June 2011 U.S. Economic Fundamentals
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U.S. economy still not firing on all cylinders
Can the U.S. economy regain its stride in 2011?
That`s the question preoccupying economists as they prepare for a flurry of data out this week. Recent numbers have proved disappointing, signalling that the pace of economic growth has slowed considerably.
Further dissatisfying statistics lie just ahead. This week will provide snapshots of all-important hiring activity as well as manufacturing vigour in May ` and neither area is expected to improve on the previous month`s performance.
Read the full article here.
Can the U.S. economy regain its stride in 2011?
That`s the question preoccupying economists as they prepare for a flurry of data out this week. Recent numbers have proved disappointing, signalling that the pace of economic growth has slowed considerably.
Further dissatisfying statistics lie just ahead. This week will provide snapshots of all-important hiring activity as well as manufacturing vigour in May ` and neither area is expected to improve on the previous month`s performance.
Read the full article here.
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U.S. economic forecast: Heavy weather
Nothing tests the faith of the optimist these days like the U.S. economy.
In less than week, the prospects for a decisive improvement in the pace of hiring and a reduction in the U.S.`s woefully high unemployment rate have gone from good to grim.
Carl Riccadonna, an economist at Deutsche Bank in New York, on Thursday tallied the U.S. employment indicators released since Monday: Six of nine deteriorated in May from April, including the Institute for Supply Management`s factory employment index, which dropped to 58.2 from 62.7.
Read the full article here.
Nothing tests the faith of the optimist these days like the U.S. economy.
In less than week, the prospects for a decisive improvement in the pace of hiring and a reduction in the U.S.`s woefully high unemployment rate have gone from good to grim.
Carl Riccadonna, an economist at Deutsche Bank in New York, on Thursday tallied the U.S. employment indicators released since Monday: Six of nine deteriorated in May from April, including the Institute for Supply Management`s factory employment index, which dropped to 58.2 from 62.7.
Read the full article here.
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U.S. jobs growth brakes sharply in May
U.S. employers hired far fewer workers than expected in May and the jobless rate rose to 9.1 per cent as high energy prices and the effects of Japan`s earthquake bogged down the economy.
Non-farm payrolls increased 54,000 last month, the weakest reading since September, the Labor Department said on Friday. Private employment rose just 83,000, the least since last June, while government payrolls dropped 29,000.
Read the full article here.
U.S. employers hired far fewer workers than expected in May and the jobless rate rose to 9.1 per cent as high energy prices and the effects of Japan`s earthquake bogged down the economy.
Non-farm payrolls increased 54,000 last month, the weakest reading since September, the Labor Department said on Friday. Private employment rose just 83,000, the least since last June, while government payrolls dropped 29,000.
Read the full article here.
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Moody's fears U.S. debt crisis
Moody's Investors Service said Thursday there is a very small but rising risk of a short-lived default by the United States if the country's debt limit is not increased in coming weeks.
In a statement, Moody's said it would put the Aaa U.S. credit rating on review for a possible downgrade if lawmakers in Washington do not make substantive progress in budget talks by the middle of July.
"Since the risk of continuing stalemate has grown, if progress in negotiations is not evident by the middle of July, such a rating action is likely," Moody's said.
Read the full article here.
Moody's Investors Service said Thursday there is a very small but rising risk of a short-lived default by the United States if the country's debt limit is not increased in coming weeks.
In a statement, Moody's said it would put the Aaa U.S. credit rating on review for a possible downgrade if lawmakers in Washington do not make substantive progress in budget talks by the middle of July.
"Since the risk of continuing stalemate has grown, if progress in negotiations is not evident by the middle of July, such a rating action is likely," Moody's said.
Read the full article here.
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Economists weigh in on home price double-dip
The S&P/Case-Shiller home price index confirmed a double-dip in home prices across much of the nation as Standard & Poor`s national reading fell another 4.2 percent during the first quarter to hit a new recession low.
The analysts at S&P say there appears to be no relief in sight as home prices continue their downward spiral.
If you take out the artificial rebound in 2009 and early 2010 resulting from the federal government`s homebuyer tax credit incentive, `there has been no recovery or even stabilization in home prices during or after the recent recession,` according to the ratings agency.
Paul Dales, senior U.S. economist for the research firm Capital Economics says the further fall in house prices during the first quarter means that `on the Case-Shiller index, prices have now fallen by more than they did during the Great Depression.`
Read the full article here.
The S&P/Case-Shiller home price index confirmed a double-dip in home prices across much of the nation as Standard & Poor`s national reading fell another 4.2 percent during the first quarter to hit a new recession low.
The analysts at S&P say there appears to be no relief in sight as home prices continue their downward spiral.
If you take out the artificial rebound in 2009 and early 2010 resulting from the federal government`s homebuyer tax credit incentive, `there has been no recovery or even stabilization in home prices during or after the recent recession,` according to the ratings agency.
Paul Dales, senior U.S. economist for the research firm Capital Economics says the further fall in house prices during the first quarter means that `on the Case-Shiller index, prices have now fallen by more than they did during the Great Depression.`
Read the full article here.
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U.S. job growth brakes sharply
WASHINGTON ` The U.S. economy may be in for a prolonged period of soft growth as employers hired the fewest number of workers in eight months in May and the unemployment rate rose to 9.1%.
Nonfarm payrolls increased 54,000 last month, the Labor Department said, fewer than the most pessimistic forecast in the Reuters survey and just over a third of what economists had expected.
The employment report which showed broad weakness confirmed the loss of momentum in the economy already flagged by other data from consumer spending to manufacturing, and stoked fears the economy could be facing a more troubling stretch of weakness than had been thought.
Read the full article here.
WASHINGTON ` The U.S. economy may be in for a prolonged period of soft growth as employers hired the fewest number of workers in eight months in May and the unemployment rate rose to 9.1%.
Nonfarm payrolls increased 54,000 last month, the Labor Department said, fewer than the most pessimistic forecast in the Reuters survey and just over a third of what economists had expected.
The employment report which showed broad weakness confirmed the loss of momentum in the economy already flagged by other data from consumer spending to manufacturing, and stoked fears the economy could be facing a more troubling stretch of weakness than had been thought.
Read the full article here.
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Employment Summary, Part Time Workers, and Unemployed Over 26 Weeks
This was a very disappointing report.
There were few jobs created (only 54,000 total and 83,000 private sector). The unemployment rate increased from 9.0% to 9.1%, even though the participation rate was unchanged at 64.2%. Note: This is the percentage of the working age population in the labor force. I expect the participation rate to move a little higher as the job market improves, and that will keep the unemployment rate elevated all year.
The average workweek was unchanged at 34.4 hours, and average hourly earnings increased slightly. "In May, average hourly earnings for all employees on private nonfarm payrolls increased by 6 cents, or 0.3 percent, to $22.98. Over the past 12 months, average hourly earnings increased by 1.8 percent."
Read the full article here.
This was a very disappointing report.
There were few jobs created (only 54,000 total and 83,000 private sector). The unemployment rate increased from 9.0% to 9.1%, even though the participation rate was unchanged at 64.2%. Note: This is the percentage of the working age population in the labor force. I expect the participation rate to move a little higher as the job market improves, and that will keep the unemployment rate elevated all year.
The average workweek was unchanged at 34.4 hours, and average hourly earnings increased slightly. "In May, average hourly earnings for all employees on private nonfarm payrolls increased by 6 cents, or 0.3 percent, to $22.98. Over the past 12 months, average hourly earnings increased by 1.8 percent."
Read the full article here.
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A root cause of America's housing crisis
That they often were talked into doing so by unscrupulous mortgage brokers, were encouraged by Alan Greenspan's record-low interest rates, and were exhorted by George W. Bush's "ownership society" mantra I'll leave to the political scientists.
What the economists will tell you is that Others rent, for awhile or forever - myself and my maternal grandparents being in the latter category. Lifetime home rental was once so commonplace that one spoke of "rental" cities (Montreal, with its above-average percentage of folks preferring to rent), and "ownership" cities (Toronto).
Given how massive housing is as a component of the economy, even seemingly tiny departures from that golden mean have a powerful impact. During the record U.S. housing boom of the 2000s, characterized by skyrocketing house values, rampant speculation, and entirely too much new-home construction, average home ownership peaked in late 2004 at 69.2%. Economically speaking, far too much of the population was attempting to finance home purchases that decades of previous experience showed was feasible.
Read the full article here.
That they often were talked into doing so by unscrupulous mortgage brokers, were encouraged by Alan Greenspan's record-low interest rates, and were exhorted by George W. Bush's "ownership society" mantra I'll leave to the political scientists.
What the economists will tell you is that Others rent, for awhile or forever - myself and my maternal grandparents being in the latter category. Lifetime home rental was once so commonplace that one spoke of "rental" cities (Montreal, with its above-average percentage of folks preferring to rent), and "ownership" cities (Toronto).
Given how massive housing is as a component of the economy, even seemingly tiny departures from that golden mean have a powerful impact. During the record U.S. housing boom of the 2000s, characterized by skyrocketing house values, rampant speculation, and entirely too much new-home construction, average home ownership peaked in late 2004 at 69.2%. Economically speaking, far too much of the population was attempting to finance home purchases that decades of previous experience showed was feasible.
Read the full article here.
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Harvard study: U.S. housing market 'terrible,' but rentals look up
The U.S. real estate market is in terrible shape and there are few signs of any imminent recovery, Harvard University`s Joint Center for Housing Studies concludes in its 2011 `State of the Nation`s Housing` report released yesterday.
`The state of the nation`s housing is sobering,` Harvard`s Eric Belsky said. `Total housing construction over the previous decade now barely exceeds the lowest level of any 10-year period in records dating back to 1974, but the vacancies remain elevated because the recession has driven demand down so sharply.`
Read the full article here.
The U.S. real estate market is in terrible shape and there are few signs of any imminent recovery, Harvard University`s Joint Center for Housing Studies concludes in its 2011 `State of the Nation`s Housing` report released yesterday.
`The state of the nation`s housing is sobering,` Harvard`s Eric Belsky said. `Total housing construction over the previous decade now barely exceeds the lowest level of any 10-year period in records dating back to 1974, but the vacancies remain elevated because the recession has driven demand down so sharply.`
Read the full article here.
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Harvard study finds severe problems for U.S. housing market
A new Harvard study on the struggles in the nation`s housing market reaches a not-very-surprising conclusion: a recovery depends on job growth and stronger consumer confidence.
Arizona has been at the center of the housing crash, with local home values steadily dropping. The state and the Phoenix area have also been plagued by high numbers of home foreclosures.
Read the full article here.
A new Harvard study on the struggles in the nation`s housing market reaches a not-very-surprising conclusion: a recovery depends on job growth and stronger consumer confidence.
Arizona has been at the center of the housing crash, with local home values steadily dropping. The state and the Phoenix area have also been plagued by high numbers of home foreclosures.
Read the full article here.
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Is the U.S. debt problem as big as the 1990s Latin America crisis?
The 1990s and early part of the 2000s nearly bankrupted governments in the Americas. Defaults and threats of defaults were common. The US, led by the Republican Party, is itching for at least a partial default. China says they`re playing with fire. Has the US become the new Argentina?
Not too long ago, when news pundits and fund managers talked warily about government debt, it was about the potential of defaults in countries like Argentina, Brazil and Mexico. Today, the risk of credit downgrading and talks of default ` however political in nature ` aren`t coming from Buenos Aires, but from Washington. In the new Bizarro World that is the global economy post-2008, the US is the debt bomb waiting to explode while major nations like Brazil are mostly busy running surpluses.
`We do have a tale of two Americas,` says Eliot Kalter, senior fellow at the Fletcher School at Tufts University and president of EM Strategies, a Washington-based consultancy for those conducting business with emerging market countries. `Brazil, like many other countries in Latin America, learned the hard lesson that it is difficult to regain control of an economy once the debt dynamics turn against you.`
Rea the full article here.
The 1990s and early part of the 2000s nearly bankrupted governments in the Americas. Defaults and threats of defaults were common. The US, led by the Republican Party, is itching for at least a partial default. China says they`re playing with fire. Has the US become the new Argentina?
Not too long ago, when news pundits and fund managers talked warily about government debt, it was about the potential of defaults in countries like Argentina, Brazil and Mexico. Today, the risk of credit downgrading and talks of default ` however political in nature ` aren`t coming from Buenos Aires, but from Washington. In the new Bizarro World that is the global economy post-2008, the US is the debt bomb waiting to explode while major nations like Brazil are mostly busy running surpluses.
`We do have a tale of two Americas,` says Eliot Kalter, senior fellow at the Fletcher School at Tufts University and president of EM Strategies, a Washington-based consultancy for those conducting business with emerging market countries. `Brazil, like many other countries in Latin America, learned the hard lesson that it is difficult to regain control of an economy once the debt dynamics turn against you.`
Rea the full article here.
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America at tipping point, Shiller warns
NEW YORK ` Recent housing and employment data suggests the U.S. economy is at a tipping point where a double-dip recession is possible and home prices could have much further to fall, a veteran economist said Thursday.
Robert Shiller said the recent uptick in unemployment is not yet enough of a sign as to which way the recovery is heading. But if unemployment continues to rise in the coming months, it could suggest another recession.
`Whether we call it a double-dip or not, I think there is a risk,` Shiller told Reuters Insider in an interview.
Likewise, data showing U.S. home prices fell into a double dip in March could prove to be either a seasonal effect over the winter months or part of a downward trend.
Read the full article here.
NEW YORK ` Recent housing and employment data suggests the U.S. economy is at a tipping point where a double-dip recession is possible and home prices could have much further to fall, a veteran economist said Thursday.
Robert Shiller said the recent uptick in unemployment is not yet enough of a sign as to which way the recovery is heading. But if unemployment continues to rise in the coming months, it could suggest another recession.
`Whether we call it a double-dip or not, I think there is a risk,` Shiller told Reuters Insider in an interview.
Likewise, data showing U.S. home prices fell into a double dip in March could prove to be either a seasonal effect over the winter months or part of a downward trend.
Read the full article here.
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Investing in U.S. real estate: If a deal looks to good to be true, it might be
VANCOUVER - There`s a gold rush going on that has nothing to do with the yellow metal.
The `gold` is U.S. real estate and the rush is the influx of salespeople flying north to tout U.S. properties as the investment opportunity of a lifetime.
Now Canadians can buy U.S. REAL ESTATE at 70 per cent off! screamed one recent advertisement, with a vacation getaway thrown in just for attending a seminar.
And it`s not only travelling salesmen promoting the idea that now is a good time to get a piece of America. A weekend Wall Street Journal article headlined Why It`s Time To Buy cited low mortgage rates, increased affordability and a glut of homes as reasons to purchase U.S. property.
Read the full article here.
VANCOUVER - There`s a gold rush going on that has nothing to do with the yellow metal.
The `gold` is U.S. real estate and the rush is the influx of salespeople flying north to tout U.S. properties as the investment opportunity of a lifetime.
Now Canadians can buy U.S. REAL ESTATE at 70 per cent off! screamed one recent advertisement, with a vacation getaway thrown in just for attending a seminar.
And it`s not only travelling salesmen promoting the idea that now is a good time to get a piece of America. A weekend Wall Street Journal article headlined Why It`s Time To Buy cited low mortgage rates, increased affordability and a glut of homes as reasons to purchase U.S. property.
Read the full article here.
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Summers calls for new boost to U.S. economy
Former White House aide Larry Summers on Sunday urged expanded tax cuts on U.S. workers` wages, warning that America`s economy was at risk of years of Japan-style stagnation without a further boost.
In an opinion piece published by Reuters on Sunday, Mr. Summers - a Harvard professor and former Treasury secretary under President Bill Clinton - argued that it would be `premature` to withdraw fiscal support for the economy at the end of 2011.
Read the full article here.
Former White House aide Larry Summers on Sunday urged expanded tax cuts on U.S. workers` wages, warning that America`s economy was at risk of years of Japan-style stagnation without a further boost.
In an opinion piece published by Reuters on Sunday, Mr. Summers - a Harvard professor and former Treasury secretary under President Bill Clinton - argued that it would be `premature` to withdraw fiscal support for the economy at the end of 2011.
Read the full article here.
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U.S. maybe not a soft patch but 'something worse'
To the man who forecast the 2008 financial crisis, 2013 could be a troubled year.
`There are already elements of fragility,` Nouriel Roubini, the New York University professor and chairman and co-founder of Roubini Global Economics, told Bloomberg News in an interview.
`Everybody`s kicking the can down the road of too much public and private debt," he said. "The can is becoming heavier and heavier, and bigger on debt, and all these problems may come to a head by 2013 at the latest.`
He cited America's fiscal troubles, slower growth in China, Europe's debt crisis and stagnation in Japan as coming together to kick the global economy, according to the news agency.
Read the full article here.
To the man who forecast the 2008 financial crisis, 2013 could be a troubled year.
`There are already elements of fragility,` Nouriel Roubini, the New York University professor and chairman and co-founder of Roubini Global Economics, told Bloomberg News in an interview.
`Everybody`s kicking the can down the road of too much public and private debt," he said. "The can is becoming heavier and heavier, and bigger on debt, and all these problems may come to a head by 2013 at the latest.`
He cited America's fiscal troubles, slower growth in China, Europe's debt crisis and stagnation in Japan as coming together to kick the global economy, according to the news agency.
Read the full article here.
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Economy weakens in several U.S. regions: Fed
For the first time this year, the economy slowed in several U.S. regions this spring. High gas prices weakened consumer spending, and the Japan crises reduced manufacturing output.
Four of the Federal Reserve's 12 bank regions suffered slower growth in April and May compared with earlier this year, a Fed survey reported Wednesday. The report confirmed a slew of data that portray a national economy whose growth has faltered. Hiring has slowed, orders to factories have declined and home prices have fallen.
Read the full article here.
For the first time this year, the economy slowed in several U.S. regions this spring. High gas prices weakened consumer spending, and the Japan crises reduced manufacturing output.
Four of the Federal Reserve's 12 bank regions suffered slower growth in April and May compared with earlier this year, a Fed survey reported Wednesday. The report confirmed a slew of data that portray a national economy whose growth has faltered. Hiring has slowed, orders to factories have declined and home prices have fallen.
Read the full article here.
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Canadians become top Florida property bargain hunters
Attracted by bargain prices, Canadian buyers are driving a property sales surge in the US, particularly in the Orlando area of Florida, according to data from leading realtors, Coldwell Banker Feltrim.
`Without a doubt, Canada is fast becoming the best market for Floridian property. This was proved when I recently re-launched a prime development in Orlando Tuscana Resort as the first 15 sales we made here were all to Canadian cash buyers and in talking to these clients, they all had very similar reasons for homing in on these particular properties,` said Garrett Kenny, chief executive of CB Feltrim.
Kenny, who has been building and selling property in the area for 15 years, said prices are exceptionally good and he reckons there has never been a better time to buy, with some properties now on the market for less than 50% of what they cost five years ago.
Read the full article here.
Attracted by bargain prices, Canadian buyers are driving a property sales surge in the US, particularly in the Orlando area of Florida, according to data from leading realtors, Coldwell Banker Feltrim.
`Without a doubt, Canada is fast becoming the best market for Floridian property. This was proved when I recently re-launched a prime development in Orlando Tuscana Resort as the first 15 sales we made here were all to Canadian cash buyers and in talking to these clients, they all had very similar reasons for homing in on these particular properties,` said Garrett Kenny, chief executive of CB Feltrim.
Kenny, who has been building and selling property in the area for 15 years, said prices are exceptionally good and he reckons there has never been a better time to buy, with some properties now on the market for less than 50% of what they cost five years ago.
Read the full article here.
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U.S. inflation leaps most in three years
WASHINGTON ` U.S. core consumer inflation rose at quickest pace in nearly three years in May and a regional manufacturing gauge shrank far more than expected this month, underscoring the headwinds facing the economy.
The Labor Department said on Wednesday its Consumer Price Index, excluding food and energy, increased 0.3%, the largest gain since July 2008, after rising 0.2 in April.
Core inflation was lifted by steep rises in motor vehicle and apparel prices and economists had expected the measure, which is closely watched by the Federal Reserve, to rise 0.2% last month.
The year-over-year core inflation index rose 1.5% in May from 1.3% in April.
Read the full article here.
WASHINGTON ` U.S. core consumer inflation rose at quickest pace in nearly three years in May and a regional manufacturing gauge shrank far more than expected this month, underscoring the headwinds facing the economy.
The Labor Department said on Wednesday its Consumer Price Index, excluding food and energy, increased 0.3%, the largest gain since July 2008, after rising 0.2 in April.
Core inflation was lifted by steep rises in motor vehicle and apparel prices and economists had expected the measure, which is closely watched by the Federal Reserve, to rise 0.2% last month.
The year-over-year core inflation index rose 1.5% in May from 1.3% in April.
Read the full article here.
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More spending won't save U.S. economy. Smart spending might
Larry Summers this weekend argued in favour of another round of stimulus, including:
* Extension and expansion of the payroll tax cut
* More aid to states and cities
* $100 billion of additional infrastructure spending.
I say `aye` to number one and number two, but enter a caveat to number three.
What we`ve seen from the prior round of infrastructure spending is that the U.S. government as today organized does not find it easy to spend infrastructure money intelligently. Future generations will look back in amazement at the 2009 stimulus and wonder: what exactly did America buy with all that money? Where is the FDR Drive, where are the Grand Canyon steps, where are all of the equivalents of the amazing things built and done in the 1930s?
And what exactly would $100 billion more buy for us?
Read the full article here.
Larry Summers this weekend argued in favour of another round of stimulus, including:
* Extension and expansion of the payroll tax cut
* More aid to states and cities
* $100 billion of additional infrastructure spending.
I say `aye` to number one and number two, but enter a caveat to number three.
What we`ve seen from the prior round of infrastructure spending is that the U.S. government as today organized does not find it easy to spend infrastructure money intelligently. Future generations will look back in amazement at the 2009 stimulus and wonder: what exactly did America buy with all that money? Where is the FDR Drive, where are the Grand Canyon steps, where are all of the equivalents of the amazing things built and done in the 1930s?
And what exactly would $100 billion more buy for us?
Read the full article here.