Recent revisions to US GDP figures by the Commerce Department, suggest that the recession triggered in late 2007 was actually worse then previously believed. According to the latest information, the US economy actually contracted by 4.1 percent from the fourth quarter of 2007 to the second quarter of 2009. Originally, growth decline was pegged at 3.7 percent.
“We do tend to get bigger revisions at turning points in the economy,” Steven Landefeld, director of the Commerce Department’s Bureau of Economic Analysis, said in a press conference this week. On the more positive side, “in the past, we’ve tended to undershoot the recovery” as well, he said.
Source: Bloomberg
The US Commerce Department announced today that the US Gross Domestic Product (GDP) fell to an annualized rate of 2.4 percent in the second quarter, compared to 3.7 percent in the first quarter. The result is the latest in mounting evidence suggesting that the US economy is slowing.
Less than two years after receiving billions in government aid money, Fannie Mae is again turning to the taxpayer for help. This time, the mortgage finance company is asking for US$8.4 billion after losing more than US$13 billion in the first quarter of 2010. If approved, Fannie Mae and Freddie Mac together, will have received together, $145 billion with Fannie Mae’s portion set at $83.6 billion.
Fannie and Freddie are firmly entrenched in the US mortgage industry. They purchase mortgages from lenders and then repackage the debt and resell to investors. During the real estate boom prior to the recession however, Fannie and Freddie loosened their lending standards resulting in a major devaluation that left the two companies severely in debt.
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As political uncertainty grows as a result of last week’s election resulting in a “hung” parliament, the Bank of England announced that benchmark lending rates will remain at 0.5 percent. The Bank also noted the recent increase in prices and the potential for inflation, but has opted to maintain its quantitative asset purchasing targets unchanged until the economy shows greater strength.
The announcement comes in the middle of talks between David Cameron’s center-right Conservatives, and the smaller Liberal Democrats to form a coalition government. The Conservatives won the most seats in last week’s election, but failed to secure a majority win over the long-time Labour party.
The minutes from the last US Federal Reserve meeting suggest that while the Fed is considering the need to back away the massive spending programs it supported during the recession, it has not developed an actual plan or time frame for doing so.
The Federal Open Market Committee (FOMC) “discussed possible approaches for formulating and communicating key elements of its strategy for removing extraordinary monetary policy accommodation at the appropriate time,” minutes from the March 16 meeting said.
Source: AFP News
The minutes from the last US Federal Reserve meeting suggest that while the Fed is considering the need to back away the massive spending programs it supported during the recession, it has not developed an actual plan or time frame for doing so.
The Federal Open Market Committee (FOMC) “discussed possible approaches for formulating and communicating key elements of its strategy for removing extraordinary monetary policy accommodation at the appropriate time,” minutes from the March 16 meeting said.
Source: AFP News
International Monetary Fund (IMF) advisers are working closely with Greek government officials as Greece begins implementing a series of deep spending cuts. Currency markets remain less than impressed however, and the euro has fallen considerably as doubt grows that Greece will be able to raise sufficient funds without direct aid from the EU and the IMF.
Source: AFP News
The Organization of the Petroleum Exporting Countries (OPEC), has recently increased by 8.4 percent the number of oil and gas wells in production despite already exceeding production quotas. OPEC implemented record production cuts as demand for oil evaporated during the height of the recession. Since then, oil prices have more than doubled and it would seem that some OPEC members are happy enough with current prices, and are willing to increase production to increase overall revenues.
This line of thinking has some analysts predicting oil prices will stabilize or even drop over the next few years due to increased supply. Leo Drollas, deputy director of the Center for Gloabl Energy Studies said that Brent crude will fall 25 percent to $60 in the fourth quarter of this year, and if OPEC can’t gain control of production, prices could fall to $50 a barrel by 2015.
Source: Bloomberg
Even though the federal homebuyer tax credit is scheduled to be eliminated next month, officials and industry insiders alike remain confident that the US housing market is poised to gain 6 percent this year. Recent news may warrant greater optimism; the Standard & Poor’s Supercomposite Homebuilding Index hit a five- month high March 9, but the real key to a real estate will be employment.
“I would bet even odds that we’re at a bottom and that we’re going to see improvement in the coming months,” said Karl Case, co-creator of the S&P/Case-Shiller Home Price Index and a professor of economics at Wellesley College in Wellesley, Massachusetts.
Source: Bloomberg
The US economy closed out 2009 on a high note, growing at a rate of 5.9 percent over the final three months. This was slightly better than the Commerce Department’s estimate of 5.7 percent but experts say the economy will not maintain the torrid pace into 2010.
Much of the growth can be attributed to a one-time boost to manufacturing as businesses re-stocked inventories they had allowed to decline during the worst of the recession. While overall growth is expected to be positive during 2010, critics point to the recent drop in consumer confidence, unemployment that continues to run at 9.7 percent, and a record fate of foreclosures as evidence that growth prospects remain weak.
Source: Associated Press
