All Posts Tagged With: "economic recovery"
Investors Await Confidence Boost
Michael Bowler | RSS | Mon, May 25 2009 | 1 Comment
The United States is entering a much needed economic recovery. The worst of the recession is over. (Keep an eye out for articles this week detailing why that assertion is correct.) Unfortunately, the economic mood deteriorated last week as investors began to question whether the recent rally was premature. They were also warned about British government debt that raised concerns about how much money the U.S. government owes, mixed with the longstanding concern that we are borrowing entirely too much money from China and other countries.
As stocks rallied, starting in early March, investors were able to find signs of hope in reports that showed a still struggling economy. As the rally is slowing down, investors are rather uneasy going into this trading week, which will see through to two reports on April home sales and the latest assessment of consumer confidence. Combine that with a potential June 1 Chapter 11 bankruptcy filing by General Motors, and you have investors all over the country ‘sitting on pins and needles’.
What is scaring investors right now is the amount of jobless figures that are still going up. What investors fail to realize is that there are two kinds of economic indicators: leading and lagging. Leading indicators are economic actions that foretell an upward moving economy. Lagging indicators are economic actions that react slowly to economic changes, therefore leaving no predictive value. Jobless figures are a lagging indicator due to the fact that jobs are not created by most companies until capital is obtained or accounted for that support them.
Jobless figures are not going to go up until all the leading indicators, which are very strong right now, manifest themselves in the way of solid economic recovery. Economic recovery can and will not happen quickly because a strong recovery happens slowly as a solid foundation is formed under each step. The economy will waver a little with each rally followed by a short decline as that slow recovery has solidarity formed under it. You are also guaranteed to see a few more struggling businesses, especially in the financial market, hit Chapter 7 bankruptcy, liquidate, and be swallowed up by stronger businesses. When that occurs, there is nowhere to go but up because there are fewer weak businesses to slow down and weaken the recovery.
Major leading indicators squeezed out a gain last week. The Dow Jones industrial average rose 0.1 percent, while the Standard & Poor’s 500 index ended the week up 0.47 percent. The first test of ability to build on these gains comes Tuesday, when the Conference Board releases its May consumer confidence index which should provide some insight into consumers’ willingness to spend. Ron Weiner, president and chief executive of RDM Financial in Westport, Conn., says that while any positive news about consumers would be welcome, the market is likely to have just a short-term upward movement. “We want the consumer to be out there, we want them to spend,” Weiner said. “For the most part, however, we don’t see consumers going to pull us out of this economy because they are also paying down debt at the same time.” Investors are also concerned about retail due to the Commerce Department’s disappointing retail sales report for April, which took the market by surprise May 13 and sent stocks plunging.
Analysts say more stabilization in the housing industry is needed for a recovery to occur. A government report is also due this week on U.S. home prices during the first quarter of 2009. The housing data could be a big force in shaping investors’ attitudes. A housing recovery is crucial to helping boost consumer confidence and to allow banks to put aside some worries about eroding asset values.
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Tags: consumers, jobless figures, leading indicators
Unemployment rises in April
Jennifer McClelland | RSS | Fri, May 08 2009 | 0 CommentsThe unemployment rate in the United States rose to 8.9% in April after losing 539,000 jobs. While the report isn’t as bad as some feared, it just proved that the recession is as bad as 1983, when the percentage of jobless in the country was the same.
At the same time, there should be some economic recovery happening by the end of the year, at least that’s what people are predicting. So far, predictions have been off, but it has been a good thing. When it came to the number of jobs lost in April, some were expecting 600,000 jobs lost, but there were only 539,000.
When compared to April 2008, unemployment was 5%.
Since the beginning of the recession in December 2007, the nation has lost 5.7 million jobs.
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Tags: recession, jobs, unemployment rate in the united states
Congress clears 2nd half of bailout
Jennifer McClelland | RSS | Fri, Jan 16 2009 | 0 CommentsIn a show of solidarity behind the President-elect, Congress voted for infusing the financial system with the remaining $350 billion just two days after Obama asked them to.
From the AP:
Congress laid the foundation for President-elect Barack Obama’s economic recovery plan on Thursday with remarkable speed, clearing the way for a new infusion of bailout cash for the financial industry while majority Democrats proposed spending increases and tax cuts totaling a whopping $825 billion.
Obama has said that he wants the rest of the bailout money to go to troubled mortgages and “main street” like he promised in his campaign.
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Tags: system, tax cuts, bailout
