Bloomberg News | Aug 9, 2010 | 10:03 AM GMT+0530
Goldman Sachs Group Inc. cut its growth forecasts for the world’s two largest economies on signs that stimulus boosts will wane. Japan will grow 1.4 percent in 2011, compared with an earlier forecast of a 1.7 percent expansion, Tokyo-based senior economist Chiwoong Lee said in a report dated Aug. 7. Goldman last week lowered its projection of U.S. growth for the same year to 1.9 percent from 2.5 percent. A report today showed Japan’s current-account surplus narrowed for a second month as export gains cooled, adding to concerns that the recovery is losing steam. Government incentives that have bolstered spending at home are wearing off, with economists forecasting second quarter gross domestic product grew at half the pace of the previous period.
“We expect signs that growth is slowing to gradually emerge in line with the disappearance of the government stimulus boost both in Japan and abroad,” Lee wrote in a separate report dated today. “The U.S. economic recovery has lost a considerable amount of its momentum.” Japan will experience a “significant falloff” in consumer spending, which has so far been propped up by government measures, according to Lee. He noted that there is “little chance” Prime Minister Naoto Kan will extend a program scheduled to expire in December that encourages household to buy energy-efficient electronics. Continue reading
Japan stocks fall, dollar hits 8-month low vs yen | Reuters 04/08/2010 | 12:50 pm IST
Japanese stocks fell behind their Asian peers and slid 2 percent on Wednesday as the yen climbed towards 15-year highs against the U.S. dollar after weak U.S. data spurred talk of more Federal Reserve easing. Asia-Pacific stocks outside of Japan were slightly off their three-month peaks scaled on Tuesday and are seen prone to profit-taking as investors remain sensitive to any signs of fatigue in the global economy. The latest signs came in the form of disappointing U.S. consumer spending and housing market reports, which fanned speculation the Fed may further relax its loose policy at its Aug. 10 meeting and pushed the dollar to an eight-month low. European shares were set to open lower, with financial spreadbetters expecting Britain’s FTSE 100 to fall about 0.4 percent; Germany’s DAX to fall 0.2 percent and France’s CAC 40 to ease 0.1 percent. Tokyo stocks fell 2.1 percent, hit by fears that a strong yen will erode exporters’ profits and sap economic growth.
Such concerns combined with a run of disappointing U.S. data that cast a pall over recovery in the world’s largest economy, boosted Japanese government bonds, pushing the 10-year yield below 1 percent for the first time in seven years. Japan’s finance minister reiterated that he was closely watching currency moves as the dollar’s weakness tests the tolerance for a stronger yen as the economy struggles to pull out of a crippling spell of deflation. “Today’s stock fall is really all about the yen. At this kind of level, there’s inevitably worries about what sort of impact this will have on company earnings going forward,” said Toshiyuki Kanayama, a market analyst at Monex Inc. Continue reading
Bloomberg | Jul 31, 2010 | 2:29 AM GMT+0530
Nomura Holdings Inc., one of the 18 primary dealers that trade with the Federal Reserve, said policy makers will “ease” at their Aug. 10 meeting, though what form it takes is debatable. Central bankers may change the language of their policy statement to signal that the Fed’s balance sheet will remain expanded and change policy on the mortgage program to start reinvesting paydowns, the firm said in a note to clients today. There is also a chance of other actions, such as a cut in the rate on excess reserves, Nomura’s global economics team said. Nomura changed its viewpoint because of a softening of the comments from policy makers such as Philadelphia Fed President Charles Plosser and St. Louis Fed President James Bullard. The firm also cited the Fed’s downward revision for growth and the slack in the economy that threatens to push inflation to an unacceptably low level for Fed Chairman Ben S. Bernanke.
“Easing is going to be very seriously considered given several months of disappointing data and the very dovish tone of public commentary across the spectrum,” said Zach Pandl, an economist at Nomura Securities International in New York. “If the Fed is averse to buying more assets, then cutting the rates of interest on reserves could be the next option.” Bullard said yesterday that the central bank should resume purchases of Treasury securities if the economy slows and prices fall rather than maintain a pledge to keep rates near zero.
Bloomberg | Jul 1, 2010
Reports on U.S. manufacturing, employment and home sales pointed to slower growth in the second half of the year; just as government spending to stimulate the economy begins to wane. The Institute for Supply Management’s manufacturing gauge fell more than forecast to 56.2 last month from 59.7 in May. A reading, greater than 50, points to expansion. Other data showed contracts to buy existing homes fell 30 percent in May, and claims for jobless benefits unexpectedly rose last week. Stocks and commodities slumped and Treasuries rose on signs the global economy is cooling after manufacturing weakened in Europe and China. The data underscore concerns of Federal Reserve policy makers that financial-market turmoil sparked by Europe’s debt crisis threatens to inhibit a self-sustaining recovery in the U.S. “The U.S. recovery is set to have a bad start to the second half” of 2010, said David Semmens, an economist at Standard Chartered Bank in New York. The pace of growth “definitely poses concerns” and won’t improve “until the labor market picks up.” Economists at JPMorgan Chase & Co. today lowered forecasts for second- and third-quarter growth, reflecting the influence of the European debt crisis on stocks, confidence and exports. The economy grew at a 3.2 percent annual rate from April through June and will expand at a 3 percent pace the following three months, down from a prior estimate of 4 percent, Michael Feroli, JPMorgan’s chief U.S. economist in New York, said in a note to clients.
The Standard & Poor’s 500 Index fell to a nine-month low, losing 0.3 percent to close at 1,027.37 in New York. The 10-year Treasury yield rose 2 basis points to 2.95 percent. Manufacturing in the U.S. expanded in June at the slowest pace this year as factories received fewer orders and demand from abroad cooled, the report from the Tempe, Arizona-based ISM showed. The median forecast of economists surveyed by Bloomberg News was for a reading of 59. General Motors Co., the largest U.S. automaker, said U.S. sales in June rose 11 percent from last year, trailing the median forecast of a 16 percent gain. GM’s results show the car market may be cooling as employment is slow to improve.
Bloomberg | Jul 1, 2010
Manufacturing growth from China to the euro-region slowed in June, suggesting the global export-led recovery is losing strength. In China, manufacturing growth slowed more than economists forecast, and a gauge of factory output in the 16-member euro region weakened for a second month, two surveys showed. The U.S. Institute for Supply Management’s manufacturing index due today probably also declined, according to the median forecast of 79 economists in a Bloomberg News survey. Asian and European stocks fell on concern that a Chinese economic slowdown combined with deepening budget cuts from Spain to the U.K. may undermine the global recovery. While the Organization for Economic Cooperation and Development on May 26 raised its global growth forecast for this year, it said that a “boom-bust scenario cannot be ruled out” in some countries. “We expect data to soften from here,” said Jacques Cailloux, chief European economist at Royal Bank of Scotland Group Plc in London. “It’s going to raise some question marks about the outlook, about a double dip. It’s an environment with significant downside risks.”
The MSCI Asia Pacific Index dropped 1 percent today. The Euro STOXX 50 Index was down 0.7 percent at 2:04 p.m. in London. The Standard & Poor’s 500 Index has shed 3.7 percent over the past month, bringing its year-to-date decline to 7.6 percent. The economy of the OECD’s 30 members will grow 2.7 percent this year instead of a previously projected 1.9 percent, the Paris-based group said on May 26. China may expand more than 11 percent this year compared with growth of 3.2 percent in the U.S. and 3 percent in Japan, according to the OECD. The euro- region economy may expand 1.2 percent, it said. Limited demand in advanced economies has left the world reliant on emerging markets, led by China, to drive a recovery that Group of 20 leaders this week described as “uneven and fragile.” Signs of a slowdown as the Chinese government clamps down on property speculation and the effects of its stimulus package fade have unsettled investors.
Reuters | Sun May 16, 2010 | 10:16pm IST
The U.S. economy has begun to climb out of the worst downturn since the 1930 Great Depression but still needs further steps by the federal government to stem a crisis in the job market, a senior economic adviser to President Barack Obama said on Sunday. "What we need now is not the withdrawal of support, but further targeted actions that will help the private sector come back more strongly," Christina Romer, chairwoman of the White House Council of Economic Advisers said in prepared remarks for a commencement ceremony at the College of William and Mary in Williamsburg, Virginia. Text of Romer’s remarks was made available in Washington.
Washington Post | Saturday, May 1, 2010
The slow-motion economic recovery has continued in the early months of 2010, according to new data that both affirm that an expansion is solidly in place and underscore that it is likely to remain sluggish. Gross domestic product, the broadest measure of economic activity, rose at a 3.2 percent annual rate in the first three months of the year, the government said Friday. That was the third straight quarter of increase, driven by a rise in spending by American consumers and increased business investment. The stock market fell sharply on Friday, with the ‘Standard & Poor’s’ 500 index down 1.7 percent on the weaker-than-expected GDP report and continuing uncertainty surrounding a potential bailout for Greece.
The details of the GDP report paint a picture of an economic recovery that is well underway and a nation that is unlikely to slide back into recession in 2010. Personal consumption increased at a pace of 3.6 percent, while investment in business equipment and software rose at a 13.4 percent rate. Those gains bode well in that they show both consumers and corporate America starting to loosen their purse strings. "Put together the rise in consumer spending and what is happening on the corporate side, and we’re starting to make the transition from a government-driven expansion to a private-sector recovery," said Robert Dye, senior economist at PNC Financial Services Group. "That’s a very important transition for us to make over the next few months."
Friday’s data showed the limits of that expansion, however, and gave some reasons to be concerned about its sustainability. A rise in business inventories — companies increased the value of goods on their warehouse and store shelves by $31 billion in the quarter — contributed 1.6 percentage points to growth but is likely to
BBC News | Wednesday, 21 April 2010 | 09:33 GMT
The number of people unemployed in the UK rose by 43,000 to 2.5 million during the three months to February, official figures have shown. The jobless total is now at its highest since 1994. The rate of unemployment now stands at 8% – the highest since 1996 – the Office for National Statistics said. However, the total number of people claiming unemployment benefit fell in March by 32,900 to 1.54 million – a much sharper fall than expected.
The ONS figures showed youth unemployment rising, with 929,000 16 to 24-year-olds out of work in the December to February period – a rise of 4,000 on the previous three months. Unemployment among the over-50s rose by 7,000 to 396,000. The figures prompted mixed reactions from City economists.
Vicky Redwood, economist at Capital Economics, warned the figures pointed to a jobless recovery in the UK economy, particularly with public sector cuts looming further down the line. But Brian Hilliard from Societe
AP | Washington | March 9, 2010 | 3:53 pm ET
Legislation to give additional months of unemployment benefits to people who have been out of a job for more than half a year cleared a key hurdle Tuesday that guarantees it will soon pass the Senate. The sweeping bill also would prevent doctors from absorbing a crippling cut in Medicare payments and extends health insurance subsidies for the unemployed through December. It would add $132 billion to the budget deficit over the next year and a half. Eight Republicans voted with Democrats to defeat a GOP filibuster of the measure, setting up a final vote as soon as later on Tuesday. The measure illustrates the great extent to which direct help for the jobless and the poor makes up a large portion of Democrats’ election-year agenda on jobs — and that it threatens to squeeze out other items on that agenda amid concerns about a budget deficit projected at a record $1.6 trillion this year. The bill also provides the annual extension of $26 billion worth of tax breaks for businesses and individuals that are popular with senators in both parties.
The $66 billion cost of providing the extended unemployment checks is added directly to a budget deficit expected to hit $1.6 trillion this year. In states with the highest jobless rates people are eligible to receive benefits for up to 99 weeks. A 65 percent health insurance subsidy for the unemployed under the COBRA program adds about another $10 billion. Federal cash to help states with Medicaid adds about $25 billion more. "Even though these programs may be good for your state, a senator has an obligation to stand up and say ‘no more,’" said freshman GOP Sen. George Lemieux of Florida. "No more spending our kids’ future. No more bankrupting the promise of this country."
NYT | 6:15 am ET | Feb. 21, 2010
Even as the American economy shows tentative signs of a rebound, the human toll of the recession continues to mount, with millions of Americans remaining out of work, out of savings and nearing the end of their unemployment benefits. Economists fear that the nascent recovery will leave more people behind than in past recessions, failing to create jobs in sufficient numbers to absorb the record-setting ranks of the long-term unemployed. Call them the new poor: people long accustomed to the comforts of middle-class life who are now relying on public assistance for the first time in their lives — potentially for years to come. Yet the social safety net is already showing severe strains. Roughly 2.7 million jobless people will lose their unemployment check before the end of April unless Congress approves the Obama administration’s proposal to extend the payments, according to the Labor Department.
Here in Southern California, Jean Eisen has been without work since she lost her job selling beauty salon equipment more than two years ago. In the several months she has endured with neither a paycheck nor an unemployment check, she has relied on local food banks for her groceries. She has learned to live without the prescription medications she is supposed to take for high blood pressure and cholesterol. She has become effusively religious — an unexpected turn for this onetime standup comic with X-rated material — finding in Christianity her only form of health insurance. “I pray for healing,” says Ms. Eisen, 57. “When you’ve got nothing, you’ve got to go with what you know.” Warm, outgoing and prone to the positive, Ms. Eisen has worked much of her life. Now, she is one of 6.3 million Americans who have been unemployed for six months or longer, the largest number since the government began keeping track in 1948. That is more than double the toll in the next-worst period, in the early 1980s. Continue reading
Bloomberg | February 7, 2010 | 22:15 EST
Small businesses are becoming the Achilles heel of the U.S. recovery by limiting growth and job creation. Companies with fewer than 500 employees, such as Phoenix Technologies Ltd. and Sonic Corp., helped lead the economy out of the four recessions since 1980. This time, they continue to cut capital spending and dismiss workers, eliminating 3,000 jobs in January, according to Roseland, New Jersey-based Automatic Data Processing Inc., the world’s largest payroll processor. Improvement in the unemployment rate, which fell to 9.7 in January from 10 percent in December, may stall later this year if these firms aren’t hiring, and growth likely won’t meet the median 2.7 percent annual rate forecast for 2010 by 67 economists in a Jan. 14 Bloomberg News survey. “Will you have a sustainable recovery a few years down the road without getting some small-business spending? No,” Cary Leahey, senior managing director at Decision Economics Inc. in New York and a former White House economist, said in an interview. “Wall Street gets it.” The Russell 2000 Index of small-cap stocks has risen 4 percent in the past six months, lagging behind a 6 percent increase in the Standard & Poor’s 500 Index. Coming out of previous recessions, shares of companies with market capitalization between $250 million and $1 billion generally led markets higher.
The Russell Index gained 17 percent in the six months following the end of the 2001 recession, compared with 0.2 percent for the S&P 500. Futures on the S&P 500 were little changed today at 1,059.10 as of 11:09 a.m. Singapore time. The U.S. economy expanded at a 5.7 percent annual rate in the fourth quarter, the fastest pace in six years, after a 2.2 percent increase in the third quarter, buoyed partly by capital Continue reading
BBC NEWS | 2010/01/27 | 00:09:47 GMT
Disputes over how best to reform the global financial system are set to dominate this year’s World Economic Forum in Davos. French President Nicolas Sarkozy is likely to add to the pressure on banks in a keynote speech on Wednesday. Numerous sessions on banking reform are expected to see clashes between bankers and regulators. The forum, meanwhile, is publishing a report on how to redesign the “global financial architecture”.
Regulators set Davos agenda
Until two years ago, bankers and bosses dominated the agenda for the 2,500 top business leaders and politicians meeting in the Swiss Alps. Last year, after the crisis struck, there was no tussle for dominance. Everybody tried to understand what had happened and searched for ideas to recover from the crisis. And most bankers stayed away, firefighting the crisis at home. This year the bankers are back, but the talk is of reform and restructuring, with politicians, regulators and central bankers setting the framework for discussions. Some well-known economists appear ready to chip in. “There are few financial innovations that are not just designed to generate profits for banks,” mutters one of them at the forum’s welcome reception. Continue reading
Reuters | Warsaw | Sat Jan 9, 2010 | 4:39pm IST
Global economic recovery is faster and stronger than expected but there are still risks for its sustainability, the International Monetary Fund’s head for Europe, Marek Belka, was quoted on Saturday as saying. In an interview with Gazeta Wyborcza daily, Belka said the economic recovery was mostly driven by state programmes and that it was not certain to continue after the aid is phased out. “(Global) situation is better than a year ago.
The recovery has happened sooner than we had expected and it is stronger, but…we owe it for now mostly to state aid,” he said. “The IMF is concerned whether the growth in demand caused by helping economy by a state proves durable,” Belka also said. He said problems would likely occur first in countries where households were excessively in debt, like Germany and France. “We don’t expect 2010 to be a year of crisis, but the recovery will be very slow,” Belka added.
The police department in this city of 470,000 has lost about 50 officers, and is hiring lower-paid civilians to do investigative work. The Little League has to pay the city $15 an hour to turn on ball-field lights. The library now closes its main location on Sundays, and city offices are open only four days a week. This holiday season, the city didn’t put up festive lights along the downtown streets.
Mesa’s tax receipts, depressed by the recession, will likely come back one of these days. But Mayor Scott Smith doesn’t believe city services will return to…
Bloomberg | December 24, 2009 | 18:42 EST
Japan’s unemployment rate rose for the first time in four months in November, an indication job growth may not be strong enough to support the economy’s recovery from its deepest postwar recession. The jobless rate climbed to 5.2 percent from October, the statistics bureau said today in Tokyo, matching the median forecast of 26 economists surveyed by Bloomberg News. More than $2 trillion in global stimulus spending has revived Japanese exports and production, fueling corporate sentiment in the world’s second-largest economy. The improvements haven’t spread to households because falling sales at home are forcing companies to curb costs.
“Compared to the situation a couple months ago, I think we can say the job market is no longer worsening,” said Yoshiki Shinke, senior economist at Dai-Ichi Life Research Institute in Tokyo. “But companies still have a strong desire to save labor costs, and they’re certainly not ready to start aggressively hiring again.” Household spending rose 2.2 percent in November, advancing for a fourth month, a separate report showed today. Sales at the nation’s largest service companies will tumble 11.8 percent in the year ending March 31, the Bank of Japan’s Continue reading