The Lastest Macroeconomic News

30.08.2010 22:43 The US economy rose at a 1.6 percent pace in 2010`s second quarter

The US economy rose at a 1.6 percent pace in 2010`s second quarter, a number that`s disappointingly tepid but still keeps hope alive that the US will avoid a dip back into recession this year. The number represents a sharp decline in the speed of economic recovery compared to the first quarter, when the gross domestic product (GDP) grew at a 3.7 percent pace. The Friday morning report from the Commerce Department also represented a downward revision to its initial estimate for the second quarter (2.4 percent) from a month ago. A bright spot is that consumer spending, which represents the core of the economy, has risen at least modestly for four straight quarters. The pace remains slower than normal in an economic recovery, however. Worries that the United States may fall back into recession have weighed on financial markets in recent weeks. Americans` disposable personal income has risen in both quarters so far this year, helping to sustain spending growth even as people have boosted their savings, according to the GDP numbers. But the growth pace is tentative. Personal consumption grew at just a 2 percent annual pace in the second quarter. Some factors that affected GDP in the second quarter have been shifting as the calendar has ticked into the year`s second half. The end of special tax credits for home buyers has caused a stall in housing market activity. State governments are moving to cut spending after making a small positive contribution to GDP in the second quarter. Those factors could weigh on domestic consumption. But one big negative in the second quarter was a surge in imports. The purchase of goods from overseas is counted as a subtraction from GDP (while exports add to domestic output). Without the import boom, GDP would have been 4.45 percentage points higher in the quarter. "Imports can be lumpy, and the leap recorded in Q2 undoubtedly reflected efforts to replenish inventories that began earlier," writes Joshua Shapiro, chief US economist at MFR Inc. in New York. Many forecasters say that economic reports so far in the third quarter suggest the economy is still growing, but so slowly that job growth has stalled. A key problem is confidence: Many consumers are reluctant to spend, and employers are in a kind of hiring freeze as they wait for a revival in demand. Employers say they`re worried about whether Washington will provide a business-friendly policy environment.Credit conditions may also be holding the recovery back. Bank credit expanded in the Federal Reserve`s most recent monthly report, so this problem may be starting to ease. Even in an economy in which many households are struggling with high debt loads, economists see the flow of new credit as an important foundation for growth.

09.08.2010 21:36 Goldman Sachs Lowers Forecast for Japan, U.S. Growth

Goldman Sachs Group Inc. cut its growth forecasts for the world’s two largest economies on signs that stimulus boosts will wane. Japan will grow 1.4 percent in 2011, compared with an earlier forecast of a 1.7 percent expansion, Tokyo-based senior economist Chiwoong Lee said in a report dated Aug. 7. Goldman last week lowered its projection of U.S. growth for the same year to 1.9 percent from 2.5 percent. A report today showed Japan’s current-account surplus narrowed for a second month as export gains cooled, adding to concerns that the recovery is losing steam. Government incentives that have bolstered spending at home are wearing off, with economists forecasting second quarter gross domestic product grew at half the pace of the previous period. “We expect signs that growth is slowing to gradually emerge in line with the disappearance of the government stimulus boost both in Japan and abroad,” Lee wrote in a separate report dated today. “The U.S. economic recovery has lost a considerable amount of its momentum.” Japan will experience a “significant falloff” in consumer spending, which has so far been propped up by government measures, according to Lee. He noted that there is “little chance” Prime Minister Naoto Kan will extend a program scheduled to expire in December that encourages household to buy energy-efficient electronics. Japan’s jobless rate is at a seven-month high and factory output fell in June. The GDP report due Aug. 16 may show that the expansion moderated to an annualized 2.1 percent from 5 percent in the previous quarter, according to the median estimate of 11 economists surveyed by Bloomberg News. Lee said Japan’s export gains are already losing steam and will be “sluggish” in 2011 given a worsened outlook for the expansion in the U.S. U.S. growth will be slower in 2011 because of lawmakers’ resistance to extend several stimulus measures, Lee said. The unemployment rate, which was at 9.5 percent in July, may climb to 10 percent “by early 2011,” he said. That may prompt the Federal Reserve to return to “unconventional monetary easing,” such as increasing its purchases of Treasuries, he added.

25.07.2010 19:39 Ben S. Bernanke said U.S. economy still in need of stimulus

Federal Reserve Chairman Ben S. Bernanke said extending at least some of the tax cuts set to expire this year would help strengthen a U.S. economy still in need of stimulus and urged offsetting the move with increased revenue or lower spending. “In the short term I would believe that we ought to maintain a reasonable degree of fiscal support, stimulus for the economy,” Bernanke said yesterday under questioning from the House Financial Services Committee`s senior Republican. “There are many ways to do that. This is one way.” While Democrats want to keep the 2001 and 2003 tax reductions passed during former President George W. Bush`s administration for families earning as much as $250,000, Republicans aim to continue the cuts for high-income people as well. Bernanke didn`t endorse either party`s position or recommend a time period for an extension. “In the longer term, I think we need to be taking steps to reassure the American people and the markets that our fiscal situation is going to be well controlled,” Bernanke said under questioning from Representative Spencer Bachus of Alabama, the committee`s senior Republican. “That means that if you extend the tax cuts, you need to find other ways to offset them.” Bernanke aims to bolster the faltering economic recovery while urging lawmakers to reduce federal budget deficits in the medium term, which he defined as the period from 2013 to 2020. His predecessor, Alan Greenspan, last week said lawmakers should allow the tax cuts to expire at the end of 2010, citing a need for the revenue to reduce the budget gap.

20.07.2010 21:28 U.S. industrial production up 0.1% in June 2010

U.S. industrial output rose 0.1% in June as higher mining and utility production offset a decline in manufacturing, the Federal Reserve reported. The increase was a modest upside surprise, as economists were expecting a 0.1% decline after a 1.3% increase in May. Industrial output is up 8.2% compared with a year ago after falling at the fastest rate since World War II. Capacity utilization, a key gauge of inflationary pressures, was unchanged at 74.1%. Manufacturing output fell 0.4% in June after a 1% gain in May. It was the first decline since February.

11.07.2010 18:26 IMF`s growth forecast increases but still faces threats

The global economy may be recovering faster over the expectations of many analysts and economists. However there may still be a delay if there is still the presence of the debt crisis in Europe. International Monetary Fund in a statement last Thursday also said the government should restore the confidence of the public. IMF raised the world growth forecast from 4.2 in April to 4.6 percent. It also had a much higher growth percentage for U.S. and China. However, the quarterly World Economic Outlook may warn that there are threats fast emerging, that is why Europe has to settle their debt problems and they should bring back the confidence in their banks. Fortunate enough, the risks are limited only to the financial markets and will table activity at a high level in May. IMF also said that industrial output and trade increased by double digits and there was a gradual recovery in advanced countries and a fast growth in developing countries. The IMF raised America`s growth forecast for 0.6 percent as the growth increased to 3.3 percent from 2.7 percent. According to Olivier Blanchard, director of the IMF`s research department, “The numbers for economic activity have come in strong — in fact, stronger than we have forecast. A global double dip is very unlikely.” IMF also predicted the growth among Asian countries particularly, China, Japan, and India. China`s forecast will go from 10 percent to 10.5 percent. Japan`s growth forecast will increase by 0.5 percent as their growth will increase from 1.9 to 2.4. And for India, IMF predicted that they would experience 0.6 percent growth from 8.8 percent to 9.4 percent. The region`s growth is estimated to have an increase of 0.5 percent from 7 percent to 7.5 percent. However, IMF warned that the crisis in Europe “would affect Asia through both trade and financial channels.” There has been a weakening confidence in the comeback from last year`s recession due to weak data from major economies in the most recent weeks. The prediction for next year however, decreased, as the growth remained unchanged at 4.3 percent. IMF lowered their growth forecast for the year 2011 countries like Japan, China, and Britain. Japan will decrease from 2 percent to 1.8 percent. China will decrease from9.9 percent to 9.6 percent. Finally, Britain will decrease from2.5 to 2.1.

02.07.2010 11:42 Fitch Raises Global Growth Outlook, Says Recovery On Track

Fitch has revised up its global growth forecast for 2010 to 3.1% from 2.8% estimated previously, citing strong first quarter growth results of Japan, and BRIC economies. The global economic recovery remains on track, despite the increase in volatility within sovereign debt markets, Fitch Ratings said in its quarterly Global Economic Outlook report published Thursday. Meanwhile the US, euro area, and the UK are performing in line with Fitch`s previous projections, the report said. Fitch expects global economy to grow 2.9% in 2011 and 3.3% in 2012. "Sovereign credit worries in Europe have taken a toll on consumer confidence and unsettled capital markets," says Brian Coulton, Managing Director of Fitch`s Sovereigns group. "In Fitch`s view, although the risk of European countries falling into a double-dip recession has increased, the likelihood that fiscal consolidation could drive the major advanced economies as a whole into a renewed recession in the near term is low," Coulton noted. BRIC refers to Brazil, Russia, India and China, which may, apparently, eclipse the combined economies of the current richest countries of the world.

20.06.2010 12:46 U.S. industrial production rises 1.2% in May 2010

The recovery in the U.S. industrial sector accelerated in May, led by strong output of durable-goods manufacturing and utilities, the Federal Reserve reported. Output of the nation`s factories, mines and utilities rose 1.2% in May after a 0.7% gain in April. It was the largest increase since August. Output in manufacturing increased 0.9% for the second straight month in May. Capacity utilization rates climbed from 73.7% to 74.7% overall, and from 70.8% to 71.5% in manufacturing. The report was slightly stronger than the expectations of economists surveyed by MarketWatch, who were forecasting a 1% increase in output.

10.06.2010 23:18 Japan`s economy grew 5.0 percent in the first quarter of 2010

Japan`s economy grew slightly more in the first three months of the year than first estimated, the government said. Gross domestic product expanded at an annualized pace of 5 percent in the January-March quarter, revised up from 4.9 percent in a preliminary report last month. The results underscore a solid recovery underpinned by exports to a surging Asia and China, which is poised to overtake Japan as the world`s No. 2 economy sometime this year. The annualized figure corresponds to quarterly growth of 1.2 percent, which is unchanged from initial estimates. The updated calculations by the Cabinet Office revealed higher consumption by consumers and a milder decline in government investment. Capital expenditures grew a less-than-expected 0.6 percent instead of 1 percent.

24.05.2010 21:31 U.S. industrial production up 0.8% as capacity utilization rises to 73.7%

U.S. manufacturing output surged in April, up 1% for the second month in a row, on broad-based increases across most factory sectors, the Federal Reserve reported. Total output of the nation`s mines, utilities and factories increased 0.8% last month, as expected, despite a 1.3% decline in utility production in response to mild temperatures. See our complete economic calendar and consensus forecast. Industrial production was 5.2% higher than it was a year earlier. Manufacturing output has increased 6% in the past year after suffering through the worst downturn since the aftermath of World War II. However, output is still 9% lower than it was at the peak in December 2007. Manufacturing output has increased 1% or more in four of the past six months. Output rose a revised 1% in March. "The industrial sector is benefiting from increased domestic demand, a strong export expansion, and to an important extent from a cyclical inventory swing," said Dan Meckstroth, chief economist for the Manufacturers Alliance. In a separate report, the Commerce Department said the inventory-to-sales ratio fell to 1.24 in March, matching the record low. Inventories are likely far too lean at most businesses, which should lead to strong growth in U.S. industrial output and imports. Industrial production is one of four key monthly indicators used to determine whether the economy is in a recession or expansion. The other three are incomes, sales and payrolls, of which only incomes have failed to rebound. Most economists believe the recession probably ended in June or July.

12.05.2010 21:32 Eurozone GDP Grows 0.2% In the First Quarter of 2010

Eurozone gross domestic product, or GDP, grew 0.2% on a sequential basis in the first quarter of 2010, flash estimate from the Eurostat showed. Economists had foreseen 0.5% growth. The 16-nation economy stagnated in the fourth quarter of 2009. On an annual basis, GDP climbed 0.5% following a 2.2% contraction in the final quarter of 2010. GDP was expected to log just 0.1% growth. Data showed Greek GDP contracted 0.8 percent in the first quarter compared to the last quarter of 2009, better than the 1.4 percent drop forecast by economists polled by Reuters. The Greek economy shrank by 2.3 percent year-on-year in the first three months of the year, the Eurostat data showed, also less than the 2.7 percent drop forecast by economists.

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