Category: Economy

The picket signs have been put away and the rabble-rousing masses are conspicuous by their absence. Wall Street is the world’s largest stock market and it is running as smoothly as Usain Bolt does the 100 metres race, but there is a worrying trend developing on the bourses. Investors are no longer playing the markets with the kind of gay abandon that marked out their approach some time back and its not just because playing the market has become tougher to win in and more fickle than ever. It’s a domino effect of a worse kind for the market with investors lopping off stocks they own and reducing their holdings in favor of safer investments such as that provided by the bond markets. There is a very real fear that this will remain a lingering sentiment; as they say, a crystal vase once broken can be fixed, but the cracks will always remain. This might be a lost generation of investors  [...]

Arms akimbo, they walk through shopping malls with credit cards close at hand and froth coming out of their mouth in anticipation of the feeding frenzy. They’re more likely to feed on a no holds barred sale than human brains though, so you have nothing to worry about. At least for now. These zombies are not the kind you’ve grown to love (or loathe) in the movies though. The ones spawned by Hollywood moguls are more intent on carnage and just being dangerous in their own lumbering way. Conversely, economic zombies are the kind that are more passive and almost pass under the radar, but the damage that they do cause is in terms of tying up capital. This was best witnessed in Japan in the early ‘90s and the parallels to present-day America cannot be ignored. The real estate market went belly up over in the Land of the Rising Sun, and this led to deflation and a concurrent drop in  [...]

It’s the perfect storm, a trifecta that knocks out bettors everywhere. Even in the midst of an economic recovery of sorts, indicators of slower than expected recovery continue to loom large. Manufacturing is still slow to pick up, the jobless aren’t pounding the streets a whole lot less than they were during the worst of the recession and consequently investor confidence too is sagging. This is shown in the way stock value has dipped lower than might have been anticipated by doyens of the industry. The Dow Jones has tumbled 144 points (a loss of 1.4% across the board), and the S&P 500 slid by 19 points, still a loss of 1.7% on previous day’s trading. Nasdaq too wasn’t much different, taking a beating of 37 points, again a mystifying 1.7% lower than the previous day’s close. It seemed as if stocks were recovering after two straight days of posting gains and this came on  [...]

Fed paper reports sinking economy and predicts another recession in next couple of years. Travis Berge, Fed scholar and professor at University of California, used data from Leading Economic index produced by the Conference Board, and prepared a paper that predicts another recession for the US in next couple of years. Most economists and researchers, by looking at the report, agree on the point that chances of another recession are rising, and if the administration neglects these indicators, impending economic downturn is inevitable. These researchers tried three experiments, making use of leading indicators like index components and other elements, mentioned in the data. However, this test didn’t include bullish current indicator. The spread of Treasury bond interest rate and fed fund rate is quite steep, which is a strong indicator of economic expansion. They believe the Fed  [...]

Congress needs to have a concrete plan to tackle slower growth, rising unemployment rate, and deficit increment as inaction from their part may slower the economic growth further, a board of economists told officials on Tuesday. The same group of economists testified at the Senate Budget Committee. They say the economic growth in 2011 would be gloomy, and the annual GDP would range anywhere between 3% and 4%. Most economists believe it’s a very slow economic recovery. ‘It’s probably one of the slowest recoveries we have had since World War II’ said Simon Johnson, lecturer at Technology’s Sloan School of Management. However, Joel Naroff, founder and president of Naroff Economic Advisors, is not very sure about the mediocre growth. He believes, if Washington doesn’t act quickly and fail to make major changes in monetary policy and fiscal policy, the economic growth would  [...]

Quarterly results of most of the companies in the US seem to be quite fascinating. However, shrinking economic numbers of the nation is still a concern. All major indicators are pointing towards an economy that’s falling apart. Here are some of the reasons why we might face another recession soon: Economists expected rise in US orders of durable goods by 1%. However, it fell by 1% in June. Apart from volatile transportation goods’ figures, overall shipments fell by over 1.3%. The quantity of inventories lying in warehouses is increasing, which indicates goods are being manufactured but not purchased by consumers. Chinese industrial output fell by more than 2.8% last month, major reason being weakening global economic conditions. According to the data revealed by Economic Cycle Research Institute (ECRI), the weekly indicator index fell significantly, reaching as low as -10.5.  [...]

Choosing your career at the age of 20 is certainly a difficult task. Let alone the world economics, you haven’t even discovered yourself completely. Besides, you would make an exciting career if your personal choices are in sync with market demand. I selected finance simply because I love number, I like talking to people, and the earning potential is high. This was, however, 15 years ago, and things have changed considerably since then. Let us have a look at few most promising sectors that will dominate the market in coming 10 years. Phone Technology As of now, this is the fastest growing market, and demand for phones is increasing by leaps and bounds. In years to come, the world will need more technicians produce, troubleshoot, and manage this technology. This sector is highly depended on communication, which is also a promising sector in itself. Certified Financial Planner Most  [...]

Economists are debating on whether our not the US will experience a double-dip recession. The prediction, however, may prove to be a bit optimistic. Most said we are on the path of recovery. However, falling unemployment rates, decreased consumer spending, dropping house rates, and unstable global cues are, unfortunately, not signs of recovery. Some economists, who have realized the graveness of this situation, have termed it as ‘Lost Decade’, which means a prolonged period of weak growth. An economist and professor at Cal State University Channel Islands, Sung Won Sohn, predict the probability of having a lost decade is much higher than a double dip recession. According to him, major engines that push growth of an economy like consumer spending, housing, and exports, are all down. For the next few years, our country might not even grow at 3%. However, if something like Lost  [...]

Many economists claim we are on the path on recovery, and the GDP will soon be high. The unemployment rate, however, is not dropping a bit. If it would have been recovery, most companies should have started hiring, at least the ones who were downsized. But the daunting trend seems to continue. Wells Fargo is about to cut 3,800 jobs and close down 638 stores in the financial division; the company announced on Wednesday. In fact, if this happens, the company may close down its consumer finance division, which offered non-prime loans to homebuyers. They will downsize around 2,800 employees in next couple of months, and the other 1,000 jobs would be cut within next 12 months. The need for separate financial division was eliminated when the company merged with Wachovia in 2008. However, they aren't doing too well since they have had their own division. The President of Well Fargo Financial,  [...]

The Fed government is trying hard to boost retail sales. There are discount tags on all the items, and loans are easily available (except mortgage) to make purchases. However, thanks to the recent economic crisis, people have started realizing the importance of money. Many lost their jobs, many were downgraded, which helped people to learn to survive in less income. This is the time when we are trying to have more disciplined finances. But the government is pushing hard to make us spend more. Tough times are gone. Unemployment rate have started diminishing, and people have started spending again. But there has been a cut in their spendings. This has put me in a great confusion. If people start spending considerably again, it would help in nothing but repeating the same cycle. Conversely, if people don't spend more, the economy with certainly take a hit this year, and in the coming years. In  [...]