business investment posts
FeedPosted Dec 17th 2008 3:50PM by Joseph Lazzaro (RSS feed)
Filed under: International markets, Forecasts, Industry, China, Politics
China will remain a major low-cost center for manufacturing, but it is egregiously incorrect and irresponsible to say it represents the landscape -- the sweep, if you will -- of the manufacturing horizon, says economist Richard Felson.
"Many low cost products will be made in China, and elsewhere, but better products can and will be made in the United States, if we plant the seeds for those industries today," Felson said.
This decade, which many economists call the U.S.'s 'decade of descent,' has been a lost decade concerning manufacturing. A failure to invest in the nation's manufacturing, technology, and basic research segments "has left the United States grossly underinvested, from physical plant and capital investment standpoints," Felson said. "The U.S. auto sector is probably the best known example of this. It is a manufacturing tragedy."
U.S. can seize the high endThe solution? Invest in industry, basic research, and technology to re-grab the high-end, and beyond, Felson says.
Think next-generation cars, he says. Think even more efficient jet engines and power systems. Think solar technology. Think wind power. Think smart electric grid. Think expanded universities to train the civil, mechanical, and electrical engineers needed to develop the innovative, energy-efficient, and smart systems of tomorrow.
Continue reading Lots of stuff will be made in China, but better stuff will be made in the U.S.
Posted Dec 10th 2008 2:32PM by Joseph Lazzaro (RSS feed)
Filed under: Forecasts, Bad news, DJIA, Recession
The world's largest economy is on pace to record its longest recession since 1947, a survey released Wednesday predicted.
A decline in consumer spending will push U.S. GDP down 2.4% in Q1 2009, and another 0.5% in Q2 2009, according to 51 economists surveyed by Bloomberg News.
If the above occurs, it would be the longest U.S. recession since 1947, so says economist Richard Felson, who did not participate in the Bloomberg survey.
"It would be a truly negative circumstance, the weakest economic conditions since the end of World War II and the weakest job market conditions since the 1981-1982 Reagan recession," Felson said. "A Q3 2009 recovery would give us a 20-22 month long recession, which is just dreadful. But you can understand why, with housing, manufacturing, exports, business investment, and consumer spending all trending in the wrong direction. It would be the 'mother of all contractions.' "
Continue reading Economists see longest U.S. recession since 1947, survey says
Posted Nov 17th 2008 9:25AM by Joseph Lazzaro (RSS feed)
Filed under: Forecasts, Bad news
From a business executive decision-making standpoint, there's no need to wait for the official designation of two consecutive quarters of negative GDP growth. In a near unanimous vote, 96% of economists surveyed by the National Association for Business Economics believe the United States is
already in a recession.
What's more, the survey indicated that members believe the recession started in Q4 2007 or Q1 2008, with about 60% expecting a mild contraction (a real GDP decline of 1.5%), with the rest expecting a deeper recession.
For 2009, the NABE's members see the U.S. economy growing just 0.9%. Economists surveyed expect the unemployment rate to rise to 7.5% by the end of 2009.
Economist Richard Felson, who did not participate in the survey, said the sentiment expressed in the survey is in-tune with economic conditions. "With consumer spending, business investment and housing all slumping, we can't point to a growth engine to stem the downtrend," Felson said. "That points to a significant GDP slump, and the slump will be worse, if credit conditions do not normalize."
Continue reading U.S. recession has started, slump could be deep: NABE survey
Posted Aug 28th 2008 9:55AM by Joseph Lazzaro (RSS feed)
Filed under: Forecasts, Economic data, Federal Reserve, Recession
A sluggish U.S. economy that grows at 3.3% in Q2? What's going on here?
The U.S. Commerce Department Thursday revised
its Q2 GDP growth estimate to 3.3% from the previously-estimated 1.9%, but economist David H. Wang remains a skeptic regarding the appearance of an economic recovery.
"Don't write home or e-mail home that we have 'blue skies' ahead regarding the U.S economy because the skies remain uncertain and stormy looking. If you take away the export gains, the economy is still pretty weak," Wang said. "Also, one quarter does not a recovery make, and we'll get final data on Q2 GDP in September [September 26]."
Economists
surveyed by Bloomberg News had expected the preliminary Q2 GDP statistic to total 2.7%. The U.S. economy grew at a 0.9% annualized pace in Q1 and contracted 0.2% in Q4 2007.
Q2 GDP data fleeting?Wang said an improvement in exports and inventory accumulation strengthened GDP in Q2, but other factors suggest "it will be difficult, if not impossible to match that GDP growth rate in Q3 and Q4."
Continue reading U.S. Q2 GDP of 3.3% likely to be fleeting
Posted Aug 22nd 2008 1:46PM by Joseph Lazzaro (RSS feed)
Filed under: International markets, Forecasts, Other issues, Federal Reserve, Recession
With the world's top central bankers gathering in Jackson Hole, Wyoming for their annual retreat, amid the global economy's worst credit crunch in a generation and slowing GDP growth in every region, BloggingStocks asked a few economists what, in their opinion, should be on the central bankers' minds.
Economist David H. Wang – "I bet they sneak away for a few minutes to watch the United States versus Argentina [2008 Olympics] semi-final basketball game today. I would. Seriously, on the one hand central bankers face the prospect of another round of housing-related write-offs and the need to intervene to keep markets liquid. On the other hand, we still have oil-fed inflation in the system, so my sense is they will issue a statement indicating that the major central banks 'stand at the ready to provide additional liquidity and take other measures' to keep markets functioning."Economist Peter Dawson – "I would really like to see some European Central Bank comments from [President Jean-Claude] Trichet that he's ready to cut rates and that the greater risk in Europe, like the U.S., is toward recession. Demand in Europe is slowing, and if E.U.-U.S. trade flows continue to decline, that will prolong the recession. Hence, ECB monetary policy is intrinsic to the recovery story." Economist Glen Langan – "Probably the most important item on their agenda, after maintaining liquid, functioning markets, concerns long-term interest rates. They haven't fallen, due to banks' reluctance to lend, in order to repair their balance sheets. Housing faces a 2-3 year recovery period but we'll need long-term mortgage rates for 30-year fixed loans to drift back toward 6.00% or 5.75% to speed housing's transition back to health. If monetary officials don't find a way to get long-term rates to trend lower, that delays the recovery."Continue reading What will be on central bankers' minds at Jackson Hole?
Posted Aug 22nd 2008 11:48AM by Joseph Lazzaro (RSS feed)
Filed under: International markets, Forecasts, Bad news, Economic data, Recession
The United Kingdom's economy was unchanged in Q2, weighed-down by the contracting housing sector and a pull-back in consumer spending, the
U.K.'s Office for National Statistics announced Friday.Economists
surveyed by Bloomberg News had expected the U.K.'s economy to grow 0.1% in Q2.
For the last 12 months, the U.K. grew at a 1.4% pace, the ONS said.
Further, the lack of growth in Q2 ended Britain's longest expansion in more than a century, London-based economist Mark Chandler told BloggingStocks Friday. The U.K.'s last recession occurred in 1991.
U.K. mirrors U.S. slowdown?Further, as in the U.S., Chandler said concern is growing in the U.K. that declining housing sales and median home prices will serve as a drag on the U.K.'s economy through 2009, perhaps longer.
"Estimates vary in the United States, but I put housing's contraction effect at about 0.7-1.0% of GDP in the U.S., and perhaps a little lower in the U.K.," Chandler said. "Home equity loans were not as common during the housing boom as in the U.S., and that's why I don't think the slump will hurt as much here as in the U.S., but we're still seeing at least two quarters of negative growth, which will slow regional growth, as well."
Continue reading U.K. economy stagnates in Q2 on housing market slowdown
Posted Jan 30th 2008 9:26AM by Joseph Lazzaro (RSS feed)
Filed under: Bad news, Economic data, Federal Reserve, Recession
U.S. economic growth slowed substantially in Q4 2007. Gross domestic product grew at a 0.6% rate as the housing sector continued to contract,
the U.S. Commerce Department announced Wednesday, raising concerns that the U.S. economy will fall into a recession in 2008, if it hasn't entered one already in December 2007.
Further, the Q4 GDP statistic represents the nation's slowest growth since the economy started to recover from the 2002 recession and was also well below the 1.2% consensus estimate. The economy grew at a 4.9% rate in Q3 2007. For 2007, the U.S. economy grew 2.2%, the slowest growth since 2002. GDP increased 2.9% in 2006.
Real personal consumption expenditures increased 2.0% in Q4 2007, compared with a jump of 2.8% in Q3 2007. Durable goods increased 4.2% in the fourth quarter, compared with a rise of 4.5% in the third. Nondurable goods increased 1.9%, compared with an increase of 2.2% the previous quarter. Services expenditures increased 1.6%, compared with an increase of 2.8% in Q3 2007.
Continue reading U.S. economy grew below estimates in Q4; Fed may cut rates today, in the future
Posted Jan 29th 2008 9:40AM by Joseph Lazzaro (RSS feed)
Filed under: Good news, Economic data
Durable goods orders jumped 5.2% in December 2007, well above the 1.6% estimate,
the U.S. Commerce Department announced Tuesday, flying in the face of predictions of the recession's onset. It was the largest gain in orders since July 2007.
The index increased a revised 0.5% in November 2007. Excluding transportation goods, the index increased 2.6% for the month.
The department said the nation registered higher demand for airplanes, communications equipment, and defense capital goods in December 2007,
Non-defense capital goods Bookings for non-defense capital goods excluding aircraft increased 4.4%, the most since March 2007. Shipments climbed 2%, the most since March 2006.
Economist Steve Affinito told BloggingStocks Tuesday the December 2007 report was surprisingly bullish.
"The non-defense capital goods increase of 4.4% was impressive, because that's an indicator of future business investment," Affinito said. "It looks like business investment is faring better than we had anticipated, despite weakness in other areas of the economy, such as housing."
However, Affinito cautioned that this was a December 2007 report, and that "signs of the slowdown's bite undoubtedly will appear in future durable goods orders reports for the initial months of 2008."
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