Category: US Economy
The analysis published under this category are as follows.
Monday, August 29, 2011
Fed Can't Fix U.S. Economy Without Washington's Help / Economics / US Economy
By: Money_Morning
David Zeiler writes:
The U.S. Federal Reserve has exhausted nearly all of its resources in trying to help the U.S. economy, Chairman Ben S. Bernanke said in a speech Friday at Jackson Hole, WY.
Now it's up to the federal government to do its part by fixing U.S. fiscal policy.
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Monday, August 29, 2011
Field Of U.S. Economic Dreams / Economics / US Economy
By: Tony_Pallotta
"If you build it he will come." - Field Of Dreams
"We built it and he did not show." - US economic reality
The consumer driven recession has begun. Keeping it very simple of the four GDP components (consumer, fixed investment, government and net trade) the consumer has simply rolled over. In Q1 2011 the consumer contributed 1.46% to the 0.4% total GDP. In other words if it was not for consumer growth or even if .5% of that growth was removed the economy contracted in Q1 2011.
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Saturday, August 27, 2011
Trade With China and India Will Not Collapse America's Economy / Politics / US Economy
By: Gary_North
For over half a century, I have read warnings that free trade is a threat to America. The freer it gets, the more we are told that slave labor in Asia is threatening the workers of America.
We hear calls for fair trade. Who is to decide what is fair trade? Congress. Ah, yes: Congress. The source of fairness if ever there was one. No special interests there, putting their PAC-filled fingers on the balance scale of justice.
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Saturday, August 27, 2011
Bernanke Keeps Door Open for Additional Stimulus on Weaker Economic Growth / Economics / US Economy
By: Asha_Bangalore
Chairman Bernanke stressed that the Fed “has a range of tools that can be used to provide additional stimulus” but he was silent on specifics. He mentioned that the costs and benefits of these options were discussed at the August 9 meeting. These details will be available when minutes of this meeting are published on August 30. He reiterated parts of the August 9 policy statement noting that “the Committee will continue to assess the economic outlook in light of incoming information and is prepared to employ its tools as appropriate to promote a stronger recovery in a context of price stability.”
Saturday, August 27, 2011
The Fed Will Allow Business Cycle To Play Out Longer This Time! / Economics / US Economy
By: Sy_Harding
The Federal Reserve played its part well, along with the Treasury Department, the White House, and Congress, in helping prevent the financial meltdown of 2008-2009 from turning the ‘Great Recession’ of 2007-2009 into the next Great Depression.
But its solo intervention with its QE2 quantitative easing program last year to boost the again faltering economy seems to have only delayed the business cycle.
Wednesday, August 17, 2011
Is The U.S. Price Index Inflating Real GDP? / Economics / US Economy
By: Tony_Pallotta
There is no shortage of correlations such as the one shown below (PPI VS real GDP) that brings into question the real GDP reported over the past two years. In other words real GDP appears somewhat inflated since Q3 2009. You can substitute PPI in the chart below and find many similar relationships or should I say "divergences from reality."
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Tuesday, August 16, 2011
Widening U.S. Trade Deficit Adds to Fears of Global Economic Slowdown / Economics / US Economy
By: Money_Morning
David Zeiler writes: The widening U.S. trade deficit surprised analysts last week by reaching a level not seen since October 2008, while the decline in exports added to growing evidence of a global economic slowdown.
The U.S. Commerce Department announced last Thursday that the trade gap grew 4.4%, to $53.1 billion from $50.8 billion in May. Economists had expected it to shrink to $48 billion.
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Wednesday, August 10, 2011
Falling Oil Prices Will Stimulate Consumer Spending / Economics / US Economy
By: Paul_L_Kasriel
As shown in Chart 6, the price of a barrel of West Texas Intermediate crude oil fell to $81.31 on August 8, the lowest price since November 23, 2010. Some talking heads on the cable financial news channels will tell you that this decline in oil prices could be the catalyst for stronger growth in consumer spending in the coming months. Could be, but might not be. You see, it all depends on why the price of crude oil has been falling since late April. If the price of crude is falling because there has been an increase in the supply of crude oil, then yes, this decline in the price of crude is positive for consumer spending and economic growth in general. But, if the decline in the price of crude is due to a decrease in the demand for crude oil, then the decline in the price of crude oil is symptomatic of weakening global economic growth.
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Wednesday, August 10, 2011
Waiting for an Inverted Yield Curve to Signal an Imminent Recession? / Economics / US Economy
By: Paul_L_Kasriel
Don’t hold your breath. As Chart 1 shows, moving from a positive spread between the yield on the Treasury 10-year security and the fed funds rate has more often than not in the past 55 years signaled the commencement of a recession on the near-term horizon. There have been a few miscues – instances when a recession occurred without the spread turning negative prior to the onset of the recession and some instances when the spread turned negative but a recession did not ensue. So, like so many other leading indicators, the negative-spread recession indicator is not foolproof.
Wednesday, August 03, 2011
Five Things You Need to Know About the U.S. Economy / Economics / US Economy
By: David_Galland
David Galland, Managing Director, Casey Research writes: At any point during the recent negotiations in Washington over the debt, did you seriously think for even a second that the U.S. was about to default?
Of course, in time the U.S. government (along with many others) will default. However, they are highly unlikely to do so by decree or even through the sort of legislative inaction recently on display. Rather, it will come about through the time-honored tradition of screwing debtors via the slow-roasting method of monetary inflation.
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Tuesday, August 02, 2011
U.S. Economic Fundamentals Are More Important, Debt-Ceiling Deal is an Induced Necessity / Economics / US Economy
By: Asha_Bangalore
On July 31, President Obama, Senator Reid, and House Speaker Boehner shook hands on a deal that will be voted on later today. The deal negotiated would lead to a total reduction of the budget deficit by $2.1 trillion during the 2012-2021 period. It also includes raising the debt ceiling between $2.1 trillion and $2.4 trillion by the final months of 2012. The timing and magnitude of the spending cuts as indicated in Table 3 of the latest scoring from the Congressional Budget Office (CBO's assessment of new legislation)point to discretionary spending cuts in the entire 2012-2021 period. Lower federal government outlays in 2012 in a fragile economic environment are a setback to economic growth.
Sunday, July 31, 2011
U.S. Real GDP Revisions Indicate Economy Still in Recovery Phase / Economics / US Economy
By: Asha_Bangalore
The U.S. economy grew at an annual rate of 1.3% in the second quarter after a downwardly revised 0.4% increase in the first quarter (previously estimated to have increased 1.9%). From a year ago, real GDP advanced only 1.6%, the smallest increase in the current recovery.
Thursday, July 28, 2011
U.S. Businesses Appear to Have Selective Uncertainty / Economics / US Economy
By: Paul_L_Kasriel
I keep hearing that what is holding U.S. businesses back from expanding and hiring is “uncertainty.” Exactly what new types of uncertainty businesses face in the current environment vs. past environments is rarely spelled out. But if, in fact, businesses are paralyzed due to uncertainty, I would not expect them to be stepping up their purchases of capital equipment. After all, capital equipment has a relatively long life. If businesses were unusually uncertain about the long-term outlook, they would be more reluctant to make longer-term commitments, which the purchase of capital equipment is. Rather, if businesses were unusually uncertain about the future, they might be more inclined to hire workers, who, after all, can be dismissed on short notice if conditions were to change suddenly.
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Saturday, July 23, 2011
Outcome of Tax Cuts Following the 2001 Recession - Noteworthy Facts / Economics / US Economy
By: Asha_Bangalore
The Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and Jobs and Growth Tax Relief Reconciliation Act of 2003 (JGTRRA) lowered taxes on personal income, dividends and capital gains. Personal income tax rate for the highest bracket was reduced in steps from 39.6% (tax rate prior to EGTRRA) to 35% (after the JGTRRA legislation). These changes of income tax rates had sunset provisions and were set to expire in 2010; but they were extended under the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (TRUIRJCA). Read full article... Read full article...
Thursday, July 21, 2011
Continued Sluggish U.S. Economic Growth Expected Through 2012 / Economics / US Economy
By: Paul_L_Kasriel
With this commentary, we unveil our first formal forecast of U.S. economic activity and interest rates for 2012. The forecast for real GDP growth is only marginally better in 2012 vs. the forecast for 2011 - on a Q4/Q4 basis, 2.45% in 2012 vs. 2.20% in 2011. We do expect some forward momentum to build in the second half of 2012 with respect to real GDP growth and for this momentum to intensify in 2013. The reason for this building momentum is an expectation of a resumption of Federal Reserve quantitative easing (QE) early in 2012 and/or a pick-up in bank credit creation. Because our forecast is for below-potential real economic growth, our view is that the unemployment rate will creep up from its Q2:2011 average of 9.1%, peaking at 9.5% in Q3:2012. It will not be until 2013, that any sustained meaningful decline in the unemployment rate sets in.
Saturday, July 16, 2011
Factory Production Decelerating Even After Excluding Autos / Economics / US Economy
By: Paul_L_Kasriel
Industrial production moved up 0.1% in June, following two consecutive monthly declines. Supply chain problems from the Japanese natural disaster led to a decline in auto production in each of the three months of the second quarter. Production at the nation's utilities rose 0.9% in June following a 2.0% drop in May.
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Friday, July 15, 2011
U.S. Q2 Retail Sales Suggest Mild Gain in Consumer Spending / Economics / US Economy
By: Asha_Bangalore
Retail sales rose only 0.1% during June after a revised 0.1% drop in May. The tally of retail sales for the second quarter shows a significant deceleration in the second quarter (+4.4%) after a 10.5% annualized gain in the first quarter, which partly reflects the vast swings of gasoline prices. Auto sales advanced 0.8% in June according to today's retail sales report, which is different from the unit sales data for June (11.5 million units vs. 11.8 million units in May).
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Wednesday, July 13, 2011
This Is Not Economic Recovery, It's the Great Correction / Economics / US Economy
By: Bill_Bonner
The fight for recovery is over. The feds have waved the white flag. Maybe…
The Labor Department came out with the latest employment numbers last week. They were atrocious. Only about a fifth as many new jobs as economists expected. Which shows you three things.
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Wednesday, July 13, 2011
April's Narrower U.S. Trade Deficit Looks to Have Been a Fluke / Economics / US Economy
By: Paul_L_Kasriel
In price-adjusted terms, the U.S. trade deficit in goods widened by almost $3.9 billion in May compared with its narrowing of $5.7 billion in April. Real U.S. exports of goods decreased 1.5% or $1.5 billion in May. Real U.S. imports of goods increased 1.6% or $2.3 billion. In April, imports contracted by $4.6 billion. This occurred in part because of the interruption in imports from Japan of motor vehicle parts. Imports of Japanese-produced motor vehicle parts rebounded in May and likely did so in June, too (see Chart 2).
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Sunday, July 10, 2011
Has the 120-year Inflation Deflation Cycle Bottomed Early? / Economics / US Economy
By: Clif_Droke
In light of the impressive equities market rally from 2009 through 2011, some are wondering if perhaps the economic long wave has bottomed early. I recently received an email asking a question that is relevant to our discussion. He writes, "Suppose the big 120-year cycle hit a few years early, which for a cycle this long would certainly be possible. Perhaps the March 2009 low was the deflationary 120-year cycle low point, and the bull market just carries on for several more years. Is this possible?"