So far the prior four times the Federal Reserve has raised rates not much has happened. I am predicting that if the current rate hike does not effect the market, Federal Reserve Chairman Alan Greenspan will raise rates again in March and May to slow our prosperous economy. The reason why a rate hike will slow down the economy is by raising the overnight rate to 5.75, the highest since 1995, it has made borrowing less attractive. In turn, corporation will have less money to invest then productivity will go down, hence supply will go down and demand will soon follow. Right now though productivity numbers released in January showed that it is on the rise, which has keep inflation in check.
Most people are in debt, in late 2005 “wage growth was shortchanged because 46 percent of the growth of total income in the corporate sector was distributed as corporate profits, far more than 20 percent in previous periods.”(24) Household income had fallen five years in a row and was 4 percent lower. The average wages of Americans are low. The growth of the American population is expanding very rapidly; the job count compared to population growth is almost unrealistic. Only one point nine percent more jobs have come up since the beginning of the last recession. The unemployment rate is four point six percent That means that a lot of people do not have jobs; the percent of people that have a job was one point three percent, So that means that more people are not working than people with a job.
Investments Moody’s Economy.com predicts a 1.1% drop in investment Gross Domestic Product (GDP), over a 2.9% drop in 2007. Given the recent sub-prime mortgage debacle and similar collaterized debt in the corporate market, the 1.1% drop is understated given the tightness in corporate lending and the government's short term stimulus package. The stock market dropped in tandem with recent events over the past few weeks including a one day 309 point drop in the Dow Jones Industrial Average. Non-Residential, Inventory Change, and Residential are the key indicators for the $1.8 Trillion annual business investment (15% of US GDP) and implications upon the economy. Nonresidential The Philadelphia Federal Reserve’s Business Outlook Survey for the month of January came in at -20.9, it’s lowest number since October 2001(median of 0 versus 50 for PMI) 1.
However, if real GDP rises too much inflation may occur which also lowers people’s standard living by eroding their purchasing power. In 1997, real GDP in the United States is expected to grow at an annual rate of around 2.25%. Growth is not expected to be as dramatic as the 4.7% rate of growth shown in the last quarter of 1996. But, overall the economy should show moderate to strong growth throughout the year.
According to the Commerce Department, the total value of goods and services slowed to 2.3% with a previous rate of 1.8% last year. The gradual decrease in growth indicates that the economy may be reducing to a more sustainable pace, and avoid another intererst rate increase from the Fed. The increase in employment costs may yet sway the Fed to to raise interest rates, but July will be decisive. Consumer consumption has fallen from 6% in increase in 1998 to 4% in 1999. The fall in consumer consumption has had its toll on the GDP as it too has slowed.
As for our manufacturing industry this has reported its worst fall in output in more than 10 years, increasing fears over the health of the UK economy. Also Factory production it is reported fell by 4% in the year 2002, This is the largest annual slump since 1991, this is according to figures from the Office for National Statistics. Britain's manufacturing industry is going through its worst recession since the early 1990s, however high consumer spending has so far protected the wider economy. 2004 has seen a rise in economic growth both in the UK and worldwide. Britain has had what economists call full employment for quite some time the problem for the future is that this could soon change and we could end up like germany with 10.5 % of the population out of work.
With credit harder to get, consumers have cut back on their spending, which is very bad for the economy since around 72% of economic activity comes from consumers (Gross 2). Retail sales dropped .4% in December, which is disturbing because usually December is the biggest month for retailers. Other factors that show the economy is slipping are that inflation was at 4.1% in December and has steadily been rising (Fox 3). In 2007, food prices rose almost 5% and gas prices rose almost 30% from the year before. Unemployment rates also went up above 5% this month, which is the highest they have been in over 2 years (Fox 3-4).
The economy again fell into recession as deleveraging in the private sector, fiscal consolidation, and a soaring unemployment rate (from 8% in 2007 to 26% in 2012.) took its toll on domestic demand and investment. Despite the poor recent Spanish economy, Spain's international trade situation has improved. In May 2013, Spain had a 2.19 billion (euros) trade surplus, narrowing the trade deficit. The economic downturn has also hurt Spain's public finances.
During the periods of September 2001 to November 2001 the U.S. experienced a terrible time in our country for our economy; it was a recession. Even though it was only for a short period of time and it wasn’t as bad as it sounds, there were people who got laid off from work, that suffered a decrease in personal income, and that felt the effects of the stock market decline. American’s felt that their comfortable lives were starting to unravel. This was not a “high point” for our economy and it’s definitely not what America wants to endure again. However, there has been talk that America may be close to another recession.
If the prices has fallen to below RM1,300 per tonne, the price would be much lower during the CPO price in 1980's and many CPO based companies would have major write down losses on forex hedging positions. 3) Global equity market did not spare also the effect of this fallen commodities. Over the past weeks, the Dow Jones also has it share of fallen and declining loss of market valuation. Regional stock market also drops as tandem with the fallen of the Dow Jones. Our KLCI for example was down to 832.44 points as at 29th October.