Category: United States

Higher Oil Prices, Higher Inflation Expected in U.S.

A perfect storm of rising oil prices and limited corporate profits is leading to higher inflation expectations for 2016.  Oil prices have rebounded from their 2016 lows, rising to $38.95 a barrel on Monday morning trading. With higher oil, gas prices have already risen in the U.S., and higher prices are expected. Gas price averages have increased from their recent lows to top $2.00 per gallon, according to Gasbuddy.com, a gas price tracking company.

The Week in Review: Markets Rejoice on Fed Decision as Economy Woes Worsen

Stock markets in Asia and Europe joined America’s market in celebrating Janet Yellen’s admission that the global economy is not doing so well.

The Federal Reserve announced on Wednesday that the central bank would not raise rates more than twice in 2016, and that it would target a 0.9% Federal funds rate by the end of the year. That is down from previous guidance of 1.4%, as the Fed also downgraded its GDP growth expectations for 2016.

U.S. Unemployment Levels Crater, But Income Growth, Demand Remain Elusive

Unemployment levels have fallen to less than 7% in all 50 states, but demand for goods and services remains weak as incomes refuse to grow.

A new report by the Bureau of Labor Statistics found that unemployment fell in 28 states from December to January 2016, while non-farm payroll employment rose in 30 states and Washington D.C. The improvements helped the U.S. headline unemployment rate, which fell 0.8% from a year ago to 4.9%.

U.S. Economic Growth Weakens as Sales, Prices Fall

Economic growth is weakening in America as consumers have less money to buy things, causing retail sales and prices to fall.

The Atlanta Federal Reserve’s GDPNow model has revised downwards its 1st quarter GDP growth expectations, down from 2.2% to 1.9%, driven by weak retail sales in the United States. The GDPNow has been more accurate, and less optimistic, in predicting economic growth by using a large data set of various economic metrics, whereas the Federal Reserve’s chairs have been significantly more cheerful about America’s prospects.

Corporate Defaults Expected to Soar, Weak Consumer Data Emerges

Expectations of corporate bankruptcies and debt defaults have skyrocketed, with America’s companies struggling to stay afloat.

Credit research firm, Fitch Ratings, has increased its high yield bond default prediction for 2016 by 33%, now saying that the high yield bond market, also known as the “junk bond” market, will see default rates of 6%, significantly higher than the historical average and about 300% higher than in 2015.

Jobless Claims Fall, Services Turnover Rises

People are spending more on services and less jobless claims hint at a recovering American labor market.  Initial weekly jobless claims fell from 18,000 to 259,000, far below expectations of a 5,000 drop to 272,000. Continuing claims also fell slightly, as 2.225 million unemployed workers in the United States continue to request help, as they cannot find work. Initial claims fell to the lowest point since October 2015, after several weeks of broad increases. The 4-week moving average for initial claims fell to 267,500.

U.S. Small Business Sentiment Softens

Across America, small businesses are feeling less confident about their future businesses and the economy as a whole.  The NFIB Small Business Optimism Business Index fell 1 point to 92.9, its lowest point in two years. The survey, which asks small business owners general questions about their attitude towards their own futures and the future of the economy from various perspectives, resulted in an increasingly negative index reading from January.

Recession Signals Sound as Credit, Labor Markets Weaken

Labor market conditions and consumer credit are weakening significantly, indicating recessionary pressures are hitting the United States.

The Federal Reserve released a report on the job market, and saw that conditions for workers have worsened significantly, falling to -2.4 from -0.8 in January. That tripling of the negative read was a significant surprise, as the Fed expected steady improvement in the job market after it raised borrowing costs on Americans in December by raising its Fed funds target.

U.S. Jobs Paradox: Shouldn’t Pay Rise as Unemployment Falls?

Unemployment rates have fallen to near full-employment levels, but American workers are not getting a boost to their paychecks. Additionally, American workers are finding they have continually less bargaining power across the United States. Employers, thanks to at will employment laws and an increasing supply of educated labor, are finding it easier to fire “troublemakers” who demand raises, better working conditions, or other incentives to stay happy and productive.