Good morning, and welcome to the Tuesday edition of what I'm reading:
Quantifying the Fed's talk therapy
Who said markets aren't listening to the Fed? Two New York Fed economists, writing on the bank's Liberty Street blog, looked at financial market volatility surrounding the release of the Fed's post-meeting statement and the press conference that follows four times a year. Looking at five-minute changes in stock, bond and currency markets, the duo found a sizable "announcement effect." Bonds tend to react more to the release of the Summary of Economic Projections, which accompanies the statement, than the press conference. The authors conclude that central banks have "several important communication tools" at their disposal. I think the more obvious conclusion is that bond traders are smarter and react more quickly than stock traders.
Taking credit where it isn't due
The Mercatus Center's Charles Blahous, a public trustee for the Social Security and Medicare programs, takes issue with the Obama administration's claim that the Affordable Care Act is responsible for the recent slowdown in healthcare spending. The Center for Medicare and Medicaid has said four factors accounted for 105 percent of the improvement, which means "the impact of the ACA worked against" it, Blahous says. The ACA has provisions that will both raise and lower costs. "Reasonable people can argue over which effect will be larger in the long run," Blahous says. "Reasonable people can even debate what has transpired to date. But no one can rightly claim that CMS has revised their near-term cost projections downward because of the ACA. That is simply false."
A layman's guide to stuffing the Obamacare turkey
The Washington Post's Sarah Kliff wants to make sure we're all prepared to answer questions from ornery relatives at the Thanksgiving dinner table. Questions on a "death spiral," for example. "If by some freak accident you happen to be born into a family of actuaries, you can call these risk adjustment and risk corridor payments," Kliff says. Uh-huh. What about death panels? Cancelled policies? Single payer? After a few glasses of wine, the ACA should be easier to digest -- or everyone will have forgotten about what seemed like a pressing question.
Better economic news over the horizon?
The outlook for U.S. economic growth in the fourth quarter is little changed from three months ago, according to the Philly Fed's Survey of Professional Forecasters. The average forecast for real GDP growth in the current quarter is 1.9 percent, accelerating to 2.7 percent in the first half of 2014: the perennial over-the-horizon stronger growth forecast. The unemployment rate is expected to be 7 percent next year. Projected monthly job growth: 190,000, about the same as the past 12 months. The risk of a quarterly decline in real GDP is about 11 percent for the next year. It's always good to allow for the unexpected.
Astroturf campaign resorts to plagiarism
Fix the Debt: It's a noble cause, a noble mission, even if some of the tactics are questionable. Once you get past the hypocrisy of an A-list of corporate CEOs ostensibly committed to debt reduction even as their lobbyists are doing everything to extract maximum tax concessions from Congress, there's the small matter of ghost-writing op-eds for college students. It gets worse. The group's PR spokesperson placed the same op-ed with various newspapers. Here's Florida's Gainesville Sun on uncovering the scam: "If you liked University of Florida student Brandon Scott's column last Sunday about the national debt, you also should enjoy columns by Dartmouth College student Thomas Wang and University of Wisconsin student Jennifer Pavelec on the issue." Touche.
Corrects spelling of Charles Blahous's name in second item.
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