U.S. Trade Deficit Jumps 15.1% In January, Even As Exports Set Record
The U.S. trade deficit widened an unexpectedly large 15.1% in January, to $46.3 billion from a revised $40.3 billion in December, according to the Commerce Department's monthly statement on the U.S.'s trade balance.
The rise far out-stripped expectations for a January trade deficit of $41.5 billion. The increase was due to increased imports of petroleum products, automotive vehicles and parts, consumer goods, and capital goods, which reached a record monthly level, according to the statement.
Both U.S. exports of goods, at $120.5 billion, and services, at $47.5 billion, actually set monthly records, for a combined increase of 2.7% from December, a fact obscured by the surprisingly large deficit. It wasn't enough, however, to overcome the 5.2% increase in imports.
"The administration is focused on jumpstarting exports and helping U.S. businesses grow and create jobs through efforts like the National Export Initiative and tax credits for business investment," U.S. Commerce Secretary Gary Locke said. "We've now seen private-sector job growth for 12 straight months, and increasing U.S. exports plays a key role in that. We are committed to putting the necessary tools in the hands of America's businesses to help them out-innovate and out-compete the rest of the world and get the U.S. economy firing on all cylinders again."
Thursday, March 10, 2011
Wednesday, March 9, 2011
Senior Economist on Food: We Could Certainly See Social Unrest in Parts of the Developed World
Senior Economist on Food: We Could Certainly See Social Unrest in Parts of the Developed World besides the middle east and north Africa ....
Tuesday, March 8, 2011
What Makes Gas Prices Soar? More Than Just Oil
It's one of the biggest unknowns in the petroleum industry. Just how do gas station owners decide how much you pay at the pump? A gas station owner near Atlanta offers some answers. (March 8)
Sunday, March 6, 2011
The Outlook for Fixed Income in 2011
What is The Outlook for Fixed Income in 2011 ?
within the fixed income space where do you see the greatest value for investors and what strategies do you suggest ?
what are the possible downside risks in fixed income ?
Doug Forsyth managing director and portfolio manager at AllianzGI Capital answers
within the fixed income space where do you see the greatest value for investors and what strategies do you suggest ?
what are the possible downside risks in fixed income ?
Doug Forsyth managing director and portfolio manager at AllianzGI Capital answers
Saturday, March 5, 2011
Bernanke Defends QE2 Amid Rising Food-Gas Prices, High Unemployment, Inflation, Uncertainty
END FED: Bernanke Defends QE2 Amid Rising Food-Gas Prices, High Unemployment, Inflation, Uncertainty
http://www.csmonitor.com/Business/Stefan-Karlsson-s-Blog/2010/1108/QE2-101-Ho...
QE2 101: How more money will stoke inflation
The new round of quantitative easing announce last week, dubbed 'QE2' by economist wonks, will generate higher inflation, everyone agrees. But how?
By Stefan Karlsson, Guest blogger / November 8, 2010
It is generally assumed, and rightly so, that the new round of "quantitative easing" will generate higher inflation in the United States. But it is rarely explained just why it will do so. After all, QE2 will not be conducted by dropping dollar bills from helicopters.
Well, there are essentially three mechanisms by which it happens: higher money supply, lower money demand and lower supply of goods and services.
1) Regarding money supply, it should be noted that by lowering interest rates, QE2 will boost demand for loans. Higher demand for loans will in a fractional reserve banking system generate a higher money supply. Given a certain level of money demand and supply of goods and services, a higher money supply will result in higher price inflation.
2) Regarding money demand, higher inflationary expectations will cause people to be less willing to hold money (as its real value is expected to drop), thus reducing money demand. And lower money demand has a very similar effect on prices as a higher money supply.
It should be noted though in this context that to the extent that QE2 lowers nominal interest rates, this will increase money demand as the opportunity cost of holding money drops.
So the net effect of Fed bond purchases on money demand depends on to what extent it raised inflationary expectations more than it lowers nominal interest rates.
And it seems that the increase in inflationary expectations is this time somewhat bigger than the drop in nominal yields.
As of this writing, the nominal 5-year yield has dropped 21 basis points since August 31 (from 1.33% to 1.12%) while the inflation indexed 5-year yield has dropped 72 basis (from 0.14% to -0.58%) points since August 31, implying that inflationary expectations has increased 51 basis points (from 1.19% to 1.70%) during that period.
Thus, QE2 has likely reduced money demand somewhat.
3) Regarding the issue of reduced supply of goods and services, it should be noted that to the extent that QE2 reduces the value of the dollar and to the extent that companies adjust prices, it will raise import and export prices, causing a reduction in the inflow of foreign goods and services and increase in the outflow, reducing the supply of goods and services available to Americans.
A lower supply of goods and services will given certain levels of money supply and demand increase the dollar price of goods and services.
In conclusion we can clearly see that by a combination of a higher money supply, a reduction in money demand and a reduced domestic supply of goods and services, QE2 will clearly increase price inflation. The only uncertainty is just how big this effect will be.
http://www.csmonitor.com/Business/Stefan-Karlsson-s-Blog/2010/1108/QE2-101-Ho...
QE2 101: How more money will stoke inflation
The new round of quantitative easing announce last week, dubbed 'QE2' by economist wonks, will generate higher inflation, everyone agrees. But how?
By Stefan Karlsson, Guest blogger / November 8, 2010
It is generally assumed, and rightly so, that the new round of "quantitative easing" will generate higher inflation in the United States. But it is rarely explained just why it will do so. After all, QE2 will not be conducted by dropping dollar bills from helicopters.
Well, there are essentially three mechanisms by which it happens: higher money supply, lower money demand and lower supply of goods and services.
1) Regarding money supply, it should be noted that by lowering interest rates, QE2 will boost demand for loans. Higher demand for loans will in a fractional reserve banking system generate a higher money supply. Given a certain level of money demand and supply of goods and services, a higher money supply will result in higher price inflation.
2) Regarding money demand, higher inflationary expectations will cause people to be less willing to hold money (as its real value is expected to drop), thus reducing money demand. And lower money demand has a very similar effect on prices as a higher money supply.
It should be noted though in this context that to the extent that QE2 lowers nominal interest rates, this will increase money demand as the opportunity cost of holding money drops.
So the net effect of Fed bond purchases on money demand depends on to what extent it raised inflationary expectations more than it lowers nominal interest rates.
And it seems that the increase in inflationary expectations is this time somewhat bigger than the drop in nominal yields.
As of this writing, the nominal 5-year yield has dropped 21 basis points since August 31 (from 1.33% to 1.12%) while the inflation indexed 5-year yield has dropped 72 basis (from 0.14% to -0.58%) points since August 31, implying that inflationary expectations has increased 51 basis points (from 1.19% to 1.70%) during that period.
Thus, QE2 has likely reduced money demand somewhat.
3) Regarding the issue of reduced supply of goods and services, it should be noted that to the extent that QE2 reduces the value of the dollar and to the extent that companies adjust prices, it will raise import and export prices, causing a reduction in the inflow of foreign goods and services and increase in the outflow, reducing the supply of goods and services available to Americans.
A lower supply of goods and services will given certain levels of money supply and demand increase the dollar price of goods and services.
In conclusion we can clearly see that by a combination of a higher money supply, a reduction in money demand and a reduced domestic supply of goods and services, QE2 will clearly increase price inflation. The only uncertainty is just how big this effect will be.
Friday, March 4, 2011
Unemployment Dips to 8.9 Pct., 192K Jobs Added
Employers in February hired at the fastest pace in almost a year and the unemployment rate fell to 8.9 percent _ a nearly two-year low. (March 4)
Shadowstats....site provides real statistics.
The real number is 20%+
These numbers are bogus....it only counts those receiving benefits - when that runs out - you fall off the stats.
Shadowstats....site provides real statistics.
The real number is 20%+
These numbers are bogus....it only counts those receiving benefits - when that runs out - you fall off the stats.
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