Ben S. Bernanke, the chairman of the Federal Reserve, presented his bleakest assessment yet of the economy on Wednesday morning, warning a Congressional committee that economic growth was likely to stagnate — and perhaps even contract — over the first half of the year.
In his first public remarks since the Fed orchestrated an unprecedented bailout of the brokerage firm Bear Stearns, Mr. Bernanke acknowledged that while the Fed’s actions had “helped stabilize” the credit markets, banks and other financial institutions remained hesitant to lend, causing problems for the broader economy.
“Financial markets remain under considerable stress,” Mr. Bernanke said, in remarks prepared for delivery Wednesday morning to the Joint Economic Committee. “The capacity and willingness of some large institutions to extend new credit remains limited.”
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Wednesday, April 2, 2008
The underemployment rate is rising
Don't be fooled by the relatively low 4.8% unemployment rate. Other measures, such as the number of people only working part-time, are a sign of recession.
An unemployment rate at 5% used to be called full employment. Today it's considered the sign of a recession.
When the Labor Department gives its March employment report this Friday, it's important to keep in mind that the relatively low unemployment rate isn't telling the whole story about the weakness of the U.S. labor market.
Economists surveyed by Briefing.com are forecasting a loss of 50,000 jobs from the nation's payrolls in the month. That would mark the third straight month of job declines.
The unemployment rate is expected to jump to 5.0% from 4.8% in February.
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An unemployment rate at 5% used to be called full employment. Today it's considered the sign of a recession.
When the Labor Department gives its March employment report this Friday, it's important to keep in mind that the relatively low unemployment rate isn't telling the whole story about the weakness of the U.S. labor market.
Economists surveyed by Briefing.com are forecasting a loss of 50,000 jobs from the nation's payrolls in the month. That would mark the third straight month of job declines.
The unemployment rate is expected to jump to 5.0% from 4.8% in February.
Read Complete Story
Tuesday, April 1, 2008
Oil drops as dollar gains trigger commodities sell-off
Oil fell toward $100 on Tuesday, extending losses from the previous session as a strengthening U.S. dollar triggered a wide sell-off across commodity markets.
U.S. crude dropped US$1.55 to US$100.03 a barrel by 1435 GMT after briefly dipping below US$100, following Monday's US$4.04 decline on end-of-quarter selling by funds locking in their profits in commodities to offset losses in other asset classes.
London Brent fell US99 cents to US$99.31 a barrel.
Gas oil futures were especially weak, dropping nearly 5% to US$921 a tonne as the heating oil season draws to a close.
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U.S. crude dropped US$1.55 to US$100.03 a barrel by 1435 GMT after briefly dipping below US$100, following Monday's US$4.04 decline on end-of-quarter selling by funds locking in their profits in commodities to offset losses in other asset classes.
London Brent fell US99 cents to US$99.31 a barrel.
Gas oil futures were especially weak, dropping nearly 5% to US$921 a tonne as the heating oil season draws to a close.
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Gold remains lower pressured by firmer dollar, ahead of U.S. ISM
Gold continued to come under pressure from a firmer U.S. dollar on fears of a global slowdown, and ahead of Tuesday's release of the United States' ISM manufacturing index.
The U.S. currency has bounced up against the euro on fears that the economic troubles in the world's largest economy have spread into the wider global economy, raising concerns that demand for commodities will be weakened.
'The rebound in the U.S. dollar has significantly destabilised the metals complex,' said Michael Jansen, analyst at JP Morgan.
At 1.02 p.m., spot gold was trading at $897.30 an ounce against the $917.00 in late New York trades yesterday, having touched an intraday low of $888.10 earlier this morning.
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The U.S. currency has bounced up against the euro on fears that the economic troubles in the world's largest economy have spread into the wider global economy, raising concerns that demand for commodities will be weakened.
'The rebound in the U.S. dollar has significantly destabilised the metals complex,' said Michael Jansen, analyst at JP Morgan.
At 1.02 p.m., spot gold was trading at $897.30 an ounce against the $917.00 in late New York trades yesterday, having touched an intraday low of $888.10 earlier this morning.
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US manufacturing shrinks again
US factories activity eased in March amid the US downturn and financial market turmoil, an industry survey showed today.
The closely watched Institute for Supply Management report on US manufacturing in March inched up to 48.6 from February's 48.3 but remained below the 50 level, which separates growth from contraction.
A weak reading on new orders pointed to sluggish demand as the economy teeters on the brink of recession.
The report also showed a rise in inflation.
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The closely watched Institute for Supply Management report on US manufacturing in March inched up to 48.6 from February's 48.3 but remained below the 50 level, which separates growth from contraction.
A weak reading on new orders pointed to sluggish demand as the economy teeters on the brink of recession.
The report also showed a rise in inflation.
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Can the Gulf weather the storm of US recession?
The US economic downturn is already taking its toll on global markets. In this issue of The Middle East three specialist commentators give their opinions on where the crisis in America will leave the oil-producing Gulf states. Skilled economic analyst, Moin Siddiqi, looks at the run-up to the crisis which has resulted in a scale of credit losses unparalleled in modern banking history. Jeff Black examines the Gulf’s exposure to a US downturn; while international financial expert analyst, Pamela Ann Smith, presents the case for why the oil-producing GCC states, while not immune, will be protected from the worst effects of the downturn
The US subprime meltdown and ensuing wider credit squeeze (i.e. the amount of money circulating in the banking system) has hit the balance-sheets of banks worldwide, thereby hurting companies and consumers alike. “Financial market strains originating in the US subprime sector – and associated losses on bank balance sheets – have intensified, while the recent steep sell-off in global equity markets was symptomatic of rising uncertainty,” the International Monetary Fund (IMF) stated.
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The US subprime meltdown and ensuing wider credit squeeze (i.e. the amount of money circulating in the banking system) has hit the balance-sheets of banks worldwide, thereby hurting companies and consumers alike. “Financial market strains originating in the US subprime sector – and associated losses on bank balance sheets – have intensified, while the recent steep sell-off in global equity markets was symptomatic of rising uncertainty,” the International Monetary Fund (IMF) stated.
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Put Money Away For Rainy Days Ahead And Brace Yourself For The Turbulence To Come
Unless you've been living in a cave for the last few months you can't really have failed to notice that things don't look great for the British economy. You've probably even heard the dreaded word "recession" bandied about. Indeed, the nation is bracing itself for its first recession in a decade.
You cannot have escaped the current focus on the emergency rescue of US investment bank Bear Stearns and the problems the US is encountering in its fight with recession.
Ever since the Northern Rock crisis and the signs of a troubled economy, a quarter of all UK consumers have become more concerned about their finances and, understandably, their confidence has been shaken. But this latest development is an opportunity. The trick is to harness this heightened awareness and to do something positive, like overhauling your finances, budgeting effectively, and investing your money in a way that makes it work smarter for your needs
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You cannot have escaped the current focus on the emergency rescue of US investment bank Bear Stearns and the problems the US is encountering in its fight with recession.
Ever since the Northern Rock crisis and the signs of a troubled economy, a quarter of all UK consumers have become more concerned about their finances and, understandably, their confidence has been shaken. But this latest development is an opportunity. The trick is to harness this heightened awareness and to do something positive, like overhauling your finances, budgeting effectively, and investing your money in a way that makes it work smarter for your needs
Read Complete Story
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