AppliedFX.com » US Economy: The Good and the Bad before the FOMC Meeting http://www.appliedfx.com Just another WordPress site Fri, 05 Apr 2013 07:02:35 +0000 en-US hourly 1 http://wordpress.org/?v=3.4.1 US Economy: The Good and the Bad before the FOMC Meeting http://www.appliedfx.com/1253-us-economy-the-good-and-the-bad-before-the-fomc-meeting http://www.appliedfx.com/1253-us-economy-the-good-and-the-bad-before-the-fomc-meeting#comments Tue, 24 Apr 2012 22:11:44 +0000 sally http://www.appliedfx.com/?p=1253 Although the US economy had begun to show great signs of recovery, at the start of the year, there has since emerged a couple of worrying signs that now make the picture more intricate.

The following is the breakdown of the good and the bad prior to the FOMC meeting tomorrow.

US economy, worrying signs for US economy, FOMC meeting

The Good

  • Growth continues: The US economy seems to be on a good recovery track, unlike the Europe. The first GDP estimates are expected to be released on Friday, and it is anticipated that they will indicate an annual rise of about 2.6 percent. And even though this rate is not usual for a sustainable recovery, it is better off, at least for now.
  • No Deflation threat: The US has so far recorded price increase with the consumer price index showing a 2.7% rise.  What is more, this rise surpasses the initial target of 2%, which is a great sign of an improving economy.
  • More Building: It is notable that there is a consistent increase in housing. Though this increase was initially blamed on winter, research indicates that housing established a base.
  • Active Consumers: Retail trade is on a consistent rise. Consumer confidence is okay, thus suggesting that the economy relies heavily on private consumption.  More expectations suggest more activity, even when pockets are not full.

The Bad

  • Unemployment: Although redundancy had started to show signs of improvement, there are signs of a consistent weakness with Non-farm payroll s recording a weak high of 120k. The report also gives a number of reasons why it should be seen as temporary. However, the main reason why this increase is alarming is the fact that it proves right Bernanke’s statement that the unemployment situation is worse that it seems.
  • Stalling Industrial output:  Reports from ISM and PMI show industrial output indicators looking positive, on the escalation side of figures.  What is more, these figures are expected to rise making it essential for participants to focus more on them than the valid output, which stopped. This has forced experts to speculate a looming recession. Even though a recession might not come soon, industrial growth is still lacking.
  • Home Prices remain Low: The US home sector has experienced some deleveraging. But Uncertainty continues to dominate.  Looking at the number of existing houses that have been sold, so far, it is clear that the housing sector is still staggering in the mud.
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