So far, so pessimistic.But the United States has a history of defying gloomy predictions.Economists predicted “secular stagnation” in the 1940s, right before the 1950s boom, and today there are signs that Fed estimates of R* are too cautious.Jason Cummins, the research chief at a major hedge fund and a candidate to lead the New York Fed, points out that capital expenditure is recovering; expectations of capital expenditure are soaring; and the personal saving rate has fallen back to its pre-crisis low.In Washington, the Trump tax cut means that the government saving rate is falling dramatically as well: We are back on the path to a trillion-dollar deficit.Meanwhile in Silicon Valley, some venture capitalists are shifting to capital-hungry projects — medical robotics, next-gen nuclear fusion, satellites and so on.Globally, healthy economies have dulled investors’ urge to park money in the United States because of its safe-haven status. All of which suggests that savings in the United States will be less abundant, demand for them will be more abundant, and the natural interest rate will move higher.Unless markets suddenly reverse themselves, the recent bondcano probably reflects an awakening.When investors revise up their view of interest rates, bond prices tumble.For many professional money managers, these may well be scalding times.But for the economy as a whole, a higher R* would be a sign that the post-2008 malaise is finally healing. Sebastian Mallaby, author of “The Man Who Knew: The Life & Times of Alan Greenspan,” is the Paul A. Volcker senior fellow for international economics at the Council on Foreign Relations and a contributing columnist for The Washington Post. More from The Daily Gazette:EDITORIAL: Urgent: Today is the last day to complete the censusEDITORIAL: Find a way to get family members into nursing homesFoss: Should main downtown branch of the Schenectady County Public Library reopen?EDITORIAL: Thruway tax unfair to working motoristsEDITORIAL: Beware of voter intimidation No matter how many jobs the economy created, many feared it would never return to the pre-crisis condition in which buoyant hiring could coexist with decent returns for savers. This pessimism has been most evident among Federal Reserve leaders.Members of the Fed’s monetary committee regularly publish their views of the appropriate long-run interest rate, known as “R*” in the jargon.This is the interest rate that the economy needs to achieve stable inflation and maximum employment.A high R* is generally good news: It means that businesses want to borrow and expand aggressively, so you can get to full employment even when interest rates are relatively high.Workers can do well even as savers do well.Think back two decades, when unemployment was low, wages were rising and savers enjoyed a risk-free 5.5 percent return on their money. Categories: Editorial, OpinionWall Street is always quick with colorful disaster metaphors, and the latest market convulsion has already been dubbed the “bondcano.” The bad news is that, in the judgment of Fed leaders, R* has come down sharply. Since 2012, the median estimate of the long-run interest rate published by monetary committee members has fallen from a bit over 4 percent to under 3 percent — this means that, stripping out inflation, the estimate for the real interest rate has collapsed by about two-thirds.Businesses seem unexcited about borrowing and investing, the Fed chiefs are saying. Interest rates will have to stay low to generate full employment.For anyone with a retirement fund, this is a grim prospect.The lower the return on savings, the more you have to set aside to afford retirement.For the past several years, admittedly, this truth has been obscured: Stocks have had a glorious run as low interest rates have chased savings into the markets.But that portfolio shift is probably over, and may well have overshot. From here on out, workers seeking to build up their retirement funds may have to save more and work longer. But a little lava spillage can be a hopeful sign.LATEST: Wall Street ends day higher, halting global routFor the first time since the financial crisis of 2008, a strange cloud that has hung over the economy may finally be lifting.By most measures, the economy has performed well since 2008.The recovery has so far lasted for 103 months and will soon rank as the second-longest post-war expansion.GDP is up by 2.5 percent over the past year, not bad for a graying society; unemployment is at a rock-bottom 4.1 percent.But an uneasy feeling has haunted the celebration. How did the economy get stuck in this rut?The gloomy estimates of R* reflect a conviction that, even before the 2008 shock, powerful forces were pushing down on interest rates. The aging of the baby boomers boosted the saving rate.So did the rise in inequality — more of the national income was flowing to people who could afford to save it.The growing supply of capital was met with falling demand for capital, pushing down the natural interest rate further.Slowing productivity gains suggested that there were not that many great machines that businesses wanted to buy — hence sluggish business investment.Even the exciting breakthroughs in Silicon Valley were not capital-hungry.You can launch a ride-sharing company or a digital coin without buying much machinery.
The Latest: Novak Djokovic praised for donation in Italy April 15, 2020 Associated Press Share This StoryFacebookTwitteremailPrintLinkedinRedditThe Latest on the effects of the coronavirus outbreak on sports around the world:___Novak Djokovic has been praised by the director general of the local health authority in Bergamo for his donation to help control the coronavirus outbreak in Italy. Peter Assembergs says “we never expected to see on our bank account a donation from such a prestigious person.”Assembergs says “reading among the donators the name of the best tennis player in the world … made me emotional.”The money will be used to help buy ventilators and other medical equipment.Djokovic, his wife and their foundation recently donated 1 million euros (about $1.1 million) to help hospitals in Serbia.___ More AP sports: https://apnews.com/apf-sports and https://twitter.com/AP_Sports,Tampa Bay Lightning advance to face Dallas Stars in Stanley Cup finals, beating New York Islanders 2-1 in OT in Game 6 This year’s Tour de France will start on Aug. 29 and finish on Sept. 20 and will be followed by cycling’s two other major races.The International Cycling Union announced the new dates after consulting with race organizer Amaury Sport Organisation. The Tour could not start as scheduled on June 27 because of restrictions related to the coronavirus pandemic.The UCI also says the world championships will go ahead as planned from Sept. 20-27 and will be followed by the Giro d’Italia and the Spanish Vuelta. No official dates were given for those two major races.The UCI says prestigious one-day road classics such as Paris-Roubaix and Liège-Bastogne-Liège will be maintained at dates still to be defined.___
RelatedThe Money Fight: Mayweather Requests The Use Of Lighter Gloves Against McGregorAugust 10, 2017In “Sports”McGregor Camp Confident Of Victory In The “The Money Fight”August 2, 2017In “Sports”[PHOTO] See Pictures Of Conor McGregor 100ft Yacht Party After Mayweather DefeatSeptember 10, 2017In “Lifestyle” Irish fighter, Conor McGregor has declared he will knock out Floyd Mayweather Jr in just two rounds, following the approval to use 8oz gloves for the August 26 “Money Fight” in Las Vegas.Last week, undefeated Mayweather submitted necessary documents to the Nevada Athletic Commission (NAC), the body authorizing the bout, requesting to use the 8oz gloves, a request that has now been approved.Speaking about the glove approval, McGregor said: “I don’t believe with the new gloves he makes it out of the second round,”“Part of me kind of wants to show some skill and dismantle him but I do not see him absorbing the blows.”“I am ready to go to war for 12 rounds and I am also ready to put him away in seconds,” he added. “There is no way in hell I am not prepared to fight in the deepest of trenches.”According to the NAC rules, 154 lbs fighters require 10oz gloves, as lighter gloves give less cushion to the hand but theoretically enables devastating punches.