April 2007 - Posts

• A difficult decision for the Feds

  April 29, 2007 A difficult decision for the Feds The housing market continues to drag down our economy. However in spite of that consumers continue to borrow and spend. In the first quarter according to the commerce department consumer spend went up 3.8%, curiously enough exports fell unexpectedly and imports continue to grow taking away � a point from our economic growth. Analyst expected that European and Asian growth plus a weak dollar should have raised exports in relation to imports. The Feds are left with a dilemma if they lower interest rates to fuel growth disregarding the recent inflationary raise, them inflation is bound to go up affecting earnings employment and basically every sector of the economy. On the other hand if they raise interest rates the Housing Market will be negatively affected and so will be the rest of the economy. Perhaps doing nothing and waiting for further signs could be the best thing for them to do. Posted Apr 29 2007, 11:42 PM by amparo with no comments

• Consumer Price Index

  April 28, 2007 Consumer Price Index Wall Street’s analyst expect Consumer Price Index to go down slightly during the month of April in accordance with its continue decline during previous months this year. According to Reuter’s Consumer Perception Index(from the University of Michigan) consumer perception went from 85.3 real to 85.0, way below the 88.4 March figure. The Consumer Perception Index was 96.6 in January and 91.3 in February. Another bad omen for our economic future performance. Posted Apr 29 2007, 12:21 AM by amparo with no comments

• Poor GDP growth

  April, 27, 2007 Poor GDP growth According to the Commerce Department the Gross Domestic Product for the first quarter of the year expanded only a 1.3%, a poor performance if we take into consideration that it is only close to � of the rate recorded for the final quarter of last year. Mean while the Consumer Price Index (excluding food and energy) went up 2.2% in the same quarter going above Wall Street’s analyst expectations. On the other hand bonds grew slightly and indication that could only forecast negative inflationary news. Bad news for the economy in spite of the relatively contraction coming from the unemployment market. The underlying problems we face because of having transferred whole sectors our economy abroad plus the outsourcing phenomenon are taking their toll. Posted Apr 29 2007, 12:19 AM by amparo with no comments

• China's powerful economic growth

  April 20, 2007 Chinese economic growth On the first trimester of this year the Chinese economy showed a growth factor of 11.1% ahead of the expectations of most analyst, China GNP reached last march the 653 billion dollar mark. Growth in the investments, imports, exports and the consumption sectors could be the cause of such and impressive economic performance, meanwhile china is opening up to other markets decreasing to some extend its dependency in the U.S.A Our recent efforts to become more competitive in our commercial relations with the Chinese is undoubtedly a step in the right direction we can’t allow our economy to become more vulnerable than what it already is. Posted Apr 20 2007, 10:50 PM by amparo with no comments

• A weak dollar and strong euro

  April 18, 2007 A weak dollar and strong euro The euro went above the 1.36 dollars figure for the first time since 2004 getting close to 1.366. On the other hand the dollar demonstrated a generalize weakness in relation to other coins. The British pound was rated at 2.01 dollars an amount similar to the level it reached in June 1981. Speculation that the feds might lower interest rates could have affected the dollar performance even more. On the other hand a weak dollar could help our exports in the global markets but if it gets too weak it could help decrease the level of foreign investment in the U.S. Posted Apr 18 2007, 10:47 PM by amparo with no comments

• Inflation goes up

  April 17, 2007 Inflation goes up During the month of march the consumers index prices went up 0.6% indicating a raise in the inflationary monthly rate. The negative news about inflation are related to the increase of energy prices last month. Energy cost went up 5.9% the highest monthly increment in more than two years. The feds should ignore this negative sign since the economy is still too vulnerable because of the house market. Raising interest rates could hamper the frail economic growth we have at present. Posted Apr 17 2007, 10:44 PM by amparo with no comments

• Economic expectations

  April 12, 2007 According to the IMF the deceleration of the economy that started during 2006 should end this year. The economy should begin the process of recuperation gradually this year and reach its full potential by the middle of 2008. The IMF report for this semester “global economic perspectives” made public yesterday forecast an economic growth of 2.2% for this year (a 0.7% less than previously expected) and a 2.8% for 2008; these last number is relatively close to the 3.3% achieved in 2006. Among the factors responsible for the slowdown of the U.S. economy that the IMF mentioned there are: the house market and the low performance of the manufacturing sector. However it indicated as positive factors, the good numbers in the labor market and the fact that interest rates are still relatively low. To the IMF the slowdown in the economy is the natural weakness that almost always takes place in the middle of a growth cycle. The report nevertheless indicated that the expected positive outcome could be altered if house market sales continues to fall, and has a decline that is worst than expected one, and scenario such as this could create problems for investments in the Real Estate Market and also have a negative impact in consumption and therefore in what concerns the creation of wealth and employment. A situation such as this will hurt the mortgage market and hence the financial sector as well as credit availability. On the good side inflation has remain stable in the last few months and the price consumption index (excluding food and energy) has declined in February to a 2.7% in reference to last December 2.9%. It is expected that the commercial deficit will go down to a 6% of the GNP this year about 1% less than indicated in the IMF’s Septembers report, the commercial deficit should be less because the dollar weakness ought to improve exports, specially with the solid economic performance of our business partner (Europe and Asia). Posted Apr 12 2007, 06:37 AM by amparo with no comments

• Finding a balance

  Frederic Mishkin Governor of the Federal Reserve warned the members of the central bank to be on the alert about the negative effects that price stability restoration can have on the economy. It is very difficult to stabilize inflation when temporal factors influence its increase. When inflation goes up because of temporal factors it is hard to control price stability. It appears them that the economy is going to go through a bumpy road for a while until the house market, gasoline cost, inflation and higher salaries stop affecting negatively one another, each of these factors are influence too by the external world market context and by the evolution of on economic process(like the house market) whose development and behavior presently is beyond anyone’s control. Some analyst believe that the lowering of interest rates by the feds could benefit the house market however this will have other important negative effects in the economy and therefore at this point it is an undesirable option.. Posted Apr 11 2007, 04:54 PM by amparo with no comments

• Consumers confidence

  Last month confidence among consumers decrease to its lowest point for the period of the last month 18 months. The fear of higher gasoline cost a recession and inflation where among the most important variables that affected consumers perception of the economy. Economic optimism decline to a 4.5% in April the lowest since the end of 2004 according to the company Business Daily and Technometric Market Intelligence. Consumers confidence is considered the most important indicators related to spending and, as we all know, spending represents more than 2/3 of the economic activity in our country. In spite of the mixed news about the economy that we have received lately consumers have focused on the negative signs being, the house market the most salient, having then a reason to worry. Posted Apr 10 2007, 04:52 PM by amparo with no comments

• Mixed news again

  While the mostly dollar based international reserves moved backwards in relation to the Euro, according to an IMF statistics report published last Friday in relation to the fourth trimester of 2006, unemployment decreased to a 4.4% the lowest since October of last year, according to information reported by the labor department. The dollar in December was 64.7% of all international(global) reserves, after a 66.7% during the fourth trimester in 2005. The euro meanwhile went up from a 24.2% by the end of 2005 to 25.8% during the end of last year. The British pound went from 3.62% in 2005 to 4.43% a year later, on the other hand during the month of March 180 thousand new jobs where created a figure that reflected an amount above analyst expectations. The labor department reported that the construction industry took away 56 thousand jobs of the total amount of new jobs created. While the unemployment news are good we ought to be aware that a lost in the share of the international reserve sector could weaken the dollar making investment in our country less appealing. An already weak dollar together with a large commercial deficit is not good news since our economy has already weakened by the dismantling of whole industrial sectors that has move abroad. The basic productive capacity of our economy relies on its service and manufacturing industries, these productive structure has lost a considerable percentage of its strength as industries keep moving to other countries; outsourcing has further damaged our economic foundations. Posted Apr 06 2007, 08:14 PM by amparo with no comments

• Consumer spending

  Consumers increased spending during the month of February thanks to an increase in earnings meanwhile inflation went up to it’s highest level during the last six months. The commerce department reported that consumer spending went up 0.6% in February it’s best performance since December while personal earnings went up 0.6% too. These numbers where twice the ones analyst expected and will help dissipate fears of a possible recession in spite of the poor house sales and automotive industrial performance on the other hand inflation (excluding energy and food) went up 0.3% in February. We keep getting tangled news about the economy which seems to be doing pretty good after all . Perhaps we might not go into a recession as Allan Greenspan thought it could happen. Posted Apr 04 2007, 08:12 PM by amparo with no comments

• A positive outlook

  Recently Gary Stern president of the Federal Reserve in Minneapolis gave an optimistic report of the United States economic performance. During a talk about investment options at Dayton’s university in Ohio he placed emphasis in the flexibility of our economic system, it’s resistance and growth capacity in spite of adverse global conditions. Mr. Stern described an economy with full employment and high consumer spending. He also indicated that capital investment and cash flow kept the economy buoyant. Stern did recognized some negative aspects of our economy as for instance the lack of growth in home sales, which according to him was something we should all be worried about. What Mr. Stern did not mention however was our large commercial deficits and increasing public debt. Posted Apr 02 2007, 05:07 PM by amparo with no comments