Economic Outlook

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Sunday Jun 27 2010
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Economic Outlook: Worsening picture in the US

By Jack Farchy
Published: June 27 2010 18:31 | Last updated: June 27 2010 18:31

Investors will this week be bracing themselves for signs that the US recovery is slowing, as a slew of economic data on the world’s largest economy is expected to paint a downbeat picture.

However, they face a challenge disentangling the effects of the removal of government stimulus programmes from the scale of the private sector recovery.
This week sees the release of the monthly US non-farm payrolls report, the most closely watched statistic in global markets.
The headline figure is expected to show a sharp drop in non-farm employment – but that is largely the effect of temporary workers hired to carry out the US census coming to the end of their contracts.
There was a decline of about 250,000 in the number of people working on the census this month from May, leading to consensus expectations of a drop of 75,000 in the headline non-farm payrolls figure.
That could push the US unemployment rate above its current level of 9.7 per cent, leading to fears that the recovery might stall.

Last week the Federal Reserve issued a cautious outlook on the US economy, noting that financial conditions had become “less supportive of economic growth”.
The markets will be watching the strength of private sector employment for hopeful signs. Private sector hires came in below expectations at 41,000 in May, and analysts forecast 119,000 for June – which would be a solid but unspectacular result.
“A handful of sectors, including manufacturing, are continuing to engage in modest hiring activity,” said economists at HSBC. “Many companies are also re-hiring the temporary workers that were cut heavily in the recession,” they added.
One area of concern is the housing sector. Last week, markets were buffeted by data showing that new home sales at a 40-year low in May.
That follows the expiry of temporary tax incentives; but economists will be looking to see whether the sector can survive without a government prop.
This week, pending home sales for May are forecast to register a 20 per cent drop, while the Case-Shiller index is expected to show a slight dip in home prices in April from a month earlier.
Citigroup’s US economists last week cut their forecasts for the US growth in the second half of the year to 2.5 per cent from 3 per cent, in part because of “new evidence that housing activity is weakening more than anticipated”.

The week’s data releases

A calendar of key statistical reports due out over the next seven days from Informa Global Markets

To complete the lacklustre picture, the Conference Board’s index of consumer confidence and the ISM manufacturing index are both expected to fall from the previous month.
That is likely to chime with global manufacturing data. Manufacturing purchasing managers’ indices for China, the UK and the eurozone are all expected to have slipped in June from May – although analysts still expect readings above 50 across the board, indicating continuing growth.
In Japan, the closely watched Tankan survey of business conditions is expected to show improving sentiment among large companies, but weaker sentiment among smaller ones.

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Ft.com

Obama Odd Man Out at Summit
by Bruce Walker
Friday, 25 June 2010
Barack Obama arrived on Friday in Toronto for the G-8 and G-20 economic summits. This summit comes amid an unprecedented explosion of red ink in America from an approach to sluggish economies that Obama is recommending to other industrial nations.
Other nations, notably Germany, Japan, Britain, and France, intend to move in the other direction, reducing their government deficits by reducing expenditures. Two years ago the leaders of these nations supported “pump priming” as a solution to the financial crisis caused by the collapse of Lehman Brothers, a giant American investment bank. Now these leaders believe that more government spending will make things worse.
Read the rest of this entry »

Kliphnote: This is from London based Financial Times.

I hope they are wrong and the economy is looking better. 

What we don't need is more bad news on the economy 

along with more job loses. 
Most of the jobs created so far has been  Government jobs.
Census workers, temporary jobs. And tax payer funded.
Not private jobs, full time jobs.

I hope we don't have a double dip recession. 

That would mean the democrats will spend more money  on stimulus.

And putting us deeper in debt. 

The stimulus has not worked, so far.

It didn't work for FDR. 

And to pay for the stimulus.... wait for more taxes, VAT!

For everyone!

And you can see what it has done to the EU.

Low growth and high unemployment.

Along with high taxes. Now some are in financial trouble.

I just hope for the best.