American Economy News & Updates

[Víðarr]

Here's More Proof the U.S. Economy Is Beating the Rest of the World

At first glance, the corporate profits data released today by the Commerce Department don't look good. Profits fell by 0.8 percent in 2014 from the prior year, the first decline since the middle of the recession.

Below the surface, however, the weakness was concentrated in earnings from abroad. It's the latest embodiment of the surge in the dollar as the U.S. recovery strengthens.

Profits originating outside the U.S. dropped by $36.1 billion in the fourth quarter, the biggest decrease since 2008 and the second-biggest since 2002. This would be money earned by big multinational companies, such as Coca-Cola Co. or Wal-Mart Stores Inc., as well as any business that sells goods and services abroad.

Profits from the rest of the world accounted for the smallest share of total corporate earnings since 2006 and have been on the downswing for years.

Meanwhile profits from domestic industries rose by $5.7 billion in the last three months of 2014, the Commerce Department's report showed. While that's not stellar, it was weighed down by a drop in earnings of financial companies. Non-financial industries reported a rise in profits of $18.1 billion.

A weak global picture is part of the problem, as places like Europe, Japan and China all work to reinvigorate their economies, said Gus Faucher, senior economist at PNC Financial Services Group in Pittsburgh. That's been compounded more recently by the stronger dollar, which reduces the value of profits earned abroad, he said.

"Corporate profits from overseas have been falling over the past few years, while at the same time they've continued to rise domestically,'' Faucher said. "It's because of better economic conditions in the United States than we've had overseas."

In the near term, "profits are going to remain under pressure," he said. "We've seen the dollar strengthen further in the first quarter so that's going to be a drag, and growth is still soft" in places like Europe.

From Here's More Proof the U.S. Economy Is Beating the Rest of the World - Bloomberg Business

 

[Víðarr]

This New Indicator Shows There's No Bubble Forming in U.S. Housing

When a parking space in Manhattan costs $136,000 and only 15 percent of San Francisco's homes are affordable for the middle class, it's easy to worry that another housing bubble is around the corner.

The vast majority of American homeowners have little to fear: A new gauge from Nationwide Insurance in Columbus, Ohio, suggests the national market is in its best shape since 2001 and there's no reason to fear a national downturn, no less a bursting bubble.

In its first data release, the national Leading Index of Healthy Housing Markets rose to 109.8 in the fourth quarter. Values greater than 100 indicate a robust industry. The index uses local data in 373 metropolitan statistical areas that are underlying drivers of the housing market, including measures on employment changes, demographics and the mortgage market.

When it comes to predicting bubbles, Nationwide's data is worthy of your attention. It accurately showed signs of unraveling in early 2005, long before the S&P/Case Shiller index of home prices peaked at the end of 2006 .

The housing market may not improve by leaps and bounds this year, and that's exactly why Americans should feel good, David Berson, Nationwide's chief economist said.

"There are a lot of markets that are probably growing less rapidly than people would like, but that means they're sustainable, and in the Goldilocks sense they're just right," said Berson. "It's difficult — if you're only growing modestly — to build up imbalances that cause the growth to end, and that's what we're seeing in most of the MSAs today."

Pittsburgh, Cleveland and Philadelphia were ranked the healthiest cities. Rock-bottom was Bismarck, North Dakota.

"In Bismarck, the booming-ness is being caused mostly by good economic fundamentals," Berson said. "Still, prices are going up there at an unsustainable rate, and that's why it gets downgraded in our rankings."

The surge in property values in Bismarck is a case in point for Berson's biggest negative risk for housing this year: Home prices that far outpace income growth.

"Really the only concern I have is that home prices continue to grow too rapidly and make more parts of the country unaffordable," he said.

Stagnant wage gains have been a thorn in the side of the U.S. economy since the expansion began, with the latest figures showing paychecks are growing at a pace that matches the average since we put the recession behind us in June 2009.

Set those pesky income data aside, though, and it's easy to see why housing is on track for stable, if not awe-inspiring, advances this year. And that's in no small part due to the impressive job gains of late, Berson said.

"Because the jobs numbers in almost all of the U.S. picked up strongly in the second half of last year, the index looks pretty good almost everywhere."

 

[Víðarr]

U.S. Oil Imports From OPEC Have Plunged to a 28-Year Low

The cartel's struggle for market share isn't going so well

America is the world's biggest oil customer, and OPEC is losing its business—fast.

U.S. imports of oil and petroleum products from OPEC have fallen to a 28-year low, according to data from the Energy Information Administration. The U.S. is pumping more of its own oil, and relying less on OPEC imports than any time since April 1987.

U.S. Imports of OPEC Oil and Petroleum Products

In the past six years, U.S. production has increased dramatically, catching global markets off-guard and contributing to the crash in oil prices. Last year, the U.S. surpassed Saudi Arabia to become the world's biggest oil producer.

America's new oil, plus rising imports from Canada, has helped cut OPEC imports by more than half.

Here's another way to look at the data. The chart below shows a close-up of the past 10 years. Each line represents a calendar year of U.S. imports from OPEC. 2014 stands alone in blue—with by far the lowest volume of imports in the decade shown.

10 Years of OPEC Imports Stacked

From U.S. Oil Imports From OPEC Have Plunged to a 28-Year Low - Bloomberg Business

 

[Víðarr]

In the first quarter of every year, we see weak growth due to poor weather (though this year a global slowdown and strong USD aren't helping either).

U.S. private payrolls, factory data point to weak economic growth

U.S. private employers added the smallest number of workers in more than a year in March and factory activity hit a near two-year low, fresh signs that economic growth slowed significantly in the first quarter.

Activity braked in the first quarter, held back by bad weather, a strong dollar, weaker overseas demand and a now-settled labor dispute at the country's busy West Coast ports.

"The U.S. economic recovery is continuing to leak momentum. Growth is expected to slow to a crawl in the first quarter," said Millan Mulraine, deputy chief economist at TD Securities in New York.

The ADP National Employment Report on Wednesday showed that private payrolls increased by 189,000 jobs last month, the smallest gain since January 2014.

That was well below economists' expectations for an increase of 225,000. Manufacturing payrolls declined for the first time since January of last year.

The ADP report, which is jointly developed with Moody's Analytics, was released ahead of the government's more comprehensive employment report on Friday.

"There are some good reasons to think that the job growth has slowed, that we're not going to see monthly job gains of 300,000 for a while," said Mark Zandi, chief economist of Moody's Analytics.

While the ADP report is not a very good predictor of nonfarm payrolls, it signals softness in job growth. Employers likely added 245,000 to their payrolls last month after hiring 295,000 workers in February, according to a Reuters survey of economists.

In a separate report, the Institute for Supply Management (ISM) said its national factory activity index fell to 51.5 last month, the lowest reading since May 2013, from 52.9 in February.

A reading above 50 indicates expansion in the manufacturing sector. It was the 28th consecutive headline reading at or above 50. The new orders index eased to 51.8 last month from 52.5 in February, and the employment index fell to 50 from 51.4, both also at 22-month lows.

U.S. stocks fell, while prices for U.S. government debt rose after the data. The dollar was lower against the euro and yen.

WEAK CONSTRUCTION SPENDING

Manufacturing has been hurt by a strong dollar and slower demand in Europe and Asia. The dollar has gained 12 percent against the currencies of the main U.S. trading partners since June of last year.

Multinational corporations such as technology giant IBM (IBM.N), semiconductor maker Intel Corp (INTC.O), industrial conglomerate Honeywell (HON.N) and Procter & Gamble (PG.N), the world's largest household products maker, have warned that the dollar will hurt their profits this year.

In addition, lower crude prices have squeezed profits for oil companies, prompting some to either postpone or scrap capital expenditure programs.

The sector, which accounts for about 12 percent of the economy, continues to deal with supply chain disruptions created by the now-resolved labor dispute at the West Coast ports.

Separately on Wednesday, the Commerce Department said construction spending dipped 0.1 percent to an annual rate of $967.2 billion. January's outlays were revised to show a 1.7 percent decline instead of the previously reported 1.1 percent drop.

That could see economists further mark down their first-quarter growth forecasts. Estimates for first-quarter gross domestic product range between a 0.8 percent and 1.2 percent annual pace. The economy expanded at a 2.2 percent rate in the fourth quarter.

Construction spending in February was restrained by a 0.8 percent drop in public construction outlays.

Spending on federal government projects jumped 9 percent, but that was offset by a 1.6 percent plunge in state and local government outlays - the largest portion of the public sector segment.

Spending on private construction projects was up 0.2 percent as a rise in non-residential outlays made up for a decline in spending on home building.

Private residential construction spending fell 0.2 percent, likely due to the disruption from cold and snowy weather in the second half of the month.

From U.S. private payrolls, factory data point to weak economic growth| Reuters


But then, it always bounces back...


U.S. factory activity at five-month high in March: Markit

Growth in the U.S. manufacturing sector rose to a five-month high in March as output and employment gained, according to an industry report released on Wednesday.

Financial data firm Markit said its final U.S. Manufacturing Purchasing Managers' Index rose to 55.7 in March from 55.1 in February and to its highest since October, when the PMI was 55.9. It also came above the preliminary reading of 55.3.

A reading above 50 indicates growth in the sector.

"The U.S. manufacturing sector is clearly regaining momentum after a slow start to 2015," said Tim Moore, senior economist at Markit.

"Job creation has remained resilient in recent months, and falling raw material costs continue to support operating margins."

The index's output component rose to 58.8 last month from 57.3 in February and better than the flash reading of 58.2.

The index measuring employment growth rose in March to 53.8, just over the preliminary 53.7 reading and above the final 52.8 in February.

Input prices fell at the fastest pace since June 2009, Markit data showed.

From U.S. factory activity at five-month high in March: Markit| Reuters

Except this trend to be cyclical. Weak first quarter growth, strong growth for the remaining three quarters.

Overall the US economy is strong and based on solid fundamentals, we're back.

 

[F-22Raptor]

King Dollar Reaffirms Its Global Supremacy

Proportion of dollars in global foreign-exchange holdings has risen to its highest level in six years


The proportion of dollars in global foreign-exchange holdings has risen to its highest level in six years, cementing the greenback’s role in the center of the financial system.

Central banks held 62.9% of their reserves in dollars at the end of the fourth quarter, up from 62.3% in the third quarter and marking the highest level since 2009, according to data released Tuesday by the International Monetary Fund. The share held in euros fell to 22.2%, the lowest allocation in 13 years.

The figures show how central banks have ceased efforts to diversify their foreign-exchange reserves away from the dollar amid a plunge in the value of the euro. Because central banks with their large reserves wield unrivaled influence in currency markets, their shift back toward the dollar gives many investors confidence in the greenback’s rally.

In the first quarter, the dollar notched its biggest quarterly percentage gain against the euro since the inception of the common currency in 1999, up 13%. The greenback is trading at 12-year highs against the euro. Late Tuesday in New York, the euro bought $1.0735, compared with $1.0834 Monday.

“If you take a step back and look at the big picture, you see that the dollar is the only true reserve currency out there,” said Jen Nordvig, a managing director at Nomura.

Central banks piled into the euro in the years following its launch, causing some observers to question whether the euro could challenge the dollar’s status as the world’s top reserve currency. The euro’s share in global foreign-exchange reserves hit a peak of nearly 28% in the third quarter of 2009.

The currency lost some appeal in the years following the eurozone’s debt crisis in 2010, when some investors feared the monetary union could disintegrate. Worries about the eurozone’s fate diminished after the European Central Bank pledged to do whatever it takes to protect the union and the currency.

The ECB’s latest moves, however, have proved much more alarming to holders of euros.

The central bank lowered the interest rate on deposits held with it to below zero last June for the first time in history, as it tried to head off a recession. On March 9, the ECB began large-scale purchases of bonds, known as quantitative easing. By buying bonds, the central bank injects euros into the financial system, driving down both the currency’s value and yields on eurozone debt in hopes of fostering lending and spurring economic activity.

Some eurozone bonds are trading at negative yields, which means that investors pay for the privilege of lending money.

“For a while, it may have looked like the eurozone was a safe environment for reserve managers to move into,” said Robert Tipp, chief investment strategist at Prudential Fixed Income, which oversees some $500 billion in assets. But “the mix of negative interest rates and quantitative easing has been quite a potent one.”

With central banks seeking to reduce exposure to the euro’s negative interest rate, few markets offer the “breadth and depth to support the size of their investments besides the dollar,” Mr. Tipp said.

Some analysts cautioned that the latest data show the shift out of euros and into dollars occurring at a slower pace than in the previous quarter, indicating that further gains in the dollar may not be as sharp as they have been in past months. The holdings disclosed in the IMF report don’t include China, which holds the world’s largest currency reserves and doesn’t disclose the composition of its assets.

David Woo, head of global rates and currencies at Bank of America Merrill Lynch in New York, believes the euro’s decline is likely to moderate. He expects the euro to fall to one dollar before the end of this year but not much further.

Mr. Woo said if the euro trades below parity, “it would increase pressure on China to weaken the Chinese yuan,’’ which could lead to another currency war. Mr. Woo said a weaker euro and stronger dollar would put downward pressure on commodities prices and add to deflationary risks globally.

Still, others note that the momentum of central-bank dollar buying may be hard to stop, now that it has started.

Central banks don’t take decisions lightly, said Christopher Sullivan, who oversees $2.45 billion as chief investment officer at the United Nations Federal Credit Union in New York. “Reserve managers are put off by negative interest rates in the euroland. I think the trend of diversifying away from the euro will continue.”

Central banks don’t take decisions lightly, said Christopher Sullivan, who oversees $2.45 billion as chief investment officer at the United Nations Federal Credit Union in New York. “Reserve managers are put off by negative interest rates in the euroland. I think the trend of diversifying away from the euro will continue.”

King Dollar Reaffirms Its Global Supremacy - WSJ

 

[Víðarr]

King Dollar Reaffirms Its Global Supremacy

Proportion of dollars in global foreign-exchange holdings has risen to its highest level in six years


The proportion of dollars in global foreign-exchange holdings has risen to its highest level in six years, cementing the greenback’s role in the center of the financial system.

Central banks held 62.9% of their reserves in dollars at the end of the fourth quarter, up from 62.3% in the third quarter and marking the highest level since 2009, according to data released Tuesday by the International Monetary Fund. The share held in euros fell to 22.2%, the lowest allocation in 13 years.

The figures show how central banks have ceased efforts to diversify their foreign-exchange reserves away from the dollar amid a plunge in the value of the euro. Because central banks with their large reserves wield unrivaled influence in currency markets, their shift back toward the dollar gives many investors confidence in the greenback’s rally.

In the first quarter, the dollar notched its biggest quarterly percentage gain against the euro since the inception of the common currency in 1999, up 13%. The greenback is trading at 12-year highs against the euro. Late Tuesday in New York, the euro bought $1.0735, compared with $1.0834 Monday.

“If you take a step back and look at the big picture, you see that the dollar is the only true reserve currency out there,” said Jen Nordvig, a managing director at Nomura.

Central banks piled into the euro in the years following its launch, causing some observers to question whether the euro could challenge the dollar’s status as the world’s top reserve currency. The euro’s share in global foreign-exchange reserves hit a peak of nearly 28% in the third quarter of 2009.

The currency lost some appeal in the years following the eurozone’s debt crisis in 2010, when some investors feared the monetary union could disintegrate. Worries about the eurozone’s fate diminished after the European Central Bank pledged to do whatever it takes to protect the union and the currency.

The ECB’s latest moves, however, have proved much more alarming to holders of euros.

The central bank lowered the interest rate on deposits held with it to below zero last June for the first time in history, as it tried to head off a recession. On March 9, the ECB began large-scale purchases of bonds, known as quantitative easing. By buying bonds, the central bank injects euros into the financial system, driving down both the currency’s value and yields on eurozone debt in hopes of fostering lending and spurring economic activity.

Some eurozone bonds are trading at negative yields, which means that investors pay for the privilege of lending money.

“For a while, it may have looked like the eurozone was a safe environment for reserve managers to move into,” said Robert Tipp, chief investment strategist at Prudential Fixed Income, which oversees some $500 billion in assets. But “the mix of negative interest rates and quantitative easing has been quite a potent one.”

With central banks seeking to reduce exposure to the euro’s negative interest rate, few markets offer the “breadth and depth to support the size of their investments besides the dollar,” Mr. Tipp said.

Some analysts cautioned that the latest data show the shift out of euros and into dollars occurring at a slower pace than in the previous quarter, indicating that further gains in the dollar may not be as sharp as they have been in past months. The holdings disclosed in the IMF report don’t include China, which holds the world’s largest currency reserves and doesn’t disclose the composition of its assets.

David Woo, head of global rates and currencies at Bank of America Merrill Lynch in New York, believes the euro’s decline is likely to moderate. He expects the euro to fall to one dollar before the end of this year but not much further.

Mr. Woo said if the euro trades below parity, “it would increase pressure on China to weaken the Chinese yuan,’’ which could lead to another currency war. Mr. Woo said a weaker euro and stronger dollar would put downward pressure on commodities prices and add to deflationary risks globally.

Still, others note that the momentum of central-bank dollar buying may be hard to stop, now that it has started.

Central banks don’t take decisions lightly, said Christopher Sullivan, who oversees $2.45 billion as chief investment officer at the United Nations Federal Credit Union in New York. “Reserve managers are put off by negative interest rates in the euroland. I think the trend of diversifying away from the euro will continue.”

Central banks don’t take decisions lightly, said Christopher Sullivan, who oversees $2.45 billion as chief investment officer at the United Nations Federal Credit Union in New York. “Reserve managers are put off by negative interest rates in the euroland. I think the trend of diversifying away from the euro will continue.”

King Dollar Reaffirms Its Global Supremacy - WSJ

But, but the Chinese on PDF keep saying the dollar is dead



Nope. Long live King dollar (just stop being so damn strong!!!).

 

[F-22Raptor]

But, but the Chinese on PDF keep saying the dollar is dead



Nope. Long live King dollar (just stop being so damn strong!!!).

It's not just here, I see it all the time on the net. It gets old after awhile.

 

[Víðarr]

U.S. jobless data boosts labor market picture; trade deficit narrows

The number of Americans filing new claims for unemployment benefits unexpectedly fell last week, suggesting the labor market continues to expand at a solid clip even as economic growth has stalled.

Sustained labor market strength supports views that the sharp slowdown in activity is probably temporary. A host of factors ranging from bad weather to a strong dollar has sucked momentum from the economy in the first quarter.

"Today’s report reinforces our view that labor market conditions continue to improve despite recent disappointments in a number of indicators related to GDP growth," said Daniel Silver, an economist at JPMorgan in New York.

Initial claims for state unemployment benefits dropped 20,000 to a seasonally adjusted 268,000 for the week ended March 28, the Labor Department said on Thursday. That was the lowest level since January.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 14,750 to 285,500 last week.

The bullish labor market tone was also underscored by signs that more people are coming off the unemployment benefits rolls.

The number of people still receiving benefits after an initial week of aid fell 88,000 to 2.33 million in the week ended March 21, the lowest reading since December 2000.

The strong labor market should keep the Federal Reserve on track to start raising interest rates this year.

The dollar was weaker against a basket of currencies, while prices for U.S. Treasury debt fell. U.S. stocks opened higher.

While the claims data has no bearing on Friday's March employment report as it falls outside the survey period, it should help allay fears of a long-lasting moderation in growth.

Nonfarm payrolls likely increased 245,000 last month, with the unemployment rate holding steady at a more than 6-1/2-year low of 5.5 percent, according to a Reuters survey of economists.

The economy, which has been hampered by weaker global demand and a now-settled labor dispute at the West Coast ports, as well as a strong dollar and a harsh winter, also got a boost from an unexpected rise in factory orders in February.

In a separate report, the Commerce Department said new orders for manufactured goods increased 0.2 percent, ending six straight months of declines. Orders excluding transportation rose 0.8 percent, the biggest rise in eight months.

First-quarter growth estimates range between a 0.6 percent and 1.7 percent annual pace. The economy grew at a 2.2 percent pace in the fourth quarter.

The growth estimates, however, could be raised as another report from the Commerce Department showed the trade deficit narrowed 16.9 percent to $35.4 billion in February, the smallest since October 2009.

Economists had forecast the trade deficit slipping to $41.2 billion. When adjusted for inflation, the deficit narrowed to $50.8 billion in February from $54.6 billion the prior month.

But the smaller trade deficit is probably temporary given a bullish dollar and weaker global demand.

"We will be looking for imports to pick up in the coming months, as consumer spending gains some momentum in the midst of rising employment levels," said Anthony Karydakis, chief economic strategist at Miller Tabak in New York.

The West Coast ports dispute appears to have slowed the flow of imports and exports. The buoyant dollar, sluggish global demand as well as lower crude oil prices also likely impacted the trade balance in February.

In February, imports tumbled 4.4 percent to $221.7 billion, the lowest since April 2011. Imports of petroleum products were the lowest since September 2004, with the average import price for crude oil at a near six-year low.

Exports fell 1.6 percent to $186.2 billion in February, the smallest since October 2012.

Exports to Canada and Mexico - the main U.S. trading partners - fell in February. Exports to China tumbled 8.9 percent, while those to the European Union were unchanged.

Imports from China plunged 18.1 percent, pushing the politically sensitive U.S.-China trade deficit down 21.2 percent to $22.5 billion.

From U.S. jobless data boosts labor market picture; trade deficit narrows| Reuters

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The Spring slowdown will be temporary, even with tepid overseas growth the US outlook is still strong.

 

[Víðarr]

Not necessarily about the US economy, it will be as the effects of renewables change the US energy picture, but I thought this was interesting none-the-less.

Obama plugs program to train veterans for solar industry jobs

President Barack Obama on Friday unveiled an expansion of U.S. government efforts to train military veterans for jobs in the solar power industry during a visit to Utah.

The administration announced a new goal of training 75,000 people to enter the solar work force by 2020. That is an increase from a goal announced last year of training 50,000 workers by the same deadline.

Many of those workers would be veterans, administration officials said.

The Department of Defense plans to have "Solar Ready Vets" programs at 10 bases across the country to train military members who are returning to civilian life for solar jobs.

"It's going to train transitioning military personnel for careers in this growing industry," Obama said of the program during remarks at Hill Air Force Base in Utah, standing near a set of solar panel installations.

Officials declined to provide a figure for what the programs would cost.

Obama plugs program to train veterans for solar industry jobs| Reuters

On Long-Island

At Nellis AFB

US Solar Potential

Increase in Solar Instillation by State in 2014

 

[Víðarr]

A strengthening USD and the weather are the biggest risks for the US economy right now. As the weather warms up, we'll see increased employment, consumer spending, construction, home sales and just about everything else.

U.S. jobless claims data point to strengthening labor market

The number of Americans filing new claims for jobless benefits rose less than expected last week and the four-week moving average of claims hit its lowest level since 2000, suggesting an abrupt slowdown in job growth in March was likely a fluke.

Initial claims for state unemployment benefits increased 14,000 to a seasonally adjusted 281,000 for the week ended April 4, the Labor Department said on Thursday. It was the fifth straight week that claims remained below 300,000, a threshold that is associated with a strengthening labor market.

"The claims data provide no confirmation of the March employment slowdown," said John Ryding, chief economist at RDQ Economics in New York.

U.S. Treasury debt yields rose on the data and also as Greece's 450 million euro loan payment to the International Monetary Fund reduced safety bids for government debt. U.S. stocks edged up at the open while the dollar rose against a basket of currencies.

Job growth slowed sharply in March, with nonfarm payrolls increasing by only 126,000, ending a 12-month stretch of employment gains above 200,000. But with the weakness mostly concentrated in the weather-sensitive leisure and construction sectors, economists downplayed the slowdown.

Last week's tepid employment report joined weak consumer and business spending, industrial production and housing starts data in suggesting the economy grew at a sub-1 percent annual rate in the first quarter.

Activity has been hit by a harsh winter, which is estimated to have chopped as much as seven-tenths of a percentage point from first-quarter growth. A now-settled labor dispute at normally busy ports on the West Coast, softer global demand and a stronger dollar also have weighed on the economy.

Economists had forecast claims rising to 285,000 last week.

A Labor Department analyst said there was nothing unusual in the state-level data. Claims tend to be volatile around Easter because of the shifting nature of the holidays.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, fell 3,000 to 282,250 last week, the lowest level since June 2000.

"If claims remain this low, and we think they might even head lower in the coming weeks, it will be hard to claim there is persistent weakness in the labor market," said Guy Berger, an economist at RBS in Stamford Connecticut.

The Federal Reserve is watching the jobs market as it contemplates raising interest rates this year.

The claims report also showed the number of people still receiving benefits after an initial week of aid fell 23,000 to 2.30 million in the week ended March 28. That was the lowest level since December 2000.

The labor market strength was underscored by a report on Tuesday showing job openings surging to a 14-year high in February and less competition for jobs among the unemployed.

A separate report on Thursday from the Commerce Department showed wholesale inventories rose in February as sales remained weak, suggesting wholesalers might have little incentive to aggressively restock warehouses in coming months.

Stocks at wholesalers gained 0.3 percent after advancing 0.4 percent in January. Sales fell 0.2 percent in February after declining 3.6 percent the prior month.

At February's sales pace it would take wholesalers 1.29 months to clear shelves, unchanged from January.

U.S. jobless claims data point to strengthening labor market| Reuters

 

[Hasbara Buster]

AIIB and BRICS Bank Pose Threat to Bretton-Woods Dollar System – Engdahl

The rapid rise of the AIIB was foreseeable: the world's emerging economies got really frustrated when the US-dominated Bretton Woods institutions disregarded them as a "group of banana republics," F. William Engdahl noted.

China-Led Development Bank Establishes New Multipolar Economic Order

Washington's policy makers have been ignoring the needs of the world's emerging economies for too long, treating them as a group of banana republics, noted F. William Engdahl, a historian and researcher, adding ironically – "they haven't had their eyes checked since 1944 apparently."

"At the 2014 BRICS summit in Fortaleza, Brazil, the five heads of state declared bluntly, "We remain disappointed and seriously concerned with the current non-implementation of the 2010 International Monetary Fund reforms, which negatively impacts on the IMF's legitimacy, credibility and effectiveness," the historian pointed out.

Indeed, in 2010 China, Brazil and other fast-emerging countries proposed a reform pledging to double the funds of the IMF in exchange for greater voting rights for such states as China, Russia, India, Brazil and some other countries.

Russia to Play Big Role in China-Led Asian Infrastructure Investment Bank

The emerging powers consider it "manifestly absurd" that IMF voting rights on the Executive Board give France, with a $3 trillion GDP far more voting weight than China with its $10 trillion GDP, or provide Belgium ($500 billion GDP) with greater voting shares than Brazil ($2.2 trillion GDP).

Remarkably, Washington retains a blocking veto share of votes and "is holding on like a pit bull to the old bylaws," the researcher noted.

However, the US Congress refused to reconsider the established status quo of the US-led Bretton Woods institutions and blocked the reform.

Thus far, China and other fast-growing economies decided to create an entirely new global monetary architecture with the Asian Infrastructure Investment Bank (AIIB) at the centerpiece.

China's AIIB Boom Shows US Influence Over Allies Has Limits

The very next move made by the US has once again demonstrated Washington's foreign policy is being run by elites incapable of flexible response: by fiercely opposing the AIIB they "have royally shot themselves in both feet," remarked the author.

The fact that the China-led initiative received global support has shown the impotence of the US-dominated Bretton Woods system.

As BRICS threatens to become an independent global actor, Washington has recently tried to carry out "its usual Color Revolution organized opposition protests," this time against Brazilian President Dilma Rousseff. Alas, it seems such a method is not working as it used to, the researcher pointed out.

Indeed, the AIIB and the BRICS Development Bank poses the greatest threat to the American dollar system and Washington's control over global financial flows since 1944. However, "peace and cooperation is a far more useful way to resolve affairs among civilized nations," the author emphasized.

Read more: http://sputniknews.com/analysis/20150410/1020734705.html#ixzz3Wx0vcqgN

 

[RabzonKhan]

Report: Ports contribute $4.6T to US economy

By Keith Laing - 04/21/15

Ports contribute $4.6 trillion to the U.S. economy, according to a new study released on Tuesday by the American Association of Port Authorities’ (AAPA) .

The report, which was conducted by Lancaster, Pa.-based Martin Associates, found that the economic value of ports rose by 43 percent between 2007 and 2014, despite recurring labor issues that have often threatened the flow of cargo packages into the U.S.

AAPA President Kurt Nagle said Tuesday that the finding show the need for more federal investment in land connections to ports like trucking and freight railways.

“On the land-side alone, AAPA’s U.S. member ports have identified at least $28.9 billion in needed investments by 2025,” Nagle said in a statement. “These necessary road, rail, bridge and tunnel improvements are crucial to enable our seaports to efficiently handle their expected cargo volumes, continue providing dramatic economic and jobs impacts, and enhance America’s international competitiveness.”
Congress passed a $12.3 billion water infrastructure measure in 2013, but the flow of cargo packages was interrupted earlier this year at 29 ports along the West Coast by a labor standoff that required federal intervention.

Lawmakers are debating an extension of a surface transportation funding measure that is scheduled to expire in May, but they are struggling to come up with a way to pay for a new round of spending for the infrastructure.

 

[Hasbara Buster]

The Dwindling US Economy

By Paul Craig Roberts

April 29, 2015 "Information Clearing House" - The announcement today (April 29) of a barely positive GDP first quarter 2015 growth rate of 0.2 percent (two-tenths of one percent) is an intentional exaggeration.

Today’s GDP report is the “advance estimate.” There will be two revisions, with the first occurring in one month on May 29.

Although the “consensus estimate,” which is Wall Street’s estimate, declined dramatically over the past month, the consensus estimate was for 1.0 percent.

The BEA’s advance estimate bears the burden of impact on financial markets even though it is the least reliable estimate. Subsequent revisions receive much less attention. Because of its market impact, the advance estimate is fudged by the Bureau of Economic Affairs (BEA) in order not to upset financial markets keyed to the consensus forecast.

All indications are that the first quarter experienced negative GDP growth, that is, a decline from the previous quarter. However, if BEA reported a negative GDP when the financial markets were relying on positive real growth, the government’s Plunge Protection Team might be unable to prevent a substantial market decline.

Therefore, the BEA in its advance estimate reported a barely positive result that kept GDP out of negative territory. This gives financial markets a month to undergo an orderly reduction prior to the first and then second revisions of the advance estimate, or simply to forget the poor performance altogether until the second quarter advance estimate.

Maintaining stability and not shocking financial markets is now ingrained in US economic reporting. No government statistical department wants to be blamed for crashing the financial markets. So bad news leaks in slowly if at all.

Indications are that the second quarter 2015 will also have negative GDP growth, that is, a further decline. As John Williams (shadowstats.com) is likely correct that there has been no recovery from the prior recession, just bottom bouncing with stock and bond markets driven by the Fed’s outpouring of liquidity, the first half of 2015 will signal a second downturn in the US economy which is collapsing as a result of jobs offshoring and a deregulated financial system.

The real economic outlook, which will emerge from BEA in a month or two, should be obvious to anyone who had the introductory course to macroeconomics. The economy depends on consumer spending. Consumers have two ways of spending more. One way is from rising incomes. The other way is from rising consumer debt.

With the advent of jobs offshoring, real median family incomes ceased to rise. The ability of consumers to substitute larger debt burdens for the missing growth in their real incomes was used up by Federal Reserve chairman Alan Greenspan’s policy of expanding consumer debt in order to fill in for the missing growth in consumer income. Today consumer debt levels are too high for consumers to incur more debt. The only element of consumer debt showing an increase is student loans.

The offshored jobs were not replaced with the promised “New Economy” jobs. No one has seen any sign of the mythical New Economy jobs. The “New Economy” is the transformation of the once powerful US economy into a third world labor force where new jobs exist only in domestic non-tradable services (services that cannot be exported) such as retail clerks, hospital orderlies, waitresses, and bartenders. As there are not enough of these jobs to go around, the labor force participation rate has dropped sharply.

The United States is an economic basket case. Washington has given away the US economy to Asian countries with lower labor costs. The owners and mangers of capital have benefitted, but the vast bulk of Americans have suffered. As capital’s owners and managers are not sufficiently numerous to drive the economy with their expenditures, the fabled American economy is no more.

What will bring the US economy out of the second leg of the downturn? If massive federal budget deficits and zero interest rates could not correct the first leg of the downturn, what does fiscal and monetary policy have left in its arsenal?

  The Dwindling US Economy    :  
Information Clearing House - ICH

 

[Transhumanist]

The Comeback of American Consumers

The Federal Reserve's latest statement contained an unusual hint about their optimism for better economic growth this year.

"Consumer sentiment remains high," the statement said, breaking from the usual drone about recent economic trends.

Sentiment — despite its impressive levels of late — is often too fickle an indicator for central bankers to put much stock in, and its correlation to spending isn't perfect, so the context of the Fed's reference is important. Real disposable incomes rose 6.2 percent in the first quarter, the most in more than two years. Yet so far, consumers are banking much of their cash.


Fed policy makers' reference to upbeat sentiment suggests their view is that "consumption is going to rebound," said Michael Gapen, chief U.S. economist at Barclays Plc. Put another way, all these high animal spirits are going to pay out in the form of shopping sprees.

Here are three indicators to watch for the consumer comeback.

1. Personal spending
Personal consumption expenditures as measured by the Bureau of Economic Analysis has under-performed so far this year, causing some to question whether the windfall from lower prices at the pump was stashed away for good.

The saving rate, or the share of disposable income that the consumer socks away, stands at 5.3 percent as of March. While down from February's 5.7 percent, which was the highest in more than two years, it was the third-best rate since the end of 2012.

The BEA's figure on consumption provides a more complete picture of the purchases that make up about 70 percent of the economy, since it captures spending on services in addition to retail sales. After adjusting for inflation, which generates the figures used to calculate gross domestic product, household spending increased 0.3 percent in March after little change in the prior month. That brought the year-over-year rate down to 2.7 percent from readings of 3.4 percent and 3 percent in January and February, respectively.

"I think Fed officials were disappointed with the pace of consumer spending in the first quarter,'' said Dana Saporta, an economist at Credit Suisse in New York. "In order to feel confident'' that it is time to raise interest rates, "they would have to see a rebound sometime soon.''

2. Autos
Vehicle sales in April had a tough time keeping up with the near-breakneck clip of the prior month, industry data showed Friday. Consumers purchased cars and trucks at a 16.46 million annualized rate last month, in line with the average for all of 2014, which was the best performance in eight years. Sales slowed a bit in weather-battered January and February before climbing to a 17.05 million annualized rate in March that was the third-best since 2006.

Auto sales have been a rare reliable bright spot in consumer spending. Fed officials will probably remain comfortable with this industry's data as long as purchases hold above the 16 million rate of annual purchases that the U.S. has seen over the past year.

3. Homes
Property sales have been a mixed bag so far in 2015, with new-home purchasesplummeting unexpectedly in March and sales of previously owned homes showing a spirited rebound after two depressing readings to start the year.

While tighter credit conditions after the last recession and limited inventories have held some potential buyers back, recent mortgage purchase applications hint at a solid spring rebound for the industry.

Americans' filings with lenders have shown a robust post-winter jump, with the index holding at 205.4 in the week ended April 2, the highest since June 2013. The Mortgage Bankers Association gauge, which dates to 1990, has averaged 193.8 in this expansion. It reached an all-time high 529.3 in 2005 during the housing bubble.

Economists at Goldman Sachs are projecting "gradual improvement in the housing market" this year, with total (new and existing) home sales rising to 5.51 million from 5.36 million in 2014, according to an April 6 research note.

 

[Echo_419]

King Dollar Reaffirms Its Global Supremacy

Proportion of dollars in global foreign-exchange holdings has risen to its highest level in six years


The proportion of dollars in global foreign-exchange holdings has risen to its highest level in six years, cementing the greenback’s role in the center of the financial system.

Central banks held 62.9% of their reserves in dollars at the end of the fourth quarter, up from 62.3% in the third quarter and marking the highest level since 2009, according to data released Tuesday by the International Monetary Fund. The share held in euros fell to 22.2%, the lowest allocation in 13 years.

The figures show how central banks have ceased efforts to diversify their foreign-exchange reserves away from the dollar amid a plunge in the value of the euro. Because central banks with their large reserves wield unrivaled influence in currency markets, their shift back toward the dollar gives many investors confidence in the greenback’s rally.

In the first quarter, the dollar notched its biggest quarterly percentage gain against the euro since the inception of the common currency in 1999, up 13%. The greenback is trading at 12-year highs against the euro. Late Tuesday in New York, the euro bought $1.0735, compared with $1.0834 Monday.

“If you take a step back and look at the big picture, you see that the dollar is the only true reserve currency out there,” said Jen Nordvig, a managing director at Nomura.

Central banks piled into the euro in the years following its launch, causing some observers to question whether the euro could challenge the dollar’s status as the world’s top reserve currency. The euro’s share in global foreign-exchange reserves hit a peak of nearly 28% in the third quarter of 2009.

The currency lost some appeal in the years following the eurozone’s debt crisis in 2010, when some investors feared the monetary union could disintegrate. Worries about the eurozone’s fate diminished after the European Central Bank pledged to do whatever it takes to protect the union and the currency.

The ECB’s latest moves, however, have proved much more alarming to holders of euros.

The central bank lowered the interest rate on deposits held with it to below zero last June for the first time in history, as it tried to head off a recession. On March 9, the ECB began large-scale purchases of bonds, known as quantitative easing. By buying bonds, the central bank injects euros into the financial system, driving down both the currency’s value and yields on eurozone debt in hopes of fostering lending and spurring economic activity.

Some eurozone bonds are trading at negative yields, which means that investors pay for the privilege of lending money.

“For a while, it may have looked like the eurozone was a safe environment for reserve managers to move into,” said Robert Tipp, chief investment strategist at Prudential Fixed Income, which oversees some $500 billion in assets. But “the mix of negative interest rates and quantitative easing has been quite a potent one.”

With central banks seeking to reduce exposure to the euro’s negative interest rate, few markets offer the “breadth and depth to support the size of their investments besides the dollar,” Mr. Tipp said.

Some analysts cautioned that the latest data show the shift out of euros and into dollars occurring at a slower pace than in the previous quarter, indicating that further gains in the dollar may not be as sharp as they have been in past months. The holdings disclosed in the IMF report don’t include China, which holds the world’s largest currency reserves and doesn’t disclose the composition of its assets.

David Woo, head of global rates and currencies at Bank of America Merrill Lynch in New York, believes the euro’s decline is likely to moderate. He expects the euro to fall to one dollar before the end of this year but not much further.

Mr. Woo said if the euro trades below parity, “it would increase pressure on China to weaken the Chinese yuan,’’ which could lead to another currency war. Mr. Woo said a weaker euro and stronger dollar would put downward pressure on commodities prices and add to deflationary risks globally.

Still, others note that the momentum of central-bank dollar buying may be hard to stop, now that it has started.

Central banks don’t take decisions lightly, said Christopher Sullivan, who oversees $2.45 billion as chief investment officer at the United Nations Federal Credit Union in New York. “Reserve managers are put off by negative interest rates in the euroland. I think the trend of diversifying away from the euro will continue.”

Central banks don’t take decisions lightly, said Christopher Sullivan, who oversees $2.45 billion as chief investment officer at the United Nations Federal Credit Union in New York. “Reserve managers are put off by negative interest rates in the euroland. I think the trend of diversifying away from the euro will continue.”

King Dollar Reaffirms Its Global Supremacy - WSJ

I guess many folks here will be disappointed