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Monday, August 6, 2012

The Agenda: A Slowdown in Growth, an Increase in Income Inequality


The income stagnation of the last decade stems, in the simplest terms, from two factors: a slowdown in economic growth and a rise in inequality, which has concentrated the economy's modest gains among a small share of the population. In this post, I want to look at both factors in a bit more detail.

The economy's recent struggles arguably began in late 2001, when a relatively mild recession ended and a new expansion began. The problem with this new recovery was that it wasn't especially strong. From the fourth quarter of 2001 through the fourth quarter of 2007 (when the financial crisis began), the economy grew at an average annual rate of only 2.7 percent. By comparison, the average annual growth rate of both the 1990s and 1980s expansions exceeded 3.5 percent.

This mediocre expansion was followed by the severe recession and weak recovery brought on by the financial crisis. The combined result is that, in recent yea rs, the economy has posted its slowest 10-year average growth rates since the Commerce Department began keeping statistics in 1947:

In addition to slow growth, the bounty from the economy's growth has largely flowed to a small slice of the population: the affluent. Since 2000, no income group has done particularly well. Income in households that rely on wages has failed to keep pace with inflation, while in households that have large investment holdings the value of many of those holdings - both real estate and stocks - has fallen.

Over a longer term, though, the affluent have done extremely well. Since 1980, a household at the cutoff for the top 1/1,000th of earners - making about $1.5 million in 2010 - has received a pay increase of more than 100 percent, after adjusting for inflation. A household in the middle of the income distribution has received an inflation-adjusted raise of only 11 percent.

Related: Read all Agen da Posts

Comparing Credit Cards\' Auto Rental Insurance


Many credit card companies offer accident insurance when the cards are used to pay for a rental car. But details of coverage vary depending on the network behind the card, a report from CardHub.com finds.

Many people end up buying extra insurance when they rent a car because they are confused about whether their own auto policies cover them while driving rentals, as well as what sort of protection their credit cards may provide, the report says.

According to the Insurance Information Institute, an industry group, most automobile insurance policies cover a policyholder driving a rental. Details vary, though, and there are sometimes exclusions; some policies don't cover a driver, for instance, who is renting while on business. So you should check with your insurance agent or company.

Similarly, there's a great deal of variation in the coverage that credit cards provide. All four major card networks - American Express, Visa, MasterCard and Discover - provide some form of insurance coverage. (MasterCard, the report found, is the only network that does not provide coverage to all cardholders; a cardholder has to check the agreement to determine eligibility.)

CardHub ranked the networks on likelihood of coverage (maximum points: 55), quality of coverage (35 points maximum) and logistics of using the insurance and filing a claim (10 points). Visa ranked at the top over all, in part because of its coverage of towing and because it covers the charges imposed by the rental car company for the loss of use of the damaged car. Discover, American Express and MasterCard followed in the rankings.

Odysseas Papadimitriou, CardHub's chief executive, noted that all networks require that the driver decline the rental car company's supplemental insurance coverage for a card's coverage to apply. So do not take the rental company's coverage unless you are sure you nee d it, because in effect you'll be declining your card's policy, he said.

He noted that all networks generally exclude very expensive cars or antique models from coverage. But consumers should be aware that American Express also excludes popular sport utility vehicles like the Chevrolet Suburban, Lincoln Navigator and Toyota Land Cruiser.

MasterCard and Visa, furthermore, do not cover accidents on dirt or gravel roads. So beware if you are driving in rural Vermont, say, or overseas in Greece.

And again, if you're going overseas, American Express, Visa and MasterCard exclude coverage in certain countries. MasterCard, for instance, excludes the Republic of Ireland, Northern Ireland, Israel and Jamaica. Discover, which is the least accepted card network internationally, is the only network that does not have any country-specific exclusions, the report found.

Do you rely on your credit card's rental car insurance coverage? Have you ever had to file a claim under the policy?

As Ticket Speculation Swirls, Romney Goes Shopping


WOLFEBORO, N.H. - In campaign jargon, Mitt Romney is “down” on Monday, meaning he has no public events scheduled.

But that doesn't mean he is idle. Beginning at 8:40 a.m., he made a run to Bradley's Hardware, a grocery store and a pharmacy about a mile from his lakeside home here, emerging from the hardware store with a beige bucket containing what he called “hardware stuff.''

He headed to Hunters Shop ‘n Save and grabbed two ears of native sweet corn, 50 cents apiece, from a display outside.

Democrats may be thumping the drum about those undisclosed tax returns, and Team Romney announcing a $100 million donor haul in July, but the presumed Republican nominee was shopping for dinner.

Asked if he was cooking on Monday night, he said: “I'll make my own dinner. That's not exactly cooking.''

He emerged from the grocery store after only 10 minutes and, despite strapping Secret Service agents at th e ready, loaded the items himself into a Suburban. They included 12-packs of Caffeine Free Diet Coke, Wild Cherry Diet Pepsi and bags including Greek yogurt.

“I've got some folks coming over today,'' Mr. Romney told the press corps.

Asked if the folks included Rob Portman or Tim Pawlenty, Mr. Romney answered, “Ha, ha, ha ha.''

The political world may be holding its breath wondering about Mr. Romney's vice-presidential choice â€" Mr. Portman, an Ohio senator, and Mr. Pawlenty, a former Minnesota governor, are thought to be on the short list â€" but from all public appearances, it is another lovely day on Lake Winnipesaukee during August vacation season.

Of course, looks are deceiving. That is why Mr. Romney's every movement and utterance are watched and parsed for any scrap of a detail that might reveal his intentions. Garrett Hakke, an NBC reporter out for a jog in Wolfeboro on Monday morning, caught sight of Mr. Rom ney's motorcade and sent a blast description of the passenger in the back seat: “open collared shirt and looking down, I presume at his iPad.''

After returning from his errands around 9:30, Mr. Romney planned to remain at home the rest of the day, hunkered in meetings with senior advisers, a campaign aide told the press corps.

Why Your Family Should Talk About Money More Often


Carl Richards is a certified financial planner in Park City, Utah, and is the director of investor education at BAM Advisor Services. His book, “The Behavior Gap,” was published this year. His sketches are archived on the Bucks blog.

It's no secret we're uncomfortable talking about money. Talking about money often ends in arguments about money. So we avoid it, and that leads to all sorts of problems.

The discomfort is often at its worst with those we love the most: family. When was the last time you discussed money in any meaningful way with your kids (or your parents)?

For most of us, we probably haven't sat down and had even the most basic of conversations about what money may mean to our family. If you own a business or have significant investments or other assets, at some point these money issues will have an impact on your family, even if it's only a question of inheritance.

Learning to talk about money in a way that's productive is important, and you may not even need to divulge your income or net worth to succeed. For wealthier families, however, it may be part of the discussion. Last week, Paul Sullivan outlined several examples of how unprepared some heirs felt when they received an inheritance. No one had talked to them or explained what was coming.

Jason Franklin, now 32, said he received a call from his grandfather's secretary asking if he wanted to serve on the board of the family foundation. He was 21 at the time, and up until that point, he said he thought his parents were just affluent professionals like his friends' parents. The invitation prompted questions.

“If your family has enough money to create a family foundation, that means you have to ask about issues of wealth,” said Mr. Franklin, who works for a philanthropic consultancy.

This may seem like a great problem to have, but it's a problem just the same. I've written before about a friend who was determined that his kids wouldn't felt entitled. From an early age, he met every request his kids made to buy something with, “We can't afford that.” One evening when his oldest was a teenager, my friend's son came to him concerned and said, “Dad, between homeless and Warren Buffett…where are we?”

My friend realized that he had not communicated his intention clearly. He had avoided having discussions about money because, like most of us, he didn't know how.

If you don't take the time to talk about money, how will your family understand money's real value? Have you talked to your kids about the relationship between hard work and money? Have you talked about the financial sacrifices, delayed gratification and the need for financial discipline? Have you talked to your kids about the only way to buy happiness?

You owe it to yourself and your family to get past the uncomfortable part and talk about the role of money in your family. Getting it out in the open can go a long way towards avoiding problems later.

G.O.P. Convention Speakers to Include Condoleezza Rice and John McCain


Republicans plan to highlight three of the party's high-profile women as “headliners” during the national convention in Tampa later this summer, officials said this weekend.

Nikki Haley, the governor of South Carolina, Susana Martinez, the governor of New Mexico, and Condoleezza Rice, the secretary of state under George W. Bush, will each have prominent speaking roles.

“They are some of our party's brightest stars, who have governed and led effectively and admirably in their respective roles,” Reince Preibus, the chairman of the Republican National Committee, said in a statement. “Ours will be a world class convention, worthy of the next president of the United States.”

Republican officials did not name the convention's keynote speaker, a coveted spot that is often used to highlight a rising political star. Chris Christie, the governor of New Jersey, has been mentioned as a possible keynote speaker .

The Democrats announced last week that Julian Castro, the mayor of San Antonio, Tex., will be the party's keynote speaker in Charlotte, N.C.

Republican convention officials also did not indicate any role for the people most often mentioned as possible vice presidential nominees: Senator Rob Portman of Ohio, Senator Marco Rubio of Florida, or Tim Pawlenty, the former governor of Minnesota.

But the speaker's list also includes a series of politicians who speeches could help fire up the convention crowd ahead of Mr. Romney's acceptance speech.

Senator John McCain of Arizona, the party's 2008 nominee, will get a speaking slot, as will Mike Huckabee, the former governor of Arkansas. Both men were rivals of Mr. Romney's in 2008.

Rick Scott, the governor of Florida, will get a headliner slot, as will John Kasich, the governor of Ohio.

Follow Michael D. Shear on Twitter at @shearm.

Romney Committees Raised More than $100 Million in July


Mitt Romney and the Republican National Committee raised $101.3 million in July, his campaign announced Monday, as Republican donors rallied behind their nominee with the national convention only a few weeks away.

The figure keeps the Republicans on pace to bring in $800 million for the cycle, the target set by Mr. Romney's team in April. Roughly a quarter of the Republicans' haul, $25.7 million, came in donations of under $250, as Mr. Romney worked to increase his appeal among small donors.

The campaign, the R.N.C., and a joint fund established by the Republicans to raise presidential campaign cash ended July with $185.9 million in cash on hand. They did not disclose what proportion of the money would end up in Mr. Romney's campaign coffers, which can only accept $5,000 from each donor every election cycle, and how much to the R.N.C., which can accept more ten times that amount fr om each donor.

The strong fund-raising puts renewed pressure on President Obama to bring in more cash and underscores the near-certainty that Mr. Romney will remain financially competitive with an incumbent whose fund-raising prowess has long been a hallmark. Mr. Obama's campaign has not yet announced his numbers for July; all campaigns are required to report their fund-raising to the Federal Election Commission by August 20.

While Mr. Obama steadily outraised Mr. Romney in 2011 and early this year, he has also spent far more, amassing a campaign tab of more than $400 million with the Democratic National Committee through the end of June.

Monday Reading: August Checklist for Rising High School Seniors


A variety of consumer-focused articles appears daily in The New York Times and on our blogs. Each weekday morning, we gather them together here so you can quickly scan the news that could hit you in your wallet.

A Big Decision, With Its Timing Carefully Planned


Barring a total surprise, the next big thing in the 2012 presidential race will be Mitt Romney's choice of a running mate.

But will it be announced this week?

Political strategists put almost as much effort into the timing of a vice-presidential announcement as they do into the decision itself. Every potential moment has advantages and liabilities.

Here is a rundown of how the possible announcement dates stack up:

EARLY THIS WEEK If Mr. Romney announces his selection in the next couple of days, it will come as a surprise. It would mean that the campaign was able to control just about any leaks until the last minute, catching journalists and political observers off guard.

Such an early choice would instantly double the amount of physical terrain that Mr. Romney's camp could cover for the rest of the month. The vice-presidential choice could spend weeks traveling through swing states, leaving Mr. Ro mney more time to raise money.

And depending on the pick, the campaign would have a new and possibly aggressive attack dog, ready to hit back against President Obama's political machine.

A downside? There is still a week of Olympic competition left, so the announcement would be competing for the attention of the voting public.

LATE THIS WEEK An announcement on Thursday or Friday would have some of the same benefits. And it would overlap with only the last few days of the Olympic Games, most likely giving it heavier news media attention.

By coming at the end of the week, it would also serve as a setup for the Sunday news talk shows and the next week ahead. First impressions are critical, as Dan Quayle proved. A late Friday announcement would give journalists little time to investigate before the shows.

Of course, that process of examination would begin in earnest the following week. Reporters would have plenty o f time to dig through the background of the vice-presidential selection in the weeks before the Republican National Convention in Tampa, Fla., which starts Aug. 27.

That is one of the downsides to an earlier announcement. By the time the convention rolls around, the vice-presidential pick has already been picked over. That lessens the excitement going into the convention.

BEFORE THE CONVENTION A more traditional choice would be to wait until just days before the convention.

That has the advantage of providing excitement and momentum (as well as wall-to-wall news coverage) for the campaign as it charges toward its big nominating party. It also keeps the anticipation alive throughout the summer, building the announcement into an ever bigger and more important moment.

A late selection also puts off weeks of scrutiny of the running mate that could undermine excitement for the ticket. And it helps dodge a “ho hum” reaction if the choice turns out to be seen as more drab or boring than the campaign might have hoped.

But a late choice also robs Mr. Romney of several weeks of help campaigning.

AT THE CONVENTION This seems the least likely. Modern political conventions have become well-planned, highly orchestrated events in which little is left to chance. Waiting to announce his vice-presidential choice until the convention would be out of character for the risk-averse Mr. Romney.

The danger? If anything went wrong, it could ruin the event. (Think Sarah Palin, whose selection was announced just days before the 2008 convention, and the swirl of controversies that dogged her in Minneapolis.)

But a convention announcement would electrify the crowd. If it could be kept secret until the end, it could provide excitement and momentum coming out of the gathering rather than going into it. That is not a bad thing for a campaign.

So when will it be?

As it turns out, Mr. Romney is planning a three-day bus tour through battleground states that starts this Friday. It is not hard to imagine him announcing the pick (via his iPhone app) early Friday morning and then appearing at the first event with his new running mate.

Mr. Romney's campaign manager has been having fun teasing reporters with e-mails like the one he sent to donors on Friday.

“The big V.P. announcement is coming soon,” he wrote. “The buzz here at campaign headquarters is exciting.”