http://www.economywatch.com/world_economy/china/China_Economy_2009_Forecast.html
http://www.ft.com/
http://info.bpiexpressonline.com/bpiprod/produpd.nsf/Economic+Updates/EconomicUpdates
http://www.rbc.com/economics/market/daily_e.html
http://www.research.commbank.com.au/cbaresearch_display/0,2209,CH3347%255FTS17346,00.html
http://www.canadianbusiness.com/index.jsp?gclid=CIHEkLe7pp0CFRQeDQodLBnr3A
http://www.ronpaul.com/
Monday, October 5, 2009
U.S. payroll employment weak; unemployment rate moves up to 9.8%
The labour market report for September showed a disappointing 263,000 loss of jobs compared to market expectations of a 175,000 drop. As well, the report suggested a break from an earlier easing trend in the pace of jobs losses following drops of 201,000 (revised from -216,000) in August, 304,000 (-276,000) in July and 463,000 in June. The report also showed an expected rise in the September unemployment rate to 9.8% from 9.7% in August.
The weakness in employment was relatively broadly based with the goods-producing sectors shedding 116,000 jobs with service-producing industries dropping 147,000. Within the former, construction lost 64,000 jobs, while manufacturing saw a drop of 51,000. Within the service-producing component, all major industries saw declines led by trade, transportation and utilities (60,000) and retail (39,000). The government sector also shed a sizeable 53,000 jobs.
Disappointing news in today’s report was also contained in the workweek measure, which dropped to 33 hours for the overall economy, down from 33.1 hours in August. It was a similar story for manufacturing where the workweek eased to 39.8 hours from 39.9 hours, while overtime dropped to 2.8 hours from 2.9 hours in August. As a result, the index of aggregate weekly hours, which reflects the combined effect of employment and hours worked, was down a disappointing 0.5% in the month. However, it is of note that the annualized decline in this measure in the third quarter of 3% represents an easing from declines of 7.8% and 8.9% in the second and first quarters, respectively.
Weakening labour markets are restraining growth in the average hourly earnings index, the key wage measure in the report. The index rose only 0.1% in the month compared to expectations of a 0.2% rise, which sent the year-over-year rate down to 2.5% in September from 2.6% in August.
The larger-than-expected drop in September payroll employment is clearly disappointing. However, some solace can be taken from the fact that, despite the deterioration in September, the average monthly drop in the third quarter of 256,000 compares to declines of 428,000 and 691,000 in the second and first quarters, respectively.
However, the continued shedding of jobs implies downward pressure on labour income and upward pressure on the unemployment rate. To prevent a negative feedback loop from kicking in and to move the economy towards job growth, policy will need to continue to be stimulative. Recently introduced fiscal measures have been an important factor returning GDP growth to the positive column in the third quarter via the “cash-for-clunkers” rebates. Monetary policy is also expected to make its contribution by continuing to help revive earlier-stalled financial markets both by directly providing liquidity and by keeping interest rates low. This support will likely be needed through next year. In fact, our forecast assumes that the Fed funds rate will not rise from its current very low range of 0% to 0.25% until the final quarter of 2010.
To view charts of today's data, go to
http://www.rbc.com/economics/html_calendars/ca/calendar.html (Canada)
http://www.rbc.com/economics/html_calendars/us/calendar.html (United States)
The weakness in employment was relatively broadly based with the goods-producing sectors shedding 116,000 jobs with service-producing industries dropping 147,000. Within the former, construction lost 64,000 jobs, while manufacturing saw a drop of 51,000. Within the service-producing component, all major industries saw declines led by trade, transportation and utilities (60,000) and retail (39,000). The government sector also shed a sizeable 53,000 jobs.
Disappointing news in today’s report was also contained in the workweek measure, which dropped to 33 hours for the overall economy, down from 33.1 hours in August. It was a similar story for manufacturing where the workweek eased to 39.8 hours from 39.9 hours, while overtime dropped to 2.8 hours from 2.9 hours in August. As a result, the index of aggregate weekly hours, which reflects the combined effect of employment and hours worked, was down a disappointing 0.5% in the month. However, it is of note that the annualized decline in this measure in the third quarter of 3% represents an easing from declines of 7.8% and 8.9% in the second and first quarters, respectively.
Weakening labour markets are restraining growth in the average hourly earnings index, the key wage measure in the report. The index rose only 0.1% in the month compared to expectations of a 0.2% rise, which sent the year-over-year rate down to 2.5% in September from 2.6% in August.
The larger-than-expected drop in September payroll employment is clearly disappointing. However, some solace can be taken from the fact that, despite the deterioration in September, the average monthly drop in the third quarter of 256,000 compares to declines of 428,000 and 691,000 in the second and first quarters, respectively.
However, the continued shedding of jobs implies downward pressure on labour income and upward pressure on the unemployment rate. To prevent a negative feedback loop from kicking in and to move the economy towards job growth, policy will need to continue to be stimulative. Recently introduced fiscal measures have been an important factor returning GDP growth to the positive column in the third quarter via the “cash-for-clunkers” rebates. Monetary policy is also expected to make its contribution by continuing to help revive earlier-stalled financial markets both by directly providing liquidity and by keeping interest rates low. This support will likely be needed through next year. In fact, our forecast assumes that the Fed funds rate will not rise from its current very low range of 0% to 0.25% until the final quarter of 2010.
To view charts of today's data, go to
http://www.rbc.com/economics/html_calendars/ca/calendar.html (Canada)
http://www.rbc.com/economics/html_calendars/us/calendar.html (United States)
CHINA ECONOMIC FORECAST 2009
Beijing, 24 Dec. The Chinese economy grew a whopping 9.9% in the first three quarters of 2008, and 11.9% in 2007. Forecasts for 2009 are nowhere near as rosy.
In 2008, the Chinese government took significant action to encourage growth amid the worldwide financial slowdown. It unveiled a US $585 billion stimulus package which will extend into 2010, and slashed the interest rate three times. It also relaxed credit regulations.
Despite these aggressive measures, global uncertainty, a general bleak outlook, and lack of liquidity between financial institutions will drag China’s growth figures, resulting in ‘only’ 8.6% growth in 2009, according to China Galaxy Securities.
Firms, excluding those in the volatile petroleum, finance, power, and steel industries, should see an earnings grow by 7% in 2009, according to Galaxy.
The World Bank made more conservative forecasts. It once expected China to grow 9.2% in 2009, but now has that revised down to 7.5%. The World Bank projected China’s GDP growth rate would be 7.5%, significantly lower than the 9.4% gained in 2008. It also expects China’s export growth to shrink to 3.5% versus a huge 11% in 2008.
David Dollar, the World Bank Country Director for China said, “In terms of the effect of China's slowdown on the world, there's good news and bad news. China's recently announced stimulus package is good news because it will keep China's growth rate up at a pretty healthy rate and so imports will continue to go into China at a fairly good rate. That's good news for countries like Mongolia and Australia that export commodities like copper and iron ore to China – it's also welcome news for countries selling primary products, machinery and parts to China. The bad news is there won't be as much stimulus to these exporting economies as China was giving in the past."
President Hu Jintao is making socially and environmentally-sustainable efforts which should help guide growth. This new policy will begin in 2009, and is sure to appeal to western investors and governments, if done right. Nevertheless, he is sending the right message.
However, human rights issues will continue to loom as ethnic struggles in Tibet and Xinjiang prevail unsolved. These are not expected to damper economic forecasts or even political stability.
Land reforms will be passed in 2009 in efforts to improve accountability within the Chinese Communist Party. Other reforms to improve accountability and democracy are not planned.
The government budget is expected to report small surpluses in 2009-10 after an approximate surplus of .4% of GDP in 2008. And while inflation has been a recent issue, much due to rising oil prices, it is expected to decline to about 3.8% in 2009. Utility costs will remain high, but these will be compensated by low consumer goods and food costs.
China will maintain a current-account surplus due to its massive amount of exports, although it is forecast to fall to about 7.5% of GDP in 2009.
Chen Xiulian, EconomyWatch.com
In 2008, the Chinese government took significant action to encourage growth amid the worldwide financial slowdown. It unveiled a US $585 billion stimulus package which will extend into 2010, and slashed the interest rate three times. It also relaxed credit regulations.
Despite these aggressive measures, global uncertainty, a general bleak outlook, and lack of liquidity between financial institutions will drag China’s growth figures, resulting in ‘only’ 8.6% growth in 2009, according to China Galaxy Securities.
Firms, excluding those in the volatile petroleum, finance, power, and steel industries, should see an earnings grow by 7% in 2009, according to Galaxy.
The World Bank made more conservative forecasts. It once expected China to grow 9.2% in 2009, but now has that revised down to 7.5%. The World Bank projected China’s GDP growth rate would be 7.5%, significantly lower than the 9.4% gained in 2008. It also expects China’s export growth to shrink to 3.5% versus a huge 11% in 2008.
David Dollar, the World Bank Country Director for China said, “In terms of the effect of China's slowdown on the world, there's good news and bad news. China's recently announced stimulus package is good news because it will keep China's growth rate up at a pretty healthy rate and so imports will continue to go into China at a fairly good rate. That's good news for countries like Mongolia and Australia that export commodities like copper and iron ore to China – it's also welcome news for countries selling primary products, machinery and parts to China. The bad news is there won't be as much stimulus to these exporting economies as China was giving in the past."
President Hu Jintao is making socially and environmentally-sustainable efforts which should help guide growth. This new policy will begin in 2009, and is sure to appeal to western investors and governments, if done right. Nevertheless, he is sending the right message.
However, human rights issues will continue to loom as ethnic struggles in Tibet and Xinjiang prevail unsolved. These are not expected to damper economic forecasts or even political stability.
Land reforms will be passed in 2009 in efforts to improve accountability within the Chinese Communist Party. Other reforms to improve accountability and democracy are not planned.
The government budget is expected to report small surpluses in 2009-10 after an approximate surplus of .4% of GDP in 2008. And while inflation has been a recent issue, much due to rising oil prices, it is expected to decline to about 3.8% in 2009. Utility costs will remain high, but these will be compensated by low consumer goods and food costs.
China will maintain a current-account surplus due to its massive amount of exports, although it is forecast to fall to about 7.5% of GDP in 2009.
Chen Xiulian, EconomyWatch.com
INDIAN ECONOMIC FORECAST 2009
New Delhi, 16 Dec. 2008 started out well enough with growth figures approaching 10%. However, with the massive financial troubles which began towards the end of 2008, 2009 does not look quite as good. The Asian Development Bank (ADB) has projected growth of a mere 6.5%. Previously, it had forecast 7%, down from another earlier estimate of 7.4%.
ADB stated, “India, South Asia's most dynamic economy in recent years, is reeling from the direct effect of the global financial crisis on its banking systems and financial markets. The growth projection for India has been revised down to seven per cent in 2008 and 6.5 per cent in 2009, from 9 per cent in 2007.”
In the first week of December, the World Bank anticipated the Indian economy would grow by 6.3% in 2008 and 5.8% in 2009.
It realized a 7.8% expansion in the first half of this fiscal year against 9.3% a year ago. The economy grew by 9% for the entire last fiscal year.
Inflation has been an ongoing threat in India, especially when it reached a peak of 12% in early August, 2008. Much of what drive this inflation is the country’s rapid growth and rising oil prices. Oil has fallen considerably since then, easing inflation.
Manufacturing is expected to be hit in 2009 due to a decreased demand as a result of the global downturn. India’s growth is not totally dependent on the West, but the slumps in the US, Europe, and even the Far East will be felt in India’s exports.
The Indian government will need to accelerate its reforms and push for more investment if it wants to maintain good growth rates in the face of the global slowdown.
In a news conference with the World Economic Forum (WEF), CII director general Chandrajit Banerjee said, “"There is a pressure on bottom lines (of companies). Production is down. We do see economic growth moderating to 7.4-7.8 percent this fiscal.”
"Since inflation is down, we expect more fiscal and monetary measures to give a momentum to growth. The government should increase expenditure in infrastructure sector and put on-going projects on the fast track," he continued, but dismissed fears of large-scale corporate lay-offs.
The worldwide credit crunch has led to foreign investors dumping shares amounting to more than $12.5 billion, and the rupee has fallen in excess of 20%.
The WEF said, "It (global crisis) could also weaken the balance sheets of the financial institutions, cause a further fall in share and asset prices, and challenge the macroeconomic situation due to shrinking global growth.”
In November, Prime Minister Manmohan Singh warned that the global financial crisis may be worse and longer than many had expected, but that the government would take the necessary monetary and fiscal action to protect growth in India.
LINK EconomyWatch.com
ADB stated, “India, South Asia's most dynamic economy in recent years, is reeling from the direct effect of the global financial crisis on its banking systems and financial markets. The growth projection for India has been revised down to seven per cent in 2008 and 6.5 per cent in 2009, from 9 per cent in 2007.”
In the first week of December, the World Bank anticipated the Indian economy would grow by 6.3% in 2008 and 5.8% in 2009.
It realized a 7.8% expansion in the first half of this fiscal year against 9.3% a year ago. The economy grew by 9% for the entire last fiscal year.
Inflation has been an ongoing threat in India, especially when it reached a peak of 12% in early August, 2008. Much of what drive this inflation is the country’s rapid growth and rising oil prices. Oil has fallen considerably since then, easing inflation.
Manufacturing is expected to be hit in 2009 due to a decreased demand as a result of the global downturn. India’s growth is not totally dependent on the West, but the slumps in the US, Europe, and even the Far East will be felt in India’s exports.
The Indian government will need to accelerate its reforms and push for more investment if it wants to maintain good growth rates in the face of the global slowdown.
In a news conference with the World Economic Forum (WEF), CII director general Chandrajit Banerjee said, “"There is a pressure on bottom lines (of companies). Production is down. We do see economic growth moderating to 7.4-7.8 percent this fiscal.”
"Since inflation is down, we expect more fiscal and monetary measures to give a momentum to growth. The government should increase expenditure in infrastructure sector and put on-going projects on the fast track," he continued, but dismissed fears of large-scale corporate lay-offs.
The worldwide credit crunch has led to foreign investors dumping shares amounting to more than $12.5 billion, and the rupee has fallen in excess of 20%.
The WEF said, "It (global crisis) could also weaken the balance sheets of the financial institutions, cause a further fall in share and asset prices, and challenge the macroeconomic situation due to shrinking global growth.”
In November, Prime Minister Manmohan Singh warned that the global financial crisis may be worse and longer than many had expected, but that the government would take the necessary monetary and fiscal action to protect growth in India.
LINK EconomyWatch.com
UNITTED STATES ECONOMIC SYSTEM
The economy of the United States is the largest national economy in the world in both actual dollars and by Purchasing Power Parity.[12] Its nominal gross domestic product (GDP) was estimated as $14.4 trillion in 2008, which is about three times that of the world's second largest economy, Japan[1] Its GDP by PPP is almost twice that of the second largest, China.
The U.S. economy maintains a very high level of output per person (GDP per capita, $47,422 in 2008, ranked at around number ten in the world). The U.S. economy has maintained a stable overall GDP growth rate, a low unemployment rate, and high levels of research and capital investment funded by both national and, because of decreasing saving rates, increasingly by foreign investors. In 2008, consumer spending made seventy-two percent of the economic activity in the U.S.[13]
Since the 1970s, the United States economy has absorbed savings from the rest of the world. The phenomenon is subject to discussion among economists. Like other developed countries, the United States faces retiring baby boomers who have already begun withdrawing from their Social Security accounts; however, the American population is young and growing when compared to Europe or Japan. The 2008 estimates of the United States public debt by the CIA Factbook and the International Monetary Fund were 61% of GDP, about the same as major European countries.
The United States has been one of the best-performing developed countries, consistently outperforming European countries. The American labor market has attracted immigrants from all over the world and has one of the world's highest migration rates. Americans have the second highest income per hour worked.[ The United States is ranked second, down from first in 2008-2009 due to the economic crisis, in the Global Competitiveness Report.
The U.S. economy maintains a very high level of output per person (GDP per capita, $47,422 in 2008, ranked at around number ten in the world). The U.S. economy has maintained a stable overall GDP growth rate, a low unemployment rate, and high levels of research and capital investment funded by both national and, because of decreasing saving rates, increasingly by foreign investors. In 2008, consumer spending made seventy-two percent of the economic activity in the U.S.[13]
Since the 1970s, the United States economy has absorbed savings from the rest of the world. The phenomenon is subject to discussion among economists. Like other developed countries, the United States faces retiring baby boomers who have already begun withdrawing from their Social Security accounts; however, the American population is young and growing when compared to Europe or Japan. The 2008 estimates of the United States public debt by the CIA Factbook and the International Monetary Fund were 61% of GDP, about the same as major European countries.
The United States has been one of the best-performing developed countries, consistently outperforming European countries. The American labor market has attracted immigrants from all over the world and has one of the world's highest migration rates. Americans have the second highest income per hour worked.[ The United States is ranked second, down from first in 2008-2009 due to the economic crisis, in the Global Competitiveness Report.
Friday, October 2, 2009
World Economic Systems
The three major types of economies are usually referred to as: command, market, and mixed economies.
Before getting into the differences between these, let us think about what an economy is. In any economic system, there must be a way for resources to be put to use to produce goods and services. That is, an economy must decide how many workers and how much land to devote to producing peaches, and how much should be used to produce vacuum cleaners, and so on. How these kinds of resource allocation decisions are made distinguishes the different economic systems.
In a command economy, these decisions are made by a central authority. A command economy is therefore a form of central planning. For example, a central government would decide how many peaches should be grown, how many vacuum cleaners should be made, and would also decide how much of the various resources would be allocated towards each good. A major problem with this type of system is that it is difficult for a central authority to gather all necessary information to make the right decisions on how to allocate resources efficiently towards the production of each good and service.
A pure market economy is the exact opposite. All decisions are made in a decentralized way, through the interaction of buyers and sellers in individual markets. That is, peach growers and vacuum cleaner builders would offer their goods, and depending on demand conditions, they would decide how many workers to hire, how much land to use, and how much to produce. A major problem of a pure market system is that these individual decisions will not account for what economists call externalities. For example, a pure market economy may result in too much production of a good that generates a great deal of pollution. For reasons like these, most economies are mixed economies.
In a mixed economy, many of the necessary decisions are made in decentralized markets, but there is also some degree of government intervention in the economy. The U.S. is certainly a mixed economy. Though markets are a key piece of our economic system, we also have Federal, State, and Local governments that enact various forms of regulation for the purpose of improving upon the outcome of a pure market economy. That is, a mixed economy like that in the U.S. is typically considered to be the best of both worlds.
Before getting into the differences between these, let us think about what an economy is. In any economic system, there must be a way for resources to be put to use to produce goods and services. That is, an economy must decide how many workers and how much land to devote to producing peaches, and how much should be used to produce vacuum cleaners, and so on. How these kinds of resource allocation decisions are made distinguishes the different economic systems.
In a command economy, these decisions are made by a central authority. A command economy is therefore a form of central planning. For example, a central government would decide how many peaches should be grown, how many vacuum cleaners should be made, and would also decide how much of the various resources would be allocated towards each good. A major problem with this type of system is that it is difficult for a central authority to gather all necessary information to make the right decisions on how to allocate resources efficiently towards the production of each good and service.
A pure market economy is the exact opposite. All decisions are made in a decentralized way, through the interaction of buyers and sellers in individual markets. That is, peach growers and vacuum cleaner builders would offer their goods, and depending on demand conditions, they would decide how many workers to hire, how much land to use, and how much to produce. A major problem of a pure market system is that these individual decisions will not account for what economists call externalities. For example, a pure market economy may result in too much production of a good that generates a great deal of pollution. For reasons like these, most economies are mixed economies.
In a mixed economy, many of the necessary decisions are made in decentralized markets, but there is also some degree of government intervention in the economy. The U.S. is certainly a mixed economy. Though markets are a key piece of our economic system, we also have Federal, State, and Local governments that enact various forms of regulation for the purpose of improving upon the outcome of a pure market economy. That is, a mixed economy like that in the U.S. is typically considered to be the best of both worlds.
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