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Mark Gongloff   |   November 13, 2014   11:51 AM ET

Quit your job, help the economy.

More than 2.7 million Americans, or 2 percent of all workers, quit their jobs in September, the Bureau of Labor Statistics reported on Thursday. That's the highest "quit rate" since April 2008, when the Great Recession was still a toddler:

This is usually a good sign for the economy. People usually don't tend to tell their bosses to kiss off unless they either a) are trapped in an hypnotic state, Office-Space-style, b) have another job lined up, or c) at least feel pretty confident they can get another job.

Quitting one job for another can also be a good way to get a raise, so a higher quit rate could be a sign that wages are finally going to stop being so stagnant and terrible.

On the other hand, some of the highest quit rates were in low-wage industries like hotels, restaurants and retail. Hopefully those people are getting better-paying jobs, but the raises might not be all that large.

This is basically America now

And the BLS also reported that there are still two unemployed people for every one job opening in America -- much better odds than at the worst of the recession, when nearly 7 people were fighting for 1 job, but still not exactly a sign of the kind of super-tight labor market that could push wages higher.

This chart from the Economic Policy Institute, a think tank focused on labor issues, shows how the job-seekers-to-jobs ratio has risen and fallen in recent years:

not enough jobs

Back in the good old days of 2000, there was roughly one job for every one unemployed person. That's just about job-market nirvana. We're not quite there yet.

Mark Gongloff   |   November 4, 2014    7:42 AM ET

The U.S. economy is growing, unemployment is tumbling and stocks are at record highs. So why aren't President Barack Obama and the Democrats getting enough credit for that to avoid a big loss in Tuesday's midterm elections?

Maybe because, for way too many Americans, the economy might as well still be in recession.

Most of the benefits of the economic recovery that began in 2009 have accrued only to the wealthiest Americans. Middle-class Americans, meanwhile, have been left behind. Their wages and wealth have stagnated -- a key reason why polls show that most Americans think the economy is still in a recession, even though it technically started recovering five years ago.

Here's a chart, courtesy of Credit Suisse, that sums it up. It shows the ratio of wealth to household income, which has spiked during this recovery to levels not seen since just before the Great Depression:


This means the rich are getting richer at a much, much faster rate than the rest of us, who are not getting rich at all. The rich have benefited from a stock market that has more than doubled in value since 2009, while the average worker's wages have barely kept up with inflation:

flat wages

Unfortunately for Obama and the Democrats, wealthier Americans tend to vote Republican, and merely getting richer in the past few years has not been enough to make them switch teams. Wealthy Americans also donate money to Republican candidates, including the ones who are widely expected to take over the Senate and extend their control over the House of Representatives in Tuesday's elections.

Not all elections hinge on the economy, but it's not hard to draw a pretty straight line from the current economy to the gloomy outlook for Democrats in this election. Most Americans say the economy is their top issue, according to several recent polls, and only 38 percent of Americans think the economy is in OK shape, according to a recent CNN/ORC International poll. Just 35 percent of Americans approve of Obama's handling of the economy, according to Gallup.

Of course, midterm elections almost always go badly for the party that holds the White House. Going into the midterm election of 1986, President Ronald Reagan had a 60 percent approval rating and a decent economy on his side, and his party still lost control of the Senate and gave up a handful of seats in the House.

Aside from a one-off swoon in GDP in the first quarter, the economy has arguably been kinder to Obama in 2014 than it was to Reagan in 1986. GDP has bounced back sharply in the past two quarters. The unemployment rate has tumbled nearly a full percentage point this year, recently falling below 6 percent (compared with 7 percent for Reagan). The Dow and S&P 500 are constantly breaking records, and the Nasdaq is at levels not seen since the peak of the dot-com bubble in 2000.

But unemployment has fallen at least partly because workers are leaving the labor force, not because of a massive boom in hiring. Workers are giving up looking for work, either because of early retirement or because they've just lost hope, meaning they no longer count as "unemployed" in the eyes of the government.

Stock prices are at record highs, but most Americans don't own stocks. Middle-class workers who have managed to save a bit in 401(k) accounts don't have enough wealth to retire on for more than a year. Most stock gains have in fact gone to top earners, including CEOs, whose pay has skyrocketed to the point where they're making nearly 300 times as much as workers, as you can see in this chart from the Economic Policy Institute:

In thinking about 2014, a more telling comparison than 1986 is 1998, when President Bill Clinton enjoyed a great midterm election. The Republicans picked up no seats that year, the first such failure for a party out of the White House since 1934.

Clinton was lucky enough to be in office in the middle of the dot-com boom. That, of course, benefited the rich, just as the recent stock market rally has done. But in 1998, the middle class was getting a taste, too. Unemployment stayed below 5 percent all year -- close to what most economists would consider full employment. GDP was in the middle of a four-year growth boom of more than 4 percent annually, the strongest stretch since the 1960s.

Most importantly, hourly wage growth was more than twice the level of inflation that year, the biggest such gap since the early 1970s. In 1998, the middle class really felt like it was getting richer. That probably made it a lot easier to reward the party in power.

Mark Gongloff   |   October 30, 2014   10:32 AM ET

Maybe someday we'll complain about Corporate America's shortage of LGBT executives, just as we complain now about the number of women and minorities at the top. And that will be an improvement -- because once Corporate America barely acknowledged that LGBT executives existed.

That changed abruptly on Thursday, when Apple CEO Tim Cook announced, in an essay for Bloomberg Businessweek, that he was gay. That made him the first openly gay CEO of a Fortune 500 company.

It's a watershed moment not only in the history of Corporate America, but in the history of the country.

A couple of other members of the C-suite have come out in the past, including former Urban Outfitters CEO Glen Senk and John Browne, the former BP CEO, who came out after he resigned. But Tim Cook is different.

Because Tim Cook doesn't just run any company. He runs Apple, for God's sake, the biggest company by market value in America, bigger than Exxon Mobil and Microsoft. Apple, the iconic American success story that started in Steve Jobs' garage and became the world's gold standard for fancy consumer gadgets.

The thought that the captain of such an enterprise would be openly gay would have been unthinkable, say, 18 years ago, when President Clinton signed the gay-baiting Defense Of Marriage Act into law.

Today it is not only thinkable, but blissfully mundane: On Wall Street, the news caused barely a ripple in Apple's stock price, which was down about 0.6 percent in recent trading.

Wall Street has come a long, long way from its days of rampant homophobia, but you can bet that if stock traders thought Tim Cook being gay was somehow bad for Apple's business, then the stock would be down a bunch. It's not. This kind of reaction says something about how far the country has come in its attitudes about people's sexual identities. It could encourage other LGBT executives to come out, too.

Of course, Cook's coming-out wasn't exactly a huge shocker: As he wrote, many people inside Apple knew he was gay. Many people outside of Apple were aware of it, too: The business and tech media have long chattered about when Cook was going to finally just make it official, already.

But the fact that Cook could rise to the very top of the biggest company in America, without hiding who he really was, is also an encouraging sign.

Maybe it will give hope to the many LGBT Americans who still face discrimination at work. More than half of all LGBT workers hide their orientation at work, according to a recent Human Rights Campaign survey, as reported just a couple of days ago by CNN. It's still legal in 29 states for employers to fire workers for being gay, CNN noted.

Cook mentioned that, too, suggesting it was part of the reason he broke his silence:

"I’ve had the good fortune to work at a company that loves creativity and innovation and knows it can only flourish when you embrace people’s differences," Cook wrote. "Not everyone is so lucky."

The tide of public opinion and laws in this country has already turned in favor of gay marriage. Maybe Cook's coming-out can help turn the tide more decisively against workplace discrimination, too. As Cook noted, it's bad for business.

Cook has been CEO of Apple for more than three years. Apple's stock price has nearly doubled in that time, and America's lust for Apple products doesn't seem to have cooled a bit. Still, Cook hasn't quite been able to escape the huge shadow of his iconic predecessor. People have wondered if the company can ever be as innovative and efficient under Cook as it was under Jobs. Would the Apple Maps debacle have happened on Steve Jobs' watch? What about bendgate?

Some questions about Cook's business legacy at Apple won't be answered for a long time. But with just one step, Cook has left Jobs' shadow and become an icon of his own.

Mark Gongloff   |   October 29, 2014    1:36 PM ET

Janet Yellen and the Federal Reserve just declared the U.S. economy well enough to leave intensive care, though it is not yet the picture of health.

The Fed announced on Wednesday that it was ending a two-year stimulus program designed to keep interest rates low and boost the economy. The program -- known as "quantitative easing," or "QE3," for the fact that it was the third round of such stimulus since the financial crisis -- involved buying billions of dollars of bonds each month. The central bank has been cutting back on these purchases with every Fed meeting since December 2013. On Wednesday it said it was making its last such purchase this month.

In pulling away support for the economy, the Fed is taking a chance that recent signs of economic strength are more reliable than recent signs of weakness. On the one hand, unemployment has tumbled to 5.9 percent, the lowest in six years, and employers have added more than 200,000 jobs per month so far this year. GDP growth jumped at a 4.6 percent annualized rate in the second quarter. Gasoline prices are at their lowest in four years.

On the other hand, wages have stayed stubbornly flat, and much of the drop in unemployment has been due to workers checking out of the labor market, meaning they're no longer counted as unemployed. Financial markets have been turbulent lately, and economies around the world seem to be teetering on the edge of recession.

One of the Fed's policy makers, Minnesota Fed President Narayana Kocherlakota, dissented from the Fed's decision, arguing the economy was still too weak for the Fed to end QE3. He also argued that the Fed should have shown more alarm about the prospect of low inflation.

Still, in announcing its decision, the Fed sounded fairly optimistic about the economy, noting the job market's recent good news and saying that consumers and businesses have been slowly increasing their spending.

The Fed also chose to look on the bright side of one ominous development in the economy: Inflation is still lower than the Fed would like it. Low inflation might sound great to people dealing with rising food prices, but if prices generally stay too low for too long, that risks "deflation," or falling prices. When deflation happens, people stop spending while they wait for prices to fall further, and the economy suffers. See Japan in the 1990s or the U.S. during the Great Depression.

The Fed kept pumping stimulus into the economy in one way: It kept its target for a key short-term interest rate near zero and promised to keep it there for "a considerable time." This interest rate, the federal funds rate, which influences other borrowing costs throughout the economy, is the Fed's traditional policy tool for slowing down and speeding up the economy.

When zero-percent interest rates weren't enough to help an economy gutted by the financial crisis and Great Recession, the Fed turned to the extraordinary measure of buying up bonds to drive interest rates even lower. That bond-buying has left the Fed with a balance sheet worth $4.48 trillion, up from less than $1 trillion before the crisis.

fed balance sheet

The Fed's balance sheet has quadrupled in size.

What remains to be seen is the effect of the program's end on the economy and financial markets. The Fed has been warning of the end of QE3 for several months, giving markets time to adjust, and stock prices have recently soared to record highs despite the looming end of QE3.

As for the economy, interest rates have stayed relatively low even as the Fed has cut back on bond purchases. The rate on a 30-year mortgage was recently just a little more than 4 percent, up from a record low of about 3.35 percent, set just as the Fed was beginning QE3, according to monthly data from Freddie Mac.

Interest rates are still relatively low.

Fed officials have long maintained -- or hoped, anyway -- that the central bank's enormous holdings of bonds will keep helping the economy even when it stops buying more.

Interest rates rise as bond prices fall, and as long as the Fed is sitting on a mountain of relatively low-risk bonds, then bond prices should stay high, and investors will still be forced to go buy riskier stuff like corporate bonds and stocks.

The stock market, in fact, has been one of the most obvious winners of the Fed's bond-buying program. Stock prices fell on Wednesday after the Fed's announcement, but not by much. The Dow Jones Industrial Average was down about 50 points, or about 0.3 percent, about 20 minutes after the Fed's announcement. The S&P 500 was down about half a percentage point.

Some Fed officials have fretted publicly about the unwanted side effects of their easy-money programs, including pumping up market bubbles and filling the coffers of the 1 percent while not doing much for the other 99 percent. Some Fed officials and economists have also been skeptical that QE was worth such risks. Many on the Fed now seem more inclined to try to use other tools to help the economy.

Mark Gongloff   |   October 20, 2014   10:36 AM ET

Here's more proof the middle class is dying.

The middle-class share of American wealth has been shrinking for the better part of three decades and recently fell to its lowest level since 1940, according to a new study by economists Emmanuel Saez of the University of California, Berkeley, and Gabriel Zucman of the London School of Economics.

In other words, remember the surge of the great American middle class after World War II? That's all gone, at least by one measure.

In this case, "middle class" is defined rather expansively as the bottom 90 percent of all Americans. "Wealth" is the total of home equity, stock and bond holdings, pension plans and other assets, minus debt. As such assets are mostly owned by mid- to higher-income households -- and considering most Americans define themselves as "middle-class" -- it seems reasonable to use the bottom 90 percent as a proxy for the "middle class."

Saez and Zucman discussed their paper in a blog post for the Washington Center For Equitable Growth on Monday that included this stark chart:

middle class

Debt has been the big force driving net wealth lower for the middle class, according to Saez and Zucman. Brief bubbles in stock and home prices in the 1990s and 2000s only temporarily offset the steady, depressing rise in mortgage, student-loan, credit-card and other debts for the bottom 90 percent.

"Many middle class families own homes and have pensions, but too many of these families also have much higher mortgages to repay and much higher consumer credit and student loans to service than before," Saez and Zucman wrote.

Another important factor has been that incomes have stagnated for most Americans over the past few decades, once adjusted for inflation. Along with rising debt levels, stagnant wages have made it impossible for most families to save very much money.

And who has been the beneficiary of this middle-class misery? The top 0.1 percent of Americans, whose incomes have just kept rising, and whose share of wealth has soared to levels not seen since Jay Gatsby was still staring at the blinking green light at the end of Daisy Buchanan's dock:

roaring 20s

In fact, the middle class is not alone in suffering from shrinking wealth. The rest of the top 10 percent of Americans below the 0.1 percent -- the "merely rich," Saez and Zucman call them -- have also suffered from falling household wealth over the past four decades.

This rising inequality of wealth can only lead to more inequality of income and wealth in the future, Saez and Zucman warned, echoing French economist Thomas Piketty. The very rich will just keep getting richer by living on the returns from their wealth, while the rest of us will keep falling behind.

Mark Gongloff   |   October 17, 2014    9:14 AM ET

The Federal Reserve is sounding increasingly alarmed about income inequality.

"The extent of and continuing increase in inequality in the United States greatly concern me," Fed Chair Janet Yellen said in a speech at an inequality conference in Boston on Friday. Her comments come just days after Swiss bank Credit Suisse warned that inequality in the U.S. is at levels that have been associated with recessions in the past, with one key measure at its highest level since the Great Depression.

Though Yellen didn't go so far as to echo Credit Suisse's recession alarm, she did warn that rising inequality risked doing serious harm to the overall strength of the U.S. economy. Yellen, too, noted that "income and wealth inequality are near their highest levels in the past hundred years, much higher than the average during that time span and probably higher than for much of American history before then."

Yellen suggested such inequality is downright un-American:

"I think it is appropriate to ask whether this trend is compatible with values rooted in our nation's history, among them the high value Americans have traditionally placed on equality of opportunity," she said.

Patriotism aside, inequality is also a worry because of its ill effects on the economy. As Yellen noted, living standards have been "stagnant" for most Americans for the past few decades, an unhealthy development for an economy that relies mainly on consumer spending to drive growth.


One key measure of inequality at its highest level since the Great Depression (Source: Credit Suisse)

And inequality tends to foster even more inequality, Yellen suggested, as the well-off tend to have better access to economic opportunity than the poor. And if the have-nots have fewer opportunities to climb the economic ladder, that hurts the general health and vibrancy of the economy.

Yellen's been warning about inequality for a while, telling Congress in February and in May that it was a "disturbing" trend. Congress, shockingly, has done nothing to address it.

On Friday she suggested a handful of possible solutions, including early childhood education, making college cheaper and helping entrepreneurs. Unfortunately, the Fed, the nation's central bank, has exactly zero control over any of those things, noted the Washington Post's Ylan Mui.

The Fed might even have made inequality worse, with stimulus measures that have boosted stock and bond prices, mainly a boon to the already wealthy. Yellen noted that the wealthiest 5 percent of Americans own two-thirds of all stocks, bonds, mutual funds and other such financial assets.

Even lower mortgage rates, one of the most direct Fed stimulus effects, have mainly helped people who already own homes or have credit good enough to buy homes. Many of those people are closer to the middle and bottom of the economic ladder, at least. But the small bounce in home prices since the Great Recession has been dwarfed by soaring stock and bond prices, and has done nothing for those homeowners' stagnant wages.

Mark Gongloff   |   October 15, 2014    9:57 AM ET

Markets just had an unusually scary day in a famously scary month.

The Dow Jones Industrial Average fell as much as 460 points, or nearly 3 percent, in early afternoon trading on Wednesday, its worst such swoon since September 2011. That was just part of a broad global piñata-whacking that hit everything from crude oil to Greek bank stocks. Investors have been getting themselves worked up about the sorry state of the global economy, and a spate of bad U.S. economic news just before the opening bell on Wednesday didn't help.


The Dow had its worst day in years.

October is a month known for market panics, including the crashes of 1929 and 1987. Wednesday's action was nowhere near as bad as that. In fact, stocks staged a dramatic rally at the end of the day, leaving the Dow down just 173 points, though all of this year's gains have been erased. The broad Russell 2000-stock index actually ended the day higher, a sign that the selling was limited mainly to big, high-flying stocks.

A mild market freakout could even be good news to anybody worried about a market bubble after a five-year-long rally. The Dow is still up 147 percent since March 2009. Your 401(k) is safe.

But the wild swings we've seen lately are not a great sign for the health of the market or the broader economy. The Dow opened Wednesday by immediately falling 350 points, then recovered 250 points, then lost another 360 points and then bounced back 290 points. So much for efficient markets!

And this was the latest in a string of triple-digit moves in the Dow in recent weeks, both up and down. That's not great for the blood pressure, and it was the kind of action we got in the wild days of late 2011, when the U.S. got its credit rating downgraded and everybody was worried about a possible breakup of the euro zone.

The Dow and the S&P 500 indexes have tumbled nearly 7 percent from record highs they set less than a month ago, and the tech-heavy Nasdaq stock index is down 8 percent after hitting a 14-year high at about the same time.

Investors have rushed for safe havens, including U.S. Treasury debt. The interest rate, or yield, on the 10-year Treasury note tumbled as low as 1.87 percent on Wednesday, its lowest since May 2013. Low interest rates are great news for people who want to borrow money or refinance their mortgage. But they typically show up when the economy is in the dumps and there's not a lot of demand for loans.

Same deal with oil prices: They are collapsing, with New York-traded crude oil falling to nearly $80 a barrel at one point on Wednesday. That is great news for people who drive cars, but prices are falling because demand for oil is falling because economic activity is slowing down around the world.

For the most part, economic worries are still focused overseas, particularly Europe. Germany, the continent's engine, is finally succumbing to its own austerity fetish and slipping into a recession. But Wednesday morning brought worse-than-expected reports on U.S. retail sales and producer prices and New York-area manufacturing. That raised questions about the strength of the U.S. economy, which has been relatively strong.

Throw in a sudden market freakout in Greece driven by political turmoil, along with a dash of ebola panic, and you've got the recipe for a scary witch's brew for markets.

Mark Gongloff   |   October 14, 2014   10:20 AM ET

You know inequality is getting bad when it's making a Swiss bank uncomfortable.

The ratio of wealth to household income in the U.S., a measure of inequality, is the highest it has been since just before the Great Depression, Credit Suisse noted in a 64-page report on global wealth released on Monday. The bank also warned that this was not good news for the health of the economy:

"This is a worrying signal given that abnormally high wealth income ratios have always signaled recession in the past," the bank wrote.

Meanwhile, the richest 1 percent in the world own 48 percent of all the world's wealth, according to Credit Suisse -- a worrying signal for the global economy.

Here's a chart from the Credit Suisse report, of wealth-to-income ratios going back to 1900:


Because wealth is a big pile of money that has been built up over the years, and income is a much smaller annual flow of new money, this ratio is always pretty high: Going back to 1900, wealth has always been at least four times as high as disposable income.

But sometimes the country's wealth stockpile surges to even greater heights. Right before the Great Depression, there was seven times as much wealth in the country as disposable income. Right before the dot-com and housing bubbles burst, there was six times as much wealth as income.

See a pattern there? This ratio tends to get out of whack when bubbles of one sort or another have been built up, This typically ends badly, very badly.

Today the ratio is higher than at the peak of the dot-com and housing bubbles. So, yikes.

This time could always be different, of course. You could argue that there's no bubble today that's nearly as ridiculous and dire as the dot-com or housing bubbles. Most of the wealth build-up of recent years has been due to the stock market soaring to record highs. There is at least some justification for record-high stock prices, given that corporate profits are at record highs, too.

Then again, the stock market that has been inflated at least partly by historic levels of Federal Reserve stimulus. And corporate profits are at record highs at least partly because companies are being so stingy with workers: Wages have been flat throughout the recovery and for the past few decades, really, when you adjust for inflation.

Whether we get a recession this time or not, this news is at least a sign that French economist Thomas Piketty is on to something when he warns that wealth tends to grow more quickly than income, leading to dangerous imbalances.

Mark Gongloff   |   October 13, 2014   11:40 AM ET

Austerity is the opposite of the gift that keeps on giving: It just keeps taking and taking.

Germany, the world's homeland for austerity obsession, is learning this firsthand. Its economy has hit a rough patch lately, likely worsened by its adamant refusal to spend just a little bit more money to keep things moving. This has Europe on track for its third recession since 2008, which has raised the threat of a global economic slowdown, which has rattled financial markets from Hong Kong to New York. Thanks, Germany! Thanks, austerity!

Germany last week reported its biggest one-month plunge in factory orders since the bad old days of the 2009 recession/depression, as you can see from this chart from

german factory

Germany also posted its biggest one-month drops in industrial output and exports since 2009. Germany is Europe's economic engine, and it appears to be driving the continent right into a recession. Take a look at the red line on this recent chart from Citi Private Bank showing how corporate spenders in various parts of the world feel things are going:


After decades of pinching deutsche marks, Germany is pretty much the only country in Europe with the spare cash to throw at this problem, as you can see from this chart by research firm Pantheon Macroeconomics (h/t Business Insider):

german purse

Global economic leaders at International Monetary Fund meetings in Washington this past weekend hammered on Germany to spend some of its money, already.

But German Finance Minister Wolfgang Schaeuble declared that "writing checks" won't fix economies and even urged France and Italy to take on more austerity.

Schaeuble's refusal to change is the latest example of a long-lasting German fetish for austerity, tracing back to the years after World War I, when inflation got so bad that Germans toted cash in wheelbarrows. Germany's economic psyche was so scarred that it vowed to avoid inflation forever. Sounds reasonable, and that approach has worked out well for Germany -- until recently. For the past several years it has resisted using its cash stockpile to help itself or its neighbors, despite an ongoing depression, and it has insisted that its neighbors be just as austere as Germany, plainly worsening the depression. It's a pathology that pretty much everybody else in Europe and the world now sees, but Germany refuses to admit -- even though its infrastructure is starting to crumble along with its economy.

So it falls on the European Central Bank to try to keep Europe's economy afloat -- but Germany is fighting that, too. ECB chief Mario Draghi wants to try out some Federal Reserve-style bond-buying soon, but the head of Germany's Bundesbank is kicking and screaming against the idea, causing a distracting rift at the top of the central bank.

Austerity fever -- egged on by a now-discredited research report that claimed government debt is bad for economies -- has been hurting economies around the world since the Great Recession.

Countries on Europe's periphery like Greece and Italy have been forced to swallow painful economic reforms, worsening their depressions. In the U.S., the harshest government-spending cutbacks since the end of the Vietnam War have hurt growth, too, though the effects haven't been nearly as strong as in Europe. Still, a lack of funding for medical research in the U.S. is a big reason we don't already have an ebola vaccine, the Huffington Post's Sam Stein reported.

Austerity just keeps finding imaginative new ways to be terrible.

Mark Gongloff   |   October 9, 2014    9:16 AM ET

Billionaire activist shareholder Carl Icahn wants Apple to give away some of its mountain of cash to shareholders.

In a letter to Apple CEO Tim Cook, Icahn said Apple's stock price was still way too cheap at roughly $100 a share. He thinks it's really worth more than $200. And he thinks Apple could goose its stock price higher by hurrying up a plan to dip into a $133 billion cash stockpile to buy stock from shareholders.

"We believe Apple is dramatically undervalued in today’s market, and the more shares [are] repurchased now, the more each remaining shareholder will benefit from that earnings growth," Icahn wrote.

Icahn, who typically agitates for wrenching changes at companies such as eBay and Family Dollar -- inspiring Silicon Valley rainmaker Marc Andreessen recently to dub him "Evil Captain Kirk" -- has taken a gentler approach with Apple.

He announced a big stake in Apple a year ago, declaring it cheap and calling for stock buybacks. Apple at least partly responded, stepping up an existing buyback program and splitting the stock, which has gained more than 50 percent since Icahn's first announcement.

Apple shares haven't reacted much to Icahn's latest letter, rising less than 1 percent in pre-market trading on Thursday morning. But the stock price rose 2 percent on Wednesday, the day Icahn tweeted a promise that a new letter was on the way.

This is a breaking news story. Please check back for further updates.

Mark Gongloff   |   October 8, 2014    8:42 AM ET

This was inevitable, but it still feels momentous: By one important measure, China's economy is now the biggest in the world, topping the United States.

China's gross domestic product is worth $17.6 trillion, adjusted for China's relatively low cost of living, compared with $17.4 trillion for the U.S., the International Monetary Fund estimated as part of its latest World Economic Outlook. Here's how that looks in chart form:

china gdp

Note the chart extends to 2018. The IMF expects this trend to continue indefinitely. (h/t to Business Insider for the news and the idea to use Google Public Data's amazing charts.)

Here's another way of looking at it -- China's share of the global economy is now slightly bigger than America's, at 16.5 percent to 16.3 percent:

china share

It's important to note that these figures are adjusted for the relative costs of living in both countries, known to fancy economists as "purchasing power parity." It's something economists do to try to make comparisons between countries more fair. It is crazy cheap to live in China and crazy expensive to live in the U.S., so a trillion U.S. dollars are worth a lot more in China than in the U.S.

And that has something to do with the fact that China is manipulating its currency to be worth much less than the dollar. It does this to help make Chinese stuff cheaper than U.S. stuff on the global market. American politicians regularly pretend to be super angry about this, but don't much mind getting all the cheap Chinese stuff. And China's booming factory sector has, in turn, helped make China's economy rapidly get bigger and bigger.

In terms of sheer size, however -- meaning, not adjusted for costs of living -- the U.S. economy still dwarfs China's, at $17.4 trillion to $10.4 trillion:

absolute dollars

GDP breaks down to nearly $55,000 per capita per year in the U.S., compared with less than $8,000 per person in China:

per capita

Again, though, that $8,000 goes a long way.

Mark Gongloff   |   September 26, 2014    8:44 AM ET

We always pretty much knew that our banking regulators were captured by the industry they regulate, and now we apparently have proof.

"The Ray Rice video for the financial sector has arrived," famous author and finance-explainer Michael Lewis declared on Friday morning. He was referring to a new report from ProPublica and This American Life about Carmen Segarra, a former New York Federal Reserve bank examiner who claims she was fired in 2012, after seven months on the job, for examining Goldman Sachs a little too aggressively.

It seems a safe bet, though, that this story won't have quite the same impact as the video of Ray Rice punching his wife unconscious in an elevator. And it may strike some as terrifically tone-deaf to compare the inner workings of banking to the horror of domestic violence. Still, Lewis's overall point holds: Here is the material proof of something we knew was happening all along.

Based on nearly 48 hours of secretly taped conversations among Fed officials and Goldman Sachs, the reports make a strong case that bank regulators are terrified of offending the banks they're regulating, exposing what Lewis calls their "breathtaking wussiness." This suggests that, despite the worst financial crisis since at least the Great Depression and financial reform that was supposed to put Wall Street on a shorter leash, regulators still bow to banks as much as they always have. That makes a future crisis seem even more likely, with banks still able to persuade regulators that they're not taking crazy risks.

The New York Fed, in a written response to ProPublica and This American Life, denied Segarra's accusations:

"The New York Fed categorically rejects the allegations being made about the integrity of its supervision of financial institutions," it wrote. It added that it would not comment further because it is still in court fighting a wrongful-termination suit by Segarra.

Goldman Sachs, in its own written response, fired a volley directly at Segarra, claiming she was mistaken about some key facts and cattily observing that she had applied for a job at Goldman three times before going to work for the New York Fed. Segarra told ProPublica she had actually applied at Goldman four times, but that she had also applied for jobs at a lot of other banks. Goldman Sachs spokesman David Wells did not immediately respond to a request for further comment.

The Huffington Post is still listening to the recordings and will update this story with more juicy details as we find them.

Still it's doubtful that the Segarra tapes will have anything near the impact of the Rice footage. The Rice video was not only far more visceral and easier to understand, but it touched a still-raw nerve in our national consciousness. Our feelings about Wall Street are a little cooler, the public image of banks has mostly been rehabilitated, and our concerns about bank regulation are minimal.

See you at the next crisis.

Update: Having listened to the recordings, or at least the ones curated by ProPublica and This American Life, we can confirm that they do indeed show New York Fed bank examiners being feckless and mush-mouthed and afraid when dealing with Goldman Sachs, at the very least.

There is no clear bombshell here -- just further evidence that not enough has changed in the cozy relationship between banks and regulators, and that the Fed should be far more transparent about that relationship.

Mark Gongloff   |   September 15, 2014    3:27 PM ET

Elon Musk tried to warn you.

Tesla's share price fell about 9 percent on Monday after Morgan Stanley declared that the recent frenzied lust for the electric-car maker's stock had gotten juuuuust a bit ridiculous. Musk, Tesla's founder, made a similar observation a couple of weeks ago that people forgot about almost immediately.

Since the end of 2012, Tesla's stock has gone from about $33 to about $290. That's a gain of 745 percent. Even with today's drubbing, the stock price is still pretty darn high:

tesla drop

Morgan Stanley thinks Tesla will eventually go to $320, notes The Wall Street Journal's Steve Russolillo. But the bank's analyst thinks maybe everybody should stop shoveling their faces with it and take some time to digest.

Musk said basically as much earlier this month, on the occasion of the company announcing a tax-friendly deal to open a battery factory in Nevada. “I think our stock price is kind of high right now to be totally honest," Musk said.

CEOs don't typically talk down their stock price, and Tesla's fell about 3 percent the next day. But it promptly bounced back to a new high last week. Tesla fans have shrugged off a few pieces of bad news lately, in fact, including mixed reviews of the company's expensive cars. Investors mostly seem convinced Tesla and Musk can do no wrong. Something tells me one little Morgan Stanley note isn't going to shake that belief for long.

Mark Gongloff   |   September 11, 2014   11:44 AM ET

If America's fracking boom is creating a job boom, it's hard to tell.

Maybe you've heard of the miraculous job-creating powers of fracking. President Barack Obama has claimed fracking could create 600,000 jobs. The Chamber of Commerce has declared that fracking creates "millions of jobs." This week, The New York Times gave fracking credit for "a transformation spreading across the heartland of the nation," one "changing the economic calculus for old industries and downtrodden cities alike."


Workers on a natural-gas well in Pennsylvania.

The story focused on a patch of Ohio from Youngstown to Canton, where "entire sectors like manufacturing, hotels, real estate and even law are being reshaped." It suggested fracking -- where you pound rock with water, sand and chemicals to release the natural gas trapped inside, along with rainbows and unicorn farts and American jobs -- had made Ohio's job market better than the rest of America's.

One supposed side benefit of fracking is that energy gets so cheap that factories will just have to start opening up and hiring people in America again. Sounds transformational -- calculus-changing, even. Except for the math part: If you look at actual numbers, it's kind of hard to see the evidence of this boom in any way that matters to humans, Dean Baker, co-director of the Center For Economic And Policy Research, a left-leaning think tank, pointed out.

"The data do not seem consistent with the story told in this article," Baker wrote.

Baker tried and failed to spot the boom in factory jobs in Youngstown:

youngstown factory jobs

Zoom out to an even longer-term view, as the Washington Post's Jim Tankersly did, and the picture is even more depressing. It would take 30,000 more jobs to get Youngstown back to where it was in the 1990s, Tankersly pointed out:


Look at all of Youngstown employment, to include all those other industries like hotels and real estate and law, and it's still hard to see the boom:

youngstown jobs

The NYT made a big deal out of how Ohio's unemployment rate, 5.7 percent, is lower than the national rate of 6.1 percent. But in the boomy boom town of Youngstown, factory employment is 15 percent lower than just before the recession. Total employment is down 5 percent. In contrast, total U.S. employment is at a record high.

The picture's a little better in Canton, but not much. Here are Canton's factory jobs:

canton factory

And here's total employment in Canton:

canton jobs

Note how the line turns down at the end of the chart. The boom's not petering out already, is it?

I'm not suggesting the NYT is making stuff up. It quotes a lot of locals who believe in the transformational power of fracking. It is possible that job growth in Ohio might look a whole lot worse if not for fracking. And the fracking boom is still pretty new, having really gotten going in earnest around 2008, in the midst of the recession.

I am suggesting that fracking is not creating nearly enough jobs to justify the environmental havoc it wreaks. It wastes trillions of gallons of water. It pumps toxic chemicals like lead, mercury and uranium into the earth. Some of this stuff, along with byproducts of fracking like methane gas, leaks into the water supply. That may make tap water flammable and certainly hazardous to human health. It causes earthquakes, maybe. It fosters our dependence on fossil fuels, even as greenhouse gases are already being pumped into the atmosphere at record rates.

And, again, it seems to barely move the needle on job growth. The post-recession recovery in jobs in Ohio is indistinguishable from a normal post-recession jobs recovery with or without fracking. For example, note how Youngstown's factory sector is in no better shape than the U.S. factory sector, which also has not enjoyed all that much of a boom:

us factory jobs