Matters of Economy

Monday, December 06, 2004

Importance of the Economy

After years of dwelling in a recession, Americans finally have a brighter economic future ahead of them. During the last few months, various articles regarding the state of the economy have discussed several factors which indicate signs of improvement. Despite a decrease in consumer confidence, the industries of retail, construction, and automotive have shown slight improvement through increased sales. Many reasons for the sluggish economy point to consumer skepticism, which weighs heavily on the commercial economy. Small business owners are an example of this skepticism. After losing money, they are placing smaller orders, saying that they will buy more when they see the profit. An additional reason for slow economic growth includes the recent hurricane activities in the South. Although the agricultural industry was affected negatively, its effect created thousands of jobs in the construction industry. In fact, nearly 337,000 new jobs were created in the month of October, most of which came from the construction. As a result, many businesses relying on the holiday season for most of its revenue believe that this year's sales will surpass the previous years. Recently, many economists have begun to express their belief that the economy is growing and gaining momentum for the future. As one article stated, the consumer price index has increased showing that the cost of consumer goods is raising. Thus sales will decrease. In the oil industry, the price of a barrel of oil has decreased from sixty-three dollars to fifty-five dollars. This results in cheaper gas and energy prices. Overall, it is widely known that the economy fluctuates over time and no one can predict the future.

by all of Matters of the Economy

Tuesday, November 30, 2004

Consumer Confidence Levels Drop Again

Since the month of April, consumer confidence in the United States has continued to fall as Americans have worried about the job market and the expansion of businesses. The reduction in confidence resulted in a twenty-eight billion dollar loss in production from the previous quarter. Before the consumer confidence levels were announced, the government had released a report stating that the economy had actually grown at a faster 3.9 percent annual pace. This growth in the annual pace rose from the estimate of a 3.7 percent pace. Economists believe that the rise in energy beginning in July are accountable for the decrease in confidence. In the article, it was shown that the number of consumers who believe that the conditions will become worse rose from 10.5 percent to 11.9 percent. The percentage of people anticipating fewer jobs will become available increased from 18.3 to 19.7. The effect of consumer confidence lies in the sales of products throughout the United States. With a decrease in confidence, people and economists can expect a decrease in consumer sales. As a result, businesses will continue to struggle. A member of the Consumer Research Center stated, "Looking beyond the upcoming holidays, the continuing erosion in expectations suggests consumers do not feel the economy is likely to gain major momentum in early 2005." Despite a rise in consumer spending from 1.6 percent in the second quarter to 5.1 percent in the third quarter, people are concerned that the economy will slow in the near future.

Consumer Worries

"Consumer confidence lowest since April; GDP revied upo" describe the situation that this economy has fallen into. Consumers have begun to worry too much about this countries economy. It seems as though the economy grew faster than the government had expected, 3.9 percent faster to be more exact. However, businesses have shown a decline by of about $28 billion. One must note that this number was affected by the unexpected hurricanes that reaped the Southeast. These things along with the spike in energy prices have caused many consumers to have doubt in our economy. However, this doubt has not affected the auto industry by very much. According to a survey, 11.9 percent of consumers feel that the economy will get worse, a number that rose from 10.5 percent. In the third quarter, inflation went down to 0.7 percent, consumer spending went up to 5.1 percent, and US export went up by 6.3 percent.

Article

http://www.usatoday.com/money/economy/gdp/2004-11-30-gdp_x.htm

Monday, November 29, 2004

Change in the Line Up for Economic Team

Link Here
President Bush has already stated that 4 out of the 5 top economic officials, which should definitly breath some new life into his economic policies and the way he handles it. Supposedly he wants to go outside of the government to find new officials which has the potential to be a very good decision, as most people that he would get from underneath his own control would most likely not be willing to go very far outside of his own views for fixing the economy. An interesting choice that I saw was a professor from MIT who is labeled for being an expert on Social Security and taxes, which is just the place that George Bush needs aid in as I understand it has been the target of much criticism. As one of the Bush administration people was quoted, they don't need some inbred politician, they need someone who will, even though it may hurt short term, will tell them what needs to be done and how to do it and how long it will take to do it, and if it will be worth it, which it most likely would be otherwise he wouldn't have suggested it. Though certain politicians have been known for making decisions that have thus far not bore the fruit they were supposed to have already, example Iraq and tax breaks.

Sunday, November 28, 2004

Rising wholesale prices

It appears that as the oil price go back down; the wholesale items go up in price. Jumping up 1.7 percent, this is the largest jump in 15 years. With an overall increase of 6.8 percent in the energy prices, gasoline has gone up by 17 percent. Seeing that barrels of oil have lowered in price by $8, many economists feel that 2005 will have a better turn out for the consumer. But, this is not the only reason economists feel this way. The Federal Reserve is increasing interest rates to help give the economy a boost. The recent hurricanes that hit Florida are partly to blame for the raise in prices. Some economists are skeptical, saying that the rise in PPI, producer price index, has a chance of not raising the inflation on the retail level. According to recent entries in the CPI, consumer price index, economists expect to see a 0.4 percent increase. Sung Won Suhn feels that we have seen the peak of the oil prices and will soon see them fall again.

Tuesday, November 23, 2004

Article

http://www.cnn.com/2004/SHOWBIZ/TV/11/23/rather.anchor.ap/index.html

Tuesday, November 16, 2004

The Large Increase in the PPI

After only an increase of 0.1 percent in the month of Oct0ber, the producer price index, also known as the ppi, jumped an astounding 1.7 percent in November. It has been over fifteen years since the percentage was this high. Thus many people are beginning to worry that high inflation will be the result. Economists believe that energy prices made the biggest impact on the producer price index. In November, gasoline prices raised seventeen percent, home heating oil prices increased eighteen percent, diesel fuel saw a twenty-one percent increase, and jet fuel increased seventeen percent. The immense increases in the energy prices even overcame a drop in the prices for barrels of oil to create the large ppi percentage. In the month of October, barrels of oil were placed at fifty-five dollars a barrel. This price was reduced to forty-seven dollars a barrel. Interestingly, the drop in oil prices may actually lower the inflation rate for the United States. Along with reduced oil prices, rising interest rates will also lower the chances of inflated rates. Sung Won Sohn, chief economist at Wells Fargo, stated, "I'm reasonably sure we've seen the peak (for oil) and it's beginning to trend down and that should do a lot to decelerate inflation." Although the initial reaction to the soaring energy prices was one of concern for the possibility of increasing inflation, the rising interest rates and the decreasing of oil prices have reassured many economists that the country's inflation will remain at its current level.

Article for week 11/15-11/19

http://money.cnn.com/2004/11/16/news/economy/ppi/index.htm?cnn=yes

Friday, November 12, 2004

Rising wholesale prices

It appears that as the oil price go back down; the wholesale items go up in price. Jumping up 1.7 percent, this is the largest jump in 15 years. With an overall increase of 6.8 percent in the energy prices, gasoline has gone up by 17 percent. Seeing that barrels of oil have lowered in price by $8, many economists feel that 2005 will have a better turn out for the consumer. But, this is not the only reason economists feel this way. The Federal Reserve is increasing interest rates to help give the economy a boost. The recent hurricanes that hit Florida are partly to blame for the raise in prices. Some economists are skeptical, saying that the rise in PPI, producer price index, has a chance of not raising the inflation on the retail level. According to recent entries in the CPI, consumer price index, economists expect to see a 0.4 percent increase. Sung Won Suhn feels that we have seen the peak of the oil prices and will soon see them fall again.