Thursday, January 31, 2002

Economic discussion at Davos. All agreed that the story of the world economy is the story of the US economy. There is no alternative engine. But Roach reckons the US is heading for a double-dip recession. Personal and corporate debt are too high, the current account deficit is at historic levels. Fosler and Frenkel, however, judge the "fundamentals" to be fine, and are optimistic about a US recovery this year. [Davos for Newbies] 3:17:51 PM    comment  []

2:53:10 PM    comment  []

Questions being raised about accounting validity and reported earnings of public companies. More. 10:17:28 AM    comment  []

Goodbye recession. Hello recovery. Yes, the economy looks like it's on a roll again. Maybe it's a slow roll, but it's a roll. [Nando Times] 8:51:12 AM    comment  []

Economist article on U.S. interest rates and economy. "Now, though, Mr Greenspan is once again in trickier territory. ... In a speech in San Francisco on January 11th, Mr Greenspan said it was still premature “to conclude that the forces restraining economic activity have abated enough to allow a steady recovery to take hold.” " "But when he testified before the Senate Budget Committee on January 24th, he seemed subtly to have shifted tack. “There have been signs,” he noted, “that some of the forces restraining activity have started to diminish and that activity is beginning to firm.” In its statement after the meeting on January 30th, the Fed concluded that the signs of strengthening economic activity have become more prevalent." "And they have. The advance GDP figures for the final quarter of last year showed a small rise: 0.2% at an annual rate is admittedly tiny, but it contrasts with widespread expectations of a further fall. The figures should be treated with great caution—they will be revised twice more, and these revisions could be significant enough to change the plus sign to a minus. Moreover, much of the increase comes from a spectacular surge in durable goods orders, which rose at an annual rate of more than 38%. This largely reflects a big rise in car sales in response to temporary special offers, including interest-free credit, used by the car industry to boost sales. At least some of the big jump in demand simply reflects orders brought forward from the future, rather than a genuine upturn in sales." "Nevertheless, quite a bit of the latest data suggests economic confidence among consumers and businesses may, slowly, be picking up. This arguably strengthens the Fed’s decision to pause before deciding whether further interest rate cuts might be needed. After all, the monetary easing which has already taken place is still working its way through the economy. There has already been some fiscal easing as well, with tax cuts and government spending increases; and President George Bush, in his state of the union address on January 29th, made it clear that much more government spending is on the way." 8:48:35 AM    comment  []

Economist article on U.S. economy and interest rates. 8:32:17 AM    comment  []