India wrestles with policy as rupee sinks; Gen Y and Boomers suffer the most; HP revenue growth 'unlikely'

1 India wrestles with policy as rupee sinks (Sudeep Jain & Nupur Acharya in The Wall Street Journal) The Reserve Bank of India's varying stance in recent weeks reflects shifting views about what poses the biggest immediate danger to the economy of the world's second-most-populous country: a weaker currency or slower growth. It is a question confronting central bankers around the developing world, as investors pull back from emerging markets in anticipation of an end to the easy-money policies of the US Federal Reserve and other big central banks.

For India, whose large external economic imbalances make it especially vulnerable, the impact has been severe. The rupee fell to an all-time low of 64.52 to the US dollar on Wednesday afternoon. It is down 16% since May. Other countries that, like India, have large current-account deficits, from Thailand and Indonesia to Turkey, have also seen currencies and markets come under pressure.

In India, much of the weight of the decision-making has fallen on the Reserve Bank's governor, Duvvuri Subbarao, known through much of his tenure, which began in 2008, as an inflation fighter.

The central bank tried to reassure investors by saying that it would reverse its tightening steps when the rupee stabilized. But the currency kept falling, and investors became increasingly fearful that the higher effective interest rates would stall India's economy recovery. India's financial markets have since been feeding off each other, with the falling rupee bringing stocks lower, and in turn hurting the currency. Foreign investors have pulled $1.9 billion out of Indian stocks and bonds since mid-July.

Investors now are waiting to see how Raghuram Rajan, former chief economist of the International Monetary Fund, will manage when he takes over as the new governor starting Sept 5. Mr. Rajan is already in Mumbai, working closely with Reserve Bank officials. Mr. Rajan faces the task of choosing among three policy goals: boosting growth, keeping inflation low and stabilizing the rupee. Under Mr. Subbarao, the RBI has tried to juggle all three.

2 Gen Y and Boomers suffer the most (Catherine Rampell in The New York Times) As my colleague Robert Pear reports, a new study from Sentier Research finds that four years after the start of the economic recovery, the median American household income is still down 4.4 percent. Incomes have risen a little since their recent trough in August 2011, but not enough to make up for the losses sustained earlier.

The declines were not distributed evenly. One of the more striking findings from the report was the variation in changes in median income by age group: Those in the 65- to 74-year-old group are the only demographic in the entire study to have incomes rise by a statistically significant amount in inflation-adjusted terms. (Householders 75 and older also reported higher incomes, but the change was not statistically different from zero.) On the other hand, those under age 25 and between the ages of 55 and 64 (roughly the baby boomer demographic) suffered the biggest hits.

By contrast, another study found that people who lost their jobs in the few years before becoming eligible for Social Security (in today’s case, that baby boomer cohort) lost up to three years from their life expectancy, largely because they no longer had access to affordable health care. The young, meanwhile, sustain long-term declines in their incomes as a result of entering the job market during a recession. In the wake of this recent recession, young people have also ended up moving back into (or never leaving) their parents’ homes in large numbers, and have suffered major wealth losses as well.

3 HP revenue growth ‘unlikely’ (BBC) Meg Whitman, the chief executive of Hewlett-Packard, has warned that the firm is "unlikely" to see a revenue growth next year. Her comments came as the firm reported a 8% decline in revenue for the quarter ending 31 July, from a year ago. HP has struggled amid falling global PC sales and rising competition. It was displaced by China's Lenovo as the world's top PC maker last year.

"What has changed about 2014's outlook is a couple of things - Enterprise Group's performance especially during the quarter," Ms Whitman told analysts during a conference call after the results. "Weak execution has amplified the market challenges we know exist. It's unlikely... that we'll see the growth in 2014 that I had hoped," she added.

HP reported a net profit of $1.4bnfor the quarter, reversing a loss of $8.9bn during the same period last year. The massive loss last year occurred as the firm wrote down the value of some assets, mostly related to its purchase of Electronic Data Systems, which it bought in 2008.

Ms Whitman, who took charge of the firm in late 2011, had previously said that it was possible for the company to see its revenues grow next year. However, global PC sales have been declining, as customers continue to switch to smartphones and tablet computers. Worldwide PC shipments have now fallen for five quarters in a row, making it the "longest duration of decline" in history, according to research firm Gartner.