Recent media stories have chronicled in great detail the events of the last couple of years. A pair of conclusions might be fairly drawn from these early drafts of history. One is that the financial-market turmoil of the last year proved to be of significant consequence to the economy. The second is that the Federal Reserve distinguished itself from historical analogues by taking extraordinary actions to address risks to the economy. Commentators, however, tend to disagree as to whether the extraordinary actions undertaken were to the good or the detriment of the U.S. economy in the long-run.
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Archive for September, 2009
The Fed’s Job Is Only Half Over
September - 25 - 2009
US Stocks Struggle In Wake Of Tepid Economic Data
September - 25 - 2009
The U.S. stock market’s struggles continued Friday, fueled by a new round of tepid economic data.
Major indexes have been stuck near break-even since the opening bell, hurt early on by a disappointing reading of durable-goods orders and later by a report showing a slip in new home sales. Consumer sentiment was better than expected, but that report wasn’t enough to revive the market from its recent slump.
The Dow Jones Industrial Average was recently off 15 points, or 0.2%, at 9692.93, on track for a third straight daily loss. The S&P 500 was off 0.3%, led by a 1% slide in its industrial sector, which is especially sensitive to the prospects for a global economic recovery.
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Don’t discount trade in economic recovery
September - 25 - 2009
Both the World Trade Organization and Global Trade Alert recently issued reports detailing the alarming trend of creeping protectionism that threatens to slow the global economic recovery and hinder national competitiveness. At the G-20 meeting in Pittsburgh, President Barack Obama has a valuable opportunity to address this issue head-on by reasserting U.S. leadership in promoting free and open trade, which is essential to global economic growth, job creation and raising standards of living around the world.
Trade is vital to economies throughout the world, and the U.S. economy in particular. In 2008, exports of goods and services generated about $1.84 trillion, or 13 percent, of U.S. gross domestic product, according to the Commerce Department. By some calculations, 10 percent of all U.S. jobs and 20 percent of our manufacturing jobs depend on exports. And trade-related jobs typically pay 13 to 18 percent more than the average U.S. wage. In the case of firms deeply involved in international markets, the wage premium is even greater. Such jobs pay an average wage of $15,000 more than jobs in firms that are less internationally integrated, or $50,000 versus $35,000, according to a recent study.
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No U.S. Economy Without Consumers
September - 24 - 2009
You mathematically cannot sustain a leveraged consumer econoomy without consumers. Over 80% of Americans work in the consumer economy or government supported by consumers paying taxes.
If you kill the consumer, you kill jobs…..and if you kill enough jobs, you kill the economy. In the last ten years, our consumer economy was fueled by the excessive extention of credit by the banking system. Now, only few have acesss to credit and the consumer economy is collapsing.
Look around, how many of your friends and neighbors are employed by the consumer economy? It is not the end of the world, simply the end of the world as you know it.
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