Sunday, June 13, 2010
South Side Pretty Nikesha Patel
The U.S. economy had little to reveal over the course of this past week, nevertheless, the data released signaled that the economy is still walking down the path of recovery, as economic activity seems to be stabilizing from the worst recession since WWII, however financial markets were rather hectic, where investors were still focused on Europe’s debt problems, which continues to threaten the outlook for global recovery.
The start was with the consumer credit index, which signaled that purchases on credit increased in April after falling in March, which represents yet another sign that spending levels are improving, though the improvement remains restricted by elevated unemployment and tightened credit conditions.
Meanwhile, the wholesale inventories index released for the month of April, the index also signaled an ongoing improvement in inventory levels, where it seems that producers are starting to build their inventory levels amid the recent improvement in economic conditions, and that is providing further support to economic growth.
Also the Federal Reserve Bank released its Beige Book, where the Feds signaled that economic conditions improved in most districts, as the Feds believe that the economy will continue to expand over a modest rate, since elevated unemployment levels continue to weigh down on economic activity, while inflationary pressures were still subdued, and accordingly, the Feds still believe that promoting economic growth is the main priority.
Moreover, the U.S. Commerce Department signaled that the trade deficit widened in April, where the rising value of the dollar weighed down on exports, as the U.S. dollar has been gaining against most of its major counterparts over the past period, and that indeed affected American exports, while weak demand levels inside the United States continue to weigh down on imports as well.
As for the weekly jobless claims data, the initial jobless claims index declined slightly, while the continuing claims index continued to signal improvement, however, conditions in the labor market are still rather challenging, where unemployment is now standing near its highest level in more than 25 years at 9.7%, while the Feds expect unemployment to range between 9.1% and 9.5% by the end of this year, which is still relatively high, as it will continue to hammer economic activity through limiting income growth and accordingly spending levels, and since spending accounts for nearly two thirds of economic activity in the United States, we should expect growth to remain under pressure over the course of this year.