Investors -- certainly U.S. stock investors -- would be wise to keep one eye on the price of oil, currently pushing $90 per barrel. Oil traded up 10 cents to $89.29 on Monday at mid-day.

And the reason is obvious enough: once again, oil is approaching the danger zone, from a U.S. GDP growth standpoint.

No one knows precisely at what point oil begins to substantially hinder consumer spending and slow commercial activity -- but this much is known: every $1 per barrel rise in oil decreases U.S. GDP by $100 billion per year and every 1 cent increase in gasoline decreases U.S. consumer disposable income by about $600 million per year.

Continue reading Oil's Price Approaches the 'Danger Zone'

Oil's Price Approaches the 'Danger Zone' originally appeared on BloggingStocks on Mon, 06 Dec 2010 13:30:00 EST. Please see our terms for use of feeds.

Continue reading Economists Lower 2011 U.S. GDP Growth Forecasts to 2.5%

Economists Lower 2011 U.S. GDP Growth Forecasts to 2.5% originally appeared on BloggingStocks on Fri, 10 Sep 2010 15:00:00 EST. Please see our terms for use of feeds.

This morning, the Commerce Department announced that the economy grew at a slower pace than previously thought in the April-to-June period. The gross domestic product grew at a 1.6% rate during the period, revised down from an initial estimate of 2.4%, and far slower than the 3.7% pace in the first quarter. Yet Wall Street actually sighed in relief because investors and economists had expected an even worse number.

Despite the euphoria on the Street over the not-as-bad-as-expected numbers, we are still faced with a stark reality as the economy has lost "significant momentum" lately. In fact, most believe that the third quarter will hold similarly weak growth.

Continue reading GDP for Second Quarter Revised Lower, Down to 1.6%

GDP for Second Quarter Revised Lower, Down to 1.6% originally appeared on BloggingStocks on Fri, 27 Aug 2010 10:00:00 EST. Please see our terms for use of feeds.

For the first time in history, U.S. government debt -- now $13 trillion -- will surpass GDP in 2012, based on forecasts by the International Monetary Fund. Bill Gross of PIMCO calls this a "debt super cycle."

The key problem with such a huge debt is that investors will demand a higher return, which translates into higher interest rates. The interest cost alone on $13 trillion will put an added burden on the government and the people.

Bill Gross further commented that "If real interest rates were ever to go up instead of down," our economic growth will not be enough to support borrowings.

Continue reading U.S. Debt to Surpass GDP

U.S. Debt to Surpass GDP originally appeared on BloggingStocks on Sat, 05 Jun 2010 11:40:00 EST. Please see our terms for use of feeds.

Continue reading Consumers Drive GDP Expansion

Consumers Drive GDP Expansion originally appeared on BloggingStocks on Fri, 30 Apr 2010 09:45:00 EST. Please see our terms for use of feeds.

The final number is in for the U.S. gross domestic product (GDP): the economy grew at a brisk 5.6% rate in the fourth quarter (according to the Commerce Department). This is the best performance in six years.

As should be no surprise, consumer spending was still light. But there was a nice spark from exports as well as corporate profits. Hey, is it any wonder the stock market has been bullish?

Continue reading Corporate Profits and Exports Power 5.6% Jump in GDP

Corporate Profits and Exports Power 5.6% Jump in GDP originally appeared on BloggingStocks on Fri, 26 Mar 2010 12:20:00 EST. Please see our terms for use of feeds.

Continue reading Fourth Quarter GDP Revised Higher

Fourth Quarter GDP Revised Higher originally appeared on BloggingStocks on Fri, 26 Feb 2010 09:30:00 EST. Please see our terms for use of feeds.

Consumer spending had its largest fall this year, thanks to the end of the "Cash for Clunkers" program. And, incomes were flat. No change to the money coming in and a drop in the cash going out translates to an impediment to economic recovery.

In September, consumer spending fell 0.5%, the first decline in five months and the worst in nine. Wages and salaries dropped 0.2%, effectively offsetting the 0.2% up-tick in August. The economy did grow in the third quarter of 2009, hinting that the worst recession in 70 years may be coming to a close, but the tough September suggests we still have some work in front of us.

Continue reading Bad September, good Q3 for consumer spending, what's next?

Bad September, good Q3 for consumer spending, what's next? originally appeared on BloggingStocks on Sat, 31 Oct 2009 11:40:00 EST. Please see our terms for use of feeds.

Continue reading White House claims 650,000 jobs saved by stimulus: are these numbers really accurate?

White House claims 650,000 jobs saved by stimulus: are these numbers really accurate? originally appeared on BloggingStocks on Fri, 30 Oct 2009 17:00:00 EST. Please see our terms for use of feeds.

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

Third-quarter GDP shows growth -- is the recession over? originally appeared on BloggingStocks on Thu, 29 Oct 2009 09:35:00 EST. Please see our terms for use of feeds.

Early estimates of a contraction in the U.K. economy were not enough. First quarter 2009 estimates were revisited, showing a 2.4% fall in gross domestic product from the last quarter of 2008 to 2009. This downward revision made the first three months of the year the worst since people wore skinny ties, hated communism, and bore nicknames like "Buzz."

In the second quarter of 1958, U.K. GDP plummeted 2.6%, though the 2.4% threshold matches the depths hit in 1979. The original 2009 Q1 estimate was -1.9%, according to the Office for National Statistics in London.

Continue reading U.K. economy has worst quarter since 1958

U.K. economy has worst quarter since 1958 originally appeared on BloggingStocks on Tue, 30 Jun 2009 10:40:00 EST. Please see our terms for use of feeds.

Continue reading International Monetary Fund warns of a double dip

International Monetary Fund warns of a double dip originally appeared on BloggingStocks on Mon, 15 Jun 2009 09:25:00 EST. Please see our terms for use of feeds.

The newspapers are looking ahead to this Tuesday's G-20 summit in London. Since the leaders who show up there represent countries that control 80% of the world's economy, it could be an important meeting. If you live in the U.K. or U.S., your leaders will be attacked by those in other countries who believe that they should not be asked to bail out the errors of Anglo-American capitalism. Beyond that, little of substance is likely to be accomplished.

However, in an alternative universe, the G-20 meeting might actually accomplish something. Specifically, it could get agreement on six principles on which to rebuild American capitalism. Here's what I think those would be:

• Grow through technology-based innovation. The United States used to be admired around the world for its ability to create new industries. In the 1990s, an Asian government wanted to emulate our success and asked me to discuss how the United States turns innovation into economic growth. Unfortunately, since 2000 our ability to take brilliant ideas from our top universities and turn them into venture-backed companies that sell their shares to the public to fuel the creation of new industries has largely been broken. If there is to be growth, it should come from reviving this process.

Continue reading Six principles for saving American capitalism

Six principles for saving American capitalism originally appeared on BloggingStocks on Sun, 29 Mar 2009 11:05:00 EST. Please see our terms for use of feeds.

The clock has an interesting history. The now-deceased Manhattan real estate developer, Seymour Durst, built this sign in 1989 because he thought that the then $2.7 trillion debt was too high. The debt kept growing after he put up the sign but by the end of Bill Clinton's second term, it was down to around $5 trillion. Since January 2001, the national debt has grown to $11.3 trillion thanks to the $850 billion bailout bill.

The good news is that the clock, which currently counts the deficit by substituting a 1 for the $ sign that was there before, will be fixed next year -- adding two digits. Too bad fixing the clock won't make the U.S. economy any less perilous. At 81% of Gross Domestic Product (GDP), our national debt is way above the 60% that the IMF considers to be a risky borrower.

Peter Cohan is President of Peter S. Cohan & Associates. He also teaches management at Babson College and edits The Cohan Letter.

National debt breaks clock originally appeared on BloggingStocks on Thu, 09 Oct 2008 11:10:00 EST. Please see our terms for use of feeds.

Today's worse-than-expected U.S. Gross Domestic Product report for the first quarter brings economics back to the fore as far as share prices are concerned.

With various other measures, including the Index of Leading Economic Indicators, signaling that a recession is imminent -- if it hasn't begun already -- history suggests the stock market could be in for a rough ride in the period ahead.

Based on an analysis of data going back 50 years, the median return of the S&P 500 Index three months after a recession has started (as determined by the National Bureau of Economic Research) has been -4.77%. After six months, the return has been -8.54%.

Given that the current bull market has not experienced a 10% correction for nearly half a decade and is already long in the tooth by historic standards, the prospect that the economy is now heading off the rails can only add to a negative outlook for the U.S. equity market.

Michael Panzner is a 25-year veteran of the global stock, bond, and currency markets and the author of Financial Armageddon: Protecting Your Future from Four Impending Catastrophes and The New Laws of the Stock Market Jungle: An Insider's Guide to Successful Investing in a Changing World.

GDP data adds to negative outlook for stocks originally appeared on BloggingStocks on Fri, 27 Apr 2007 11:21:00 EST. Please see our terms for use of feeds.

Stock futures are lower in early morning, indicating stock markets would also open lower. This is a day after Microsoft Corp. (NASDAQ:MSFT) reported financial results and before the quarterly GDP data is released.

As I indicated yesterday in Microsoft's earnings preview, the Street would hardly pay attention to the quarterly results and instead focus on outlook for the upcoming year. Indeed, Microsoft beat street estimates and yet left investors unimpressed as it also gave a lowered guidance.

Today, ahead of the bell at 8:30 a.m. ET, GDP figures will be reported. Economists expect Gross Domestic Product data to show a third quarter economic growth of 2.1% annual rate, compared to 2.6% in the previous quarter. This figure is especially important as economists try to see if the Fed's monetary policy hadn't choke up the economy too much with its consecutive rate hikes. The slowdown that is evident in the housing market is already an indication of the overall economic growth slowdown.

Also today, just before 10:00 a.m., October's University of Michigan's consumer confidence index will be released.

Earnings: The biggest company to report before the bell is Chevron Corp. (NASDAQ:CVX). Analysts expect a 24% jump in earnings.

Also in the news:

Sun Microsystems Inc. (NYSE:SUNW) reported quarterly earnings yesterday as well and posted a narrower net loss with a revenue rise of 17%.

In Hong-Kong, shares for Industrial & Commercial Bank of China rose nearly 15% to HK$3.52 ($0.45) in the world's largest IPO. The strong debut disappointed investors in Shanghai nonetheless. Analysts predicted the stock would rise between 10% to 15%.

In the auto industry a few stories are developing:

• According to The Wall Street Journal, car dealer AutoNation Inc. (NYSE:AN) will slash its orders from the Big Three -- General Motors Corp. (NYSE:GM), Ford Motor Co. (NYSE:F) and DaimlerChrysler (NYSE:DCX) -- automakers by 30% due to already high inventories.
• GM also said that due to losing sales to Toyota Motor Corp. (NYSE:TM), it will use some of the money saved in cost cuts to make more fuel efficient cars and match Toyota's technology. And while talks of bankruptcy have receded, analyst still sound cautious about GM.
• Finally, Volkswagen, the world's fourth-largest carmaker, beat expectations by nearly doubling third-quarter operating profit, reaffirming its full-year increased forecast.

Wal-Mart Stores Inc. (NYSE:WMT), struggling to communicate its new image of being both trendy and low-cost will sever its ties with another longtime ad agency. Personally, I wonder if Wal-Mart has ever internalized the term "target-market." You can't dance at too many weddings, Wal-Mart.

Staying on Wal-Mart, a union group and the Rev. Jesse Jackson demanded yesterday that Wal-Mart fire a Republican consultant. Find out why here.

Sony Corp. (NYSE:SNE) battery woes seem unending.

Finally, car rental company Hertz Global Holdings Inc. will issue 88.2 million shares of common stock in a planned initial public offering for an estimated price of between $16 and $18 per share.

Bonds rallied again yesterday with the yield on the benchmark 10-year Treasury note falling to 4.72% from 4.76% late Wednesday.

Overseas, Asian markets closed mixed to lower. European markets are mixed at the moment with a negative trend.

Futures are negative in early morning trade (8:00 a.m.), pointing to a lower start for stocks.

Before the bell 10-27-06: Futures lower ahead of GDP originally appeared on BloggingStocks on Fri, 27 Oct 2006 08:17:00 EST. Please see our terms for use of feeds.