Outside of an individual’s oil stock holdings, damage to the economy from the fall in oil has been pretty minimal so far. Indeed, the price cut in home heating oil and gasoline has probably outweighed the damage from lower oil prices… so far. Unfortunately, this situation may not last.
Consumer spending rose by the largest amount in nearly half a year even as incomes remain stagnant. According to a new report by the Commerce Department, consumer spending rose 0.4% in March, which is double the February rate. While a sharp rise, it falls short of the 0.5% growth rate that economists had expected.
Adjusted for inflation, the growth was even lower: 0.3%, up from the post-inflation flat rate of the prior month.
Consumers today have easy access to a wide range of products and services. The task of choosing between hundreds of products or packages each having dozens of different fees however, is the opposite of easy.
The US dollar has yet to stabilize against the euro and sterling, although it has steadied against the dollar-bloc currencies and yen. The euro bid through the $1.10 level on the back of stronger month supply growth and the first growth in private credit in two years. After finishing yesterday’s North American session on its highs, fully recovering from the disappointing Q1 GDP, sterling has extended its gains to $1.54. Since the April 13 low near $1.4565, sterling has appreciated by 5.8% or nearly 8.5 cents.
We are at the beginning of a second big transition. Our economies, our work and our lives will change hugely as we slowly adjust to the new demands of a technological age that could go one of two ways: towards a brutalised form of capitalism, or an inclusive one. It is a massive political responsibility for world leaders, but a neglected one.
The US corporate earnings season is almost half over. Fears that the US S&P 500 would report the first decline in income since 2009 have eased.
One of the key reasons is that operating margins appear to have improved more than anticipated. Many had seemed to exaggerate the impact of the dollar’s appreciation. It is true that many corporations have cited the dollar’s rise as a factor dampening the value of their foreign sales. However, many analysts have confused this with a comprehensive evaluation.
The US dollar remains on the defensive even after both Japan and the UK disappoint. Japan reported an unexpected 1.9% decline in March retail sales. The UK’s initial estimate of Q1 15 GDP was 0.3%, below expectations for a 0.5% expansion, and half the pace of Q4 14 growth.
The market’s response has been limited. The dollar’s trading range is a little more than 10 pips around JPY109.00. Sterling initially fell about half a cent on the disappointment but quickly resurfaced back above the $1.5200 level.
Over the past decade, many developing countries have made substantial progress toward reducing poverty, and remittances sent by migrant workers have hugely contributed to this progress.
With several central bank meetings this week, including the Federal Reserve, and Q1 GDP figures from the UK, US and Spain, and month-end position adjustments, ahead of the May 1 holiday, it promises to be an eventful week. However, it gets off to a slow start. The US dollar is firmer, but largely confined to its pre-weekend ranges. The US dollar is trading within a range around a half a big figure against all the major currencies.
There have been three developments to note today.
A disappointing string of data challenges ideas that the US economy had returned to a growth path that was sufficiently strong enough to permit the Federal Reserve to begin normalizing monetary policy. This will culminate with the first estimate of Q1 GDP on April 29. There still seems to be some downside risk to the consensus of 1.0% annualized growth.
