Asian Markets Fall on Evaluation; Chinese Stocks Said 2 B Entering Correction
By Shani Raja and Masaki Kondo
Aug. 12 (Bloomberg) — Asian stocks fell for the first time in three days and Chinese shares entered a so-called correction, amid concern a rally in equities had outpaced earnings prospects.
China Mobile Ltd. dropped 3.8 percent in Hong Kong, as the Chinese commerce ministry said efforts to boost domestic demand can’t completely offset an export slump. Great Wall Motor Co., China’s largest maker of pick-up trucks, declined 10 percent in Hong Kong and Zhuzhou Smelter Group Co. sank 6 percent in Shanghai after they reported lower profits. Ascendas Real Estate Investment Trust slumped 6.3 percent in Singapore after selling shares at a discount.
The MSCI Asia Pacific Index dropped 1.4 percent to 111.19 as of 8:07 p.m. in Tokyo, after a two-day, 1.8 percent gain. The gauge has added 58 percent from a five-year low on March 9 amid speculation of a global economic recovery. Stocks in the measure are valued at an average 24 times estimated profit, higher than the MSCI World Index’s 17 times.
“Given the recent rally, it’s no surprise investors are booking profits,” said Masaru Hamasaki, a senior strategist at Tokyo-based Toyota Asset Management Co., which oversees the equivalent of $13 billion. “After what people are calling the once-in-a-century crisis, there is a sense of exhaustion among investors. Current valuations are prohibitive.”
Japan’s Nikkei 225 Stock Average retreated 1.4 percent. Mitsubishi Corp., a trading company that gets more than a third of its sales from commodities, lost 2.6 percent on lower oil and metals prices. Honda Motor Co. also slipped 2.6 percent in Tokyo, as a weaker dollar hurt the outlook for overseas earnings. The yen rose against all 16 major currencies.
China Export Slump
China’s Shanghai Composite Index sank 4.7 percent, taking its drop from a 15-month high on Aug. 4 to 10 percent. Hong Kong’s Hang Seng Index slumped 3 percent. Hong Kong Exchanges & Clearing Ltd., operator of Asia’s No. 3 stock market, declined 3.9 percent after first-half profit slumped 26 percent.
Australia’s S&P/ASX 200 Index added 0.3 percent, even as the statistics bureau said wage-growth stalled last quarter. Better-than-estimated profit lifted Commonwealth Bank of Australia by 3.2 percent.
Futures on the Standard & Poor’s 500 Index added 0.1 percent. The gauge slid 1.3 percent yesterday as Dick Bove, an analyst at Rochdale Securities, said the recent rally in banking shares was driven by a change in investor sentiment and earnings in the industry won’t improve in the third and fourth quarters.
Lower Profits
China Mobile, the nation’s largest mobile operator, dropped 3.8 percent to HK$87.80. Great Wall slumped 10 percent to HK$7.57. The company’s 36 percent profit decline in the first half came amid rising marketing expenses and falling exports. Hong Kong Exchanges declined 3.9 percent to HK$146…..
European Markets Gain on Earnings News
By Adam Haigh and Daniela Silberstein
Aug. 12 (Bloomberg) — European stocks advanced, led by utilities, as E.ON AG’s better-than-estimated earnings overshadowed results from ING Groep NV that trailed projections. Asian shares declined, while U.S. index futures fluctuated.
E.ON rallied 4.5 percent after Germany’s biggest utility said profit increased. ING, the largest Dutch financial-services company, retreated 3.4 percent. Balfour Beatty Plc, Britain’s biggest builder, surged 6.5 percent after earnings rose.
Europe’s Dow Jones Stoxx 600 Index added 0.3 percent to 227.02 at 1:15 p.m. in London, erasing an earlier drop of 0.8 percent and extending its gain since March 9 to 44 percent. The measure was valued at 40.1 times the profits of its companies last week, the highest level since September 2003, according to data compiled by Bloomberg.
“Companies have been very good at cutting their cost and therefore we are beginning to see companies surprise on the upside,” Jane Coffey, who helps oversee $12 billion at Royal London Asset Management, said in a Bloomberg Television interview. “We can expect positive GDP growth but that still means that it’s going to be hard work getting the recovery going.”
Oil Trades Down Slightly to $69 pb
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Benchmark crude for September delivery was down 34 cents to $69.11 a barrel by late afternoon in Singapore in electronic trading on the New York Mercantile Exchange. On Tuesday, the contract fell $1.15 to settle at $69.45.
The Energy Department’s Energy Information Administration on Tuesday said global crude demand will likely fall by 1.71 million barrels this year, more than its previous forecast of a drop of 1.56 million barrels.
The Organization of Petroleum Exporting Countries said it expects consumption to slide by 1.65 million barrels a day this year, before rising next year.
Investors have mostly shrugged off dismal demand numbers in recent months, focusing instead on signs the global economy may recover by the end of the year.
“The current fundamentals don’t really support the price, but the expectation is the economy will improve and demand will improve,” said Gerard Rigby, an energy analyst with Fuel First Consulting in Sydney.
U.S. crude inventories unexpectedly fell last week, a sign demand could be rebounding.
Inventories dropped 1.4 million barrels last week, the American Petroleum Institute said late Tuesday. Analysts expected the API numbers to gain 1.2 million barrels, according to a survey by Platts, the energy information arm of McGraw-Hill Cos.
The EIA reports mandatory supply figures on Wednesday, while the API numbers are reported by refiners voluntarily.
In other Nymex trading, gasoline for September delivery fell 1.02 cents to $2.03 a gallon and heating oil dropped 2.17 cents to $1.88. Natural gas for September delivery slid 1.7 cents to $3.52 per 1,000 cubic feet.
In London, Brent prices fell 60 cents to $71.86 a barrel on the ICE Futures exchange.
By Bob WillisAug. 12 (Bloomberg) — The U.S. trade deficit in June widened less than forecast, reflecting a second consecutive gain in exports as economies throughout the world picked up. A jump in oil prices also boosted imports.
The gap climbed 4 percent to $27 billion from $26 in May that was the lowest level in almost a decade, the Commerce Department said today in Washington. Overseas demand for American- made goods, such as semiconductors and aircraft engines, pushed exports up 2 percent, almost matching the 2.3 percent increase in imports.
The increase in sales signals the worst global slump in the post-World War II era is coming to an end, helping the U.S. economy pull out of the recession even as consumer spending is slow to recover. Federal Reserve policy makers, wrapping up a two- day meeting today, are expected to commit to keeping rates low to spur growth.
“Growth in the rest of the world is picking up,” Jay Bryson, global economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said before the report. “Across Asia, we’re seeing a pickup and we should see export growth.”
The trade gap was projected to widen to $28.7 billion, according to the median of 70 forecasts in a Bloomberg News survey of economists. Deficit projections ranged from $31 billion to $25.5 billion.
Exports climbed to $125.8 billion from $123.4 billion in May. Sales of chemicals, fuel oil and foods, in addition to capital equipment, climbed.
Oil Prices
Imports increased to $152.8 billion from $149.3 billion the prior month. The price of imported crude oil jumped to $59.17 a barrel, the highest level since November, from $51.21. Americans also bought more foreign-made automobiles and parts and computers. Demand for consumer goods, such as toys, televisions and clothing, slumped.
Demand for auto parts and industrial supplies by companies such as General Motors Co. and Toyota Motor Corp. ahead of the annual retooling of plants for the new model year may have boosted imports in June, according to Mike Englund, chief economist at Action Economics LLC in Boulder, Colorado.
The gain in auto imports was probably even bigger in July when plants reopened and the federal “cash-for-clunkers” program got under way, said Englund. Car sales last month climbed to the highest level since September.
After eliminating the influence of prices, which are the numbers used to calculate gross domestic product, the trade deficit shrank to $35.9 billion, the smallest since December 1999.
Help from Trade
The shrinking of the trade shortfall in the first half of the year helped limit the severity of the worst recession since the 1930s. Economists surveyed by Bloomberg this month forecast the economy will grow at a 2.1 percent pace in the second half of 2009.
Exports are likely to keep expanding as the global recession eases. China may grow 7.5 percent this year, the International Monetary Fund said July 8 in its latest forecast. Demand for American-made goods increased in Mexico, the European Union, Canada and China.
The trade gap with China increased to $18.4 billion from $17.5 billion in the prior month.
Some companies are already seeing gains overseas. Caterpillar Inc., the largest producer of earthmoving equipment, posted second-quarter profit that exceeded analysts’ highest estimate and raised its full-year forecast, saying China’s stimulus program is supporting global demand.
Stimulus Working……
India’s Industrial Production Rises
By Kartik Goyal
Aug. 12 (Bloomberg) — India’s industrial production increased at the fastest pace in 16 months in June, adding to signs that Asia’s third-largest economy has escaped the worst of the global recession.
Output at factories, utilities and mines jumped 7.8 percent from a year earlier after a revised 2.2 percent gain in May, the statistics agency said in New Delhi today. That was more than double the 3.8 percent rise expected by economists.
Manufacturing is beginning to recover across Asia as government stimulus worth about $1 trillion starts to kick in and customers order semiconductors, textiles and processed food produced in the region. China’s industrial production rose the most in five months in July and Malaysian output fell the least in seven months in June.
“Asian economies are in recovery mode,” said Duncan Wooldridge, chief Asia economist at UBS AG in Hong Kong. “We believe Asia has bottomed and will improve in the second half of 2009 and in 2010.”
Bonds fell. The yield on the 6.07 percent note due May 2014 rose to 6.78 percent as of 12:02 p.m. in Mumbai from 6.74 percent before the report, according to the central bank’s trading system.
India’s industrial production has benefited from record low interest rates, which have encouraged consumers to borrow to purchase cars, motorbikes and other factory-made goods.
Interest Rates
The Reserve Bank of India cut borrowing costs six times from October to April to help shield the economy from the worst global downturn since the Great Depression.
Consumers in the $1.2 trillion Indian economy also have more to spend after Prime Minister Manmohan Singh’s government in the July 6 budget reduced the tax burden on individual incomes, lowered some taxes on companies and announced higher spending to create rural jobs.
Production of consumer durables such as cars, refrigerators, washing machines and air conditioners rose 15.5 percent in June from a year earlier after gaining 12.5 percent in the previous month, today’s report showed. Manufacturing increased 7.3 percent, mining advanced 15.4 percent and electricity gained 8 percent in the month.
“The combined dose of monetary and fiscal measures is showing a positive impact on the economy,” said Dharmakirti Joshi, an economist at Mumbai-based Crisil Ltd., the local unit of Standard & Poor’s. “The central bank will continue to keep interest rates low until there are clear signs of recovery.”
Looking Ahead
India’s factory output may have improved further last month, according to some economic indicators.
Manufacturing output in India rose for a fourth month in July, according to a Purchasing Managers’ Index prepared by Markit Economics. The measure stood at 55.3 last month, unchanged from June. It was the fourth monthly reading above 50, which indicates factory production increased.
“The industrial sector is recovering on higher government spending but there is a threat that it may lead to inflation and complicate the job for the central bank, which may find it difficult to keep rates low,” Joshi of Crisil said.
Governor Duvvuri Subbarao on July 28 raised the central bank’s inflation forecast to 5 percent in the year ending March 2010 and said that may require a reversal in its expansionary policies. The Reserve Bank also said it expects the economy to grow 6 percent in the same period.
‘Cast a Shadow’
India’s economy grew 6.7 percent in the year to March 2009, the slowest pace of expansion since 2003. Growth averaged 8.8 percent in the previous five years……
European Global Confidence Rises
By Shamim Adam
Aug. 12 (Bloomberg) — Confidence in the world economy surged to a 22-month high in August on signs the worst global recession since World War II is coming to an end, a Bloomberg survey of users on six continents showed.
The Bloomberg Professional Global Confidence Index jumped to 58.12 this month from 39.13 in July. It is the first time the reading exceeded 50, which means optimists outnumber pessimists. A measure of U.S. participants’ confidence in the world’s largest economy rose to 47.3 from 29.5, the survey showed.
“It’s clear the recession is over and some kind of recovery is underway,” said Nick Kounis, chief European economist at Fortis Bank Nederland Holding NV in Amsterdam, and a regular survey participant. “We have the biggest monetary and fiscal stimulus policy in history, globally, and we’re starting to see it work. Probably the next debate will be about how strong and sustainable the recovery is.”
The MSCI World Index has increased 12 percent in the past month and President Barack Obama said last week’s unexpected drop in the U.S. unemployment rate indicates the worst may be over. Nobel Prize-winner Paul Krugman said Aug. 10 that the world, now in a “rough stabilization” mode, has averted another Great Depression.
The survey of more than 2,300 Bloomberg users was conducted between Aug. 3 and Aug. 7. Since the previous survey, the U.S. jobless rate declined, second-quarter growth in the U.S. and China was better than expected, and the European Central Bank held interest rates at a record low.
Jobless Rate
U.S. payrolls fell by 247,000 in July, after a 443,000 loss in June. The jobless rate unexpectedly dropped to 9.4 percent from 9.5 percent. The Standard & Poor’s 500 Index closed above 1,000 for the first time since November last week.
The U.S. economy will expand 2 percent or more in four straight quarters through June, the first such streak in more than four years, according to the median forecast in the monthly Bloomberg News survey. Analysts lifted their estimate for the third quarter by 1.2 percentage points compared with July, the biggest such boost in surveys dating from May 2003.
In Europe, a recession is also showing signs of bottoming out. ECB President Jean-Claude Trichet said on Aug. 6 that the euro-region economy will show a “gradual recovery” followed by a return to growth in 2010. The gauge for Western Europe rose to 41.1 from 31.
Slowing Contraction
Manufacturing and service industries in Europe contracted at a slower pace in July and business confidence in Germany, its largest economy, rose for a fourth month. Linde AG, the world’s second-largest maker of industrial gases, forecast business to pick up in the second half of 2009 from the previous six months, it said Aug. 3.
“Government and central bank measures are starting to show an impact,” said Peter Leonhardt, an analyst at Dekabank in Frankfurt, and a regular survey participant. “Sentiment is improving much faster than expected. There’s a need to catch up after a deep slump.”
In Asia, respondents were more optimistic, with the index reaching 74.2 from 59.4. Goldman Sachs Group Inc. this week raised its forecast for China’s 2009 economic growth to 9.4 percent, and said Asian nations excluding Japan will expand faster than earlier expected as well……
BoE Expects Inflation to Stay Low Keeping Rates Down
By Jennifer Ryan
Aug. 12 (Bloomberg) — Bank of England Governor Mervyn King said inflation may miss the central bank’s target over the next three years, signaling investors may have to rein in expectations for interest rate increases.
King said it’s “likely” that inflation will slow below 1 percent this year and stay below the bank’s main 2 percent goal until at least the end of 2012. The bank’s forecasts showed that an increase in the benchmark rate above 1 percent in the second quarter from the current record low of 0.5 percent would ensure inflation trails the target. Bond yields fell.
“The clear upshot of the bank’s inflation projections is that the market is getting ahead of itself in pricing in rate hikes over the short to medium term,” said Richard McGuire, an economist at Royal Bank of Canada in London.
King and the rest of the central bank’s nine-member Monetary Policy Committee last week expanded their asset- purchase program to head off deflationary risks amid the worst recession in a generation. While King said recent economic reports are “encouraging,” banks are still restricting access to credit and government data showed today unemployment rose to the highest level in 14 years in June.
The central bank is dashing some investors’ expectations that it would be the first in the Group of Seven to raise rates and withdraw stimulus. The yield on the benchmark 10-year U.K. government bond slipped 3 basis points to 3.778 percent today. The pound fell to 86.11 pence per euro compared with 85.83 pence before King’s comments.
Surprised
King said he was “surprised that people were surprised” by the Aug. 6 decision to increase bond purchases by 50 billion pounds ($82 billion) to 175 billion pounds, given the inflation outlook. Consumer prices rose an annual 1.8 percent in June, the first increase below 2 percent since September 2007.
Officials took the decision “in order to avoid a period of perhaps quite protracted below-target inflation,” said King. “We are determined to bring inflation back to the target and it’s that which led us to take the action.” The U.K. will find itself “in a difficult position for a long time to come,” hes said.
The bank’s forecasts, which are published as fan charts, show keeping the benchmark rate at 0.5 percent until at least the end of 2012 would see inflation approach 2 percent by the end of the period. Raising the rate above 1 percent in the second quarter as assumed by investors would see inflation clearly undershoot the target, the projections show.
“It is too soon to talk about exit strategies,” said Peter Dixon, an economist at Commerzbank AG, Germany’s second- largest bank.
Brown Support
The Bank of England’s commitment to keep buying bonds may help Prime Minister Gordon Brown, who is trailing in the polls less than a year before the next national election. The opposition Conservatives lead Brown’s Labour Party by 18 percentage points, according to a ComRes opinion poll commissioned by the Independent and published July 29.
The bank said that funding conditions for banks have improved “a little” and that its asset purchase program may have helped the situation. Lenders may need to raise more capital as they restructure balance sheets, the bank said.
Skeptics Start To Expect Recovery As Applause For Obama Stimulus Gets to Work
By Shobhana Chandra and Kristy Scheuble
Aug. 12 (Bloomberg) — Recovery from the worst recession since the 1930s has begun as President Barack Obama’s fiscal stimulus — derided as insufficient and budget-busting months ago — takes effect, a survey of economists indicated.
The economy will expand 2 percent or more in four straight quarters through June, the first such streak in more than four years, according to the median of 53 forecasts in the monthly Bloomberg News survey. Analysts lifted their estimate for the third quarter by 1.2 percentage points compared with July, the biggest such boost in surveys dating from May 2003.
“We’ve averted the worst, and there are clear signs the stimulus is working,” said Kenneth Goldstein, an economist at the Conference Board in New York.
The new projections, following better-than-anticipated reports on manufacturing, employment and home construction, echo gains in investor confidence that have propelled the Standard & Poor’s 500 Stock Index to its high for the year. A rebound may help cushion declines in Obama’s approval ratings, political analysts said.
“The fact that people for the first time in over a year are starting to look at some glimmers of hope plays to the prospect of some strength in the stimulus,” said Susan Molinari, a Republican strategist in Washington who advised Rudy Giuliani during his presidential nomination campaign in 2008.
Global Confidence Surges
Confidence in the world economy surged to a 22-month high in August on signs the worst global recession since World War II is coming to an end, a Bloomberg survey of users on six continents showed. The Bloomberg Professional Global Confidence Index jumped to 58.12 this month from 39.13 in July. A measure of U.S. participants’ confidence in the world’s largest economy rose to 47.3 from 29.5, the survey showed.
The anticipated expansion in the coming year won’t be enough to prevent the unemployment rate from reaching 10 percent for the first time since 1983, the survey also showed. That will force the Federal Reserve to forego raising its benchmark interest rate until the third quarter of 2010, according to the median projection.
The Fed’s policy-setting Open Market Committee will today keep the target rate at zero to 0.25 percent and retain plans to buy as much as $1.45 trillion of housing debt by year-end to help secure a recovery, analysts said. The FOMC’s statement is expected at about 2:15 p.m. in Washington.
Republican Criticism
Obama’s $787 billion economic recovery effort, spanning tax cuts, infrastructure spending and a goal to create or save 3.5 million jobs, was enacted about six months ago. Republican lawmakers, nearly all of whom voted against the package, have pilloried the plan as a waste of money.
“Trillions more in Washington spending will not end a recession, it only puts future generations under a mountain of unsustainable debt,” House Minority Leader John Boehner, an Ohio Republican, said last week. The nonpartisan Congressional Budget Office estimated last week that the stimulus has pumped $125 billion into the economy so far.
A federal program to replace older vehicles with more fuel- efficient ones helped boost sales of cars and light trucks last month to the highest level since September, according to industry figures. Automakers, operating with lean inventories, will resume output to meet the jump in demand.
‘Clunkers’ Impact
“Cash-for-clunkers was the icing on the cake,” said David Greenlaw, chief fixed-income economist at Morgan Stanley in New York. “It’s well-timed stimulus syncing with cyclical forces leading to a ramping up of production.”
Company heads seeing an improvement include David Weidman, chief executive officer of Dallas-based chemical maker Celanese Corp. “We exited the quarter with increasing optimism,” and there are “clear signs of economic recovery,” Weidman said in an interview in July.
“The stimulus was really a long-term political and economic play by the administration, and now they’re starting to see the results they wanted,” said Bill Buck, a Democratic strategist who worked on the presidential campaigns of former Vice President Al Gore and retired General Wesley Clark. “The administration would be wise to use this to build their credibility with the public” on other issues like health care, he said.
Approval Rating Declines
The president’s approval rating is falling on concern over rising joblessness and the growing budget deficit, a Quinnipiac University poll showed last week.
Half of the registered voters surveyed from July 27 to Aug. 3 by Quinnipiac said they approve of the job Obama is doing, compared with 42 percent who disapprove. That’s down from 57 percent approval and 33 percent disapproval in a late June poll.
Americans are hurting as employers continue to cut jobs, albeit at a slower pace. The unemployment rate will average 9.8 percent in 2010, according to the Bloomberg survey taken from Aug. 5 to Aug. 11.
“The labor market is going to be the key,” said Michael Feroli, an economist at JPMorgan Chase & Co. in New York. “The risk isn’t that it gets much worse, but that it doesn’t improve quickly enough. It’d be nice if the consumer found his legs.”
Consumer spending, which accounts for about 70 percent of the economy, will rise an average 1.5 percent from July to December, up from prior estimates, the survey showed.
“What’s happening now is a leveling off, not a strong increase in growth, and that owes a little to the stimulus package,” said Robert Solow, a Nobel laureate and professor emeritus at the Massachusetts Institute of Technology in Cambridge, Massachusetts. “Seeing the rest of it filter through to the economy in the second half of the year will be extremely helpful.”
Mortgage Applications Fall as Rates Rise
By Julie Haviv
NEW YORK (Reuters) – U.S. mortgage applications fell last week, reflecting a drop in demand for home refinancing loans as interest rates soared to their highest levels since June, data from an industry group showed on Wednesday.
Applications for loans to buy homes, an early indicator of sales, rose slightly. Tepid interest in purchase loans does not bode well for the hard-hit U.S. housing market, which has been showing signs of stabilization.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended August 7 decreased 3.5 percent to 499.0.
Celia Chen, senior director of housing economics at Moody’s Economy.com in West Chester, Pennsylvania, said higher interest rates on mortgages tend to depress home buying, but that demand is not as sensitive to changes in rates as it is in refinancing activity.
“Even though mortgage rates are rising, they still remain quite affordable,” she said.
“The bigger obstacle to home buying is job losses and tight qualifying conditions for borrowing,” she said.
With the U.S. unemployment rate at 9.4 percent, many potential home buyers who have lost or who fear they may lose their jobs remain sidelined even though home affordability has improved significantly.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.38 percent, up 0.21 percentage point from the previous week. It was the highest rate since the week ended June 19 and significantly above the all-time low of 4.61 percent set in the week ended March 27. The survey has been conducted weekly since 1990.
Interest rates a year ago were at 6.57 percent.
Mortgage rates were above 5 percent for an 11th straight week. Some experts say rates at 5 percent and below are needed to make a significant impact on home loan demand.
The MBA’s seasonally adjusted purchase index rose 1.1 percent to 267.2, the third, albeit small, gain in the last four weeks.
The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 0.7 percent.
LOOMING FORECLOSURES TO PRESSURE HOME PRICES
Chen said the biggest obstacle for the U.S. housing market is foreclosures.
Moody’s Economy.com is expecting 3.85 million defaults this year compared to 2.7 million last year, she said. First mortgage defaults are the first step in the foreclosure process; not all defaults turn into foreclosures. Continued…
NEW YORK (Reuters) – The Federal Reserve is expected to give a nod to signs the U.S. recession is waning but will likely warn that the recovery will be slow and dampen any expectations it will soon start to raise interest rates.
The Fed’s policy-setting committee, which meets on Tuesday and Wednesday, is expected to hold its benchmark overnight rate in a range of zero to 0.25 percent. A statement on the decision is due about 2:15 p.m. EDT on Wednesday.
“The markets have begun pricing in a near-term increase in interest rates. That is extremely unlikely. The Fed is going to want to discourage that,” said former Fed Governor Lyle Gramley.
The Fed is likely to decide to let its $300 billion Treasury purchase program expire, as scheduled, in September. Fourteen out of 16 primary dealers polled by Reuters last week said they expect the Fed not to extend the controversial program.
The central bank may debate whether to extend a program that supports financing for commercial real estate, however, given the steep drop in commercial property prices that could prove a stumbling block for a nascent recovery.
ECONOMY
There have been signs the deepest recession since the Great Depression may be coming to an end.
–Gross domestic product, which measures total goods and services output within U.S. borders, fell at a 1.0 percent annual rate in the second quarter, according to the Commerce Department, after tumbling 6.4 percent in the January-March quarter.
–The Blue Chip Economic Indicators survey of private economists showed about 90 percent of respondents surveyed believe the economic downturn will be declared over in the third quarter.
–Sales of new single-family homes in the United States rose 11 percent in June, the largest monthly rise since 2000, while the inventory of homes for sale fell to an 11-year low, according to the Commerce Department.
–U.S. employers cut 247,000 jobs in July, far less than expected and the least in any month since last August. The unemployment rate eased to 9.4 percent in July from 9.5 percent the prior month, the Labor Department said, the first time the jobless rate had fallen since April 2008.
But risks remain and any recovery is likely to be slow, policymakers have warned in recent speeches.
–Many American households still face “tattered finances” after the loss of trillions of dollars of wealth through the drop in home prices and the stock market, Janet Yellen, president of the San Francisco Fed Bank, said in July.
The U.S. Conference Board’s consumer sentiment index fell to 46.6 in July from 49.3 in June as the percentage of Americans saying jobs are hard to get increased.
–A number of policymakers point to the collapse in commercial real estate prices as potentially putting the recovery in jeopardy. Continued…
