The federal deficit is at a post-WWII high as spending is increased by as much as 20% over a year ago. Most of our spending was allocated to Medicare, Social Security and Income Security. This is normal when a country is going through a recession; however the double digit percentage gains in spending are still very large despite the recession.
Tax revenues and corporate income taxes have also fallen at double digit rates. It is no mystery where our economy is heading. One can expect a bigger deficit down the line and the downward pressure for a little while to come. This will also continue to drive the global economy lower as deficits are running high all around the globe.
What are your views on the matter? How years before we should start seeing a turnaround in the Federal budget?
If you are one of those people watching the gas prices rising everyday then you are not alone! The price of petroleum has jumped by more than 20% in June. How is this affecting the global economy? Wachovia reported Friday that this has caused a more than expected increase in import prices, rising about 3.2 percent in June.
Non-oil import prices did not change much. Biggest increases for non-oil products were about 0.2 percent. This caused the year-to-year inflation rates to be down. Therefore we should see a downward pressure on prices for most products.
Oil prices are predicted to decline in July and in the coming months. This should continue the downward slope of import prices as well as other non-oil products. Overall it looks like we might be seeing some relief at the gas pump for a little while longer. Will the prediction follow through and what can we see from the global economy in the coming months?
Wachovia reports consumer credit outstanding in May, showing a $3.-2 billion decline. Though this seems like a big amount, this drop is smaller than expected. Judging by the last three straight months of steep decline the expected drop for May was to be much greater. This was mainly due to increased amount of retail sales. What does this tell us? Perhaps we are seeing a little bit of a rebound in the economy.
The report also shows a 3.7 percent decline in revolving credit (e.g. credit cards) and a 0.3 percent decline in non-revolving credit (e.g. loans). This is, of course, consistent with the fact that consumers are not eager to spend money. Report shows that nominal personal consumption expenditures declined 1.8 percent year-over-year. This is the worst we have seen it since 1960 folks! Lenders have no choice but to cut credit lines and raise minimum payments.
Though the numbers are looking bad, there is no doubt that lower numbers still were expected. So what does this tell us? Is it good news or still bad news for our economy?
The head of China’s central bank said Monday the country’s economy was on the mend and expressed confidence that a government target of 8 percent growth this year would be met. Zhou Xiaochuan, governor of the People’s Bank of China claimed that the economy was on a upturn. Beijing has sought to insulate China from the global recession with a 4 trillion yuan ($586 billion) stimulus plan that calls for higher spending on construction of highways and other public works. Beijing is the world’s largest holder of U.S. debt, which it purchases with its vast foreign currency reserves.
Although Zhou feels that the econmy of China is stabilizing and is actually taking a turn for the better, can we really take his statement literally?
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The International Monetary Fund forecast: “the worst recession in the developed world.” Dublin Ireland a land in which property crippled banks are struggling to remain open. A Washington based lender claims “its economy shrink 8.5 percent this year, unemployment rise from the current 11.8 percent to 15.5 percent next year, and lose euro35 billion ($49 billion) — about 20 percent of its gross domestic product — in defaulting loans chiefly to property developers.” Originally the numbers were much lower and to combat this growing deficit the government of Ireland is raising taxes and cutting spending. In attempts to reduce spending Ireland resorts to an infamous method known as cutting back, cutting back on welfare that is.
How does this recession affect the world economic status?
Will Irelands struggle to remain in the Euro Zone be short lived?
Can such a deficit be possible in the United States?
The federal deficit is at a post-WWII high as spending is increased by as much as 20% over a year ago. Most of our spending was allocated to Medicare, Social Security and Income Security. This is normal when a country is going through a recession; however the double digit percentage gains in spending are still very large despite the recession.
The head of China’s central bank said Monday the country’s economy was on the mend and expressed confidence that a government target of 8 percent growth this year would be met. Zhou Xiaochuan, governor of the People’s Bank of China claimed that the economy was on a upturn. Beijing has sought to insulate China from the global recession with a 4 trillion yuan ($586 billion) stimulus plan that calls for higher spending on construction of highways and other public works. Beijing is the world’s largest holder of U.S. debt, which it purchases with its vast foreign currency reserves.
The International Monetary Fund forecast: “the worst recession in the developed world.” Dublin Ireland a land in which property crippled banks are struggling to remain open. A Washington based lender claims “its economy shrink 8.5 percent this year, unemployment rise from the current 11.8 percent to 15.5 percent next year, and lose euro35 billion ($49 billion) — about 20 percent of its gross domestic product — in defaulting loans chiefly to property developers.” Originally the numbers were much lower and to combat this growing deficit the government of Ireland is raising taxes and cutting spending. In attempts to reduce spending Ireland resorts to an infamous method known as cutting back, cutting back on welfare that is.
