The U.S. government will spend at least $1 trillion more than it collects in revenues in 2020 and will do so throughout this decade and probably beyond, according to the Congressional Budget Office (CBO). That means this year the federal government will spend $1.28 for every $1.00 it takes in. The CBO estimates that accumulated...
Category: TRENDS ON THE U.S. ECONOMIC FRONT
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HOME PRICES EDGE UP
Average home prices in major U.S. metro areas rose 3.5 percent in early January, up from 3.2 percent in December. Prices gained in each of the 20 metro areas monitored by the CoreLogic Case-Schiller U.S. National Home Price Index. December was 2019’s strongest month for home sales, up 3.6 percent. Gains are driven by continued...
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U.S. STOCK MARKET STILL UPBEAT
Yes, the markets are riding high again. Investors see the prospect of a U.S.-China trade deal and relatively strong earnings reports from major companies, as good omens that stock prices will continue to rise. Also, the percentage of stocks in the S&P 500 that are trading above their 200-day moving average – a key indicator...
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FED MAY CAP BOND YIELDS
When the U.S. economy enters a recession, the Federal Reserve cuts interest rates to spark a recovery. Over the last three downturns, the Fed has pruned rates by about 5 percent to juice recession-prone economies. With overnight rates now 1.50 to 1.75 percent, the rate-cutting tool’s impact to generate growth when the economy begins to...
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FED WITHDRAWAL WORRIES MARKETS
The Federal Reserve has opened more than $6.6 trillion in short-term loans to the repo market since September 2019 to keep interest rates low and the markets open. And although they refuse to call a spade a spade, the Fed also has been buying short-term Treasury bonds at a rate of $60 billion a month,...
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TWO PERCENT: THE NEW NORMAL
The Federal Reserve expects the U.S. economy to grow in the 2-percent range for years into the future and many economists agree. The labor force is shrinking as Baby Boomers age, curtailing the number of people available to fill jobs; older people living on savings or fixed incomes also tend to buy less. In addition,...
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U.S. ECONOMY SLOWS, MARKETS GLOW
The U.S. economy slowed in 2019 after two consecutive years of growth, according to the U.S. Department of Commerce. In 2018, the economy expanded by 2.9 percent; in 2019 overall, the rate is calculated at 2.3 percent. For the last half of 2019, the rate was 2.1 percent. Household purchases were responsible for 1.2 percent...
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EUROPE: POLICIES UNDER PRESSURE
The weakness of Europe’s economy in January has surprised analysts, but it comes as no surprise to Trends Journal subscribers. IHS Markit’s Purchasing Managers Index (PMI) for the region was stuck at 50.9 as the year began, unchanged from December. Observers had expected it to begin January at 51.2. The German economy’s strength early this...
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CHINA: BANKSTER BLUES
More banks need bailouts. China’s lax banking regulations have led to decades of bad loans, corruption, and mismanagement. Now, according to UBS Research, more than 24 of the nation’s banks need $339 billion in rescue funding to have 12.5 percent of their at-risk portfolio balanced by cash – the global standard for safe practice. Although...
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MONETARY METHADONE: REPO RESCUE TOPS $6 TRILLION
The Federal Reserve Bank of New York has pumped $6.6 trillion into major financial trading houses in the last five months through the repo market (repurchase agreement) market, according to data posted on the bank’s website. The first week of the current repo rescue was last 17 through 24 September, when the repo interest rate...