Category Archives: Economy
“Standard & Poor’s reduced its estimate for next year’s U.S. economic growth to 2.6 percent from the 3.1 percent growth it expected last quarter.
The credit ratings agency said in a report that “significant downside risks” from government spending cuts sparked the change, CNBC reports.
“We’ve lowered our forecast for U.S. GDP growth in light of the additional sequester [automatic] spending cuts in 2014 as well as the potential for another political standoff in Washington after the October government shutdown,” S&P explains.
To be sure, Democrats and Republicans in Congress struck a deal Tuesday that reduced some of the automatic spending cuts slated for fiscal 2014, which began Sept. 30.
The deal calls for a discretionary budget of $1.012 trillion for the year, compared to the $967 billion amount originally slated under sequestration.
The bipartisan accord does increase deficit reduction by $23 billion with the extension of a Medicare spending cut.
S&P also cites the Federal Reserve as a wild card….”
So the last time we had a very poor consumer confidence reading the fed opened the QE3 spigot. Could we be in for additional stimulus for the upcoming holiday season?
“Consumer Confidence in U.S. Drops for Sixth Consecutive Week
Consumer confidence in the U.S. fell for the sixth week in a row, reaching the lowest level in a year as Americans struggled to make ends meet.
The Bloomberg Consumer Comfort Index declined to minus 37.9 in the week ended Nov. 3, the worst reading since October 2012, from minus 37.6. The one-week drop was the smallest since the partial government shutdown ended in the middle of last month….”
“The only two charts that matter from today’s distroted nonfarm payrolls report.
First, the labor force participation rate, which plunged from 63.2% to 62.8% - the lowest since 1978!
But more importantly, the number of people not in the labor force exploded by nearly 1 million….”
“Did you know that the number of Americans on welfare is higher than the number of Americans that have full-time jobs? Did you know that 1.2 million public school students in the U.S. are currently homeless? Anyone that uses the term “economic recovery” to describe what is happening in the United States today is being deeply insulting to the nearly 150 million Americans that are considered to be either “poor” or “low income” at this point. Yes, things are great in New York City, Washington D.C. and San Francisco, but almost everywhere else economic conditions continue to steadily get worse.
The gap between the wealthy and the poor is at a level that America has never seen before, and this is beginning to create a “Robin Hood mentality” that could cause a tremendous amount of social chaos in the years ahead. Anger at the “haves” in America continues to rise at a very alarming pace, and the “have nots” are becoming increasingly desperate. At some point all of this anger is going to boil over, and you won’t want to be anywhere around major population centers when that happens.
Despite unprecedented borrowing by the federal government in recent years, and despite unprecedented money printing by the Federal Reserve, poverty in the United States keeps getting worse with each passing year. The following are 29 incredible facts which prove that poverty in America is absolutely exploding…
1. What can you say about a nation that has more people getting handouts from the federal government than working full-time? According to the latest numbers from the U.S. Census Bureau, the number of people receiving means-tested welfare benefits is greater than the number of full-time workers in the United States.
2. New numbers have just been released, and they show that the number of public school students in this country that are homeless is at an all-time record high. It is hard to believe, but right now 1.2 million students that attend public schools in America are homeless. That number has risen by 72 percent since the start of the last recession.
3. When I was growing up, it seemed like almost everyone was from a middle class home. But now that has all changed. One recent study discovered that nearly half of all public students in the United States come from low income homes.
4. How can anyone deny that we are a socialist nation when half the people are getting money from the federal government each month? According to the most recent numbers from the U.S. Census Bureau, 49.2 percent of all Americans are receiving benefits from at least one government program.
5. Signs of increasing poverty are even showing up in the wealthiest areas of the nation. According to the New York Post, New York subways are being “overrun with homeless“.
6. According to the U.S. Census Bureau, approximately one out of every six Americans is now living in poverty. The number of Americans living in poverty is now at a level not seen since the 1960s.
7. The gap between the rich and the poor in the United States is at an all-time record high. The wealthy may not consider this to be much of a problem, but those at the other end of the spectrum are very aware of this…..”
Earlier this week we had a look into the wonderful world of $MCD; now let’s look at $WMT.
“On Tuesday, the BLS engrossed in the same frenzy of openly making up data like the Dept of Labor has been with the initial claims data ever since early September when it started upgrading its California “systems” and never finished, announced that while only 140K or so jobs were created in September, nearly 700K full-time jobs were added as over 500K part-time jobs were converted into full-timers. On the surface this is great news… until one actually looks for empirical evidence that this is happening anywhere besides the data manipulating, massaging and fabricating models used by the BLS. And one certainly won’t find it at the biggest private employer in the US – Walmart, which just announced that a whopping 475,000 of its employees earn at least $25,000 a year. Great news, right? Sure, until one considers that WMT has over 1 million employees, which means that well over 50% of Wal-Mart’s employees make a tiny $25,000 year.
Wal-Mart has provided some new and useful information: More than 475,000 of its 1 million hourly store employees earn at least $25,000 a year for full-time work. This figure comes from Bill Simon, the president and chief executive officer of Walmart U.S., who presented (PDF) it at Goldman Sachs’s (GS) Global Retailing Conference last month. The statistic, which was listed under the heading “Great job opportunities,” means as many as 525,000 full-time hourly employees earn less than $25,000 a year.
OUR Walmart, the union-backed workers’ group that’s been staging protests and asking for higher wages, pointed this out during a press conference in Washington, D.C., on Wednesday. (The company’s presentation is also on its website.) Three store associates, as well as three Democratic members of the House of Representatives, called on the retail giant to pay all of its full-time workers at least $25,000 a year.
Wal-Mart is adamant: the pay is fair.
“We have hundreds of thousands of associates who are making $25,000 a year or more,” says Kory Lundberg, a Wal-Mart spokesman. “And the opportunity exists for those who aren’t to grow into the career they want. We promote 160,000 people a year.” Lundberg also explained how to parse some of Wal-Mart’s figures. The company has 1.3 million hourly workers, which led OUR Walmart to claim at the press conference that 825,000 of them made less than $25,000 a year. Lundberg points out that Simon’s presentation was referring to the 1 million who work in the stores. (The rest work as truck drivers and at the Bentonville (Ark.) headquarters, among other places.) So about 52 percent of its associates make less than $25,000 a year—not 63 percent.
The other side disagrees. As expected, the minimum wage workers demand – what else – higher wages.
“A decent wage is their demand—a livable wage, of all things,” said Representative George Miller (D-Calif.). The problem with companies like Wal-Mart is their “unwillingness, not their inability, to pay that wage,” he said….”
“Chinese exports fell 3.1% year-over-year (YoY) in June, missing expectations for a 3.7% rise.
Meanwhile, imports fell 0.7% YoY, missing expectations for a 6% rise.
Trade balance also came in shy of expectations, widening to $27.1 billion.
This compares with a 1% rise in exports and 0.3% fall in imports in May.
Export growth was expected to stay muted because of a weak global economic environment….”
“WASHINGTON (MarketWatch) — The U.S. trade deficit widened by 12.1% in May to $45.0 billion, the Commerce Department said Tuesday. This is the largest deficit since last November and was well above expectations. Wall Street economists polled by MarketWatch had forecast a deficit of $40.3 billion. The deficit has jumped in two straight months after falling to $37.1 billion in March….”
“Emerging-market stocks fell, heading for the biggest drop in more than a week, as growth in Chinese service industries slowed and consumer shares sank amid surging oil prices. South Korea’s won led currencies lower.
Daphne International Holdings Ltd. (210), a footwear retailer, sank the most in four years in Hong Kong as crude climbed above $100 a barrel for the first time since September and the city’s retail sales trailed estimates. Industrial & Commercial Bank of China Ltd. tumbled 2.5 percent.Fubon Financial Holding Co. (2881) slumped 5.1 percent in Taipei after raising $850 million from a share sale. The won and India’s rupee both weakened 0.9 percent versus the dollar, while the ruble fell 0.2 percent, heading for its lowest level in a year.
The MSCI Emerging Markets Index lost 1.6 percent to 916.99 at 2:56 p.m. in Hong Kong, poised for the biggest drop since June 24. Oil’s surge, sparked by political turmoil in Egypt and an industry report showing U.S. stockpiles shrank, threatens to curb consumer spending power and spur inflation for energy-importing countries such as China and India. China’s non-manufacturing purchasing managers’ index fell to 53.9 in June, the lowest level since September, even as the government seeks to boost the economy’s reliance on services.
“Investors are hoping the spike is temporary because a sustained and continued gain in oil prices will hurt economic growth prospects,” said Allan Yu, who helps manage about $10 billion at Manila-based Metropolitan Bank & Trust Co. “Given the size of its economy, a slowdown in China will have an impact on its neighboring markets.”
“The Institute for Supply Management (ISM) has released its Report on Business for the month of June, and the numbers are pretty bad. In fact, the June report appears to be a four-year low at 47.0. The ISM represents that this is the worst reading since May of 2009. The ISM is trying to signal that the news is not as bad as might appear. It shows that future optimism did not flinch, suggesting the drop in current conditions could be temporary.
Tuesday’s report was positive on the jobs component and on the purchase volumes. The report sentiment represents that business impediments had a less favorable tone compared to last month. “No difficulties” was still the most popular response, but working capital shortages increased and skilled labor shortages decreased. Here is a breakdown of some of the data:
- The six-month outlook came in at 66.1….”
“Euro-area manufacturing output contracted less than initially estimated in June, adding to signs the currency bloc’s economy is beginning to emerge from a record-long recession.
A gauge of manufacturing in the 17-nation euro area increased to 48.8 last month from 48.3 in May, London-based Markit Economics said today. That’s above an initial estimate of 48.7 on June 20. The gauge has been below 50, indicating contraction, since July 2011.
Today’s PMI data followed an encouraging euro-zone economic confidence report for June that recorded the biggest jump since July 2010. The 17-nation economy’s 18-month recessionprobably ended in the second quarter, as the economy stagnated before returning to growth in the following three months, according to a Bloomberg News survey of economists.
European Central Bank President Mario Draghi said last week that policy makers stand ready to act to support economic growth in the euro area. The Frankfurt-based central bank cut its benchmark interest rate to a record-low 0.5 percent in May.
The ECB’s monetary policy “will stay accommodative for the foreseeable future,” Draghi said. “We have an open mind about all other possible instruments that we may consider proper to adopt.”…”
“U.S. manufacturing activity growth slowed slightly in June as the pace of hiring and overseas demand weakened, making the second quarter the weakest for the sector in the last four, a survey showed.
Financial data firm Markit said its “flash,” or preliminary, U.S. Manufacturing Purchasing Managers Index fell to 52.2 in June from 52.3. A reading above 50 indicates expansion.
June’s 52.2 reading was also the average for the second quarter, behind the 54.9 average in the first three months of the year and the worst showing since the third quarter of 2012.
“Slower growth in the goods-producing sector looks likely to have acted as a drag on the wider economy,” said Markit chief economist Chris Williamson. The U.S. economy grew at a 2.4 percent rate between January and March.
Markit’s output index rose to 53.9, a three-month high, from 52.7 in May while the gauge of new orders also rose to its highest level since March, offering some hope. But the pace of hiring slowed to 50.4 from 52.6, reflecting the weakest rate of job creation since January 2010….”
“China’s manufacturing is shrinking at a faster pace this month, a trend that threatens to stem an economic recovery in the euro area from the currency bloc’s longest-ever recession.
A preliminary reading of 48.3 for the Chinese Purchasing Managers’ Index (EC11FLAS)released today by HSBC Holdings Plc and Markit Economics compares with the 49.1 median estimate in a Bloomberg News survey of 15 economists. In Europe, a composite index based on a survey of purchasing managers in the services and manufacturing industries rose to 48.9 from 47.7 in May, Markit Economics said. While that’s the highest in 15 months, a measure below 50 still indicates contraction.
China’s manufacturing weakness, along with a cash crunch in the nation’s money market, will test how far Premier Li Keqiang is willing to go in sacrificing short-term expansion for more-sustainable long-term growth. After record credit in the first four months of the year failed to stoke growth, China’s State Council, led by Li, said yesterday that the financial system needs to do a better job of supporting the economy.
The China PMI Index “is a reminder that a strong euro-zone export recovery is unlikely” to materialize soon, said Martin Van Vliet, senior euro-area economist at ING Bank NV in Amsterdam. “Any further recovery later in the year is likely to be very slow and bumpy.”
No taper comments by the fed, unemployment rate remains slightly elevated, downside risks have diminished, 2 members decent to current policy with Bullard saying the Fed is not paying enough attention to inflation risks…
“Japan’s exports rose more than forecast in May as a weaker yen boosted the value of overseas sales, underscoring the profit boon for manufacturers from Prime Minister Shinzo Abe’s reflation campaign.
The value of shipments abroad increased 10 percent in May from a year earlier, the most since 2010 and exceeding the 6.4 percent median estimate in a Bloomberg News survey of economists, a Finance Ministry report showed in Tokyo. At the same time, export volumedropped 4.8 percent.
Today’s data reflect an almost 12 percent slide in the yen against the dollar in the past six months that stoked criticism from trade partners including South Korea that Japan’s monetary stimulus is distorting commerce. The key for Abe is that exporters from Nintendo Co. (7974) to Mazda Motor Corp. (7261) use profit gains to boost wages and investment at home.
“The yen’s exchange rate, even though it has been adjusted a bit recently, is still weaker than last year’s level and giving a lot of impetus for Japan’s export drive,” said Long Hanhua Wang, an economist at Royal Bank of Scotland Group Plc in Tokyo. “The volume of exports is still unimpressive as the economic growth of China is stagnating and Europe’s expansion remains weak.”
The nation’s 11th straight monthly trade deficit was 993.9 billion yen ($10.4 billion) as imports gained 10 percent, today’s report showed. The shortfall was the third largest on record, and the largest ever in May. The yen’s decline boosted the costs of imports, while nuclear-plant shutdowns added to energy demand…..”
“WASHINGTON (AP) — U.S. consumer prices rose slightly in May as higher energy costs were partly offset by cheaper food. The small increase comes after two straight declines, underscoring that American consumers are benefiting from mild inflation.
The consumer price index ticked up a seasonally adjusted 0.1 percent last month, only the second increase in seven months, the Labor Department said Tuesday. Consumer prices fell 0.4 percent in April, the largest decline in four years. In the past 12 months, prices have increased just 1.4 percent. That’s up from a 1.1 percent annual pace in April, which was the smallest in 2 ½ years.
Slow economic growth and high unemployment have kept wages from rising quickly. That’s made it harder for retailers and other firms to raise prices.
Still, tame inflation has helped consumers increase spending this year, despite slow income growth and higher Social Security taxes. It also makes it easier for the Federal Reserve to continue its extraordinary efforts to boost the economy.
And while inflation is low, economists say it isn’t low enough to alarm Fed policymakers. Tuesday’s report “won’t prevent the Fed from beginning to reduce its monthly asset purchases, probably beginning in September,” said Paul Ashworth, an economist at Capital Economics….”
“European car sales fell to a 20-year low in May as record joblessness caused by a recession in the euro area reduced demand at PSA Peugeot Citroen (UG), Renault SA (RNO), Fiat SpA (F)and General Motors Co. (GM)
Registrations dropped 5.9 percent to 1.08 million vehicles from 1.15 million a year earlier, the Brussels-based European Automobile Manufacturers’ Association, or ACEA, said today. The figure was the lowest for the month since 1993, said Quynh-Nhu Huynh, the group’s economics director. The ACEA compiles data for the 27-nation EU plus Switzerland, Norway and Iceland….”
New orders fall while unemployment ticks higher…..
“June 11 (Bloomberg) – U.K. industrial production unexpectedly rose in April, boosted by increased output at oil and water companies. Manufacturing fell after gains in February and March.
Output at factories, utilities and mines rose 0.1 percent from March, the Office for National Statistics said today in London. The median forecast of 28 economists in a Bloomberg News survey was for no change. Manufacturing dropped 0.2 percent after gains averaging 0.9 percent in the previous two months.
Industrial output posted its strongest quarterly performance in almost three years through April, adding to signs the economy is gaining momentum after returning to growth in the first quarter. Surveys by Markit Economics published this month showed services and manufacturing were at the highest in 14 months in May. The euro area, Britain’s largest trading partner, is also showing signs of improvement, with European Central Bank President Mario Draghi saying last week the region’s economy will return to growth by the end of the year.
“The U.K. economy can and will get better,” said Rob Wood, an economist at Berenberg Bank in London. “Today’s industrial production data suggest the sector will contribute positively to growth in the second quarter.”
The pound fell after the data were published, and traded at $1.5553 at 10:43 a.m. in London, down 0.1 percent from yesterday.
In the three months through April, industrial production gained 0.8 percent, the largest increase since July 2010, the ONS said. Manufacturing rose 0.5 percent, the most since September last year. From a year earlier, manufacturing fell 0.5 percent and industrial production declined 0.6 percent.
Out of 13 categories in manufacturing, 10 declined in April, while three increased. The fall on the month was led by transport equipment. There were also declines in the output of wood and paper products and basic metals and metal goods. The declines were largely offset by a 14 percent jump in pharmaceuticals production….”