Economic Recovery
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The Headline You Never Expected: Foreign Growth Could Bail Out the U.S. Economy
During a period of increasingly worrisome headlines about the U.S. economy, there is one bright spot.
The rest of the world appears to be doing much better than we are.
In the long run, that's good news for the United States. Rapid world growth will eventually rekindle the economic fires here, producing a growth that is more balanced than the bubbles of 1995-2008.
Still, getting to that point will be a challenge, since - economically speaking - the home fires don't appear to be burning all that brightly.
To see how foreign growth could bail out the U.S. economy, please read on...
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Question of the Week: Investors Preparing for Double-Dip Recession
The "pause" button has been hit on the U.S. economic recovery, fueling worries that we're headed for a double-dip recession.
"We're in a pause in a recovery, a modest recovery, but a pause in the modest recovery feels like a quasi-recession," Former U.S. Federal Reserve Chairman Alan Greenspan said in an interview on NBC's "Meet the Press" broadcast last Sunday.
Greenspan touched off speculator interest in a double-dip downturn when he announced that a further decline in home prices could push the economy into a new recession.
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An Anemic Economic Recovery Keeps the Fed From Focusing on Inflation
With interest rates near zero and a balance sheet that's in excess of $2 trillion, U.S. Federal Reserve Chairman Ben Bernanke would be very glad to offload some of the Fed's obligations. But so far he's has been unable to do so, as an anemic economic recovery continues to monopolize his attention.
The central bank yesterday (Tuesday) announced that it would reinvest the proceeds from expiring mortgage-backed securities into longer-term U.S. Treasuries. The move should help a weakening economy by keeping mortgage rates low. And while it also may boost inflationary pressures, the central bank feels it had little choice.
"Information received since the Federal Open Market Committee met in June indicates that the pace of recovery in output and employment has slowed in recent months," the Federal Open Market Committee said.
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Will the Fed Opt For More Stimulus as the Economic Recovery Founders?
Weaker-than-expected job growth is fueling speculation that the Federal Open Market Committee (FOMC) will unveil new stimulus measures to prop up the economic recovery when it meets today (Tuesday) for its regular rate-setting session.
Friday's July unemployment report was by most measures a disaster, providing the latest indication the economic recovery is running out of steam with 14.6 million Americans still searching for work.
The economy shed 131,000 jobs, as 143,000 temporary census workers fell off federal payrolls. Private-sector employment grew by 71,000 in July after a downwardly revised June increase of 31,000 workers.
The private sector so far this year has added 90,000 jobs a month on average, well below the 125,000 needed to keep up with population growth - let alone recover the eight million jobs lost during the recession.
"It's a double whammy because it causes people to take a psychological step back," Tig Gilliam, chief executive of staffing firm Adecco Group North America, told The Wall Street Journal. "Now, it looks like not only has the economy slowed, but maybe it wasn't as good when it was originally reported as we thought."
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Slight Job Gains Won't Shrink the High Unemployment Rate
Employment reports released this week show mixed results, but lead to the same conclusion: The high unemployment rate isn't improving any time soon.
U.S. private-sector jobs last month grew by only 42,000, according to a report issued yesterday (Wednesday) by payrolls processor Automatic Data Processing, Inc. (Nasdaq: ADP). ADP revised the number of jobs added in June to 19,000 from 13,000, which fell far short of economists' predictions of 39,000.
The ADP report "shows continued weakness in the jobs market, which is in part caused by the uncertainty in the economy and general business climate," said Gary Butler, ADP's chief executive, in a statement. "American businesses are on the cusp of recovery, but more effective incentives are needed to encourage business investment resulting in the creation of more jobs."
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We Want to Hear From You: Are You Preparing for a Double-Dip Recession?
The "pause" button has been hit on the U.S. economic recovery, fueling worries that we're headed for a double-dip recession.
"We're in a pause in a recovery, a modest recovery, but a pause in the modest recovery feels like a quasi-recession," Former U.S. Federal Reserve Chairman Alan Greenspan said in an interview on NBC's "Meet the Press" broadcast Sunday.
Greenspan touched off speculator interest in a double-dip downturn when he announced that a further decline in home prices could push the economy toward a new recession.
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Flat Consumer Spending and Declining Factory Orders Point to Slower Economic Recovery
Consumer spending in the United Sates was flat in June and personal savings were the highest in a year, underscoring how unemployment continues to hamstring the U.S. economic recovery.
Separately, U.S. factory orders fell by more than expected in June from May, and pending home sales continued to plunge as the expiration of a government subsidy for first-time homebuyers depressed housing market activity.
Taken together with the gross domestic product (GDP) data for the second quarter, the latest string of reports shows a U.S. economy that is drawing closer to a double-dip recession.
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Wall Street's Mood Shift Is Signaling a Profit-Making Price Push Ahead
A mood of mild optimism has begun to spread down Wall Street not long after there was nothing but long faces. Fancy that.
More good news out of Europe, better-than-expected new home sales, and the latest of a solid second-quarter earnings season has helped resuscitate the animal spirits that were missing in action since the spring.
Stocks rose past some key milestones in their historic July over the past week, pushing the Dow Jones Industrial Average just barely into positive territory for the year. It was a very professional, low volatility rally this week, a welcome change from the intra-day dramatics that had put everyone on edge lately.
What has really changed from the point of view of government policy or corporate results? Nothing and everything.
To find out what’s changing on Wall Street, click here.
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History Gives a Reason to Be Hopeful about U.S. Stocks
Volatility has hamstrung U.S. stocks recently, but history suggests there's a reason for hope on the horizon.
The past week and a half has been a welcome reprieve from the extreme volatility we've seen over the past few months. There have been no fewer than 19 days this year in which up or down volume has accounted for more than 90% of total volume.
The rapid up-and-down, all-or-nothing nature of the stock market has confounded even the most talented, highly paid and well informed traders. The hedge fund industry as a whole has been caught flat-footed - posting losses in each of the last two months.
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World's Largest Steelmaker Warns of Slowing Economic Recovery
Lakshmi Mittal, the chairman of ArcelorMittal (NYSE ADR: MT), the world's largest steel company, yesterday (Wednesday) issued a warning about the slowing pace of the global economic recovery and lowered his company's third-quarter forecast.
ArcelorMittal posted a 146% rise in net profits in the second quarter compared with the same period last year as demand recovered. However, the company warned third quarter results would slump by as much as 30% - hit by a seasonal dip in demand during the European summer, slower growth in China, and higher costs for iron ore.
"The improved performance in the second quarter is in line with our expectations and reflects the continued slow and progressive recovery," Mittal told The Wall Street Journal. "The challenge for the second half of the year will be to pass on the full extent of cost increases to our customers."
