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Economy

consumer-spending-consumer-sentiment-reuters

(Photo: Reuters)

The Survey of Consumers, a closely-watched gauge of consumer sentiment from the University of Michigan, clocked in at 89.8 in August, down from the preliminary reading of 90.4. Economists anticipated a reading of 90.6 for the month.

Surveys of Consumers chief economist, Richard Curtin:

Confidence eased back in late August to register a trivial decline from the July reading. Less favorable personal financial prospects were largely offset by a slight improvement in the outlook for the overall economy. Most of the weakness in personal finances was among younger households who cited higher expenses than anticipated as well as slightly smaller expected income gains. Importantly, long term inflation expectations fell to the lowest level ever recorded, with near term inflation expectations anchored to that same low level. Just as low inflation has provided strong support for real income gains, low interest rates have increasingly become the sole driver of large discretionary expenditures. Although consumers increasingly expect a Clinton victory, consumers remained nearly equally split on which candidate would actually improve overall economic conditions or their own personal finances. Overall, the data remains consistent with real personal consumption improving by 2.6% through mid 2017, with large purchases sensitive to future interest rate trends.

Final Consumer Sentiment Results for August 2016
Aug Jul Aug M-M Y-Y
2016 2016 2015 Change Change
Index of Consumer Sentiment 89.8 90.0 91.9 -0.2% -2.3%
Current Economic Conditions 107.0 109.0 105.1 -1.8% +1.8%
Index of Consumer Expectations 78.7 77.8 83.4 +1.2% -5.6%
Next data release: September 16, 2016 for Preliminary September data at 10am ET

The Survey of Consumers, a closely-watched gauge

World

The Islamic full-length swimming suit known as burkini is displayed on mannequins at a department store in France.

The Islamic full-length swimming suit known as burkini is displayed on mannequins at a department store in France.

DEVELOPING: A French court overturned the controversial burkini ban passed in several coastal towns. The Burkini is a Muslim full-body women’s swimsuit. Mayors cite concerns about public safety after deadly Islamic terror attacks this summer and other officials have argued that the burkini oppresses women.

Opponents of the law argued represented by two human rights groups argued against the legality of the ban by claiming it infringes on basic freedoms. They told the top court that mayors overstepped their powers by telling women what to wear on beaches.

While the ruling by the Council of State Friday specifically concerns a ban in the Riviera town of Villeneuve-Loubet, the binding decision sets a legal precedent for all the 30 or so French resort municipalities that have implemented similiar burkini bans. However, some of the mayors said they will not confirm to the court’s ruling.

Patrice Spinosi, a lawyer representing the Human Rights League, said the decision should set a precedent and that other mayors should conform. He encouraged other women who have already received fines to protest them based on the decision.

DEVELOPING: A French court overturned the controversial

Economy

GDP-Shipping-Cranes-Trade-Portland-Oregon

File photo: Shipping-cranes-in move containers at a port in Portland, Oregon. (Photo: REUTERS)

The Commerce Department said Friday the U.S. economy stalled, with second-quarter (2Q) gross domestic product (GDP) coming in at a disappointing and weak 1.1%. The second reading on 2Q GDP declined from the preliminary reading of 1.2% initially reported.

The government’s revision reflected in part more imports than previously estimated, as well as weaker spending by state and local governments. The economy grew at a similarly weak 0.8% pace in the first quarter (1Q), and just 1.0% in the first half of 2016. Trade deficits and inventories continue to plague U.S. economic growth, with the latter alone slicing off 1.26% from GDP growth.

That’s the largest drag in more than two years and the fifth straight quarter that inventories weighed down growth. It’s also an increase from the 1.16% inventories sliced off in previous month’s estimate. Business inventories fell $12.4 billion in the second quarter, marking the first time since the 3Q 2011 that it declined and far steeper than the $8.1 billion decline reported last month.

Meanwhile, imports were revised down to a 0.3% rate instead of 0.4 %. There was also a downward revision to export growth, which resulted in trade contributing just one-tenth of a percentage point to GDP growth in the second quarter, rather than the 0.23% previously reported last month. With after-tax corporate profits falling at a 2.4% rate last quarter, expectations for a rebound in business spending are now unwarranted.

Business spending on equipment contracted (3.7%) for a third consecutive quarter, the longest since the 2007-2009 recession and down from the 3.5% pace reported last month. There were also downward revisions to investment in nonresidential structures–to include oil and gas wells–as well as residential construction spending.

The Commerce Department said Friday the U.S.

Politics

WikiLeaks founder and editor-in-chief Julian Assange appears on Fox and Friends. (PHOTO: Fox News)

WikiLeaks founder and editor-in-chief Julian Assange appears on Fox and Friends. (PHOTO: Fox News)

WikiLeaks founder Julian Assange said Friday morning that the worst and “most serious” leak about Hillary Clinton, the Clinton Foundation and Benghazi is yet to come.

“The most serious relates to upcoming publications,” the controversial editor-in-chief of the anti-secrecy group said on on Fox and Friends. Mr. Assange, in response to a viewer’s question, also stated that the corruption in Washington D.C. “goes all the way to the top,” a reference to President Barack Obama.

[brid video=”60547″ player=”2077″ title=”WikiLeaks Julian Assange “The Most Serious Relates to Upcoming Publications””]

On Thursday, a federal judge ordered the State Department to release roughly 15,000 additional emails from Mrs. Clinton beginning on September 13. The emails, which will now be public as the result of a Freedom of Information Act lawsuit by the conservative watchdog group Judicial Watch, were uncovered by the Federal Bureau of Investigation during their probe into the former secretary of state’s use of a private server. Mrs. Clinton did not initially turn over the emails, despite saying she had turned over all material.

[brid video=”60546″ player=”2077″ title=”WikiLeaks Julian Assange Emails Show Corruption in D.C. “Goes All the Way to the Top””]

He also addressed the Clinton campaign’s claims, which have been echoed by speculation in the media, that the Republican presidential nominee is a Russian sympathizer. Mr. Assange said that narrative is a false Clinton-constructed narrative meant to distract Americans because they know the upcoming information yet to be leaked is extremely damaging.

“The Trump campaign has a lot of things wrong with it,” Assange said, “but as far as we can see being Russian agents is not one of them.”

WikiLeaks first began to make headlines regarding the U.S. presidential election when they dumped emails showing the Democratic National Committee (DNC) collaborated with the Clinton campaign to harm Sen. Bernie Sanders politically. However, the media corruption and collaboration was perhaps the most concerning revelation in the emails. Reporters at the Washington Post, such as Greg Sargent, and Politico were literally writing whatever they were told to write by the DNC.

WikiLeaks founder Julian Assange said on Friday

Politics

Hillary Clinton delivered a speech in Reno, Nevada on Thursday August 25, 2016 attempting to link Donald Trump and his supporters to the "alt right" racism. (Photo: Associated Press/AP)

Hillary Clinton delivered a speech in Reno, Nevada on Thursday August 25, 2016 attempting to link Donald Trump and his supporters to the “alt right” racism. (Photo: Associated Press/AP)

In a speech in Reno, Nevada on Thursday, Hillary Clinton attempted to link Donald Trump and his supporters to the “Alt-Right” white nationalist movement. The Democratic presidential candidate, who has been plagued by bombshell reports indicating pay-for-play corruption during her tenure as secretary of state relating to the Clinton Foundation, said a “fringe element has effectively taken over the Republican Party.”

“From the start, Donald Trump has built his campaign on prejudice and paranoia,” Mrs. Clinton said. “He’s taking hate groups mainstream and helping a radical fringe take over the Republican Party. His disregard for the values that make our country great is profoundly dangerous.”

The line of attack also largely surrounded Stephen Bannon, Trump campaign CEO and head of the right-wing website called Breitbart.com. Citing the Southern Poverty Law Center, a left-wing group which tracks hate groups, Breitbart embraces “ideas on the extremist fringe of the conservative right. The Federal Bureau of Investigation (FBI), after serious questions surfaced regarding the SPLC, stopped working with the once-respected civil rights group.

“He hired Stephen Bannon,” she said about Trump. “The head of a right-wing website called Breitbart.com, as campaign CEO.”

Breitbart News responded to Mrs. Clinton by mocking her on Twitter.

“The de facto merger between Breitbart and the Trump Campaign represents a landmark achievement for the “Alt-Right.” A fringe element has effectively taken over the Republican Party,” she said.

The speech proceeded the release of a controversial campaign ad that critics say takes the race card to a whole new level. The ad depicts members of the Ku Klux Clan (KKK) stating why they support Mr. Trump. A few minutes before Mrs. Clinton delivered her speech, the New York businessman issued a preemptive response to charges that he and his supporters are “racists.”

“It’s the oldest play in the Democratic playbook,” Mr. Trump said at an event in New Hampshire. “The news reports are that Hillary Clinton is going to try to accuse this campaign, and the millions of decent Americans who support this campaign, of being racists.”

“Shame on you,” he said, pointing at the media cameras toward Mrs. Clinton.

Meanwhile, the Republican presidential candidate met with black and hispanic Republican leaders on Thursday, including Pastor Mark Burns and Dr. Ben Carson, at Trump Tower in New York City.

“It’s got to be everybody or we don’t have a great country,” Mr. Trump said. “But a very important part of the message for me is the African-American community because they have really been let down by Hillary Clinton and the Democrats.”

The meeting is part of a larger push by the campaign to reach out to minorities, something the Clinton campaign publicly mocks by privately stresses over. In response to a question, the GOP candidate said in order to Make America Great Again, “we have to make all of it great again, including our inner cities.”

Under fire for the Clinton Foundation, Hillary

Policy

Hillary-Clinton-Cornell-College-Iowa-Reuters

Hillary Rodham Clinton spoke during a campaign event at Cornell College in Mount Vernon, Iowa, on Wednesday. (Photo: Scott Morgan/Reuters)

“So many bad ideas, so little time.”

That’s my attitude about Hillary Clinton. She proposes misguided policies at such a rapid rate that I feel like I’m having to spend too much of each day trying to correct all the economic mistakes that emanate from her and her campaign.

For the fifth time over the last seven days (see other examples here, here, here, and here), I feel obliged to do it again.

Our topic is her proposal to increase handouts, subsidies, and bailouts for colleges and universities.

Here’s a brief interview I just did on the topic. Our discussion had to be abruptly ended because of what the industry calls a “hard break,” but I got out my main points that 1) subsidies benefit college bureaucracies rather than students and 2) that Hillary’s ostensible reforms will make things worse.

[brid video=”60530″ player=”2077″ title=”Dan Mitchell Criticizing Bailouts Subsidies and Handouts for Higher Education”]

By the way, I can’t resist chuckling about the main assertion put forth by Alan Colmes. He thought it would be effective to point out that some of the handouts started under President George W. Bush.

But so what?!? The fact that a bad policy originated under a Republican before being expanded by a Democrat doesn’t somehow turn a pig’s ear into a silk purse.

Also, just in case you’re curious about what I was planning to say when the interview was cut off. I was going to point out that I agreed with Alan about President Bush’s role, but I was going to say that was additional evidence (given Bush’s overall statist record while president) against what Hillary is proposing.

And then, my additional point was going to be that it’s a very bad idea to allow loan forgiveness just for former students who become bureaucrats (i.e., go into “public service”). For Heaven’s sake, people who get government jobs already are getting far higher compensation than taxpayers in the private sector. Needless to say, it’s not a good idea to make a life of bureaucratic indolence even more attractive.

But let’s return to the bigger issue of why it’s misguided to have bailouts, subsidies, and handouts for higher education. If you want the opinions of a real expert on this issue, Charlie Sykes has a column on the topic in the Wall Street Journal.

Hillary Clinton’s plan for higher education is simple: a massive bailout wrapped in the promise of free tuition and relief from student loans. It’s a proposal that seems specifically designed to further inflate the higher-education bubble, while relieving the college-industrial complex of any pressure to reform. …College today costs too much, takes too long and offers dubious value to too many students. For decades, the price of a degree has risen much faster than the rate of inflation. …schools are spending more than ever on administration, promotions, athletics and noninstructional student services. The New England Center for Investigative Reporting and the American Institutes for Research found that between 1987 and 2012, colleges added 517,636 administrators and professional employees, creating a ratio at public colleges of two non-academic staffers for every full-time, tenure-track faculty member.

The current system has been bad news for students, who – thanks to subsidy-induced increases in tuition and fees – have been trapped on a treadmill.

Mr Sykes elaborates.

If the student finances the bill with loans, it’s more like buying a Lamborghini on credit—and then driving it off a cliff. Total student-loan debt has hit $1.3 trillion, according to the Federal Reserve, exceeding both the nation’s credit-card debt and its auto loans. Two-thirds of students now borrow to pay for their education, up from 45% in 1993, according to a New York Times analysis of federal data. At the end of 2014 the average student-loan borrower owed $26,700,according to analysts at the New York Fed, while 4% owed $100,000 or more.

More giveaways from government may seem like a good idea for students, but that’s only made possible by instead hurting taxpayers.

And students almost surely will suffer as well when you consider the indirect effects of this intervention.

Forgiving student debt or providing “free” tuition, with no new accountability measures, will only worsen today’s problems for future generations. The multibillion-dollar bailout Mrs. Clinton has proposed would only shift the costs of higher education to taxpayers, many of whom have not had the benefit of college. The Democratic nominee’s plan would also encourage more students to make poor educational choices by creating the illusion that college is free.

By the way, it’s very important to note that taxpayers are getting a rotten deal.

We’ve had lots more spending in recent decades, but no actual improvement in education.

Over the past five decades, billions in state and federal subsidies have contributed significantly to the exploding cost of higher education by making it easier for colleges to justify outrageous amenities. “Free” tuition will only further distort the incentives. …there is little evidence that additional spending has enhanced the value of the college degree. In a 2014 academic study of collegiate spending, economists Robert E. Martin and R. Carter Hill noted that research universities had cumulatively spent more than half a trillion dollars from 1987 to 2005. “There should be evidence of higher quality at these investment levels,” they wrote. Instead, “completion rates declined, grade inflation increased, students spend less time studying, adult numeracy/literacy rates declined, and critical thinking skills did not improve.”

Amen.

Indeed, this is exactly what we’ve seen in K-12 education.

Someone (more clever than me) needs to come up with the collegiate equivalent of this famous chart from the late Andrew Coulson.

We already know that the United States spends more per student on K-12 education than any other nation and gets mediocre results . That’s probably mostly due to the inefficient monopoly structure of elementary and secondary education.

The problems at the collegiate level are third-party payer and the inevitable negative effects of bureaucratic bloat and inefficiency.

The bottom line is that Hillary is right when she says higher-education spending is an investment. The problem is that she likes making investments that generate negative returns.

P.S. You won’t be surprised to learn that Paul Krugman also approves of investments with negative returns.

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Mitchell: Hillary Clinton proposed to increase handouts,

Opinion

Hillary Clinton and Bill Clinton speak at an event for the Clinton Foundation, or Clinton Global Initiative. (PHOTO: Greg Allen/Invision/AP)

Hillary Clinton and Bill Clinton speak at an event for the Clinton Foundation, or Clinton Global Initiative. (PHOTO: Greg Allen/Invision/AP)

Hold on; we may finally be getting some fireworks in this lackluster presidential campaign — as the Clinton Foundation scandal seems to be gathering steam.

Could the Clintons finally have to face the music for their adult-lifetime of corruption? Is it possible that Hillary Clinton’s lifelong scheme to be America’s first female president could be derailed by this power couple’s wanton venality?

I’ve watched closely through the years the Clintons’ uncanny agility at hurdling real scandals and coming out almost unscathed. Yes, Bill Clinton was impeached, but what a dud that turned out to be, with Clinton rising to the figure of beloved statesman among Democrats and his accusers being painted as petty partisans.

There has been no justice, and they have made off like bandits ever since. One might argue that it’s unfair to impute Bill Clinton’s misdeeds to his wife, but but it’s not a matter of imputation. Hillary Clinton has been integrally involved every step of the way — from enabler to enforcer to joint participant. Don’t ever forget her complicity, such as her leading role in destroying the train of women who dared to blow the whistle on him.

From the beginning, these two have stepped all over people (Travelgate) and mutually abused .and destroyed Bill’s harassment victims. But do you remember the grating mantra of the Clinton-guarding media? “These are private matters that have nothing to do with his public life. Private conduct is irrelevant to one’s fitness for public office.”

Well, these disgraceful hacks don’t have that excuse in their arsenal of dodges this time. There is no way even a journalism school valedictorian could credibly argue that the Clinton Foundation graft didn’t directly involve the public interest.

The media and Democratic Party’s joint alibis for the Clintons through the years have puffed the Clintons up with a sense of invincibility. The couple have to believe there is nothing they could do that would bring them down.

When I first heard about the foundation’s influence peddling, I had little doubt there was truth to it, but I had no expectation that anything would come of it. In a sense, the Clintons have benefited from the plethora of charges leveled against them over the years. After a while, these allegations — no matter how credible — become just noise and are easily characterized as another chapter in a decades-long partisan witch hunt.

It’s awfully convenient for the Clintons and their liberal hatchet men to paint every scandal as a politically motivated slander, but when the media and the Democratic Party themselves always refuse to put truth above their own ideological and political interests, it’s inevitable that only Republicans would bring these charges.

But the Clinton Foundation scandal seems to be different. It is objectively true that the Clintons have become mega-millionaires since the close of Bill’s second term — and they’ve done it through exorbitant speaking fees, which, absent other consideration, couldn’t possibly benefit the payers commensurate to their payments, and bizarre contributions to their foundation by foreign interests that had unusual access to Hillary’s State Department.

Bill Clinton flippantly dismissed the suggestion of any quid pro quo, saying there is no evidence that any of the donors received anything for their donations. When asked whether there is at least an appearance of impropriety, he said, “I’m not responsible for anybody else’s perception.” It couldn’t be more fitting that he was the first postmodern president. He lent Oval Office credence to the demonic lie that words have no meaning apart from what people choose individually to assign to them. He’s unctuously transitioned from “It depends upon what the meaning of the word ‘is’ is” to “I can’t be held accountable for your accurate perception that my wife and I are wholly corrupt and have not only used our public positions to financially profit but also compromised and damaged the nation’s interests in the process.”

Just think about the charge that Crown Prince Salman of Bahrain secured a meeting with Secretary of State Hillary Clinton that led to her approval of certain extremely controversial arms sales to Bahrain after his kingdom donated up to $150,000 directly to the Clinton Foundation and some $32 million to the Clinton Global Initiative. This alone would be enough to bring down a deified Roman emperor.

The Associated Press reported that more than half the people outside the government who met with Hillary Clinton while she was secretary of state donated to the Clinton Foundation either individually or through related entities. Clinton apologists are already trying to tell us there’s nothing to see here, but sentient human beings know better.

No president in modern history, including Richard Nixon, has been the scandal virtuoso that both of the Clintons are in their own right. The jig just may be up.

WikiLeaks editor Julian Assange promises more email dumps that will bring Hillary Clinton down. Wouldn’t it be the profoundest poetic justice if the Clintons were done in by the very emails Hillary thought she had deep-sixed months ago?

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Hold on; we may finally be getting

Video

[brid video=”60487″ player=”2077″ title=”Alex Jones Caught by Surprise Hillary Attack”]

Alex Jones, host of “Infowars,” responded to Hillary Clinton naming him in her “alt-right” speech attempting to paint Donald Trump and his supporters as racists. Jones called Clinton’s accusations “lies and twisted disinformation.”

“They admit now they want to censor us,” he said. “And they say that Breitbart and other conservatve grassroots media don’t have the right to exist. Because we’re kicking your butt with the information because it is the internet age. We can show Hillary on tape saying ‘build a wall’ 15 times and then later saying that Trump is a bigot for wanting to build a wall. We can show what a fraud you are, lady!”

Alex Jones, host of "Infowars," responded to

Policy

minimum-wage-graphic-image

Minimum Wage Graphic Image

While economists are famous for their disagreements (and their incompetent forecasts), there is universal consensus in the profession that demand curves slope downward. That may be meaningless jargon to non-economists, but it simply means that people buy less of something when it becomes more expensive.

And this is why it makes no sense to impose minimum wage requirements, or to increase mandated wages where such laws already exist.

If you don’t understand this, just do a thought experiment and imagine what would happen if the minimum wage was $100 per hour. The answer is terrible unemployment, of course, which means it’s a very bad idea.

So why, then, is it okay to throw a “modest” number of people into the unemployment line with a “small” increase in the minimum wage?

Yet some politicians can’t resist pushing such policies because it makes them seem like Santa Claus to low-information voters. Vote for me, they assert, because I’ll get you a pay raise!

All of this sounds good, and it may even be the final result for some workers. But there’s overwhelming evidence that you get more unemployment when politicians boost the minimum wage.

There are no “magic boats.” In the real world, businesses only hire workers when they expect that additional employees will generate more than enough revenue to offset their costs. So when politicians artificially increase the cost of hiring workers, there will be some workers (particularly those with low skills) who become redundant.

And that’s exactly what we’re seeing in cities that have chosen to mandate higher minimum wages.

The Wall Street Journal opines on Seattle’s numbers.

Seattle’s increase last year seems to be reducing employment. That’s the finding of a new report by researchers at the University of Washington. The study compared nine months of 2015 in Seattle, where the wage is ticking up gradually and hit $13 an hour in January, with similar areas elsewhere in Washington. …The researchers found that the ordinance decreased the low-wage employment rate by about one-percentage point. …The ordinance “modestly held back” employment of low-wage earners, and hours worked “lagged behind” regional trends, on average four hours each quarter (or 19 minutes a week). Many such individuals moved to take jobs outside the city at “an elevated rate compared to historical patterns,” says the report. …None of this will surprise anyone who understands that increasing the cost of something will reduce the demand for it. Then again, that concept seems to elude both major presidential candidates, who have floated national minimum-wage increases.

By the way, it’s not just Trump and Clinton supporting this destructive policy. Mitt Romney also was on the wrong side back in 2012.

And it goes without saying that Obama has been a demagogue on the issue.

Sigh.

Let’s examine evidence from another city. Mark Perry of the American Enterprise Institute looks at what has been happening in Washington, DC.

Since the DC minimum wage increased in July 2015 to $10.50 an hour, restaurant employment in the city has increased less than 1% (and by 500 jobs), while restaurant jobs in the surrounding suburbs increased 4.2% (and by 7,300 jobs). An even more dramatic effect has taken place since the start of this year – DC restaurant jobs fell by 1,400 jobs (and by 2.7%) in the first six months of 2016 between January and July – that’s the largest loss of District food jobs during a 6-month period in 15 years. Perhaps some of those job losses were related to the $1 an hour minimum wage hike on July 1, bringing the city’s new minimum wage to $11.50 an hour. In contrast, restaurant employment outside the city grew at a 1.6% rate in the suburbs (and by 2,900 jobs) during the January to July period. …While it might take several more years to assess the full impact, the preliminary evidence so far suggests that DC’s minimum wage law is having a negative effect on staffing levels at the city’s restaurants. At the same time that suburban restaurants have increased employment levels by nearly 3,000 new positions since January, restaurants in the District have shed jobs in five out of the last six months, with a total loss of 1,400 jobs during that period (an average of nearly 8 jobs lost every day). The last time DC experienced restaurant job losses in five out of six consecutive months was 25 years ago in 1991, and the last time 1,400 jobs were lost over any six-month period was 15 years ago during the 2001 recession.

Here’s a chart looking at how restaurant employment in DC and the suburbs used to be closely correlated, but how there’s been a divergence since the city hiked the minimum wage.

As Mark noted, we’ll know even more as time passes, but the net result so far is predictably negative.

For additional background info, this video is a succinct explanation of why minimum-wage mandates are such a bad idea.

It makes no sense to impose minimum

Sports, US

American Loympic swimmers Ryan Lochte, left, and Jimmy Feigan, right.

American Loympic swimmers Ryan Lochte, left, and Jimmy Feigan, right.

Brazilian police officials formally charged U.S. Olympic swimmer Ryan Lochte late Thursday with filing a false robbery report in Rio de Janeiro. Lochte and three Olympic swimmer teammates–Jack Conger, Gunnar Bentz and Jimmy Feigen–lied about being robbed at gunpoint, Brazilian authorities said. Further, police say the athletes made up the story to cover up their damaging a bathroom door at a Rio gas station and that Mr. Lochte will be informed of the indictment in the United States so he can decide whether to introduce a defense in Brazil.

The indictment will also be sent to the International Olympic Committee’s ethics commission, which is investigating the whether Mr. Lochte and his teammates violated the Olympic charter.

Melissa Nathan, a spokeswoman for Mr. Lochte, said he had no comment. He lost four major sponsors early this week, including Speedo USA and Ralph Lauren. However, on Thursday he picked up a new sponsor — Pine Bros. Softish Throat Drops. The company said people should be more understanding and confirmed he will appear in ads that say the company’s product is “Forgiving On Your Throat.”

He has 12 Olympic medals, second only to Michael Phelps among U.S. male Olympians.

Under Brazilian law, the penalty for falsely reporting a crime can bring a maximum penalty of 18 months in prison. Mr. Lochte could be tried in absentia if he doesn’t return to Brazile to face the charge, but legal experts say the chance of extradition is nil.

Brazilian police officials formally charged U.S. Olympic

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