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Second U.S. recession could be worse than the first
A second recession, what many are calling the double-dip recession, could be on its way, economists warn. And should it come, it will probably be even more devastating than the previous period of economic woe.“It would be disastrous if we entered into a recession at this stage, given that we haven’t yet made up for the last recession,” Conrad DeQuadros, senior economist at RDQ Economics, told the New York Times.
The Standard and Poor’s downgrade of the U.S.’s credit rating bodes ill for the world’s financial markets as well as the domestic market.
President Barack Obama, once the debt deal with Congress to avoid a debt default was struck, announced a pivot to focus on jobs.
“I’ll continue also to fight for what the American people care most about: new jobs, higher wages and faster economic growth,” Obama said in a statement to press after the debt deal was passed last week.
While the working age population has grown 3 percent in the past four years, the economy has 5 percent fewer jobs — or 6.8 million less than four years ago. Unemployment stands at 9.1 percent.
Economists don’t think another stimulus package will do the trick, either.
“There are only so many times the Fed can pull this same rabbit out of its hat,” Torsten Slok, the chief international economist at Deutsche Bank, told the Times.
QE2 Is Damaging The Economy And Reducing GDP Growth
QE2 is going to go down as one of the worst monetary policy initiatives in the history of the modern Federal Reserve era. On almost any metric applied, QE2 ends up not only falling well short of its proposed goals, but actually turns certain metrics like GDP growth negative compared with the prior quarter, and heading in the wrong direction.
Costs Eat into Corporate Profits = No Hiring
Analysts all over Wall Street are starting to revise their 2nd quarter GDP forecasts down, and some like Goldman Sachs have made several downward revisions as higher input costs due to a weak dollar are creating an additional burden on businesses and consumers and thus slowing economic growth.
A weak dollar (Fig. 1) to a point can help exports, but an extremely weak dollar which in combination with QE2 liquidity juicing up commodities even further, turns out to be a net negative on the economy, and risks sending the Read more…
China-Russia relations and the United States: At a turning point?
By Dr. Richard WeitzSince the end of the Cold War, the improved political and economic relationship between Beijing and Moscow has affected a range of international security issues. China and Russia have expanded their bilateral economic and security cooperation. In addition, they have pursued distinct, yet parallel, policies regarding many global and regional issues.
Yet, Chinese and Russian approaches to a range of significant subjects are still largely uncoordinated and at times in conflict. Economic exchanges between China and Russia remain minimal compared to those found between most friendly countries, let alone allies.
Although stronger Chinese-Russian ties could present greater challenges to other countries (e.g., the establishment of a Moscow-Beijing condominium over Central Asia), several factors make it unlikely that the two countries will form such a bloc.
The relationship between the Chinese and Russian governments is perhaps the best it has ever been. The leaders of both countries engage in numerous high-level exchanges, make many mutually supportive statements, and manifest other displays of Russian-Chinese cooperation in what both governments refer to as their developing strategic partnership.
The current benign situation is due less to common values and shared interests than to the fact that Chinese and Russian security concerns are Read more…
Pressure on Portugal After New Credit Downgrade
LISBON — Portugal’s borrowing costs pushed higher after Moody’s downgraded the country’s credit rating, stoking the pressure on the country’s beleaguered minority government.
The yield on Portugal’s ten-year bond rose 0.04 percentage point to 7.44 percent. The equivalent yields for Greece and Spain, two other euro countries struggling with high borrowing levels, were down modestly.
Moody’s Investors Services cut the country’s rating by two notches to A3 late Tuesday, saying the debt-stressed country is struggling to generate growth and faces a tough battle to restore the fiscal health needed to calm jittery financial markets.
Prime Minister Jose Socrates said late Tuesday he would quit if Parliament doesn’t consent to his government’s latest batch of contested austerity measures.
Portugal aims to raise up to €1 billion in a sale of Read more…
Employment Report: IT SUCKS
Wow…. if you remember on the ADP and Claims numbers, I said I was expecting +100k.
That was way off – we really got +36k.
The unemployment rate fell by 0.4 percentage point to 9.0 percent in January, while nonfarm payroll employment changed little (+36,000), the U.S. Bureau of Labor Statistics reported today. Employment rose in manufacturing and in retail trade but was down in construction and in transportation and warehousing. Employment in most other major industries changed little over the month.
Youch.
There’s no love in here. Worse, the benchmark revisions are out, and they show about 300,000 supposedly-reported jobs that didn’t really happen. No, really? How come that number seems to always be in this direction? That is, why is it that the BLS always seems to over-report reality in the establishment survey?
That inconvenient truth, incidentally, is why I always use the household numbers. They’re at least a real survey without BS “adjustments” applied and while they’re subject to Read more…
Three of Next Five Winters Could be as Cold or Colder
This winter is on track to become the coldest for the nation as a whole since the 1980s or possibly even the late 1970s. According to AccuWeather.com Chief Long Range Forecaster Joe Bastardi, three or four out of the next five winters could be just as cold, if not colder.
He is worried that next winter, for example, will be colder than this one.
Bastardi adds that with the U.S. in the middle of one of its worst recessions in its history and the price of oil in question, he is extremely concerned about the prospect for more persistent cold weather in the coming years putting increased financial hardship on Americans.
“Cold is a lot worse than warm,” Bastardi said, “and that’s why your energy bill goes up during the winter time: because of the fact that it takes a lot to heat a house.” Read more…
Could China Be Forced To Bring A New Global Recession by 2015?
By Dian L. Chu, EconForecast
Bloomberg on Sunday, Jan. 30 cited a 28-page report–The Financial Crisis of 2015: An Avoidable History (pdf file below)–by Barrie Wilkinson, a London-based partner at consulting firm Oliver Wyman.
The report describes a scenario–spanned 2013 to 2015–when Western QE-induced inflation brings down China, creating a debt crisis in the commodity sector–inclusive of resource-dependent countries as well as commodity producers–which eventually plunge the world into another recession, and a new world order by 2015.
“…the dramatic rises in commodities prices resulting from loose Western monetary policies eventually caused rampant inflation in China. China was forced to raise interest rates and appreciate its currency to bring inflation under control.”
Well, I think we are pretty much there already.
“Once the Chinese economy began to slow, investors quickly realized Read more…
Oklahoma budgets could be cut up to 10 percent
OKLAHOMA CITY — The head of the Senate committee overseeing the state budget is warning agency heads to prepare for funding cuts of up to 10 percent and directed them to produce plans on how to make the reductions.
Sen. David Myers, the new head of the powerful Senate Appropriations Committee, said Thursday he has begun giving agency heads the bad news as legislative leaders consider ways of filling a deficit estimated at nearly $600 million, or 10 percent of the overall state budget.
Some agency officials were shaken by the magnitude of the potential cuts, he said. “They’re giving us those responses, which in some cases are pretty painful,” Myers, R-Ponca City, said in an interview with The Associated Press. “We’re going to have to look at those and evaluate how much pain do we want to put here or there. We’re going to be looking at that very steadily over the next few months.”
Although lawmakers have known the size of the estimated deficit for months, Myers’ comments are the first to specify the potential cutbacks envisioned in state programs.
Alex Weintz, spokesman for Gov. Mary Fallin, said the extent of the reductions needed won’t be known Read more…
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