Our Awful Situation

Archive for the ‘Economy’ Category

Fed sees the light

Posted by patriot on May 21st, 2008

Well, duh. Central planners can be real dough-heads sometimes…

The Federal Reserve sees worse economic problems ahead, according to new forecasts from the central bank released Wednesday.

But even so, the Fed may be reluctant to cut interest rates any further than it already has, the minutes from its last meeting show. (The minutes were also released Wednesday.)

The Fed lowered its economic growth forecast for the year. At the same time, it raised its projections for inflation and unemployment. The combination of slowing growth and rising prices created a difficult situation that made the Fed’s latest decision to cut rates on April 30 a “close call.”

Gun owners pinched as ammo costs shoot up

Posted by Charlie Kilo on May 21st, 2008

Bang, bang! Rising metal prices, demand for war effort driving up price of bullets:

Ammo prices for many popular guns have more than tripled in the last three years, driven in large part by surging demand for metals in rapidly industrializing China.

As the Asian giant becomes wealthier, millions of tons of copper, lead and zinc, which are also used to make bullets and brass shell-casings, are being snapped up.

Shooters, gun dealers and sheriffs say the impact has been further aggravated by competition for limited ammo stocks with the U.S. military, currently fighting wars on two fronts in Iraq and Afghanistan.

Gold price on course to double says top manager

Posted by patriot on May 20th, 2008

Got gold?

The top US equity manager François Mouté, believes the gold price should be 16 times the price of a barrel of oil and on a par with the price of platinum.

Speaking at Citywire’s European Fund Selectors Forum in Zurich, Mouté (pictured above) emphasised the prospects for his holdings in gold mining companies by pointing to recent research into the historical price of gold.

‘We have seen research which suggests gold should be 16 times the price of a barrel of oil,’ the AAA-rated fund manager said.

What’s next for the economy? Look at California

Posted by Charlie Kilo on May 20th, 2008

Tough times in world’s seventh largest ecomomy: consumer spending down, unemployment up, municipalities going bust:

As it did when the housing bubble began to burst, California is leading the way in the next leg: a consumer bust.

Squeezed by rising unemployment, inflation in food and energy costs and plunging house prices, Californians are cutting back on spending. Besides causing woes for state and local government, this is giving California’s economy another knock and makes further job losses, home repossessions and banking problems more likely.

The figures are pretty bad. The median home price has fallen by 29% in the year to March, according to the California Association of Realtors, and repossessions are surging. Unemployment has risen by 24%, to 6.2%, in the same period.

But most importantly, in the 10 months to the end of April sales tax receipts in California are actually down in absolute terms. Gasoline tax receipts are essentially flat. When you factor in that there would have been considerable inflation during the period, and that some essentials like gasoline will have risen sharply in cost, the picture is clear: Californians are tightening their belts.

Why are gas prices so high?

Posted by patriot on May 20th, 2008

They hardly mention the falling dollar and skyrocketing inflation, which is really the #1 cause of the sharp increase in gasoline price.

It’s hard to imagine now, but in 1999 gasoline sold for 90 cents a gallon. How’d we get from there to $4 a gallon?

There is no short answer - many things happened, and together they formed a chain of events from cheap gas to

A new use for SUV’s…call it “home”

Posted by Charlie Kilo on May 16th, 2008

Economic hard times are forcing Americans to move out of their homes and into their cars.

CNN video here

Economic ‘misery’ more widespread

Posted by Charlie Kilo on May 14th, 2008

Some experts argue that true inflation and unemployment - the components of the economy’s ‘Misery Index’ - are higher than the government’s official figures.

Really…

Americans are feeling a lot more economic pain than the government’s official statistics would lead you to believe, according to a growing number of experts.

They argue that figures for unemployment and inflation are being understated by the government.

Unemployment and inflation are typically added together to come up with a so-called “Misery Index.”

The “Misery Index” was often cited during periods of high unemployment and inflation, such as the mid 1970s and late 1970s to early 1980s.

And some fear the economy may be approaching those levels again.

The official numbers produce a current Misery Index of only 8.9 - inflation of 3.9% plus unemployment of 5%. That’s not far from the Misery Index’s low of 6.1 seen in 1998.

But using the estimates on CPI and unemployment from economists skeptical of the government numbers, the Misery Index is actually in the teens. Some worry it could even approach the post-World War II record of 20.6 in 1980.

“We’re looking at government numbers that are really out of whack,” said Kevin Phillips, author of the book “Bad Money.”

Frustrated owners try to unload their guzzlers

Posted by Charlie Kilo on May 6th, 2008

It looks like the roads of small town America are about to change forever:

After paying $75 to fill his black Dodge Ram pickup truck for the third time in a week, Douglas Chrystall couldn’t take it anymore.

Feeling pinched at the pump, and guilty as well, Chrystall, a 39-year-old father from Wellesley, is putting ads online to sell the truck, and the family’s other gas-guzzler, a Jeep Grand Cherokee. He knows it will be tough to unload them because he is one of a growing number of consumers downsizing to smaller, more fuel-efficient cars.

Americans are turning away from the boxy, four-wheel-drive vehicles that have for years dominated the nation’s highways. Sport utility vehicles and pickup trucks - symbols of Americans’ obsession with horsepower, size, and status - are falling out of favor as consumers rich and poor encounter sticker shock at the pump, paying upward of $80 to fill gas tanks.

The sale of new SUVs and pickup trucks has dropped precipitously in recent months amid soaring gas prices and a weakening economy: SUV sales for the month of April alone fell 32.3 percent from a year earlier and small car sales rose 18.6 percent. This fundamental shift comes against a backdrop of relentless gas increases, and growing concerns over the environment and US oil consumption, according to auto analysts and car dealers.

“The SUV craze was a bubble and now it is bursting,” said George Hoffer, an economics professor at Virginia Commonwealth University whose research focuses on the automotive industry. “It’s an irrational vehicle. It’ll never come back.”

What I Saw in America

Posted by Charlie Kilo on May 5th, 2008

Paper tiger:

According to this story appearing today, the Secretary-General of OPEC now foresees a time within the decade when oil will no longer be priced in dollars. Like kicking a lumbering giant who has fallen down, this ill- (or well-) timed disclosure could send the U.S. economy further into a severe tailspin. If not immediately, it presages the end of the American Century and the final destruction of an already broken and broke U.S. economy.

Recession forces changes in economic behavior

Posted by patriot on April 28th, 2008

Well, the chickens have come home to roost:

Stung by rising gasoline and food prices, Americans are finding creative ways to cut costs on routine items like groceries and clothing, forcing retailers, restaurants and manufacturers to decode the tastes of a suddenly thrifty public.

Spending data and interviews around the country show that middle- and working-class consumers are starting to switch from name brands to cheaper alternatives, to eat in instead of dining out and to fly at unusual hours to shave dollars off airfares.

Though seemingly small, the daily trade-offs they are making — more pasta and less red meat, more video rentals and fewer movie tickets — amount to an important shift in consumer behavior.

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