By JEANNINE AVERSA, AP Economics Writer Jeannine Aversa, Ap Economics Writer –
WASHINGTON – With signs the economy is improving but still fragile, Federal Reserve policymakers are considering whether some programs intended to drive down rates on mortgages and other consumer debt should be slowed down.
Most economists predict that Fed Chairman Ben Bernanke and his colleagues, who resumed meeting Wednesday morning, won't launch any bold new efforts at the end of their two-day gathering.
Fears have grown on Wall Street that the Fed's radical efforts to lift the country out of the longest recession since World War II could ignite inflation later on.
"Injecting additional money into the banking system is a pretty dangerous game right now, and the Fed cannot afford to press on the accelerator amid a potentially inflationary environment," said Richard Yamarone, economist at Argus Research.
Wanting to snuff out any rise in inflation expectations, the Fed could opt to tweak its already-announced programs to slow down purchases of either government debt or mortgage-backed securities. Doing so also could help avert possible market disruptions and make it easier for the Fed to reel in these programs once the economy rebounds.
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Showing posts with label economic policy. Show all posts
Showing posts with label economic policy. Show all posts
Wednesday, June 24, 2009
Wednesday, April 29, 2009
Diversionary Tactics? Economy Worse.
Now that you have comparative data (prior post), showing that the true resistant flu is not the Swine Flu (H1N1), but instead H3N2, you may want to see the newest twist.
First, by now you may have already read or heard the we had our first "American" death from the Swine Flu. Well, while I have sympathy for anyone who loses a loved one, the toddler wasn't really "American". It happened on our soil, yes. However, the child was visiting from Mexico.
While any spread of illness is a serious issue (and I am certainly of the opinion that you should be prepared), flu illnesses are not uncommon and that includes new strains.
I still wonder why there is so much attention being paid when a simple warning could be put into place for prevention measures (i.e., washing hands which everyone should do anyway).
When you read the story below (along with the fact that $1.5 billion has been pulled off by Obama as an emergency fund even though we have strategic reserves of antivirals) you may wonder why the economy has not been touted the main story of the day...
Economy shrinks at 6.1 percent pace in 1Q
Jeannine Aversa, Ap Economics Writer
WASHINGTON – The economy shrank at a worse-than-expected 6.1 percent pace at the start of this year as sharp cutbacks by businesses and the biggest drop in U.S. exports in 40 years overwhelmed a rebound in consumer spending.
The Commerce Department's report, released Wednesday, dashed hopes that the recession's grip on the country loosened in the first quarter. Economists surveyed by Thomson Reuters expected a 5 percent annualized decline.
Instead, the economy ended up performing nearly as bad as it had in the final three months of last year when it logged the worst slide in a quarter-century, contracting at a 6.3 percent pace. Nervous consumers played a prominent role in that dismal showing as they ratcheted back spending in the face of rising unemployment, falling home values and shrinking nest eggs.
In the January-March quarter consumers came back to life, boosting their spending after two straight quarters of reductions. The 2.2 percent growth rate was the strongest in two years.
Much stronger demand for big-ticket "durable" goods, including cars, furniture and household appliances led the increase. That spending rose at a 9.4 pace, the most in a year. Consumers also boosted spending on clothing, shoes, recreation services, medical care, gasoline and other energy products. But not on food, where spending dipped slightly.
Still, the consumer rebound was swamped by heavy spending cuts in virtually every other area.
Businesses cut spending on home building, commercial construction, equipment and software, and inventories of goods. Sales of U.S. goods to foreign buyers plunged as they retrenched in the face of economic troubles in their own countries. Even the government trimmed spending. It was the first time that happened since the end of 2005.
All told, the economy logged its worst six-month performance since the late 1950s.
The sharp cuts underscore the toll the housing, credit and financial crises — the worst since the 1930s — are having on the country. The recession, which began in December 2007, has taken a big bite out of national economic activity and snatched 5.1 million jobs.
To cushion the impact of the downturn, the Federal Reserve has slashed a key bank lending rate to a record low near zero and rolled out a string of radical programs to spur lending. The Fed at the end of its two-day meeting Wednesday is expected to keep its key rate near zero and probably hold it there well into next year.
Wall Street shook off the weak gross domestic product reading as it awaited the Fed's assessment of the economy. The Dow Jones industrial average added more than 155 points in midday trading and broader indices also rose.
President Barack Obama is counting on his $787 billion stimulus of tax cuts and increased government spending on big public works projects to help bolster economic activity later this year. The administration also has put forward programs to rescue banks and curb home foreclosures — big negative forces weighing on the economy.
White House spokesman Robert Gibbs called the first-quarter's showing a "pretty severe contraction," but added that some more up-to-date signals on the economy have been more encouraging. "We continue to get, as the president said, some glimmers of hope," he said.
Even in the face of Wednesday's weaker-than-expected report, some analysts stuck to predictions that the economy would shrink less in the current April-June period — at a pace of 1 to 2.5 percent — as Obama's stimulus begins to take hold. Those analysts also continue to hope the economy would start to grow again in the final quarter of this year.
"The recession was bad in the first quarter but won't be as bad going forward," said John Silvia, chief economist at Wachovia. "I don't think this lessens the expected pattern that the economy will be entering a recovery by the end of this year."
However, the recent outbreak of the swine flu, which started out in Mexico and has spread to the United States and elsewhere, poses a new potential danger. If the flu stifles trade and forces consumers to cut back further, those negative forces would worsen the recession.
Before the flu outbreak, Fed Chairman Ben Bernanke said the recession could end this year if the government succeeds in stabilizing the shaky financial system and getting banks to lend again.
In recent weeks, Bernanke and his colleagues had cited "tentative signs" of the recession easing in some consumer spending, home building and other reports. Finance officials from the U.S. and other top economic powers meeting here last week also saw some hopeful signs for the global economy.
Fresh glimmers of hope emerged in the U.S. Tuesday. The Conference Board's Consumer Confidence Index rose far more than expected in April, jumping more than 12 points to 39.2, the highest level since November. And a housing index showed that home prices dropped sharply in February, but for the first time in 25 months the decline was not a record.
However, in the first quarter there was much weakness in those areas and others.
Spending on home building fell at a 38 percent annualized rate, the most since the second quarter of 1980. Businesses cut spending on equipment and software at a 33.8 percent pace, the most since the first quarter of 1958.
Inventory reductions shaved 2.79 percentage points off overall first-quarter economic activity. But with stockpiles slashed, any pickup in business sales would help increase production and bolster the economy in the current quarter.
Still, U.S. exports plunged at a rate of 30 percent, the biggest drop since the first quarter of 1969, reflecting the crimped appetite of struggling foreign buyers. The government also cut spending 3.9 percent, the most since the end of 1995.
Even if the recession were to end this year, the economy will remain feeble and unemployment will keep climbing, government officials and analysts say.
The Labor Department on Wednesday said that all 372 metropolitan areas tracked saw their jobless rates rise in March from a year earlier. The rate in Indiana's Elkhart-Goshen region soared to 18.8 percent, up 13 percentage points, which was the biggest gain in the country.
The national jobless rate is now at a quarter-century high of 8.5 percent and is expected to hit 10 percent by the end of this year. It will probably rise a bit higher in early 2010 before starting to slowly drift downward. Still, the Fed predicts unemployment will stay elevated into 2011, and economists don't think it will return to normal — around a 5 percent jobless rate — until 2013.
More layoffs were announced this week. Textron Inc. said it will expand layoffs, eliminating 8,300 jobs, or 20 percent, of its global work force as the recession weakens demand for corporate planes. The maker of Cessna planes, Bell helicopters and turf-maintenance equipment earlier this year said it would reduce its work force by 6,200 jobs, or 15 percent, mostly at Wichita, Kansas-based Cessna.
General Motors Corp. laid out a massive restructuring plan that includes cutting 21,000 U.S. factory jobs by next year. Clear Channel Communications Inc., the largest owner of U.S. radio stations, said it's cutting 590 jobs in its second round of mass layoffs this year amid pressure from the recession and evaporating advertising budgets. And bearings and specialty steels maker Timken Co. indicated it will cut about 4,000 more jobs by the end of this year after earlier suggesting about 3,000 jobs already had been targeted.
First, by now you may have already read or heard the we had our first "American" death from the Swine Flu. Well, while I have sympathy for anyone who loses a loved one, the toddler wasn't really "American". It happened on our soil, yes. However, the child was visiting from Mexico.
While any spread of illness is a serious issue (and I am certainly of the opinion that you should be prepared), flu illnesses are not uncommon and that includes new strains.
I still wonder why there is so much attention being paid when a simple warning could be put into place for prevention measures (i.e., washing hands which everyone should do anyway).
When you read the story below (along with the fact that $1.5 billion has been pulled off by Obama as an emergency fund even though we have strategic reserves of antivirals) you may wonder why the economy has not been touted the main story of the day...
Economy shrinks at 6.1 percent pace in 1Q
Jeannine Aversa, Ap Economics Writer
WASHINGTON – The economy shrank at a worse-than-expected 6.1 percent pace at the start of this year as sharp cutbacks by businesses and the biggest drop in U.S. exports in 40 years overwhelmed a rebound in consumer spending.
The Commerce Department's report, released Wednesday, dashed hopes that the recession's grip on the country loosened in the first quarter. Economists surveyed by Thomson Reuters expected a 5 percent annualized decline.
Instead, the economy ended up performing nearly as bad as it had in the final three months of last year when it logged the worst slide in a quarter-century, contracting at a 6.3 percent pace. Nervous consumers played a prominent role in that dismal showing as they ratcheted back spending in the face of rising unemployment, falling home values and shrinking nest eggs.
In the January-March quarter consumers came back to life, boosting their spending after two straight quarters of reductions. The 2.2 percent growth rate was the strongest in two years.
Much stronger demand for big-ticket "durable" goods, including cars, furniture and household appliances led the increase. That spending rose at a 9.4 pace, the most in a year. Consumers also boosted spending on clothing, shoes, recreation services, medical care, gasoline and other energy products. But not on food, where spending dipped slightly.
Still, the consumer rebound was swamped by heavy spending cuts in virtually every other area.
Businesses cut spending on home building, commercial construction, equipment and software, and inventories of goods. Sales of U.S. goods to foreign buyers plunged as they retrenched in the face of economic troubles in their own countries. Even the government trimmed spending. It was the first time that happened since the end of 2005.
All told, the economy logged its worst six-month performance since the late 1950s.
The sharp cuts underscore the toll the housing, credit and financial crises — the worst since the 1930s — are having on the country. The recession, which began in December 2007, has taken a big bite out of national economic activity and snatched 5.1 million jobs.
To cushion the impact of the downturn, the Federal Reserve has slashed a key bank lending rate to a record low near zero and rolled out a string of radical programs to spur lending. The Fed at the end of its two-day meeting Wednesday is expected to keep its key rate near zero and probably hold it there well into next year.
Wall Street shook off the weak gross domestic product reading as it awaited the Fed's assessment of the economy. The Dow Jones industrial average added more than 155 points in midday trading and broader indices also rose.
President Barack Obama is counting on his $787 billion stimulus of tax cuts and increased government spending on big public works projects to help bolster economic activity later this year. The administration also has put forward programs to rescue banks and curb home foreclosures — big negative forces weighing on the economy.
White House spokesman Robert Gibbs called the first-quarter's showing a "pretty severe contraction," but added that some more up-to-date signals on the economy have been more encouraging. "We continue to get, as the president said, some glimmers of hope," he said.
Even in the face of Wednesday's weaker-than-expected report, some analysts stuck to predictions that the economy would shrink less in the current April-June period — at a pace of 1 to 2.5 percent — as Obama's stimulus begins to take hold. Those analysts also continue to hope the economy would start to grow again in the final quarter of this year.
"The recession was bad in the first quarter but won't be as bad going forward," said John Silvia, chief economist at Wachovia. "I don't think this lessens the expected pattern that the economy will be entering a recovery by the end of this year."
However, the recent outbreak of the swine flu, which started out in Mexico and has spread to the United States and elsewhere, poses a new potential danger. If the flu stifles trade and forces consumers to cut back further, those negative forces would worsen the recession.
Before the flu outbreak, Fed Chairman Ben Bernanke said the recession could end this year if the government succeeds in stabilizing the shaky financial system and getting banks to lend again.
In recent weeks, Bernanke and his colleagues had cited "tentative signs" of the recession easing in some consumer spending, home building and other reports. Finance officials from the U.S. and other top economic powers meeting here last week also saw some hopeful signs for the global economy.
Fresh glimmers of hope emerged in the U.S. Tuesday. The Conference Board's Consumer Confidence Index rose far more than expected in April, jumping more than 12 points to 39.2, the highest level since November. And a housing index showed that home prices dropped sharply in February, but for the first time in 25 months the decline was not a record.
However, in the first quarter there was much weakness in those areas and others.
Spending on home building fell at a 38 percent annualized rate, the most since the second quarter of 1980. Businesses cut spending on equipment and software at a 33.8 percent pace, the most since the first quarter of 1958.
Inventory reductions shaved 2.79 percentage points off overall first-quarter economic activity. But with stockpiles slashed, any pickup in business sales would help increase production and bolster the economy in the current quarter.
Still, U.S. exports plunged at a rate of 30 percent, the biggest drop since the first quarter of 1969, reflecting the crimped appetite of struggling foreign buyers. The government also cut spending 3.9 percent, the most since the end of 1995.
Even if the recession were to end this year, the economy will remain feeble and unemployment will keep climbing, government officials and analysts say.
The Labor Department on Wednesday said that all 372 metropolitan areas tracked saw their jobless rates rise in March from a year earlier. The rate in Indiana's Elkhart-Goshen region soared to 18.8 percent, up 13 percentage points, which was the biggest gain in the country.
The national jobless rate is now at a quarter-century high of 8.5 percent and is expected to hit 10 percent by the end of this year. It will probably rise a bit higher in early 2010 before starting to slowly drift downward. Still, the Fed predicts unemployment will stay elevated into 2011, and economists don't think it will return to normal — around a 5 percent jobless rate — until 2013.
More layoffs were announced this week. Textron Inc. said it will expand layoffs, eliminating 8,300 jobs, or 20 percent, of its global work force as the recession weakens demand for corporate planes. The maker of Cessna planes, Bell helicopters and turf-maintenance equipment earlier this year said it would reduce its work force by 6,200 jobs, or 15 percent, mostly at Wichita, Kansas-based Cessna.
General Motors Corp. laid out a massive restructuring plan that includes cutting 21,000 U.S. factory jobs by next year. Clear Channel Communications Inc., the largest owner of U.S. radio stations, said it's cutting 590 jobs in its second round of mass layoffs this year amid pressure from the recession and evaporating advertising budgets. And bearings and specialty steels maker Timken Co. indicated it will cut about 4,000 more jobs by the end of this year after earlier suggesting about 3,000 jobs already had been targeted.
Friday, December 5, 2008
Paulson Committing Terrorism? You must listen to this!
In this economy, many people are attempting to blame anyone they can to make sense of the situation. Some claim that this is the New World Order, but you need to decide that for yourself. Conspiracy? Truth? Very interesting!
Saturday, November 29, 2008
Where is the economic transparency?
"'With arrears forecast to increase over 2009, it is essential that all lenders ensure that their arrears and repossession policies treat customers fairly.'"
'Borrowers facing difficulty deserve to know that their lenders have the right measures in place to treat them fairly and try to help them keep their homes wherever this is an achievable outcome.'
These two statements were official and placed in the www.dailymail.co.uk
"Mortgage lenders were warned today to treat customers in arrears fairly or face action, as 45,000 people are expected to lose their homes by the end of the year."
Wouldn't it have been prudent that the mortgage companies, lenders, and all other organizations tied-up in this mess might have thought of treating each case as special (not, one-size-fits-all) before this melt-down? If that would have happened, much of the mess would have been avoided.
Do these companies really have to be told to "treat customers in arrears fairly"? I guess they are that stupid, since they are the ones that got us in this mess in the first place.
Isn't there some way that a compromise can be met? I mean, I am sure that there are those who are really having a tough time. There are consumers who have lost their jobs and have not been able to make ends meet. And then, there are those who bought the big house, the new cars, the new furniture, and spent double or even triple their income. And now they are going to ask for money or leniency.
And what about those of us who have been paying our mortgage? What about those of us who have not purchased new cars, new furniture, and are paying our bills on time? Should we just stop doing that so that we can get an equal hand-out?
Where is the motivation to succeed if you can just buy anything and have the government (or, in other words, the U.S. taxpayer) pay for it?
I believe that the general population would like to see the economy issues solved in a fair, motivational, growth-inspiring way. Wouldn't you like to see the details of rules they have created for the bailout so that you know where your money is going? Where is the U.S. economic transparency that needs to be in place for the use of our taxpayer dollars?
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