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IMF
Raises Forecast for U.S. Economy, Risk of Debt
The International Monetary Fund...raised its outlook for the U.S. and called for steps to reduce concern about rising public
debt and inflation. The IMF forecasts the worlds largest economy will contract 2.5 percent this year before expanding 0.75
percent in 2010...In the IMFs World Economic Outlook report released in April, the U.S. was forecast to contract 2.8 percent
this year before stalling in 2010. The Washington-based lender said a gradual recovery is likely with risks tilted to the
downside. The Federal Reserve could ease credit further if conditions worsen and additional fiscal stimulus could also be
considered in the event the economy doesnt bounce back, the IMF said. The combination of financial strains and ongoing adjustments
in the housing and labor markets is expected to restrain growth for some time, with a solid recovery projected to emerge only
in mid-2010,...
Global Finance Chiefs Cite Signs of Stability
Financial chiefs from the Group of Eight industrialized nations yesterday offered their most optimistic assessment yet of
the global crisis, noting encouraging signs of economic stabilization and calling for an "exit strategy" from the policies
that have been used to stimulate growth around the world...Financial chiefs expressed cautious optimism on the global economy,
pointing to the recent rebound in stock markets and a bout of encouraging economic data. Signs of a bottoming out of the crisis
are particularly strong in the United States and China. Officials said, however, that significant risks remain.
...data published by the Organisation for Economic Co-operation and Development...pointed to a possible recovery by the end
of the year...The composite index for 30 economies rose 0.5 points in April, the second monthly rise in a row, after falling
for the previous 21 months. The index seeks to identify turning points in the cycle about six months in advance. The Paris-based
organisation reported in its latest monthly analysis of forward-looking indicators that a possible trough had been reached
in April in more developed countries that make up almost three quarters of the worlds gross domestic product. (Click to read
all).
US productivity
remains strong
Say what you will about the the U.S. economy, auto company travails and all, U.S. worker productivity has not weakened one
bit. U.S. worker productivity increased at an annualized rate of 1.6 percent in Q1, with unit labor costs rising three percent
rate, the U.S. Labor Department announced...as companies continued to find ways to increase per employee output amid difficult
business conditions. Economists surveyed by Bloomberg News had expected productivity to increase 1.2 percent in Q1 and unit
labor costs to rise 2.8 percent. In Q4 2008, productivity increased at an 0.8 percent annual rate and unit labor costs rose
3.5 percent. However, there is a downside to the recent, strong productivity data: hours worked plummeted nine percent in
Q1 -- the largest drop in hours worked since 1975, the Labor Department said. The stat means companies are paring back staff
roles and cutting hours -- which equates to fewer jobs -- while still maintaining production output.
IS THE RECESSION MAKING US BETTER PEOPLE?
Survey: Most Economists See Recession Ending This Year
A survey of economists released this morning shows
that 74 percent believe that the recession, which began in December 2007, will end in the third quarter of this year...Another
19 percent predicted the recession will end in the last quarter of this year and the remaining 7 percent believe it will linger
until 2010...
The recession will end when U.S. GDP returns to positive territory. It dropped 6.1 percent in the first quarter
of this year and another 1.8 percent in the second quarter. The economists predict it will turn positive, barely, edging up
1.2 percent in the second half of this year.Because unemployment is a lagging indicator, the economists say that joblessness
will continue to rise even as the economy recovers
12 Reasons To Be (Economically) Optimistic
(1) In
the U.S., consumer confidence rebounded during April.
(2) The
percentage of consumers who say that jobs are hard to get edged
down in April after rising thirteen of the previous fourteen months. This tends
to confirm the recent downticks in weekly initial unemployment claims.
(3) The
home price story isn’t all bad news recently. Indeed, after more than a year
and a half of declines, California’s median home price finally managed a meager
gain, rising 2.2% month over month.
- (4) Corning is bringing back some laid off
workers on stronger-than-expected demand for glass used in making flat-screen televisions.
- (5) Sharp is forecasting a strong recovery
in profits and sales in all its business divisions during the second half of the year.
- (6) IBM said Tuesday that it will increase
its quarterly dividend by 10% and will repurchase an additional $3bn of its stock.
- (7) The 4/28 Financial Times reported that
the high yield bond market may be starting to open up again. About $7 billion was raised in April, the highest volume since
last July.
- (8) The stock market held up remarkably well
on Monday and Tuesday despite nervousness over bank stress tests, swine flu, and the forced downsizing of the U.S. auto industry.
- (9) The first quarter earnings season is
off to a good start as 64% of the 235 S&P 500 companies reporting so far have a positive surprise and all 10 sectors are
beating their first-quarter forecast too.
- (10) Our Fundamental Stock Market Index rose
during the week of August 18 as jobless claims edged lower and the Consumer Comfort Index moved higher.
- (11) Condé Nast has decided to shutter Portfolio
after two years of struggle. The introduction of the glitzy magazine about Wall Street launched in the spring of 2007 marked
the end of the bull market. Now its demise may mark the end of the bear market.
- (12) Confidence in the Euro Zone rose in
April from a record low in March. The European Commission’s economic sentiment indicator jumped up to 67.2, from a revised
64.7 in March, but remains well below its long-term average of 100. Households and firms are less pessimistic about the outlook.
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Geithner ve avances en combate contra crisis EEUU
El secretario del Tesoro de Estados Unidos, Timothy Geithner, dijo el miércoles que el Gobierno estaba logrando avances para
calmar a los mercados y que hacia julio tendrá en marcha un programa destinado a limpiar los activos tóxicos de los balances
de los bancos. En una presentación ante la Comisión de Bancos del Senado, Geithner dijo que el sistema financiero de Estados
Unidos "comenzaba a sanarse" tras un periodo de trauma. El responsable dio crédito a una serie de programas del Gobierno para
ayudar a aliviar una crisis provocada por el alza de los incumplimientos de pagos hipotecarios. Sin embargo, Geithner dijo
que el panorama seguía frágil y que la administración debía ser cautelosa en el uso del menguante dinero restante del fondo
de rescate financiero por 700.000 millones de dólares aprobado por el Congreso en octubre pasado.
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Fed Says Recession's
Grip Is Easing
The Federal Reserve expects the U.S. economy to improve in coming months, even as policymakers downgraded their outlook for
all of 2009 and said the unemployment rate could approach 10 percent. Fed Chairman Ben Bernanke and his colleagues continue
to believe that business sales and factory production will begin to recover gradually during the second half of this year
as President Barack Obama's stimulus package and the Fed's aggressive efforts to lift the country out of recession take hold.
They also pointed to signs that the recession's grip was easing in the current quarter, according to documents released Wednesday.
"Participants noted some improvement in financial conditions in recent months, signs that consumer spending was leveling out
and tentative indications that activity in the housing sector might be nearing its bottom," the documents said. That's consistent
with observations made earlier this month by Bernanke, who gave his most optimistic prediction about the end of the recession,
saying he expected the economy to begin growing again later this year.
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The pace of contraction
in world
economic output
appears to be easing
and recovery
could begin at the end of
this year,
World Bank President Robert
Zoellick told Spanish television..."I'm
neither an
optimist nor a pessimist, I
am uncertain,
a realist. Clearly the fall
has been interrupted.
I think there's a
good chance
that while we face
declines, they
will be smaller in size.
The majority
expect a recovery at the
end of this
year, at the beginning of
next year."...Reuters, 5/19/09
...deep in the maw of the deepest recession since the Great Depression millions are still being hired.
...while 4.8 million workers were laid off or chose to leave their jobs in February, employers across the
country hired 4.3 million workers that month, according to the Bureau of Labor Statistics.
Activity rate increased among many groups including immigrants, women and
older Americans and in all regions except Midwest, which had a slight decline
(KANSAS CITY, Mo.) April 30, 2009 — New business formation increased in 2008 but, in what may be a potential
harbinger of the current economic recession, U.S. entrepreneurship rates increased for the lowest-income-potential and middle-income-potential
types of businesses from 2007 to 2008; it decreased for the highest-income-potential types of businesses. This is one of the
shifts in firm formation trends found in the annual Kauffman Index of Entrepreneurial Activity, a leading indicator of new
business activity that provides the earliest documentation of new business development across the United States. Analyzing
matched monthly data from the Current Population Survey since 1996, the Kauffman Index allows comparisons of new business
creation over time.
"The overall pace of entrepreneurial activity did not suffer during the
recession in 2008, which is great news. This is consistent with historical patterns, to the extent we understand them, which
indicate that entrepreneurial activity is largely insensitive to the economic cycle," said Robert Litan, vice president, Research
and Policy at the Kauffman Foundation. "So far, at least through 2008, this pattern is holding up."
Overall, the 2008 entrepreneurial activity rate increased slightly over
2007. An average of 0.32 percent of the adult population (or 320 out of 100,000 adults) created a new business each month—representing
approximately 530,000 new businesses per month—as compared to 0.30 percent in 2007. While entrepreneurial activity has
remained generally consistent over the past decade, the Kauffman Index points out important shifts in the demographic and
geographic composition of new entrepreneurs across the country.
Key findings include:
- The oldest age group—ages 55 to 64—experienced
a big increase in business-creation rates from 2007 to 2008 and, as a result, has the highest level of business creation (0.36
percent).
- The activity rate increased sharply for immigrants in 2008—from
0.46 percent in 2007 to 0.53 percent in 2008—further widening the gap between immigrant and native-born rates.
Although the increase in entrepreneurship rates among immigrants was driven entirely by low- and medium-income-potential types
of businesses, immigrants also are more likely than U.S. natives to start high-income-potential types of businesses.
- Latinos' entrepreneurial activity rate increased from 0.40
percent in 2007 to 0.48 percent in 2008, continuing an upward trend that began in 2005. Over the thirteen years of the study,
Latinos have had the highest percentage increase in entrepreneurial activity (from 0.33 percent in 1996 to 0.48 percent in
2008).
- Asian-Americans' entrepreneurial activity also increased
sharply, from 0.29 percent in 2007 to 0.35 percent in 2008. Non-Latino white business-creation rates increased slightly, while
African-American rates slightly declined.
- Entrepreneurial activity increased from 2007 rates for both
men and women (from 0.41 percent to 0.42 percent for men and from 0.20 percent to 0.24 percent for women).
- With the exception of the Midwest, all regions saw increased
entrepreneurial activity from 2007 to 2008.
- The states with the highest 2008 entrepreneurial activity
rates were Georgia, New Mexico, Montana, Arizona, Alaska and California.
- The states with the lowest entrepreneurial activity rates
were Pennsylvania, Missouri, Wisconsin, West Virginia, Iowa and Ohio.
- Among the United States' fifteen largest metropolitan statistical
areas, Atlanta had the highest entrepreneurial rate (0.74 percent) in 2008. Philadelphia had the lowest rate (0.16 percent).
"The total business creation rate increased over the past year, but this
masks diverging underlying trends. Entrepreneurship rates increased only for low-income types of businesses and not for high-income
types, which may be early signs of how the recession is impacting firm formation," said study author Robert Fairlie, professor
of economics and the director of the Master's program in Applied Economics and Finance at the University of California, Santa
Cruz. "The continuing effects of the recession on business creation are important because entrepreneurs contribute to economic
growth, innovation and job creation in the United States."
Unlike other studies that capture young businesses that are more than a
year old, the Kauffman Index captures all adults ages 20 to 64 when they first create their businesses, including both incorporated
and unincorporated businesses, and those who are employers and non-employers. The Kauffman Index of Entrepreneurial Activity,
defined as the percent of the adult U.S. population of non-business owners that start a business as their main job each month,
is conducted annually.
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