21/02 2010: US Economic-Growth back on Trail  The worst and longest economic recession since the Great Depression ended. Fourth quarter GDP increased at 5.7 percent annually (subject to revision). Third quarter GDP growth was just 2.2 percent. The growth is not supported by US industrial production which grew by just 0.9 percent in January (5), but reflected strong growth in private inventory investment. Meanwhile, the Fed raised its discount rate to 0.75 percent. Key interest rates remain at historic lows of 0.25 percent (1). Experts do not expect inflation to rise over the coming months as the year-over-year CPI-U index for All Urban Consumers grew by just 0.2 percent in January and December after rocking 1.8 percent in November and falling -0.2 in October 2009 (2). After remaining tame over the past year, the Eurozone inflation rate eventually picked up in January to 0.9 percent year-over-year after increasing 0.5 percent in December 2009 (3). The rate of unemployment remained unchanged in February fuelling hopes for a sustained economic recovery (4). This rate compares to 7.2 percent in 2008 and just 4 percent in 2000. Yet, the US public debt of 11 trillion is set to double over the next decade on bailouts and fiscal stimulus plans (6). The debt could reach as much as 100 percent of GDP in the coming years. See US GDP/Public Debt Diagram. Even as Obama made a pledge to reduce defense spending as he withdraws troops from Iraq, his military engagement in Afghanistan with a troop buid up of 30'000 and pledge to provide all Americans with a universal health-coverage may not help the economy recover from hyperbolic defense spending in the Bush era and a crisis-burdened economy.
(1) US Rates: www.moneycafe.com/library/fedfundsrate.htm |
26/01 2010: Jerry Lee's Red Line on Economics At the peak of the financial crisis back in September 2008, payrolls were falling at a rate of 740'000 per month. These times are gone. But the resulting recession is stubborn and the US economy will not recover from its pre-crisis strength shortly. 7.2 million jobs were lost over the last two years, the worst as a percentage since WWII ended in 1944-45, including 85'000 jobs in December - much worse that the average forecast of 76 US economists. While the rate of unemployment unexpectedly dropped to 9.7 percent in January, the participation rate, or share of the population in the labor force, fell to 64.6 percent in December from 64.9 the previous month. This shows how people are giving up looking for a job. Their return on the job market will mean a rise in the rate of unemployment to somewhere around 10.5 percent, economists predict. These are news related to the 2007-2009 financial crisis:
More related news in Jerry's Red Line 2009, 2008 |
31/12 2009: Consumer Sentiment The US index for consumer sentiment improved to 72.5 percent in November (70.6 in October) mainly due to discounting by merchants. Fourth quarter average is 70.2, a slight improvement over the third quarter. The index reached an all-time low in February of 2009 at 56.3. The Reuters/University of Michigan Surveys of Consumers said in a statement that "while most think the worse is over, consumers are still quite uncertain about when prospects for their own finances will improve. Even when consumers become convinced that sustained gains will be forthcoming, there will still be strong spending headwinds, including intentions to add to their savings and reserve funds and to decrease their indebtedness as well as continued restraints on the availability of credit. Overall, the data suggest consumer spending will rise by just 1.6 percent in 2010." Look here for more statistics on US Consumer Sentiment.
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26/01 2010: US Existing Home Sales and Prices Average US Existing Home Sales increased year-over-year by 5.2 percent in 2009, which compares to a fall of 13.1 percent in 2008. Realtors's chief economist Lawrence Yun said "sales are on track to rise again in 2010. However, the job market remains a concern and could dampen the housing recovery - job creation is key to a continued recovery in the second half of the year". By contrast, compared to 2008, the fall of home prices as a yearly average in 2009 accelerated to 12.5 percent reflecting persistent weakness in the real estate market depite federal tax credits.
Look here for the latest news and statistics on single home prices and sales. |
07/11 2009: Oil prices After an all-time high of USD 147.27 per barril on July 11, 2008, oil prices eased considerably to USD 91.00 and USD 36.00 in September and December 2008 respectively without any significant changes in oil supply and demand, which suggests that at least 70 percent of that record-breaking rally was caused by speculation alone. Interestingly, a rise in the price of oil contributed to a weaker dollar, and inversely. While oil-dollar correlations may be explained on a purely theoretical basis, they are not supported by long-term historical data. Get the latest on oil at the New York Mercantile Exchange (NYMEX): www.nymex.com/lsco_fut_cso.aspx
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