Dow Reaches 15,000 as Jobs Growth Exceeds Forecasts
Since the recession in 2008, the Dow Jones Industrial Average has suffered a significant impact on the index. For the first time, in four years the Dow Jones has hit the 15,000 mark as stocks increased from the boost of confidence in the market. The unemployment rate has been on a decline, as employment was at an all-time low in the last four years. Based on payroll records, as much as 165,000 workers found jobs just last month dropping the jobless rate to 7.5 percent. S&P 500 Stocks were trading 6.6 percent above the 30- day average. The Volatility Index also slid 5.2 percent and has dropped as much as 29 percent this year.
All of these are signs that the economic recovery is heading the right way. The smaller the volatility in the markets, the less uncertainty there is for investors. With the boost in confidence, companies are growing and jobs are being created to stimulate the economy. The Dow Jones Industrial Average breaking the 15,000 point will definitely help boosts investor’s confidence in investing.
Written by: Jessica Ho
Source:
http://www.bloomberg.com/news/2013-05-03/u-s-stock-futures-are-little-changed-before-jobs-report.html
Stock Prices Rise Due To ECB
U.S. stocks have been seeing rises due to reports that less people are filing for unemployment benefits, but the stock market also had a positive reaction due to news that the European Central Bank will be cutting some of its main interested rates. The Dow Jones Industrial Average saw an increase this morning, and this increase was significant cause it has seen a large yesterday. The decision of the ECB to cut part of its interest rate was made in order to help to expand their shrinking economy. The ECB is trying to push policies to help their economy, but they do not intend on taking on the same policies that the Fed and the Bank of Japan are currently using.
It is beneficial to the global economy that the ECB is starting to push new changes that would help to stimulate their economy. This scenario well depicts how important the global economy is to the American economy, such news in Europe had a large impact on the American market. If the ECB is willing to take a more active role in helping their economy to recover, the American economy may see large growth as well.
Written by: Jessica Ho
Source: The Wall Street Journal
Fed To Continue Bond-Buying Program
A few weeks ago many were saying that that the Fed was considering on pulling back on their bond-buying program, but it has been recently announced that they will not do so, and will instead increase the numbers of treasury and mortgage backed securities that they will be buying. The Fed believes that the government’s fiscal policy is doing little to help the economy grow. The Fed is willing to adjust the amount of bonds that they buy based on the shape of the economy in order to help with expansion. Investors are expecting the Fed to continue pushing out money to buy bonds until the economy shows that it is in better shape.
It is good that the Fed is willing to continue their bond-buying program in order to help the economy grow, but the Fed should not be the only ones who are trying to do so. It is important that the government and all those who are vital to the economy also help to expand the economy.
Written by: Jessica Ho
Source: The Wall Street Journal
Housing Prices See Large Increase
Housing sales have recently seen an increase in pricing, more people are willing to buy houses, but the amount of houses available for sale remain small, this is what is causing prices to see such large increases. The rate of increase of prices is the largest rate that the housing industry has seen since 2006, prior to the housing crisis of 2008. Some states have seen double-digit percentages in price increase of housing.
Although the housing industry is doing well employment is not. There are still many people who are unemployed, so although housing prices are beginning to increase again, this may not be a sign that our economy is going through large recovery. The price increase has little to do with the economy, and more to do with the amount of houses available on the market. It is necessary that people are aware that such signs do not indicate that the economy is healthy, but this increase in price can be looked at as a step to a recovering economy.
Written by: Jessica Ho
Source: The Wall Street Journal
Consumer Spending Sees Little Increase
Although consumer spending increased in the month of March, it is expected that not much increase will be seen for the next few months due to the fact that income has not seen much growth as well. With less income, consumers are less likely to spend as much money since they do not have much to spend in the first place. Many believed that the increase in spending for the month of March came mainly from its cold temperatures. Consumer spending on products such as health care and clothing increase by a slight 0.2% last month.
This minor increase in consumer spending is not healthy for our economy, and most definitely would not lead to further growth. Investors will see this as a sign to not make many investments since they see that the public is not willing to spend, which in turn will yield a smaller profit margin for investors. The economy is currently being negatively affected by many factors, and this low increase in consumer spending is one of them.
Written by: Jessica Ho
Source: The Wall Street Journal
$2.2 Billion Lost To Unemployment Fraud
It is estimated that about $2.2 billion of unemployment benefits in the year of 2011 went to people who were actually employed. Unemployment benefits were made for those who need support after they have just been laid off, but for many, unemployment benefits have just become an extra source of income. A total of $108 billion was used towards unemployment benefits in 2011, and although $2.2 billion may only be a small percentage of $108 billion it is still a lot of money.
Since there is such a large amount of money being allocated towards people who are employed, people can expect that the amount of people employed is actually higher than what we know it as due to the fact that there are many jobs that pay under the books. But although the work force may be larger, this says little about the unemployment rate due to the fact that many people who aren’t looking for jobs are not factored into the unemployment rate. In order to decrease the amount of money spent on those who do no deserve unemployment benefits, the government should impose stricter regulations on such benefits.
Written by: Jessica Ho
Source: The Wall Street Journal
Companies Hold Back On Borrowing
The amount of companies borrowing money from banks is decreasing, and this in return slows down the progress of many banks. The amount of loans being taken by companies has decreased since last month, and the increase of loans for the first quarter is relatively low compared to that of the previous years. Companies are not borrowing much because investors are afraid and suspicious of the economy, and are not fully confident that their investment will have a positive return. Many investors are worried about what will happen in the future.
Investors have valid reasons to hold back on investing because the recent reports of the stock market and its highs and lows are not in any way reassuring for investors. The constant drop and rise on the stock market tells investors that the market is not yet stable, thus giving them less of an incentive to invest. Employment rates are also indicating that the economy is not doing so well. But at the same time investors holding back on their investments is also having a negative impact on the economy, so as they hold back because the economy is not doing well, they themselves are hurting the economy at the same time.
Written by: Jessica Ho
Source: The Wall Street Journal
The Aftermath of The Cyprus Bailout
Policy makers the Europe have successfully helped to bail out Cyprus out of its economic crisis, but many small business throughout the Euro-zone continue to struggle, which in turn causes their economy to continue on down the path of a shrinking economy. After Cyprus’ banking crisis, the amount of money being help in their banks have seen large decreases and in return other countries have seen increases in deposit. This hit towards Cyprus banks actually helped to stimulate banks in neighboring countries. Although Cyprus saw large conflicts in the money held in their savings accounts, this did not discourage citizens of other countries to feel that their money was unsafe in bank deposits. Though Cyprus’ crisis was not a positive situation, the turn out of the bailout did not have an extreme negative impact.
It is a good sign that people in other countries do not feel threatened by the situation in Cyprus. If people in neighboring countries had felt like the same situation may occur to them, then banks would see a large number of people flooding in to withdraw all the money from their savings accounts, which would in turn lead to an even deeper economic crisis.
Written by: Jessica Ho
Source: The Wall Street Journal
U.S. Stocks See Growth
Stock prices have been lowering these recent weeks, but today U.S. stocks have seen rises as reports that the rate of layoffs in the United States has seen a decrease, and as the British experience economic growth. Stocks in Asian countries such as Hong Kong and Japan have also seen growth. The Dow Jones and S&P 500 have both seen increases as well. Though sales are increasing in many industries, these increases in sales may not lead to a large economic growth. It has also been reported that there was another decrease in the number of people filing for unemployment, this number is the one of the lowest numbers since the 2008 crisis.
The rise of the stock market well indicates how the global economy has an impact on the American economy. As other countries are doing well, the American economy grows as well. Since countries have such a large impact on one another, countries in a better off economic conditions should try to help countries that are not doing to well such as Cyprus and Spain.
Written by: Jessica Ho
Source: The Wall Street Journal
Housing Industry Not Key To Recovery
Home sales have been seeing increases and has hit the highest in terms of first quarter sales since the housing crisis in 2008. Many people are hoping that this increase in housing sales can lead to the further recovery of our economy. Many people believed that the increase in house sales can improve the economy by encouraging spending as the worth of their homes begin to increase, but Amir Sufi says that those who were spending large amounts of money during the housing boom are not the ones that are causing the increase in housing sales, in order words, they are not the ones buying these houses.
I agree with Sufi that the housing industry may not be the key to economic recovery, since there are also many other factors that also have a large impact on the economy. The U.S. economy is very complex, so it is difficult to say that one specific factor would help push our economy back up. Even if housing sales show a large increase, investors may not begin to take larger caution into investing in this industry due to the past crisis.
Written by: Jessica Ho
Source: The Wall Street Journal
http://blogs.wsj.com/economics/2013/04/24/why-housing-wont-save-the-u-s-economy/
Spain Continues To Face Economic Crisis
Countries in the Euro-zone have not been doing so well recently, and Spain has seen yet another economic downfall for the first quarter of 2013 compared to the last quarter of 2012. Demand rates in Spain are low, and their housing industry is facing a crisis as well. Not only is the housing industry doing poorly but many people are in debt (both corporations and consumers) and unemployment rates are high. Many believe that Spain’s economy will see little recovery this year, and would continue to shrink.
The Euro-zone is in very bad shape right now as Cyprus recently tried to get itself out of bankruptcy and as Germany is seeing a large crunch in their once strong automobile industry. The Euro-zone covers so many countries, and as these countries that have a large impact on the European economy do not do well, neighboring economies in the Euro-zone take the hit as well. As more countries in the Euro-zone begin to suffer, the rest of the world will also be impacted.
Written by: Jessica Ho
Source: The Wall Street Journal
Germany’s Slow Recovering Automobile Industry
The economy of countries in the Euro-zone are not doing very well, especially in the automobile industry. Germany is the Euro-zone’s leader in the automobile Industry and large contributor to their economy, it has been seeing decreases in automobile sales. Recently Germany has seen a decrease in sales of 12.9% compared to that of 2012. Car sales in the UK have also not been doing well, although they have done better as the years progress, they still have yet to reach back to their high point in 2003.
The Euro-zone has not been doing well and if the German Car industry is not doing good as well then the Euro-zone should really reconsider its monetary policies. The Euro-zone is having a large negative impact on the global economy, and since this topic has been coming up a lot lately especially with Japan and it’s new monetary policy, the Euro-zone should really rethink their policies.
Written by: Jessica Ho
Source: The Wall Street Journal
Health Care And Utilities Do Well While Large Corporations Suffer
Stock prices for Utilities and Health Care have been seeing growth as other sectors of the stock market seem to not be doing so well. Health care and Utility are typically not the categories that many investors see large growth in since they are usually what people invest in as a safety net, but while many large corporations don’t seem to be doing so well these stocks are prospering. The fact that these stocks are doing much better than others indicate that economic growth is moving at a slower pace.
This may be a bad sign to investors because they may begin to feel that there is little profit to make on other stocks, and may become less likely to invest their money, and with less investment these stocks may continue to fall downhill. Not only is this bad for these particular stocks but this is also bad for the companies themselves, because the companies will receive less funding to become more efficient at what they do. This also is having a large effect on the global economy, and the timing seems to be very bad, especially when the euro zone and the Japanese Yen seem to bringing the global economy down as well.
Written by; Jessica ho
Source: The Wall Street Journal
Japan Gets G-20 Approval
The Group of 20 financial minsters (G-20) from the world’s top 20 economies have recently come together and stated that they support Japan’s new monetary policies, but that Japan should go about these policies carefully. Japan has stated that their new policies are aimed at improving their economy as opposed to solely changing the value of their currency. Some countries have stated that if not performed with caution drastic changes in monetary policy can lead to a decrease in growth. Since Japan seems to be doing well the G-20 is encouraging some countries in the euro zone to take action to bring their economy back up as well.
If the G-20 is showing support for Japan’s new monetary policies, more countries may be inclined to do the same. Japan’s currency has been weakening against the dollar, and if the same applies for other countries, then those countries will see a large increase in exports, while America would see a large decrease. These new policies would be a large benefit to the GDP of foreign countries but have a large negative affect of the GDP of America.
Written by: Jessica Ho
Source: The Wall Street Journal
The Small Street Journal 