Archive for the ‘Federal Reserve’ Category

Federal Reserve lowers key interest rate

Posted by Michael on October 8th, 2008

With the way the market has been moving violently lower the past couple of week, the Federal Reserve announced today it was lowering its key federal funds rate by half of a percentage point, down to 1.5%. It lowered the discount rate by the same amount, down to 1.75%.

The Fed stated that economic growth had slowed “markedly in recent months,” and that the cut was necessary.

Futures are trading higher this morning, and it looks like we should break the five day losing streak on Wall Street, and get some much needed bounces in some pretty beaten up stocks today.

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Posted in Before the Bell, Economy, Federal Reserve, Forecasts, Interest Rates, Recession No Comments »

Inflation eases a bit in April

Posted by Michael on May 14th, 2008

Despite surging food prices, inflation was actually a bit lower in April than the 0.3% inflation that we saw back in March.

According to the Labor Department, inflation moved up 0.2% in April, which was slightly under the 0.3% inflation in March. Analysts had been expecting to see inflation rise by 0.3% again in April.

If you exclude food and energy costs, then you are left with a core inflation, which was really well behaved in April, only rising by 0.1% during the month. Analysts had been expecting to see core inflation growth of 0.2% for the month.

While it is good to see that inflation is not rising as rapidly as some had thought, you have to take into account the current run up in oil prices. With oil trading up close to $127 a barrel, inflation could be getting ready to really jump. Analysts are warning that the current record high oil prices have still not be felt at the consumer level yet, and their impact could be rather dramatic.

Looking at inflation for the year, overall inflation is now running at an annual rate of 3%, compared with the 4.1%  increase that we saw in all of 2007. The Federal Reserve, which has been slashing interest rates lately in an attempt to fight off a recession, has signaled that it would more than likely pause the rate cuts in order to fight off any unwanted inflation in the months to come. The next time the Fed meets will be the third week in June, and dont expect the April numbers to lead them to change their stance and cut rates. I am sure that everyone is still waiting for the other shoe to drop on the recent run up in energy prices.

You can find a pretty nice graph of CPI inflation since 2000 over on economistblog

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Posted in Consumer Experience, Economy, Energy, Federal Reserve, Good News, Oil No Comments »

Economy is slow, but still growing

Posted by Michael on April 30th, 2008

With all the concerns that we have been hearing about a possible recession this year, it was good to see that the U.S. economy did grow during the first quarter, even if it was just bit a small amount.

According to a report from the Commerce Department today, the economy grew at 0.6% during the first quarter of the year. That is the same growth that we saw in the last quarter of 2007. While the news could have been better, it definitely could have been a lot worse. Many analysts were expecting to see growth slow to 0.5%, or even possibly lower.

We have been hearing rumblings for the past year about the looming recession on the horizon, and many thought that this would be the quarter that we saw economic growth fall into negative territory, and now there are already analysts coming out and predicting that the current second quarter will definitely see such an event. Let’s hope they are wrong once more, but the writing is definitely on the wall… but then again it has been for some time now too.

Soaring energy prices, and the continuing credit crunch that has gripped a large part of the country will continue to apply pressue to consumers. Will we get some relief in the months to come? Only time will tell. Currently oil is trading at $114, so prices would still have a long way to fall before we got back into any sort of “cheap oil” environment.

So, it could have been a lot worse. At least we are seeing growth, just really really slow growth. We will see just how today’s report impacts the expected rate cut from the Federal Reserve later today.

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Posted in Consumer Experience, Dollar, Economy, Federal Reserve, Good News, Oil, Recession No Comments »

March a tough month for employees

Posted by Michael on April 4th, 2008

unemploymentMarch was another tough month for employees, as recession fears in America led to 80,000 jobs being slashed across the country.

Looking at total unemployment, the unemployment rate for the country rose from 4.8% up to 5.1%. This could be one of the biggest signals that the country has already been contracting. This is the highest rate that the country has seen since back in September 2005 when the country was hit with massive Gulf hurricanes.

There was no one single sector that can be blamed for last month’s jumps. Unemployment rates rose in several sectors, including construction, manufacturing, retailing, financial services and various business services. On the other side of the coin, there were a couple sectors that did see some gains during the month. These included education and health care.

There is a still a pretty big debate taking lace over whether or not the country is, or at least will be, in a recession before the current situation plays itself out. Some have argued that even though GDP growth has not dropped for two consecutive quarters that the country has already slipped into a recession. Others are holding steady, and will not even mention a possible recession unless we see the true definition of a recession play itself out.

Before today’s numbers were released, analysts had been expecting to see a drop of around 50,000 jobs in March, so it was no real surprise that unemployment rose, it was just a surprise how much the number did indeed rise. This was the largest one month jump in job losses since March 2003.

Are we seeing the first signs of a true recession hitting the country? Only time will tell, but this week was the first time that Federal Reserve chairman Ben Bernanke formally stated that there was a good chance the country was headed into a formal recession. What he plans to do to fight such a possibility was not mentioned, but it led Wall Street to believe that we will be seeing more interest rate cuts later this month when the Federal Reserve meets again.

The total number of unemployed people in America is now sitting at 7.8 million and rising.

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Posted in Bad News, Consumer Experience, Economy, Employees, Federal Reserve, Forecasts, Interest Rates, Market Updates, Recession, Rumors 1 Comment »

Bernanke comments help give stocks a boost

Posted by Michael on April 2nd, 2008

ben bernankeThis morning we were seeing the markets in the red, but they were given a bit of relief following Fed Chaiman Ben Bernanke’s testimony to Congress today.

Ironically, it was Bernanke himself that had initially put the markets into the red when he stated that there was a decent chance that the U.S. economy would contract during the first half of this year. With all the recession rumors and fears floating around these days, his comments earlier were enough to spook the markets into an early sell off.

Luckily, Bernanke testified in front of Congress that we should not expect to see any additional financial institutions collapsing the way we saw Bear Stearns go down last month. After hitting a massive liquidity crisis, Bear Stearns was forced to look for help, and was bailed out by the Federal Reserve, and JP Morgan which is in the process of finalizing its purchase of the company.

It is no secret that the past 6 months have been tough on Wall Street. The credit crunch, weak dollar, and collapsing real estate market have taken their toll, but we are starting to see some signs that traders are beginning to bet that the worst has come and gone. How long the recent rebound will last (if at all) remains to be seen.

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Posted in Congress, Consumer Experience, Dollar, Economy, Federal Reserve, Forecasts, Good News, Housing, Market Updates, Recession 1 Comment »
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