The U.S. economy grew less than forecast in the second quarter, after almost coming to a halt at the start of the year, as consumers retrenched.
Gross domestic product rose at a 1.3 percent annual rate following a 0.4 percent gain in the prior quarter that was less than previously estimated, Commerce Department figures showed today in Washington. The median forecast of economists surveyed by Bloomberg News called for a 1.8 percent increase. Household purchases, about 70 percent of the economy, climbed 0.1 percent.
Slower job and income gains raise the risk that a pickup in purchases during the remainder of 2011 will fail to materialize. The faltering economy may get another blow from spending cuts being negotiated in Congress and is one reason why Federal Reserve Chairman Ben S. Bernanke has said policy makers need to keep all options open.
Bloomberg
Market exuberance for the trillion dollar European Union bailout package waned Tuesday as global markets reconsidered Monday’s gains. The euro, after briefly gaining 2.7 percent on the dollar but closing Monday with only a 0.4 percent gain, fell another 0.7 percent by 8:30 am in New York on Tuesday, with expectations of further losses.
While the availability of emergency funding alleviates the likelihood of an immediate default, countries including Greece, Spain, and Portugal still face the prospect of severe spending cuts to meet required “austerity” targets. Economists also predict that growth in the EU will lag that of the US for the remainder of the year and into 2011.
Global stock markets are giving up some of yesterday’s gains following the news that a deal had been reached to provide nearly US$1 trillion in funding to prevent the debt crisis in Greece from spreading to other EU countries. In London and Frankfurt, leading shares fell 1.5% after gaining 5% on Monday, while in Paris they lost 2% after soaring 9% in the previous session.
Source: BBC News
Australian consumer prices rose in the fourth quarter, driving the local currency higher as investors increased bets the central bank will raise interest rates as early as next week.
The consumer price index climbed 0.5 percent from the third quarter, when it gained 1 percent, the Bureau of Statistics said in Sydney today. The median estimate of 20 economists surveyed by Bloomberg News was for a 0.4 percent increase. Prices advanced 2.1 percent from a year earlier.
Bloomberg
Japan’s exports rose for the first time since the collapse of Lehman Brothers Holdings Inc., adding to signs that the world’s second-largest economy is recovering from the global recession.
Bloomberg
The dollar fell toady as Japan reported strong growth of 1.4 percent in the third quarter increasing investor demand for higher returns.
“The Fed has committed to low rates for a long time,” said Richard Franulovich, a senior currency strategist at Westpac Banking Corp. in New York. “With the Fed out of the equation, good numbers provide the backdrop for further risk taking.”
The dollar briefly pared its decline versus the euro after the Commerce Department reported that U.S. retail sales excluding automobiles increased last month less than economists forecast. Sales advanced 0.2 percent after a 0.4 percent gain in September. The median forecast of 61 economists in a Bloomberg survey was for a 0.4 percent gain. Including autos, sales increased 1.4 percent following a 2.3 percent drop.
Bloomberg
Statistics Canada reported today that Retail Sales rose by 0.8 percent in August to $34.5 billion (USD$32.9 billion) due largely to an increase in gasoline prices and new car sales. Without gasoline and car sales included in the total, retail sales would have registered only a 0.4 percent increase.
Yahoo News
