Recession 2013
DJ Industrial Ave Theoretical (m)
N/A: DJIA
Jun 18
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Last price15,318.23Prev Close15,179.85
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Change138.38% Change0.9%
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Open15,186.30Volume31,209,800
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Day Low15,173.89Day High15,362.73
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52 Wk Low12,502.6652 Wk High15,409.39
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Does Weakening Eurozone Mean Recession 2013 for U.S.?
The Eurozone economy contracted in the second quarter, increasing fears that "Recession 2013" for the U.S. is a step closer to reality.
From April to June, gross domestic product (GDP) in the ailing Eurozone region withered 0.2%.
That compares to the prior three months where there was no growth as the area was besieged by the ailing economies of Greece, Italy, Spain and Finland, which all sharply contracted.
"[The contraction] confirmed that the Eurozone is to all intents and purposes in recession, even if it has avoided the technical definition of two successive quarters of negative quarter-on-quarter GDP," Howard Archer, an economist at IHS Global Insight wrote in a note to clients.
The only thing preventing the Eurozone from contracting more in the second quarter and falling back into its second recession in three years was a buoyant economic performance from Germany.
Healthy investment and domestic consumption boosted the German economy and helped it grow 0.3% in the second quarter, topping expectations of 0.1%. The Netherlands also beat expectations, reporting growth of 0.2% for the quarter.
Meanwhile, French GDP didn't budge, sidestepping a highly anticipated contraction.
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Recession 2013: Retail Sales Figures are the Latest Sign of a Slowing Economy
For the third consecutive month, retail sales fell as demand waned for everything from cars and electronics to building material, another telling sign that the U.S. economy may be slipping back into a recession.
The Commerce Department reported Monday that retail sales dipped 0.5% in June, much less than analysts' forecasts of a 0.2% rise. The decline marked the first time retail sales had fallen for three straight months since late 2008, near the height of the Great Recession.
Most noticeable in the rash of declining sales was the 0.6% drop in motor vehicles and parts, an area that was widely expected to show an uptick.
Also showing a sharp slump were receipts for electronics and appliances which fell 0.8%. Sales of building materials sagged 1.6%, and receipts at gasoline stations dried up some 1.8% even while gasoline price fell during the month.
The report adds more fodder to the lingering hope that the Federal Reserve could launch another round of quantitative easing.
The dismal commerce numbers also add to the recent wave of weak economic data.
On Monday, the International Monetary Fund (IMF) cut is forecast for global economic growth and urged European policy makers to take more aggressive measures to curtail their crisis, while cautioning that China's economy is at risk for taking a hard fall.
Meanwhile, Reuters reported a poll released on Monday that revealed American companies have tempered any plans to hire workers, while a growing number of firms believe the mess in Europe is hurting sales. The poll showed nearly half (47%) of companies polled believe their sales have suffered thanks to the Eurozone debt crisis.
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Central Banks Move to Prevent Recession 2013
With more investors and consumers concerned over the Recession 2013 threat, Europe and China today (Thursday) took action to motivate their sluggish economies and prevent a drastic global slowdown.
It hasn't even been a week since a crucial European summit provided a blueprint for the 17-member Eurozone to pull out of its debt crisis. But already the rally that immediately followed has fizzled. At issue is how European leaders will work out the tricky details for a central banking authority and the expanded use of bailout funds.
Now the European Central Bank (ECB) doesn't have much left in its arsenal to calm fears of a broad economic slowdown in the region. It used one of its last tools Thursday when it slashed its benchmark lending rate by 0.25 percentage points to 0.75%, the lowest level since 1999, when the euro was created.
At this level, the ECB hopes that bankers be more willing to lend and also that investors will open their wallets wider.
ECB President Mario Draghi noted in a press conference following the group's decision that the move was made independently of China's decision to cut rates.
"There wasn't any co-ordination that went beyond the normal exchange of views on the state of the business cycle...economy...or global demand," said Draghi.
Draghi stressed that the cut wasn't aimed to help an individual country, but to assist the entire struggling region.
"We can genuinely say that this measure is addressed to the whole of the euro area, and not only to specific countries," he said.
Reiterating that markets haven't felt the full effect of the ECB's recent moves to increase liquidity, Draghi also cautioned that the bank could only do so much. Draghi said the central bank couldn't do more than it already had to encourage people to borrow or invest.
"Credit is now led predominantly by demand, and if demand is weak, you wouldn't expect string credit growth," Draghi added.
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Are We Headed Straight for Recession 2013?
Fresh reports pointing to a slowdown in the struggling U.S. economy, coupled with worries of Europe's fiscal woes, have experts warning that Recession 2013 is inevitable.
The dismal and downtrodden jobs numbers, the elevated long-term unemployment levels, the ailing housing market and the looming "fiscal cliff" are all fueling recession fears.
Just last month, the nonpartisan Congressional Budget Office reported that unless lawmakers move to avert scheduled tax increases and spending cuts at the end of this year, a recession is likely.
This marked the first time the CBO has forecast a recession resulting from the fiscal cliff.
The CBO projected that gross domestic product (GDP) will contract by 1.3% in the first half of 2013 before growing 2.3% later in the year. Annualized, GDP would grow just 0.5% in 2013.
That forecast is an about face from January when the CBO forecast a 1.1% GDP growth in 2013 (if policies are not dealt with).
The report stated, "Given the pattern of past recessions as identified by the National Bureau of Economic Research, such a contraction in output in the first half of 2013 would probably be judged to be a recession."
Now other economic experts are saying the same.
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How this Year's Election Will Shape "Recession 2013"
More and more Americans have voiced concern over the U.S. economy barreling toward "Recession 2013."
Fears were fueled by a May 22 Congressional Budget Office (CBO) report that claimed the scheduled year-end tax increases and spending cuts (known as Taxmageddon and fiscal cliff) will be followed by a U.S. recession.
Congress has until the end of the year to change the course of the U.S. economy, although the longer it waits, the more volatility could creep into markets.
"The markets don't want to wait until Dec. 31," Peter Fisher, senior managing director at BlackRock Inc., and a former Federal Reserve and Treasury official, told Bloomberg Television May 30. "Congress is going to have to wake up in October when the markets start pricing in the uncertainty of a recession in 2013."
But there's another big factor at play: Election 2012.
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Recession 2013: This Report Shows We're Already Headed There
Recent reports have indicated a downturn in the U.S. economy. Coupled with fears stemming from the Eurozone debt crisis, they've fueled speculation about "Recession 2013."
In fact, former President Bill Clinton said he thinks we are already in a recession - and that was before the latest U.S. unemployment numbers were released, painting an even gloomier picture.
By now most of you have heard about the awful numbers in the discouraging U.S. jobs report for May, where only 69,000 jobs were added - nowhere near the 150,000 expected.
But what's worse about the U.S. jobs report is the trend of long-term unemployment.
Even though the national unemployment rate has dropped from its October 2009 high of 10.1% to its current level of 8.2%, the long-term unemployment levels have not seen a similar drop.
Without improvement in these numbers, fears regarding another recession will become reality.How U.S. Jobs Trend Will Spell "Recession 2013"
Long-term unemployment, measured every six months, reached a peak of 46% of the unemployed population during May 2010.
That number has only fallen to 42.8%, or 5.4 million of the total unemployed, and has risen of late.
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