Tag Archives: economy
U.S. stocks fall as GDP trails forecast
New York, NY, United States (AHN) – Wall Street opened lower Friday after a report showed that the U.S. economy expanded less than forecast..
Just after the opening bell, the Dow Jones Industrial Average was lower by 33 points, the Standard and Poor’s 500 Index was flat and the NASDAQ was up by about 6 points.
Weighing on stocks was a report that showed the U.S. economy expanded at 2.8 percent in the fourth quarter, less than the 3 percent that had been projected.
In Europe the Stoxx Europe 600 Index slipped 0.7 percent as investors await word on developments on the region’s sovereign debt crisis. European Union Economic and Monetary Affairs Commissioner Olli Rehn said authorities are “very close” to reaching an agreement on private-sector involvement in a Greek debt swap.
Despite those words of optimism, the dismal growth of GDP in the U.S. was keeping investors cautious. The health and growth of the U.S. economy is a very important and leading indicator of economic growth worldwide. As analysts like to say, “when the U.S. sneezes, the world catches a cold.”
In corporate news, Ford fell after reporting numbers that missed estimates. Starbucks shares slipped despite reporting better than expected numbers, and Juniper Networks plunged after the second biggest maker of computer networking equipment forecast sales and profits that missed estimates.
In commodities, oil was unchanged at $$99.60 a barrel, gold rose $4.70 to $1,725 a troy ounce and silver was up a few pennies at $33.63.
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Euro recession fears spike on hint of German GDP drop
Berlin, Germany (AHN) – Signs of an economic contraction in Germany’s economy raised fears of a recession in Europe.
The news escalated concern that demand for oil might fall, causing oil futures prices to drop by as much as 1.1 percent. In addition, the euro weakened against the dollar.
Germany has long served as the engine for economic growth for the entire European Union. Therefore, news that the German economy likely shrank by 0.25 percent during the last three months of 2011 caused alarm and has observers worrying the European Union might slide back into a recession.
Official figures from the Federal Statistics Office show that the German economy only grew by 3 percent during 2011 and that was only achieved because of strong growth during the first half of the year.
Moreover, the Statistics Office said that most of the growth during the first six months was driven by domestic demand. The Statistics Office based the annual figure on an estimate of fourth quarter growth. However, the government won’t post the official data for the last quarter until Feb. 15.
In the meantime, Norbert Raeth from the Statistics Office announced at a press conference Wednesday that the economy likely shrank by “around a quarter of a percentage point” in the fourth quarter.
Although the 3 percent growth rate was down from the 3.7 percent in 2010, Germany still had a stronger figure than the United States or the EU.
According to the Organization for Economic Co-operation and Development (OECD), among its member nations Germany showed better growth than the expected growth rate of the following nations:
- U.S. 1.7 percent
- France 1.6 percent
- United Kingdom 0.9 percent
- Italy and Spain 0.7 percent
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Federal Reserve Beige Book says economy still growing weakly
Washington, DC, United States (AHN) – The economy is weak in much of the nation, but it is still growing slightly and is not in recession, according to the Federal Reserve’s latest outlook released Wednesday.
According to the so-called Beige Book, although the country does have a robust economy, many districts still have growth in at least the “modest” or “slight” range.
The book is a summary of outlooks from the 12 district banks across the country published by the Federal Reserve eight times a year.
Fed officials say that overall economic activity in September continued to expand. Moreover, business spending increased a bit while consumer spending was up in most districts.
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European debt crisis heats up U.S. presidential rhetoric on economy
Washington, D.C., United States (AHN) – The New York Stock Exchange closed up but the Nasdaq was down Thursday as fears continue that the European debt crisis is getting out of control.
A default among major European countries is likely to drag down the U.S. economy too, possibly into another recession, according to economists.
The risk to the U.S. economy is bringing warnings from President Barack Obama and becoming part of the campaign rhetoric of his opponents in the 2012 presidential race.
Obama said during a cross-country tour this week to promote his job creation proposals that Europe’s debt crisis is “scaring the world.”
He is urging European leaders to move quickly to resolve their debt problems.
He blamed setbacks this year for the U.S. recovery on international turmoil, such as European debt and Arab Spring uprisings that drove up oil prices.
Europe’s biggest unknown is Greece, where the government is seeking a bailout from the European Union as its debt rises.
The 17 member nations are considering enlarging the European Financial Stability Facility, a fund that would provide bailout loans and financial incentives when any one of the Union’s economies stumbles.
Finland voted this week to enlarge the fund, which would require each European Union country to contribute more money.
However, all of the member countries must approve the proposal before the fund could be enlarged.
“They have not fully healed from the crisis back in 2007 and never fully dealt with all the challenges that their banking system faced,” Obama said during a speech in Mountain View, Calif. “It is now being compounded with what is happening in Greece.”
China joined the United States during a recent International Monetary Fund meeting to encourage the European Union to control its debt crisis.
“So they are going through a financial crisis that is scaring the world and they are trying to take responsible actions but those actions haven’t been quite as quick as they need to be,” Obama said.
The United States exports about $240 billion in goods to Europe each year but imports about $320 billion.
Many of the jobs in Obama’s $447 billion job creation proposal depend on a strong import-export market with Europe.
With unemployment stuck at around 9.2 percent, Obama wants to raise taxes on the wealthy and give tax breaks to employers who hire more workers.
“The income of folks at the top has gone up exponentially over the last couple of decades while the incomes of the middle class have flat lined over the last 15 years,” Obama said.
Republican presidential candidates, such as Rick Perry and Mitt Romney, are skeptical of Obama’s proposal because of the tax increase for the highest income earners. They say it would hurt job creation.
Economists are saying saving the U.S. economy could depend heavily on what European leaders decide in the next few days.
Before they can take decisive action, European leaders must reach agreement.
However, leaders from the most economically powerful countries – such as Germany – risk losing popular support if they make too many concessions to help out weaker neighbor nations, according to economists.
Meanwhile, as the euro loses value on international markets, American investments in Europe are weakening.
Their business losses eventually could mean fewer American jobs.
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U.S. economy grew at tepid 1.9% during first quarter
New York, NY, United States (AHN) – The United States economy grew at a slow 1.9 percent pace during the first quarter of the year a slowdown in growth that Federal Reserve policy makers hope will only be a temporary.
In contrast, the economy grew at a more robust 3.1 percent rate in the previous quarter. Still the 1.9 percent figure was better than the 1.8 percent rise in gross domestic product predicted for the first quarter by government officials last month.
Real gross domestic product is the total output of goods and services produced by labor and property located in the U.S.
“The increase in real GDP in the first quarter primarily reflected positive contributions from personal consumption expenditures (PCE), private inventory investment, exports, and nonresidential fixed investment that were partly offset by negative contributions from federal government spending and state and local government spending. Imports, which are a subtraction in the calculation of GDP, increased,” the U.S. Department of Commerce Bureau of Economic Analysis said in a statement.
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Treasury Yields Approach This Year’s Low on Europe Debt Concern
Treasury yields approached the lowest level this year on speculation Europe’s debt crisis is getting worse and the U.S. economy is weakening.
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Italy Pledges to ‘Intensify Its Reforms’ After S&P Warning
Italy’s Treasury said it will “intensify” structural changes in the economy and push ahead with measures to balance the budget by 2014 after Standard & Poor’s said its debt rating is at risk of a downgrade.
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Budget medicine doled out in right measure says new Treasury secretary
The new secretary of the Treasury has hit back at criticisms of the budget, arguing that a faster return to surplus would have weakened the economy and diminished government revenue. He has also warned that Australia has experienced a long-term structural shift in the value of the Australian dollar and industries will have to adapt to survive.
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Fed to end $600 billion bond stimulus in June
The economy and job creation have strengthened enough for the Federal Reserve to end on schedule a program of buying Treasury bonds to help the economy, the Fed said Wednesday. Ending a two-day meeting, the Fed made no…
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