Recession Archives - Page 3 of 6 - Money Morning - Only the News You Can Profit From
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.
State Budget Crises Threaten U.S. Economic Recovery
Across the country state budget crises are threatening to undermine the U.S. economic recovery.
Some 48 states are emerging from a round of painful budget cuts for their 2010 fiscal budgets, and at least 46 states face shortfalls for the upcoming 2011 fiscal year, which in most states began July 1.
The recession has caused the steepest decline in state tax receipts on record – and states will continue to struggle to find the revenue needed to support critical public services for a number of years as a result.
Since virtually all states are required to balance their operating budgets each year they cannot maintain services during an economic downturn by running a deficit, as the federal government does.
The Global Double-Dip Recession: Which Markets to Hold… And Which Ones May Fold
Last week's stock-market meltdown was a worldwide affair, and was touched off by trader fears of a global "double-dip" recession.
However, the truth is that the odds of a recessionary reprise are high in just a few countries – primarily those that have experienced excessive fiscal and monetary "stimulus," or that have real inflation problems.
The rest of the world is recovering just fine.
Uncertainty Undermining the Global Economic Recovery
The International Monetary Fund (IMF) said yesterday (Thursday) that the global economic recovery is losing steam because uncertainty in financial markets is keeping businesses and consumers from investing in future growth.
In a revision to its World Economic Outlook released yesterday in Hong Kong, the IMF said worldwide economic expansion will decline to 4.3% next year from 2010's 4.6% pace. The forecast for 2010 was revised upwards by 0.4 percentage points to reflect faster-than-anticipated growth earlier this year.
However, "downside risks have risen sharply," the IMF warned, referring to European governments' debt problems and volatility in financial markets.
Unemployment Report Shows Sluggish Recovery Will Take Years to Replace Jobs Lost in Great Recession
Unemployment figures released Friday confirmed that the U.S. economy is still recovering, but they also showed it will take years to replace the 8 million jobs lost during the Great Recession.
And until meaningful hiring takes place, consumers are unlikely to loosen their purse strings, the key to putting the economy back on track to full recovery.
Employment fell in June for the first time this year, reflecting a drop in federal census workers and a smaller-than-forecast gain in private hiring.
Payrolls declined by 125,000 as the government cut 225,000 temporary workers conducting the 2010 census, Labor Department figures in Washington showed. Economists projected a decline of 130,000, according to the median forecast in a Bloomberg News survey. Private employers added 83,000 to their payrolls.
Misguided Policy Paving the Way for a Double-Dip Recession
With unemployment still hovering near 10%, policymakers should be doing all they can to combat joblessness and reinvigorate a recovery that is showing signs of weakness.
But they're not.
Instead, they're reeling in stimulus measures and enabling a double-dip recession, simply for the sake of fiscal austerity.
The Labor Department is expected to report today (Friday) that the unemployment rate held steady at 9.7% in June, or worse, edged up to 9.8%. That would follow yesterday's (Thursday's) disappointing report that showed new claims for jobless benefits jumped by 13,000 to a seasonally adjusted 472,000. The four-week moving average, which smoothes out volatility, rose by 3,250 to 466,500 – its highest level since March.
Can Bulls Lift a Market Threatened By Uncertainty Surrounding U.S. Stimulus Measures?
Stocks spilled the past week like water over a broken dam as investors priced in more evidence that consumers, businesses and home-buyers have gone on strike despite U.S. stimulus measures and record-cheap interest rates that have put mortgages, car loans and store-credit costs at 100-year lows. In the five-day span, the Dow Jones Industrial Average fell 2.5% and the Standard & Poor's 500 Index sank 3.6%; Nasdaq and Russell 2000 Index all fell 3.2%.
Catalyst for the latest spasm of selling came from disappointing news on durable goods sales and initial jobless claims, and weak earnings news or outlooks from consumer-facing companies Bed Bath & Beyond Inc. (Nasdaq: BBBY), Darden Restaurants, Inc. (NYSE: DRI), Lennar Corp. (NYSE: LEN) and Nike, Inc. (NYSE: NKE).
How to Profit From Europe's Stealthy Resurgence
European countries – both inside and outside the Eurozone – are slashing their budget deficits.
Greece, Portugal and Spain – three of the so-called "PIGS" – have to do so, of course. But Germany – generally reckoned to be in excellent shape – is also cutting its deficit, as is France, which hasn't run a budget surplus in 40 years. Britain, too, with no need to protect the euro (it's not a Eurozone member) just introduced a budget that cut the deficit by $140 billion over four years.
But here's the surprising reality: Europe may gain from its fiscal pain – and its deficit-trimming actions offer the best hope for a lengthy recovery.
Dodge a Possible Debt Debacle With These Two Stimulus-Plan Safety Plays
U.S. President Barack Obama's $862 billion stimulus plan, passed in great haste after his inauguration, has now revealed its true costs and benefits. It didn't revive the U.S. economy – that bottomed about May 2009, before a dollar of it had been spent. Further, combined with the mad wave of similar "stimulus" outlays across the planet, it has destabilized global bond markets – which may end up being very expensive indeed.
For details of the two stimulus-plan safety plays, read on…
General Motors: On the Road to Recovery, but Moving Slowly
General Motors Corp. just logged its first quarterly profit since 2007. The company also claims to have paid back its government loans "in full," and is rumored to be interested in buying back its financing arm.
But the truth of the matter is that GM isn't as far down the path to recovery as it would like the public to believe. The company's strong first quarter was greatly aided by Toyota Motor Corp.'s (NYSE ADR: TM) highly publicized recalls. Its claims that it has paid back government debt have been greatly exaggerated. And the United Automobile Workers (UAW) union is already pushing for restoration of many of the perks that it lost during the auto industry's near collapse.
General Motors reported first-quarter profit of $865 million as its revenue surged 40% to $31.5 billion. That made for the company's first quarterly profit in three years. GM – a company that took millions in taxpayer money to remain viable and came close to running out of money in 2008 – reported free cash flow of $1 billion.