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    Over the past five years, the S&P 500 has averaged a 2.5% decline in the month of August. But forget August -- investors shouldn't have much to worry about for the rest of the year if the Federal Reserve holds off on hiking interest rates, Jim Lebenthal of Lebenthal & Co., said on CNBC's "Fast Money Halftime" show.

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    Companies that encourage workers to participate are more productive. BERKELEY, Calif.-- Over the last 35 years, real wages in the United States failed to keep pace with productivity gains; for the typical nonfarm worker, the latter grew twice as fast as the former. Instead, an increasing share of the gains went to a tiny fraction of workers at the very top-- typically high-level managers and CEOs-- and to shareholders and other capital owners.

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    If you want to know what's going on in Puerto Rico, you have to look past the dire headlines, according to one San Juan-based banker. "Things in Puerto Rico are a lot more stable than the headlines," Jose Rafael Fernandez, CEO of OFGBancorp, said at a conference in New York.

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    The economy of the years between 2011 and 2014 was even more mediocre than previously recognized, according to the Bureau of Economic Analysis. The agency said Thursday it had overstated the rate of economic growth during the period.The bureau often has to revise its estimates as it gathers new data or makes improvements to its methods for calculating economic growth, and these revisions are minor on the whole. Instead of an average growth rate of 2.3 percent over those years, the economy grew at a rate of only 2 percent, the bureau said.Still, it's worth looking carefully at the reasons for the change. State and local governments spent less than the bureau realized throughout the interval, as did the federal government last year. When government spends less, its public employees, contractors and suppliers are all stretched. They have less to live on, and less money to spend in the rest of the economy.There were other reasons for the revisions as well. For example, consumers were spending less money than previously estimated -- probably part of the reason that state and local governments were spending less, too, since many of them rely on sales taxes for funds.That's exactly the point, many economists argue. When consumers spend less, so does government. When government spends less, so do consumers, which just makes things worse. Government should spend more, borrowing money if necessary, to break that cycle, the argument goes. Over the previous four years, though, government wasn't really spending.With Congress adjourning for its summer recess, Wonkbook will also enter a brief hiatus next week. The newsletter will resume Monday, Aug. 10. Welcome to Wonkbook. To subscribe by e-mail, click here. Send comments, criticism or ideas to Wonkbook at Washpost dot com. Follow Wonkblog on Twitter and Facebook.What's in Wonkbook: 1) Top long reads, including Ball on the sensation that is Bernie Sanders 2) Opinions, including Philip Klein on Obamacare 3) What would raising the minimum wage mean for the price of fast food? and more:Italy is the country most likely to leave the euro. Its economy has had the bust without the boom, expanding just 4.6 percent in the 16 years since it joined the currency union. Matt O'Brien in The Washington Post.1. Top long readsWhat went wrong for Rand Paul? "Interviews with more than a dozen sources close to the Kentucky senator, all of whom spoke on the condition of anonymity, painted a picture of an underfunded and understaffed campaign beaten down by low morale. They described an operation that pitted a cerebral chief strategist against an intense campaign manager who once got into a physical altercation with the candidate’s bodyguard. And they portrayed an undisciplined politician who wasn’t willing to do what it took to win — a man who obsessed over trivial matters like flight times, peppered aides with demands for more time off from campaigning and once chose to go on a spring-break jaunt rather than woo a powerful donor. ... At least one key aide recently departed, and others have had conversations with rival campaigns." Alex Isenstadt at Politico.BALL: There's something about Bernie. "In the biggest surprise of the race for the Democratic presidential nomination, this thoroughly implausible man, Bernie Sanders, is a sensation. He is drawing enormous crowds—11,000 in Phoenix, 8,000 in Dallas, 2,500 in Council Bluffs, Iowa—the largest turnout of any candidate from any party in the first-to-vote primary state. He has raised $15 million in mostly small donations, to Hillary Clinton’s $45 million—and unlike her, he did it without holding a single fundraiser. Shocking the political establishment, it is Sanders—not Martin O’Malley, the fresh-faced former two-term governor of Maryland; not Joe Biden, the sitting vice president—to whom discontented Democratic voters looking for an alternative to Clinton have turned. ... Clinton is still the favorite of Democratic voters nationally by nearly 30 points. She has the money, she has the endorsements from the party elite, and she has the massive teams of staff and advisers. But Bernie Sanders has one thing Hillary Clinton doesn’t: an ideology." The Atlantic.MEYERSON: The American low-wage economy is actually the Southern economy. "The American South before the Civil War was the low-wage—actually, the no-wage—anchor of the first global production chain. Today, as the auto and aerospace manufacturers of Europe and East Asia open low-wage assembly plants in Tennessee, Alabama, South Carolina, and Mississippi, the South has assumed a comparable role once more. ... In fact, now more than then, the South’s efforts to spread its values across America are advancing, as Northern Republicans adopt their Southern counterparts’ antipathy to unions and support for voter suppression, and as workers’ earnings in the North fall toward Southern levels. And now as then, a sectional backlash against Southern norms has emerged that, when combined with the Southern surge, is again creating two nations within one."The American Prospect.2. Top opinionsPHILIP KLEIN: Obamacare is a government takeover after all. "It's become clear that the critics of Obamacare were correct about the government's role under the program — a reality that was reinforced by new federal data. ... In 2007, when Obama launched his presidential campaign and outlined a plan to overhaul the nation's healthcare system, private spending accounted for 60 percent of total U.S. health expenditures, compared with 40 percent coming from government-sponsored spending. By 2024, after a decade of Obamacare's coverage expansion, the government share is projected to reach 47 percent, while the private share is expected to shrink to 53 percent. ... Beyond the direct spending, Obamacare's regulations exert more control over the healthcare system. For instance, even 'private' insurance must be designed based on dictates of the federal government."The Washington Examiner.Number of the day: 2.3 percent. That's the official estimate of the rate of economic growth between April and June of this year. Chico Harlan in The Washington Post.PETHOKOUKIS: What if the economy is doing much better than the growth figures suggest? "Think about it: Month after month, the economy is generating about a quarter million net new jobs. The unemployment rate is close to 5 percent. Corporate profit margins are at record highs, with stock values not far behind. And Silicon Valley is on fire. A new TechCrunch analysis finds that the number of unicorns — technology startups valued at over $1 billion — has more than doubled since 2013. ... We are measuring productivity wrong, and therefore we are measuring GDP wrong. A metric devised for America's 1930s 'steel-and-wheat' economy, in the words of economic historian Joel Mokyr, doesn't work so well for a rapidly growing digital economy. ... GDP growth might actually be close to 3 percent right now, which would be more in sync with what's happening in labor markets and the tech sector." The Week.MATTHEWS: Sanders's views on immigration are wrongheaded and ugly. "He's wrong about what the effects of an open-border policy would be on American workers, and he's wrong in treating Americans' lives as more valuable and worthy of concern than the lives of foreigners. ... High-quality studies that use 'natural experiments' — cases where there was a big, unexpected spike in immigration — suggest that the absolute effect of immigration on native workers is neutral or positive. ... Increased immigration reduces the price of services provided by immigrants, such as gardening and housekeeping. There's some evidence that immigration even gets more women into the workforce by making it cheaper to hire people to watch after children and elderly relatives... If [Sanders] saw an immigrant drowning in a pond, he has just as much of a duty to rescue her as he would if she were a native-born American, and the same duty applies when he's voting in the US Senate. Taking that idea seriously — the idea that all people are created equal, and deserve to be treated as though their lives matter regardless of their place of birth — entails supporting open borders."Vox.3. In case you missed itDonald Trump's health care plan looks a lot like Obamacare. "Donald Trump says Obamacare is 'very bad' and needs to go. 'Repeal and replace with something terrific,' he told CNN on Wednesday. What would the terrific replacement be? ... Trump proposed: competing private plans (which Obamacare exchanges provide for); protecting hospitals from catastrophic events (which Obamacare deals with by requiring people to get insurance so they don't pass on their emergency care costs), and government plans for low-income people who get sick and lack options (which Obamacare does by expanding Medicaid). ... Larry Levitt, a health care expert at the nonpartisan Kaiser Family Foundation, also saw parallels... 'It's maybe not so surprising that Donald Trump's talking points sound a bit like the ACA, since the law is rooted in a lot of conservative ideas,' Levitt said." Sahil Kapur for Bloomberg.Hillary Rodham Clinton could support a $12 minimum wage. "Clinton, the front-runner in the Democratic presidential primary, has backed the concept of a wage hike on the campaign trail without specifying a figure — a reticence that's been criticized by her closest rival, Sen. Bernie Sanders (I-Vt.), who's pushing for a $15 rate. But on Thursday, after meeting with leaders of the American Federation of Labor and Congress of Industrial Organizations (AFL-CIO), Clinton got as close as she's come to endorsing a specific level, hinting that a $12 minimum wage proposal sponsored by Sen. Patty Murray (D-Wash.) and Rep. Bobby Scott (D-Va.) might offer a viable path forward." Mike Lillis in The Hill.An increase in the minimum wage wouldn't make fast food that much more expensive. "Would you pay 17 extra cents for a Big Mac if it meant the person who prepared it could earn a living wage? What about an extra 30 cents each time you ate out at any fast food restaurant? These are the small prices we would have to pay on average to ensure that fast food workers around the country earned an hourly-wage of $15, according to a new study by researchers at Purdue University... Assuming the industry maintained its current profit margin of 6.3 percent — which, to be fair, is fairly slim — hiking the pay floor at fast food restaurants to $15 an hour would mean just a 4.3 percent increase in prices." Roberto Ferdman in The Washington Post.Clinton also says she didn't work on the Trans-Pacific Partnership. "'I did not work on TPP,' Clinton said. 'That was the responsibility of the United States Trade Representative.' ... While Clinton herself would not have been personally engaged in the nitty-gritty of hammering out the TPP, the State Department is represented at the table when trade deals are negotiated. Her downplaying of her role appears to contradict the view of at least one of her peers. Obama's national security adviser, Susan Rice, last month told Bloomberg’s Mark Halperin that Clinton 'participated in everything we did in the first term in a meaningful way.' " Josh Eidelson for Bloomberg.






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    One of the most closely watched measures of labor costs decelerated sharply in the second quarter, suggesting the Federal Reserve can be patient and allow the labor market more time to heal before hiking interest rates. The wages and benefits that companies, governments and nonprofit institutions pay their employees rose a record-low 0.2% in the second quarter, according to the employment cost index released by the Labor Department on Friday. That was well below the 0.7% gain...

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    Correction: An earlier version of this story incorrectly stated that Congress had reauthorized the charter of the Export-Import Bank. The measure was part of a Senate bill, but was dropped from the House version. The bank’s charter expired on July 1 and remains so. This story has been updated.Unless the debate about the Export-Import Bank is settled this year, Boeing (BA) is considering moving some of its work abroad, the company’s outgoing chief executive said this week.James McNerney, who retired as head of the airplane maker this month but still serves as chairman of its board, talked about the fate of the bank in remarks during an appearance with the Economic Club of Washington, D.C. this week. Boeing is the biggest dollar recipient of funding from the bank, which finances businesses that export American products.Congress did not reauthorize the bank’s charter this week as part of the larger highway bill that funds road and mass transit projects. A Senate version of the bill had a provision to renew the bank’s charter, but it was removed in the House. The legislation is a temporary extension of funds until Oct. 29, when lawmakers have to come back and start negotiations about a longer-term measure.The bank’s fate has bitterly divided Republican lawmakers on the Hill, pitting those who support its role in job creation at home against those who say it subsidizes large corporations such as Boeing (BA), General Electric (GE) and others. Ninety percent of the bank’s funding goes to American small businesses, according to official data.McNerney told those assembled in Washington that Boeing (BA) was “actively considering” moving pieces of the company overseas if the issue isn’t resolved on a permanent basis, echoing GE chief executive Jeffrey Immelt’s remarks to the same group last month.Both executives argue Export-Import Bank financing lets large corporations pass on benefits to American-owned small businesses. McNerney said around 70 percent of the work that goes into a Boeing (BA) plane is provided by small businesses.“We have kept our jobs and technology in this country in part because of that arrangement,” McNerney said.Political issues aside, McNerney shed light on why the world didn’t yet have supersonic planes that would cut down on long commercial flights. In response to a question from Economic Club president and Carlyle Group (CG) co-founder David Rubenstein, McNerney said the company had one in the works before world events caused it to change course.“Just before 9/11 happened, we were on our way to develop a sonic cruiser,” he said. “But in the course of 18 months, we had to completely change our view,” he said.After the attack, security became a bigger concern than speed or range, and skyrocketing fuel prices forced the company to focus on designing more fuel-efficient aircraft.McNerney said he still hasn’t given up hope that such a plane will ferry passengers in the future.






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    Now that U.S. Federal Reserve chief Janet Yellen has made it clear she's looking out for "some" improvement in the job market before voting for the first Fed interest rate rise in nearly a decade, so is everyone else.

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    Consumer sentiment fell in July, pulling back from a five-month high hit in June on disappointment over the pace of economic growth, according to a report from the University of Michigan released Friday. The final July reading on consumer sentiment dropped to 93.1 from a final June level of 96.1, reports said. A preliminary July reading estimated sentiment at 93.3.

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    Consumer sentiment fell to a final July reading of 93.1 from a final June level of 96.1, according to reports on the University of Michigan gauge released Friday. A preliminary July reading estimated sentiment at 93.3. Economists polled by MarketWatch had expected a final July figure of 94. Economists follow readings on confidence to look for clues about consumer spending, the backbone of the economy.

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    Several years ago, when the economy was still looking grisly, it was easy to explain the single most popular trope about millennials — that an unusually high number of them were still living in their parents' basements. Obviously, they didn't have jobs. Where were they supposed to go?"The standard explanation was, 'it’s a crummy job market,'" says Richard Fry, a senior researcher at the Pew Research Center. He reasoned, as just about everyone did, that as the job market improved, Millennials would move out. A new Pew analysis this week muddles that picture: The unemployment rate has fallen significantly since the recession for 18-to-34-year-olds. But the number of them heading their own households has not budged at all."That expectation," Fry recalls of the old job-market hypothesis, "at least so far has proven wrong."About 42 million 18-to-34-year-olds lived independently of their families on the eve of the recession. About 42 million of them live on their own today, even as the size of this age bracket has grown. That means a young adult is even more likely to live at home in 2015 than back in 2008.So now we have a modest, more perplexing new trend: Millennials are finding work, but many are still crashing at home anyway.That pattern raises some much tricker questions. For one: Why? And how long will this last? Is this a sign of financial savvy or gun-shy caution? And what are these people doing with their newfound income if they're not spending it on rent?Some of this may be explained by student debt. But the Pew analysis, based on data from the Census Bureau's Current Population Survey, suggests that young adults are less likely than at any point since the recession to live on their own, whether they have a college degree or just a high school diploma.Another likely factor: While young adults have been sitting at home, housing beyond their parents basements has been getting more expensive. So even as their incomes are rising, housing costs are rising, too. And other data show that many of the metros where the job market is the strongest are also places where rents are rising quickly.So San Francisco, Seattle and Washington may be great places to find a job. But they're not great places to find an $800 apartment.A 25-year-old who stays at home for a little while longer may, in fact, be making a smart choice. It's hard to know right now, Fry says, if this trend is good or bad for Millennials, or even good or bad for their parents."What I do know is the number of households being run by young adults is stuck at 25 million. It was 25 million in 2010, and it’s still 25 million in 2015," he says. "That does have serious larger economic ramifications. A lot of money gets spent when you set up your house, whether you’re a renter or an owner. Realtors care. Home Depot (HD) cares. The cable company cares."It's possible other sectors of the economy are benefiting — maybe restaurants and bars — from the money these particular Millennials aren't spending on build-it-yourself bed frames. But it's also possible they're saving it. Or maybe they're paying rent at home. Back in a 2011 Pew survey, about a third of 18 to 34-year-olds living at home said they pay rent there, and three-quarters said they contribute to household expenses. Maybe their parents could use that money.Either way, if there's a loser here, it is clearly Ikea.






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    Several years ago, when the economy was still looking grisly, it was easy to explain the single most popular trope about millennials — that an unusually high number of them were still living in their parents' basements. Obviously, they didn't have jobs. Where were they supposed to go?"The standard explanation was, 'it’s a crummy job market,'" says Richard Fry, a senior researcher at the Pew Research Center. He reasoned, as just about everyone did, that as the job market improved, Millennials would move out. A new Pew analysis this week muddles that picture: The unemployment rate has fallen significantly since the recession for 18-to-34-year-olds. But the number of them heading their own households has not budged at all."That expectation," Fry recalls of the old job-market hypothesis, "at least so far has proven wrong."About 42 million 18-to-34-year-olds lived independently of their families on the eve of the recession. About 42 million of them live on their own today, even as the size of this age bracket has grown. That means a young adult is even more likely to live at home in 2015 than back in 2008.So now we have a modest, more perplexing new trend: Millennials are finding work, but many are still crashing at home anyway.That pattern raises some much tricker questions. For one: Why? And how long will this last? Is this a sign of financial savvy or gun-shy caution? And what are these people doing with their newfound income if they're not spending it on rent?Some of this may be explained by student debt. But the Pew analysis, based on data from the Census Bureau's Current Population Survey, suggests that young adults are less likely than at any point since the recession to live on their own, whether they have a college degree or just a high school diploma.Another likely factor: While young adults have been sitting at home, housing beyond their parents basements has been getting more expensive. So even as their incomes are rising, housing costs are rising, too. And other data show that many of the metros where the job market is the strongest are also places where rents are rising quickly.So San Francisco, Seattle and Washington may be great places to find a job. But they're not great places to find an $800 apartment.A 25-year-old who stays at home for a little while longer may, in fact, be making a smart choice. It's hard to know right now, Fry says, if this trend is good or bad for Millennials, or even good or bad for their parents."What I do know is the number of households being run by young adults is stuck at 25 million. It was 25 million in 2010, and it’s still 25 million in 2015," he says. "That does have serious larger economic ramifications. A lot of money gets spent when you set up your house, whether you’re a renter or an owner. Realtors care. Home Depot (HD) cares. The cable company cares."It's possible other sectors of the economy are benefiting — maybe restaurants and bars — from the money these particular Millennials aren't spending on build-it-yourself bed frames. But it's also possible they're saving it. Or maybe they're paying rent at home. Back in a 2011 Pew survey, about a third of 18 to 34-year-olds living at home said they pay rent there, and three-quarters said they contribute to household expenses. Maybe their parents could use that money.Either way, if there's a loser here, it is clearly Ikea.






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    The dollar tumbled against its rivals Friday after an index measuring the price of U.S. labor declined sharply in the second quarter. The euro jumped to $1.1060, from $1.0980 before the report, while the dollar dropped to 123.94 yen, from 124.30 yen. The data suggested that wage inflation remained weak in the second quarter, and that the labor market may not be as strong as employment data suggested.

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    Chicago PMI rose in July to the highest level since January, suggesting a pickup in business during the summer. MNI Indicators said the index climbed to 54.7 points in July from 49.4 in June. This is the last of the regional manufacturing gauges before the release of the national Institute for Supply Management poll on Monday.

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    The dollar added to earlier losses on Friday as a U.S. government index on employment cost rose less than forecast, paring bets the Federal Reserve may interest rates later this year. The dollar index that gauges the greenback's value against a basket of currencies was last down 0.69 percent at 96.886. The greenback reversed its earlier gains versus yen.

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    An index that measures the price of U.S. labor decelerated sharply in the second quarter, easing fears of inflation and signaling the labor market may not be as healthy as the low unemployment rate suggests. The employment cost index barely increased, rising 0.2% in the second quarter after a 0.7% increase in the first three months of the year. The rise was an all-time low for the series going back to 1982 and was well below forecasts.

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    If economists are puzzled about the stagnant productivity in the U.S. economy, they would do well to consider how much of their time is wasted in anticipating, reading and analyzing Federal Reserve policy decisions. And that's not counting the time of professional portfolio managers, average investors and journalists who cover the Fed. After all the waiting, the Federal Open Market Committee's latest policy deliberation announced Wednesday hinged on the addition of a single...