the next few months," Gus Faucher, an economist at Moody's Analytics, told The Associated Press. "There's even a one in three chance it could slip back into recession," he said.

The outlook for the third quarter isn't much better with economists expecting just a 1.7% growth.

Also, the private sector is not adding enough jobs to dent the unemployment rate, which remains stuck at 9.5%.

The sagging housing market has also been a drag on economic growth. Earlier this week, new home sales sunk to a record low in July and existing homes sales fell 27%.

Consumer spending in the second quarter grew 2%, from 1.9% in the first quarter.

The somber news comes as Fed Chairman Ben Bernanke will give a key speech to bankers Friday that will be aimed at restoring confidence in the economy.

"While we don't expect the chairman to brace the nation for a 'double dip,' he may warn that near-term growth could be insufficient to promote a sustained reduction in the country's 9.5% unemployment rate," Neal Soss of Credit Suisse Group, told the Wall Street Journal.

Keep in mind that Ben Bernanke was wrong about the housing market, wrong about the '08 recession and wrong about pretty much everything else, so just because Ben Bernanke doesn't think the economy is heading for recession doesn't mean it isn't heading for recession.

Mark Zandi says there is now a 33% chance of recession. A few weeks ago he said the chance of recession was 20%.

Nouriel Roubini says the chance of recession is 40%.

And Robert Schiller says the chance of recession is greater than 50%.

Yeah, the "data" is bad.

And yet somehow, President Data Fetish, so happy to use data to fire teachers, close schools and shame people publicly, doesn't want to take responsibility for his own miserable record on the economy and the "proof" we have in the form of the data.

Let me repeat:

9.5% unemployment.

19% underemployment.

Both heading higher.

1.6% GDP for Q2.

There will be one more revision for this number, so it could go even lower.

The number of home foreclosures in July actually fell for the first time since 2006, but the number of homeowners behind on payments has increased, meaning foreclosures are likely to increase again in the coming months.

And now the problem is people with prime loans, not people with subprime or Alt-A loans.

See, when people are unemployed or underemployed, they can't pay their mortgages or spend money to buy things.

This would be bad for the overall health of the economy.

But President Data Fetish, on his sixth vacation this year, seems wholly unconcerned about the situation.

He did have a conference call with his economic advisers about the weak economic data, but they decided not to change course on any of their policies.

And of course the financial "reforms" Obama touted as a major accomplishment of his have been a sham.

Banks are engaging in the exact same risky ventures and bets they did before the '08 financial crisis.

So don't look to Wall Street to stabilize this mess.

If Obama was a teacher in the LA school system, he'd see his name in the paper on Sunday under the heading "Bad President."

And while I am NOT a fan of value-added analysis of teachers or of publicly naming names in the paper in order to shame people to quit their jobs, in Obama's case, I think both are warranted.