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Manufacturing, economic growth in China

Export orders were on the rise in October in China, suggesting a strengthening recovery and an opportunity to cut back on stimulus spending. The manufacturing measure grew at its fastest rate in the past year and a half, according to the HSBC (NYSE: HBC) purchasing managers' index. It increased to a seasonally adjusted 55.4 from 55 in September.

If you're looking for a reason behind the gain, it's all in the flow of capital. In addition to the government's economic stimulus package, $1.27 trillion in new loans were written to help deliver the country from the global financial crisis.

Continue reading Manufacturing, economic growth in China

Third-quarter GDP shows growth -- is the recession over?

It appears that the U.S. economy may finally be dragging itself out of the economic doldrums. At least, that is what the third-quarter Gross Domestic Product indicates. The GDP showed that the U.S. economy grew at a 3.5% annual pace in the third quarter, snapping a four-quarter contraction streak.

The growth is attributed to the massive government stimulus, which led to higher consumer spending. In addition, a reduction in inventories and robust government spending helped spur growth in the third quarter. But even excluding the influence of auto sales, production and inventories, the economy grew 1.9 percent last quarter.

Continue reading Third-quarter GDP shows growth -- is the recession over?

Consumer sentiment drops: savings and debt repayment are culprits

The recession is only over if you ask the right people. While some sectors are starting to see the light at the end of the tunnel, consumers remain concerned. It may be tempting to listen to the experts over the average Joe, but the former don't control 70% of the U.S. economy. So, as long as people are worried abou unemployment (which continues to rise), the levels of debt they carry and whether they're at risk of foreclosure, the recession will live on in the hearts of those who write checks and swipe credit cards.

Continue reading Consumer sentiment drops: savings and debt repayment are culprits

It was a record quarter ... for foreclosures

It has been a great quarter for the economy, hasn't it? I mean, the economic recovery is in full swing . . . right? The Dow has eclipsed 10,000 for the first time in a year and there is absolutely no hint of the doldrums from which the economy has emerged. Not so fast, my friend.

According to RealtyTrac, an online marketer of foreclosed homes, 937,840 homes were foreclosed on during the past quarter -- a record number. That is a lot of foreclosures -- 5% more than in the second quarter and 23% more than a year ago. In fact, this means that one in every 136 homes were in foreclosure. Rick Sharga from RealtyTrac told CNNMoney: "They [the past quarter] were the worst three months of all time."

Continue reading It was a record quarter ... for foreclosures

Are you ready for a 'slow and painful' recovery?

On Monday, the National Association of Business Economics (NABE) announced that it believes the recession is over, but many of the economists it surveyed don't believe there will be a "meaningful improvement in jobs, credit or housing for months to come."

NABE asked a group of 43 top economists if they believe the U.S. economy has pulled out of the recession. Of those responding, 81% believe the recovery has started recovering, and 9% (four of those responding) thinking we are still in a recession. Four others were unsure.

Continue reading Are you ready for a 'slow and painful' recovery?

Recovery now more dependent on consumers than ever

Consumer spending may be down, but its share of U.S. economic activity has increased. So, we're now more dependent than before on the average Joe's open wallet to guide us out of the recession. A year ago, consumer spending accounted for 70% of the U.S. economy. Since then, it has edged up to 71%. The long-term average is approximately 65%.

The increase in consumer spending's share of the economy indicates that other sectors fell harder. Business and construction spending on new equipment have constricted at a record rate since 2008. This isn't unusual, though, as consumer spending tends to take a larger piece of the economic pie during downturns.

Continue reading Recovery now more dependent on consumers than ever

Alcoa posts surprising third quarter profit

alcoa third quarter earningsAlcoa (NYSE: AA) surprised the market this afternoon by posting its first quarterly profit of the year.

The company credited recent cost cutting measures as the main reason for its profit of $77 million during the quarter (75.8% lower than the same period last year), or 4 cents per share excluding certain items. This was a nice surprise to Wall Street, which had expected to see the company show a loss for the quarter of 9 cents per share.

Continue reading Alcoa posts surprising third quarter profit

International Monetary Fund sees sluggish recovery

On Thursday, the International Monetary Fund (IMF) said the global economy will grow next year, but cautioned the recovery will be sluggish. The IMF added that the recovery could even "stall out" if policymakers assume the slump is over. The IMF's recent outlook, however, is better than July's outlook, as the IMF predicts better growth in 2010 thanks to "strong public policies ... that have supported demand and all but eliminated fears of a global depression."

As for the recovery, the IMF believes that it will be subdued and "well below" the growth seen before the economic crisis. The group added that there is a "significant risk" of a reversal, noting that central banks in advanced economies need to wait until the recovery is on firm footing.

Continue reading International Monetary Fund sees sluggish recovery

Job cuts slow in August, more not-so-bad news

The Automatic Data Processing (ADP) employment report was released before the opening bell Wednesday morning, showing that the private sector lost 298,000 jobs during August. Expectations called for a loss of 255,000 jobs, but the loss was better than the revised 360,000 jobs lost during July.

A spokesperson for ADP noted a "gradual improvement in labor markets" because "monthly losses are diminishing." That said, the group did note that job losses are likely to continue for "several more months."

In addition to this news, Challenger Gray & Christmas reported that layoffs planned by major U.S. corporations fell 21% from July to August. The 76,456 layoffs in August were the second-lowest amount cut in 2009.

Continue reading Job cuts slow in August, more not-so-bad news

June housing construction makes unexpected jump

new home constructionWe get a second piece of positive news out of the housing industry in as many days today as the Commerce Department announced this morning that new home construction jumped 3.6% in June.

No one is going to put forth the argument that the housing market is all of a sudden in good shape again, but we are starting to see signs that things could be at least leveling off, which is the first step that needs to be made.

Continue reading June housing construction makes unexpected jump

Is the outlook on the economy brightening?

Economists are a strange bunch. Their predictions range from the wildly optimistic to the bleakest pessimism. They use numbers to suit their philosophical bent, numbers that will justify their positions. Some believe that the numbers are hocus pocus. However, we must depend upon the numbers that the government provides .

Here are economists' predictions for the second half of 2009 and 2010 according to a Bloomberg survey:

  • Growth will average 1.5% in the second half and 2.1% next year.
  • Economists see no need for a second stimulus package.
  • The economy probably shrank 1.8% in the last quarter.

Continue reading Is the outlook on the economy brightening?

Banks putting pressure on UK retail sales

Retail sales took an unexpected downward turn in May in the United Kingdom -- for first time in three months. Cautious banks appear to be the problem, as their rationing of credit is impeding broader economic recovery. Retail sales fell 0.6% from the previous month, while economists had predicted a 0.3% change in the other direction.

Year-over-year, retail sales were off 1.6%. Sales for the year are down 1.1%, the greatest decline since score-keeping began in 1988. Of course, there's plenty of fodder for rationalizing the results. The annual change was affected by an "unusually large" retail sales estimate for May 2008. Clothing, textile, and footwear retailers and department stores led the plunge, with nonfood store sales off 1.4%, compared to a 0.3% increase in food retail sales.

Continue reading Banks putting pressure on UK retail sales

Will the recession end in 2009?

It appears that a majority of economists believe that the current recession in the United States is going to end this year. The National Association for Business Economics (NABE) will release today a survey that reflects this belief and is in line with a forecast from Fed Chairman Ben Bernanke and others.

According to the survey, 74% of the forecasters believe the recession will end in the third quarter, with 19% pegging the fourth quarter as the final quarter for the recession. The remaining 7% believe the first quarter of 2010 will be the recession's swan song.

Continue reading Will the recession end in 2009?

White House expects no job growth until 2010

While many people were enjoying time with their families on Mother's Day, the White House released a bit of news that may fly under the radar of some. According to The New York Times, President Obama's chief economics forecaster Christina Romer, chairwoman of the White House Council of Economic Advisers, announced that she expects unemployment to continue rising, even after the economy turns.

Romer stated that the GDP has to grow at a rate of about 2.5% before unemployment will start to wane. That said, Romer believes that it is "unfortunately pretty realistic" that unemployment may reach 9.5%. This revelation follows last Friday's data showing that unemployment was 8.9% in April -- the highest level in 25 years.

Continue reading White House expects no job growth until 2010

Consider tracking the economic recovery with UPS

United Parcel Service isn't a 'back up the truck' play, but it is a suitable position for investors who can tolerate moderate risk. Here's why:

One could make a strong case that United Parcel Service, Inc. (NYSE: UPS) deserves to trade at the low end of it valuation, at a p/e of 10 or 12, instead of the current 18, given weak demand, and a likely continued drop in package delivery volume in Q2 and Q3. But the view from here argues institutional investors aren't likely to take that stance.

Continue reading Consider tracking the economic recovery with UPS

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Last updated: November 23, 2009: 03:25 PM

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