NEW YORK, May 18, 2012 /PRNewswire via COMTEX/ –
The Conference Board Leading Economic Index® (LEI) for Spain declined 0.9 percent in March to 104.3 (2004 = 100), following no change in February, and a 0.5 percent increase in January.
At the same time, The Conference Board Coincident Economic Index® (CEI) for Spain, a measure of current economic activity, declined 0.2 percent in March to 98.1 (2004 = 100), following a 0.2 percent decline in both February and January.
In March, The Conference Board LEI for Spain started to decline again after briefly rising in December and January, and its six-month growth rate fell deeper into negative territory. At the same time, The Conference Board CEI for Spain has been declining for almost a year. Taken together, the recent behavior of the composite indexes suggests that the current contraction in Spain is unlikely to end in the near term.
About The Conference Board Leading Economic Index® (LEI) for Spain The composite economic indexes are the key elements in an analytic system designed to signal peaks and troughs in the business cycle. The leading and coincident economic indexes are essentially composite averages of several individual leading or coincident indicators. They are constructed to summarize and reveal common turning point patterns in economic data in a clearer and more convincing manner than any individual component – primarily because they smooth out some of the volatility of individual components.
The six components of The Conference Board Leading Economic Index® for Spain include:
Capital Equipment Component of Industrial Production Contribution to Euro M2 Stock Price Index Long term Government Bond Yield Order Books Survey Job Placings For more information including full press release and technical notes:
For more information about The Conference Board global business cycle indicators:
http://www.conference-board.org/data/bci.cfm
About The Conference Board The Conference Board is an independent business membership and research association working in the public interest. Our mission is unique: To provide the world’s leading organizations with the practical knowledge they need to improve their performance and better serve society. The Conference Board is a non-advocacy, not-for-profit entity holding 501 (c) (3) tax-exempt status in the United States.
www.conference-board.org .
Summary Table of Composite Indexes
2012 6-month
Jan Feb Mar Sep to Mar
Leading Economic Index (LEI) 105.3 r 105.3 r 104.3
Percent Change 0.5 0.0 r -0.9 -1.5
Diffusion 66.7 50.0 .0 25.0
Coincident Economic Index (CEI) 98.5 p 98.3 p 98.1 p
Percent Change -0.2 p -0.2 p -0.2 p -1.8 p
Diffusion 20.0 40.0 40.0 20.0
n.a. Not available p Preliminary r Revised
Indexes equal 100 in 2004
Source: The Conference Board All Rights Reserved
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Copyright (C) 2012 PR Newswire. All rights reserved
Fed on Hold Longest Since 1940s as Curve Shows Slow Growth July 11, 2011, 8:29 AM EDT
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By Daniel Kruger
(Adds today’s budget talks on the last screen.)
July 11 (Bloomberg) — The Federal Reserve may keep interest rates at record lows for the longest period since World War II as the economic slowdown that sparked a four-month bond rally worsens, according to Treasury market signals.
The 3-percentage-point gap between yields for three-month and 10-year Treasuries indicates the economy may grow 1.1 percent in the 12 months ending June 2012, a study by the Fed Bank of Cleveland says. That’s less than half the central bank’s current forecast, and may delay any rate increase from the zero- to-25 basis point range held since December 2008.
Slower expansion means the Fed is unlikely to tighten credit until June 2012, the longest static period since the government forced the central bank to buy Treasuries during the 1940s. Any spending cuts agreed by President Barack Obama and Congress before the Aug. 2 deadline to raise the $14.3 trillion debt limit may restrain the economy.
“No one is looking for very spectacular growth,” said Krishna Memani, director of fixed income at OppenheimerFunds Inc. in New York, who helps manage $70 billion. The chance of the Fed lifting borrowing costs “is significantly lower today than it was six months ago,” Memani said. “Growth expectations in the U.S. and global growth expectations are probably lower and more realistic.”
Waning Confidence
Confidence in the economy has waned since February, when 10-year Treasury yields reached a high for the year of 3.77 percent, and federal fund futures showed a 51 percent chance of a central bank rate increase by December. That percentage dipped to 39 percent in April and stands at 10 percent.
The yield on the benchmark 10-year note fell to 3.03 percent on July 8, a drop of 16 basis points, or 0.16 percentage point, for the week. The 3.125 percent note due May 2021 rose 1 10/32, or $14.06 per $1,000 face amount to 100 26/32, Bloomberg Bond Trader prices show. Three-month bill rates are 0.02 percent.
Treasuries advanced today, with the 10-year yield sliding eight basis points to 2.95 percent at 8:05 a.m. in New York.
Bank of America Merrill Lynch bond indexes show Treasuries have returned 4.7 percent since yields peaked Feb. 8, beating the 2.3 percent gain for the Standard & Poor’s 500 stock index.
The economy’s inability to produce jobs may be the biggest obstacle for the Fed before it can remove the support it has provided with purchases of $2.3 trillion in assets and the reduction of its overnight lending rate to near zero.
Rising Unemployment
The U.S. has added 1.7 million jobs since the start of 2010, after losing 8.7 million in 2008 and 2009. The unemployment rate was 9.2 percent in June, up from 8.8 percent in March and 4.4 percent in 2007.
Fed Chairman Ben S. Bernanke said June 7 that policy makers “cannot consider” the recovery to be established until they see a “sustained period” of strong job creation. The Fed said it sees expansion of between 2.7 percent and 2.9 percent.
“Bernanke’s going to be comfortable at zero for quite a while, and downright concerned about the direction and momentum,” said John Fath, a principal at the investment firm BTG Pactual in New York who helps manage $2.5 billion. “The momentum was turning up from December through March. It’s clearly gone the other way.”
Policy makers will wait until mid-2012 to raise rates for the first time in six years, according to average forecast of 58 economists in a Bloomberg News survey published July 8.
‘Rediscount Rate’
The last time the Fed maintained such prolonged monetary support for the economy was from 1937 to 1947 when it kept its “rediscount rate,” or the discount it applied to commercial banks borrowing cash against high quality promissory notes they had issued, at 1 percent.
From 1941 to 1951 the central bank also bought Treasuries as America grappled with the need to fund World War II, convert the U.S. back to a peacetime economy, and pay for the Marshall Plan to rebuild Western Europe.
“We are fighting a war,” said David Jones, 73, former vice chairman of Aubrey G. Lanston & Co., one of the original primary dealers established by the Fed in 1960. “This time it’s economic.”
U.S. employers added 18,000 workers in June, the fewest in nine months, and the unemployment rate rose to 9.2 percent, the highest level this year, the Labor Department said July 8. The median estimate in a Bloomberg News of survey 85 economists called for a gain of 105,000.
Predictive Powers
Economists use the yield curve to gauge the forecast the economy’s direction. Three-month bill rates have topped 10-year note yields eight times since 1960, with recessions following in six of those cases. There hasn’t been a recession that wasn’t preceded by an inverted curve in that period.
Rates on three-month bills rose past 10-year note yields in July 2006 after the Fed boosted its target rate for overnight loans between banks to 5.25 percent. The curve remained inverted through May 2007, just months before the economy began contracting, according to the National Bureau of Economic Research. The recession ended in June 2009.
“Few, if any” predictive measures are consistently better at forecasting the economy’s direction, Joseph G. Haubrich, head of banking and financial institutions research at the Cleveland Fed, said in an e-mail response to questions last week.
Fed policy has made it “sort of pointless” to use the curve to forecast growth because short-term yields are anchored by a target rate near zero, said Priya Misra, head of U.S. rates strategy at Bank of America Merrill Lynch in New York, a primary dealer. Misra said she now focuses on the difference between five- and 30-year yields, which are less influenced by the Fed.
Widening Curve
That part of the curve has widened to 2.7 percentage points from 2.23 percentage points March 31, with shorter-term yields falling as traders increase bets on how long the Fed will be “forced to be accommodative” and 30-year yields rising on the “fiscal risk” that debt-ceiling talks fail, Misra said.
“Although our approach is somewhat pessimistic as regards the level of growth over the next year, it is quite optimistic about the recovery continuing,” Haubrich and Timothy Bianco, a researcher at the Cleveland Fed, wrote in a June 30 report.
Even though the economy is struggling to add jobs, earnings growth in the S&P 500 is climbing back to the average rate since the 1960s. Net income may rise 19 percent in 2011, according to analyst estimates compiled by Bloomberg.
The Fed completed its $600 billion of purchases of Treasury debt on June 30, though it could continue to reinvest about $300 billion of proceeds from maturing mortgage-related assets and government securities into U.S. government debt in order not to contract the supply of money.
‘Further Away’
“Inflation risk is probably further away than we think and strong growth is probably further away as well,” Eric Pellicciaro, head of global rates investments at BlackRock Inc. in New York, which manages $1.14 trillion in fixed income, said in a Bloomberg Television interview. “We ultimately think this short-term rise in yields is more of an opportunity.”
Yields on 10-year Treasuries are likely to remain within a range between 2.75 percent and 3.5 percent, Pellicciaro said.
Obama plans to hold a press conference at 11 a.m. in Washington today, his fifth public remarks on the debt in a week, as he presses lawmakers to reach an agreement to raise the debt ceiling. The president and bipartisan congressional negotiators agreed to meet every day until they reach a deal, said one legislative aide on condition of anonymity.
Treasury 10-year yields near 3 percent reflect expectations that lawmakers will reach an agreement on raising the debt ceiling that will include significant spending cuts, and that those cuts will impede growth in the short-run, said Ajay Rajadhyaksha, co-head of fixed-income strategy in New York at Barclays Plc. The firm is another primary dealer.
“Everyone’s been calling for a sell-off at some point, the logic being yields can’t stay low forever,” Rajadhyaksha said. “You’ll have a hard time finding an economist who says cutting deficits is good for near-term growth.”
–Editors: Philip Revzin, Dave Liedtka
To contact the reporter on this story: Daniel Kruger in New York at dkruger1@bloomberg.net
To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net
Posted at 09:47 AM ET, 07/07/2011
Debt an economic disaster of biblical proportions
By Jordan Sekulow
WASHINGTON, DC – JULY 6: (L-R) Senators Lamar Alexander (R-TN), John Barrasso (R-WY), John Cornyn (R-TX), Jon Kyl (R-TX) and Senate Minority Leader Mitch McConnell (R-TN) speak to reporters about the looming deadline on raising the federal debt limit and stated the republican’s rejection of short term deals offered by Democrats, on Capitol Hill, Wednesday, July 6, 2011.
(Melina Mara)
To use the terminology the Obama administration is using as they push for a debt ceiling increase, the United States is headed for an economic “disaster of biblical proportions.”
The administration says that if Congress does not raise the debt ceiling by August 2nd, there will be “catastrophic economic and market consequences.” At the recent Twitter town hall, President Obama compared the mainstream conservative position on the debt ceiling negotiations to “a gun against the heads” of Americans.
As I recently wrote in a post for On Faith, our nation’s current debt crisis is a moral problem, and it is important to examine how we got in this situation so we can determine how to get out of it.
While revenue is projected to maintain, and even exceed, its yearly average, spending is increasing from the average 20 percent of GDP to 24.7 percent of GDP this year. With this increase in spending, we have seen an explosion in debt. Since President Obama took office in January 2009, the national debt has increased from $10.6 trillion to $14.3 trillion; that’s a 33 percent increase in the national debt in two and a half years. That pace is unsustainable, and in a word, immoral.
Conservatives in Congress have had enough of the insanity. Congresswoman Diane Black, (R-Tenn.) along with 76 freshmen members of Congress, is urging “the president to stop sitting on the sidelines of this debate” and put forward “a package of significant spending cuts and structural reforms.” The American people sent a clear message to Washington last November: cut spending and stop saddling our children and our grandchildren with this uncontrollable debt.
President Obama acknowledged months ago that we cannot continue “running up the credit card anymore.” Yet, the key focus of the president and Democrats’ approach to the debt is to raise taxes on Americans who already provide the government with the majority of its tax revenue. This is repugnant to the conservative-controlled House of Representatives, so it is not even a realistic proposal. Social conservatives believe that it is moral to cut taxes. (Read the blog post about that very topic here.)
As Freshman Representative James Lankford (R-Okla.) recently stated, he and the American people “would have preferred that we had dealt with this a long time ago.” Time is getting short, and as he said, “I don’t think there is a whole lot of energy in the House for a short-term increase.”
The president must act now to “do something big” – cut spending, lower the debt and stop threatening our highest earners and biggest spenders with higher taxes.
With China as our biggest creditor, if we do not act, we may experience the consequences Solomon warned of thousands of years ago, “the borrower becomes the lender’s slave.”
By Jordan Sekulow
| 09:47 AM ET, 07/07/2011
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NEW YORK (Dow Jones)–Governments are “kicking the can down the road” on major economic issues that could result in a perfect storm of trouble in 2013, economist Nouriel Roubini said Wednesday during an …
At the second anniversary of the current
economic expansion, housing remains stuck in a rut according to Fannie Maes
Economic Outlook for June which notes that most housing indicators started the
second quarter with little momentum.
Housing starts and builders confidence are still at depressed levels
and the sluggish construction activity reflected in both measures is one of the
reasons that the current economic recovery is less robust than previous ones
have been.
Total construction spending improved in
April but it was driven by home improvements rather than single or multifamily
construction, both of which declined below the first quarters average. Single-family construction spending fell for
the third consecutive month to reach the lowest level since June 2009.
The report says that market conditions
continue to favor multifamily and rental housing with demand outpacing supply
in some markets. Consequently, rents are
beginning to rise. The strong
multifamily figures in the first quarter had already moved Fannie Mae to revise
higher its multi-family starts projections for the year. Total housing starts are now expected to
increase 3.5 percent solely because of the multi-family sector. Single-family starts will fall modestly in
2011 compared to 2010.
The supply of new homes hit a record low
in April while sales of new homes have increased twice since they hit an all
time low in February. At present the
inventory of new homes stands at 6.5 months, nearing the long-term average of
about six months. However, the good news
does not carry over to existing homes where few of the indicators are
positive. The National Association of
Realtorsreg; (NAR) is blaming the sluggish market on what is calls unnecessarily
tight credit and to low appraisals. NAR
reported that one-quarter of its members claimed in a survey that they had to
cancel contracts or renegotiate them at a lower price because of the appraised values.
That same NAR survey showed that
distressed and cash sales continue to account for a big but declining part of
the market. Distressed sales made up 37
percent of all sales in April, down from 40 percent in March while 31 percent
of sales were all-cash compared to a record 35 percent in March. The
report states that a continued decline of distressed home sales as a percentage
of the market would reduce the discount component and might give a lift to home
prices in the second quarter.
The discounts serve to depress appraised
values, leading to the canceled or renegotiated contracts referenced
above. Homebuyers have also become
accustomed to watching prices fall and continue to delay action on purchasing
non-distressed homes.
There is
some good news about mortgage performance.
The Mortgage Bankers Association reported that short-term mortgage
delinquencies were near pre-recession levels.
Serious delinquencies (90+ days) have dropped for five consecutive
quarters and are at their lowest levels since the beginning of 2009 and
foreclosure starts are at the lowest point since the end of 2008. The report states that these figures along
with the drop in the percentage of loans in the foreclosure process from the
record high of the previous quarter indicate that the shadow supply of housing
may have peaked, although remaining at very elevated levels. It will likely
take years for the excess supply and the shadow supply of housing to be
absorbed, even with a meaningful improvement in the labor market and household
formation, which has been elusive so far.
The
elevated inventories continue to hold home prices down. However, most third-party price indices
adjusted for distressed sales seem to indicate that troubled loans being put
through foreclosure are getting seasonally adjusted (foreclosure is not a
seasonal activity), and also are likely causing an over statement of price
declines for arms length transactions.
On the broader economy Fannie Mae believes the likelihood that the economy will slip into another downturn within a year is still quite low, but has risen slightly. Still Fannie Mae did downgrade their economic growth outlook for 2011 from +2.9 percent to +2.5 percent in the previous forecast, which is more than a full percentage point lower than their forecast at the start of this year. Several reasons for the downgrade were cited including continued European sovereign debt problems, a marked slowdown in growth in China as it fights rising inflation, the trade-related effects of reduction in Chinese economic activity , and dampening effects surrounding US monetary and fiscal policy.
Fannie Maes economists conclude that
the near-term outlook for home sales appears gloomy with both mortgage
applications down in May and again in June and pending home sales dropping 12
percent in April.
Ultimately,
employment remains the key to the outlook for the economy and the housing
market. If the tentative labor market recovery falters amid signs of a slowdown
in consumer demand, it could jeopardize the projected moderate rebound in home
sales later this year. Continued deterioration in home prices, tight lending
standards, and households desire to reduce their debt loads much further are
among the main risks to the housing market and the overall economy.
LAS VEGAS –
Nevada businesses are pessimistic about the economy amid falling home prices, sluggish consumer spending and slow job growth, according to the Center for Business and Economic Research at the University of Nevada, Las Vegas.
Stephen Brown, director of the center, told business leaders Monday at an economic conference in Las Vegas that southern Nevadas economy has begun to recover, but a weak US market and a sinking real estate industry means the economy is not picking up as fast as it could.
Washington The United States remains the No. 1 destination for foreign direct investment, with close to $228.5 billion received in 2010, up 49 percent over the previous year, the White House Council of Economic Advisers said Monday.
President Barack Obamas administration is committed to stimulating investment and opening the US market to foreign capital, Council chair Austan Goolsbee said in a conference call with reporters.
One of Washingtons priorities is to smooth the way for any company wishing to invest in the United States, Goolsbee said.
After an abrupt decline as a result of the economic crisis in 2009 when $153 billion entered the country, in 2010 the amount of FDI received by the United States grew by 49 percent, and continues to top the global list with China, India and Brazil still runners-up.
Nonetheless, the figure does not approach the $319.7 billion received in 2008.
This remains the most competitive and most desirable place for investment in the world and that investment has had a great impact on the economy, Goolsbee said, calling the United States a safe harbor in an increasingly uncertain world.
He also said that incoming investment is three time greater that the amount going to Britain and France and between five to 10 times more than emerging countries receive.
Companies based in other countries with operations in the United States provide jobs for 5.7 million people and invest more than $40 billion in research and development, 14 percent of the total private sector, Obama said Monday in a statement accompanying the Councils report.
The president noted the productivity of US employees and the countrys unique culture of innovation and entrepreneurship, remarkable colleges and universities, and a business environment marked by transparency, protection of intellectual property, and the rule of law.
He added, however, that the United States faces increasing competition for the jobs and industries of the future. Taking steps to ensure that we remain the destination of choice for investors around the world will help us win that competition and bring prosperity to our people.
There are two items of major significance for the Federal Open Market Committee as its June 21-22 meeting approaches. One, the second round of the Federal Reserves Treasury bond purchases from banks — known as QE2 — is definitely expiring this month. Secondly, the economic recovery that QE2 was designed to bolster has clearly lost momentum.
Investors are already pointing at the lackluster economy and pining for a third round of quantitative easing, which is essentially designed to drive down interest rates and thus induce lending that leads to job creation.
But Fed Chairman Ben Bernanke has acknowledged that any QE3 would have unattractive trade-offs — namely inflation and a weaker US dollar. Nevertheless, the pressure for more easing will certainly mount if the economy deteriorates further.
If youre getting a feeling of deja vu, youre not alone. We have the same laundry list of issues, and essentially the same timing, as we did last summer. A slowing economy in the US and abroad, European debt issues and the end of Fed stimulus arent unique to 2011.
Look at the parallels to last year: A nice first-half run for stocks that begins to wane amid fading economic momentum; the sunset of a Fed bond purchase program — last year QE1 and this year QE2; Greece needed a bailout last year, and look who is back for more this year.
When Bernanke holds his press conference Wednesday afternoon, hell likely repeat that he views the US economic weakness as temporary, and it probably is. But Bernanke has also said inflation pressures are temporary. Yet, the Consumer Price Index was up 3.6% in the 12 months ending in May. So it is apparent that inflation isnt going away yet, despite lower commodity prices. In May, the core rate of inflation — which excludes volatile food and energy — was actually up more than the headline index that includes them.
This just isnt an environment where the Fed will take any steps toward tightening. So the Fed will continue reinvesting the proceeds of maturing government proceeds into Treasuries, which has the effect of pumping liquidity into the financial system. Interest rates will not be raised, with the federal funds rate still targeted at near-zero. And it will not be pulling in any of the liquidity lines or downsizing its own balance sheet to sop up as-yet unused bank reserves.
An uninspiring, slow-to-moderate growth rate for the economy means nothing will change in the foreseeable future. The question: Will we still be dealing with the same issues at the same time next year?
Dmitry Medvedev has set out, in an interview with this newspaper and a speech at the St Petersburg economic forum, a vision for liberalising Russia’s Kremlin-controlled political and economic system. For the first time in some years, Russia has a president who is at least saying the right things.
The country sorely needs the kinds of reforms Mr Medvedev claims to support. The deep recession caused by the global financial crisis exposed its over-reliance on energy and failure to diversify its economy. Simply riding the commodity cycle will no longer deliver the growth needed to close the gap with advanced economies.
Michigan business leaders discuss the states future and economic growth. Its a meeting of the minds at the business leaders for Michigan leadership summit. Company officials discussed strategies to make Michigan a winner when it comes to boosting the business climate and creating jobs.
Experts feel Michigan has some serious work to do. Company leaders and Michigan CEOs got right down to business comparing the states business climate to others around the country.
Ron Starner: Most competitive states, at least statistically, are in the south. Weve seen that theres a continued southward migration of corporate headquarters projects.
Ron Starner Manages Conway Data in Atlanta. As an outsider looking in, he says Michigan has fallen behind the curve, failing to make itself attractive to companies who want to relocate or expand.
Ron Starner: In terms of what Michigan needs to do better is,I think it needs to look at what neighboring, competing states like Ohio and Indiana are doing, and quite frankly copy some of their best practices.
Starner says Ohio dramatically changed its tax structure to benefit businesses and stimulate economic growth within the past several years, drawing several new manufacturing plants that would have otherwise come to Michigan. He applauds the tax legislation that Governor Snyder is pushing. Given the states niche in manufacturing, Starner says Michigan needs to offer serious retraining opportunities for Michigans industrial workforce.
Ron Starner: For Michigan, if they put together the right plan in place today, by 2014 we should be seeing significant results from that.
Thats three years these leaders have to change the game.