As global markets are sizing the Euro-zone sovereign risks and the Chinese reserve requirement, the U.S. economy is giving tangible signs of recovery. The U.S. dollar, in the mean time, is finding good resistance points at current levels.
U.S: Recovery unfolding
Bringing some order inside the troubled finances remains the main target this year in the United States and in Europe. Nevertheless, with the job market layouts having probably topped at current levels, especially in the U.S., consumer spending should rise in the coming months, albeit at a lower level compared to previous recessions. In January, consumer spending moved up by 0.5% month-on-month, more than the expected 0.4%. December and November numbers were revised up as well. The first moved to -0.1% from -0.3% and the second jumped to 2.0% from 1.8%. January’s rise was broad-based confirming that households keep on spending even after the holiday season. Sells rose 0.8% excluding auto, gasoline and building equipment. The housing market remains at contrary a corner stone of the U.S. recovery, but prices might struggle to find their way out of the bottom. Housing starts are stalling, also due to the adverse weather conditions, although the uptrend should continue. The Federal Reserve will maintain the gradual removal policy, as the initial step toward higher rates that could materialize later in the year. Policymakers still expects low growth and low inflation for the months ahead. In effect, December’s trade deficit confirms that the economic recovery is unfolding in the United States. The deficit increased to $ 40.2 billion from November’s $ 36.4 billion. Both export and import rose. The first moved up by 3.3% and the second increased by 4.8%. So, the Gross Domestic Product (GDP) might pass 3.5% this year. Core retail sales rose almost 6.0% annually in the past six months. The vast majority of key U.S. companies have overcome Q4 forecasts with profits rising on a pace of over 15% year-on-year excluding financials.
Tuesday, March 9, 2010
U.S.: Growth To Expand. How Much?
Concerns on credit’s availability are putting a cap on growth prospective, while the U.S. dollar is once again the safe haven currency. However, the correction might be temporary and prices should again move to the upside in the coming months. We are only in the mid of a long inflationary cycle which contemplates higher commodity prices and a lower dollar. Current sell-offs might be only in anticipation of milder growth in the months ahead for the United States and the rest of the world.
U.S.: output to expand
The global financial reshuffling is underway, as worldwide markets are in a selling tone and the U.S. dollar is once again the safe haven currency. So, from stocks to crude oil, the decline is unfolding and it might continue for the shorter term as well. The escalation of fiscal and credit challenges for some European countries is keeping the Euro under pressure. Proposals, both in the U.S. and in Europe, for tougher rules for financial institution activities are increasing concerns on credit’s availability and economic expansion. Finally, the possibility of inflation in leading economic nations, such as China and India, is questioning the magnitude of current recovery. However, the correction might be temporary and prices should again move to the upside in the coming months. In effect, we are only in the mid of a long inflationary cycle which contemplates higher commodity prices and a lower dollar. In addition, the U.S. economy has just moved away from the bottom, output reached the positive territory only in 2009, and upside potentiality remains intact for now.
U.S.: output to expand
The global financial reshuffling is underway, as worldwide markets are in a selling tone and the U.S. dollar is once again the safe haven currency. So, from stocks to crude oil, the decline is unfolding and it might continue for the shorter term as well. The escalation of fiscal and credit challenges for some European countries is keeping the Euro under pressure. Proposals, both in the U.S. and in Europe, for tougher rules for financial institution activities are increasing concerns on credit’s availability and economic expansion. Finally, the possibility of inflation in leading economic nations, such as China and India, is questioning the magnitude of current recovery. However, the correction might be temporary and prices should again move to the upside in the coming months. In effect, we are only in the mid of a long inflationary cycle which contemplates higher commodity prices and a lower dollar. In addition, the U.S. economy has just moved away from the bottom, output reached the positive territory only in 2009, and upside potentiality remains intact for now.
EUROPE: Rescue Package Needed
The economy is on the move again in the United States, but the Federal Reserve will keep rates low for few more months. In Europe, instead, concerns over the European fiscal and sovereign debt are still keeping the European currency under pressure. The next important support level is at 1.37 against the U.S. dollar.
U.S.: Fed’s policy confirmed for now
The U.S. economy is clearly improving, albeit the recovery remains challenged by high unemployment rate and tight credit conditions. Beating expectations, the first estimate of the fourth-quarter 2009 Gross Domestic Product (GDP) grew 5.7% compared to both the forecasted 4.8% and the up-move of 2.2% in the third-quarter of last year. The increase was broad-based with final sales increasing at a 2.2% pace. The up-trend should continue this year as well. Household spending rose on goods and services, but consumers will remain caution over the year. In effect, consumer confidence moved up to 55.9 in January from December’s 53.6, as consumers expect the current situation to improve, although prospects of job conditions remained tepid. Nonetheless, durable goods orders increased 0.3% in December stopping two months slide. Uncertainty over the extension of the first time home buyer tax credit (it was extended until the end of April 2010) weighted instead on home sale numbers in December. As a result, existing home sales fell almost 17% month-on-month, while home prices rose 1.5% compared to the previous year. Both condos and single homes showed heavy losses and the month of supply of unsold houses rose to 7.2 months from 6.5. New home sales fell 7.6% during the same month, while inventories of unsold new homes rose to 8.1 months from 7.6 months in November. Declines were broad-based, but sales stay above the record low of 329,000 registered in January 2009. The Federal Reserve should keep rates low for few more months, although it expects the economy to continuing strengthening. The Fed also confirmed it will decrease the pace of purchase of agency debt and agency MBS and will complete the program by the end of March.
U.S.: Fed’s policy confirmed for now
The U.S. economy is clearly improving, albeit the recovery remains challenged by high unemployment rate and tight credit conditions. Beating expectations, the first estimate of the fourth-quarter 2009 Gross Domestic Product (GDP) grew 5.7% compared to both the forecasted 4.8% and the up-move of 2.2% in the third-quarter of last year. The increase was broad-based with final sales increasing at a 2.2% pace. The up-trend should continue this year as well. Household spending rose on goods and services, but consumers will remain caution over the year. In effect, consumer confidence moved up to 55.9 in January from December’s 53.6, as consumers expect the current situation to improve, although prospects of job conditions remained tepid. Nonetheless, durable goods orders increased 0.3% in December stopping two months slide. Uncertainty over the extension of the first time home buyer tax credit (it was extended until the end of April 2010) weighted instead on home sale numbers in December. As a result, existing home sales fell almost 17% month-on-month, while home prices rose 1.5% compared to the previous year. Both condos and single homes showed heavy losses and the month of supply of unsold houses rose to 7.2 months from 6.5. New home sales fell 7.6% during the same month, while inventories of unsold new homes rose to 8.1 months from 7.6 months in November. Declines were broad-based, but sales stay above the record low of 329,000 registered in January 2009. The Federal Reserve should keep rates low for few more months, although it expects the economy to continuing strengthening. The Fed also confirmed it will decrease the pace of purchase of agency debt and agency MBS and will complete the program by the end of March.
U.S.: Unemployment Rate Topping?
In the U.S., retail sales came out worst than expected. However, the underline numbers are pointing to recovery, as discretionary spending has been up-trending for over two months. In Europe, concerns are mounting over the creditworthiness of some
U.S.: imports to increase further?
The economic recovery is underway in the United State with some drawdown here and there. Unexpectedly, retail spending declined 0.3% in December (+0.4%), after having increased 1.8% in November and 1.2% in October. Motor vehicle and parts fell 0.8% compared to the gain of 1.2% registered the previous month. The poor weather conditions might have played a role in December. In addition, consumers have been used recently to do their Christmas shopping earlier in the year, so to take advantage of pre-holiday discounts. Consumer spending remains overall bumpy with the job and credit markets remaining weak. However, quarterly data confirms that the uptrend has already begun, as discretionary spending has been in green for two consecutive months. The jobless rate appears to stabilizing at current levels. Jobless claims rose slightly for the week ending January 9, but the four-week moving average declined to 441,000 from 450,000.
U.S.: imports to increase further?
The economic recovery is underway in the United State with some drawdown here and there. Unexpectedly, retail spending declined 0.3% in December (+0.4%), after having increased 1.8% in November and 1.2% in October. Motor vehicle and parts fell 0.8% compared to the gain of 1.2% registered the previous month. The poor weather conditions might have played a role in December. In addition, consumers have been used recently to do their Christmas shopping earlier in the year, so to take advantage of pre-holiday discounts. Consumer spending remains overall bumpy with the job and credit markets remaining weak. However, quarterly data confirms that the uptrend has already begun, as discretionary spending has been in green for two consecutive months. The jobless rate appears to stabilizing at current levels. Jobless claims rose slightly for the week ending January 9, but the four-week moving average declined to 441,000 from 450,000.
Europe: ECB Steady For Now
In the United States, the unemployment rate appears to be topping near the important level of 10.0%, although temporary upswings are possible. In Europe, exports are increasing, but the economic recovery stays uneven.
U.S.: Unemployment topping?
The global economic growth is gaining momentum, supported by China, India and Brazil. With exports increasing, the Gross Domestic Product (GDP) will move toward 3.0% this year, after having performed poorly in 2009. Domestic demand is on the move as well, although it still remains subdued by tight credit and high unemployment rate. Its success would be critical in rebalancing economic deficiencies. Nevertheless, in December, the U.S. economy has lost 85,000 jobs with more than half coming from the private sector. Although numbers were expected to remain unchanged compared to the previous month, losses are decreasing from the beginning of 2009. Revisions, at the contrary, were mixed. In fact, while November manifested to first gains since 2007 with 4000 new positions, October showed a drop of 127,000.
U.S.: Unemployment topping?
The global economic growth is gaining momentum, supported by China, India and Brazil. With exports increasing, the Gross Domestic Product (GDP) will move toward 3.0% this year, after having performed poorly in 2009. Domestic demand is on the move as well, although it still remains subdued by tight credit and high unemployment rate. Its success would be critical in rebalancing economic deficiencies. Nevertheless, in December, the U.S. economy has lost 85,000 jobs with more than half coming from the private sector. Although numbers were expected to remain unchanged compared to the previous month, losses are decreasing from the beginning of 2009. Revisions, at the contrary, were mixed. In fact, while November manifested to first gains since 2007 with 4000 new positions, October showed a drop of 127,000.
EUROPE: Exports To Increase
The economic recovery has faced some setbacks during the Winter in the U.S., but should accelerate in Spring and Summer. The euro currency, in the mean time, is challenging important resistance lines against the U.S. dollar.
U.S.: Awaiting for March numbers.
There is only modest recovery, so far. This is what stands out from the latest Fed’s Beige Book prepared before Feb. 22nd. Consumer spending is rising, but activity remained modest, also due to the poor weather conditions. Inventories have been rebuilt, as manufacturers are showing optimism and planning to increase their investments. In effect, personal income moved up 0.1% month-on-month in January, while spending rose 0.5% during the same period. However, the job market remains weak, albeit improving. In February, the workforce contracted only by 36,000, better than the expected decline of 50,000. The unemployment rate, which also surveys 60,000 households, stayed unchanged at 9.7%, but below October’s high of 10.1%.
U.S.: Awaiting for March numbers.
There is only modest recovery, so far. This is what stands out from the latest Fed’s Beige Book prepared before Feb. 22nd. Consumer spending is rising, but activity remained modest, also due to the poor weather conditions. Inventories have been rebuilt, as manufacturers are showing optimism and planning to increase their investments. In effect, personal income moved up 0.1% month-on-month in January, while spending rose 0.5% during the same period. However, the job market remains weak, albeit improving. In February, the workforce contracted only by 36,000, better than the expected decline of 50,000. The unemployment rate, which also surveys 60,000 households, stayed unchanged at 9.7%, but below October’s high of 10.1%.
EUROPE: Exports To Increase
The economic recovery has faced some setbacks during the Winter in the U.S., but should accelerate in Spring and Summer. The euro currency, in the mean time, is challenging important resistance lines against the U.S. dollar.
U.S.: Awaiting for March numbers.
There is only modest recovery, so far. This is what stands out from the latest Fed’s Beige Book prepared before Feb. 22nd. Consumer spending is rising, but activity remained modest, also due to the poor weather conditions. Inventories have been rebuilt, as manufacturers are showing optimism and planning to increase their investments. In effect, personal income moved up 0.1% month-on-month in January, while spending rose 0.5% during the same period. However, the job market remains weak, albeit improving. In February, the workforce contracted only by 36,000, better than the expected decline of 50,000. The unemployment rate, which also surveys 60,000 households, stayed unchanged at 9.7%, but below October’s high of 10.1%.
U.S.: Awaiting for March numbers.
There is only modest recovery, so far. This is what stands out from the latest Fed’s Beige Book prepared before Feb. 22nd. Consumer spending is rising, but activity remained modest, also due to the poor weather conditions. Inventories have been rebuilt, as manufacturers are showing optimism and planning to increase their investments. In effect, personal income moved up 0.1% month-on-month in January, while spending rose 0.5% during the same period. However, the job market remains weak, albeit improving. In February, the workforce contracted only by 36,000, better than the expected decline of 50,000. The unemployment rate, which also surveys 60,000 households, stayed unchanged at 9.7%, but below October’s high of 10.1%.
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