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from MarketWatch: For one reason or another, this economy is going down. As everyone must know by now, a fiscal cliff looms ahead. Unless current law is changed, the U.S. economy will take a $600-billion hit starting next year. Taxes will go up by $500 billion, while spending will have to be slashed by $100 billion. These are big numbers for a healthy economy to absorb, much less one that’s [...] If you want to know just how bad the labor market really is, then you need to multiply September’s jobless rate by three. For starters, let’s recall that last month’s reported rate of unemployment was 7.8%. This was 0.3 points lower than in August and the lowest since the beginning of 2009. However, it was still a whopping three percentage points higher than the average rate posted in 2007.
Europe Goes Red, As S&P Whacks Growth Forecast S&P has just whacked its growth forecast for Europe. It now sees a contraction of 0.8% this year, and 0.0% growth next year. European markets have gone red. Italy’s benchmark FTSE MIB had been up slightly earlier in the day, but is now down 0.6%. S&P says new recession hitting euro zone Standard & Poor’s Rating Services on Tuesday pared down its economic forecast for the euro zone in [...] By Irwin Kellner, MarketWatch Since low interest rates haven’t worked, how about higher rates? Now don’t get me wrong. I am not talking about tight money. I don’t want the Federal Reserve to start shrinking the money supply. That would repeat the mistakes made by the central bank in the 1930s, which led to deflation and a severe contraction in economic activity. What I am talking about is different — [...] By Irwin Kellner, MarketWatch PORT WASHINGTON, N.Y. (MarketWatch) — The fiscal cliff may be six months away, but it is already affecting the United States economy. As I warned at the beginning of last month ( see column ), unless current law is changed, taxes will rise and spending will fall big time, come year-end. Taxes are set to jump by $500 billion, while federal spending is set to decline by more [...] Irwin Kellner Now that inflation is beginning to pick up, it is vital to distinguish between what is real and what is just an illusion caused by inflation. If one does not, one might very well come away with the impression that the economy is shifting into higher gear when, in fact, it is not. Take retail sales, for example. On the surface they are encouraging, since February’s sales gain [...] By Irwin Kellner, MarketWatch PORT WASHINGTON, N.Y. — Rising prices are making some statistics look better than they really are. Now that inflation is beginning to pick up, it is vital to distinguish between what is real and what is just an illusion caused by inflation. If one does not, one might very well come away with the impression that the economy is shifting into higher gear when, in fact, [...] By Irwin Kellner, MarketWatch PORT WASHINGTON, N.Y. — Whether the Federal Reserve should ease or not is the question when it comes to figuring out what the next step for U.S. monetary policy is likely to be. In an effort to provide MarketWatch readers with the best possible insights, I will begin by breaking this question into its three component parts: 1. Should the Fed ease? 2. Will it ease? [...] By Irwin Kellner, MarketWatch PORT WASHINGTON, N.Y. — Monetary and fiscal policies are not as stimulative as they appear. Indeed, by some measures, they are actually slowing the pace of economic growth, rather than boosting it. Once again, the fledgling recovery appears to be hitting headwinds. Even though the pace of economic growth in the fourth quarter was just revised upward to a robust 3%, expectations for the current quarter [...] PORT WASHINGTON, N.Y. (MarketWatch) — The umpire of the business cycle has called the recession over but the players want to review the tape. According to the National Bureau of Economic Research, the U.S. economy stopped falling in June of 2009. This implies that business conditions bottomed out some 15 months ago and have been improving ever since. See full story on NBER. Hello? The real world would [...] |
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