Australian perspective of US economy
This is what we see and hear about the US economy in Australia. I just thought I'd pass it on for comment.
[url]http://www.businessspectator.com.au/bs.nsf/Article/Cloud-over-US-retail-pd20100223-2WRJQ?OpenDocument&src=kgb[/url]
One of the more sobering pieces of US economic data came out last week when retail giant Wal-Mart released its fourth quarter results.
The world's largest retailer saw its same-store sales drop 1.7 per cent in the final three months of 2009, the first decline in its history.
Wal-Mart boss, Mike Duke, was wary about the immediate outlook, commenting that the economy remained "challenged" for many of the stores' customers around the world, and that US sales in the first quarter of 2010 were likely to be "difficult".
Now, Wal-Mart picks up about $1 of every $10 spent at stores in America, so signs that its sales are flagging suggest the US consumer is in trouble.
And that's bad news for the US economy, because the US consumer accounts for more than 70 per cent of gross domestic product.
US consumers are in bad shape for two reasons. In the first place, they've got too much mortgage and credit card debt. Consumers built up heavy debt loads over the past decade, lured by easy credit conditions and low interest rates. As a result, they're now saddled with an estimated $4 trillion of debt that they have to progressively work off.
But an even more pressing problem is the poor state of the US labour market. Because without jobs, consumers can't spend.
The US unemployment rate edged down to 9.7 per cent in January, but many argue that this figure significantly understates the size of problems in the jobs markets.
That's because the figures only count those people who have been unemployed for 15 weeks or longer, and are actively looking for work. In contrast, the broader measures which include discouraged workers currently stands at a massive 16.5 per cent.
What's more, the dismal jobs market over the past two years has prompted a large number of people to decide to permanently quit the labour market.
It's estimated that if the labour force participation rate had stayed at its 2000 levels, the official US unemployment rate would be closer to 13 per cent.
There's also evidence that employers are responding to the uncertain economic conditions by hiring part-time, rather than full-time workers. This has led to a 3 per cent drop in the number of people working full-time.
The weak state of the US jobs market has led to an increased dependence on the government benefit payments. A staggering 20 per cent of personal income in the United States now comes from transfer payments, which is money handed over by the government.
It's difficult to see how the US is going to rectify its unemployment problem, given that so many of the big employers – such as state and local governments, and the construction, retailing and finance sectors – are facing huge stresses.
There are tentative signs that US factories are hiring more staff, but this is unlikely to be sufficient to compensate for the likely job cuts in other areas.
As David Rosenberg, chief economist and strategist at Gluskin Sheff notes, manufacturing only employs 11.5 million workers in the United States, or about 9 per cent of the workforce.
Even a 5 per cent pick up in hiring in the manufacturing sector would only generate slightly more than 500,000 new jobs.
In contrast, there are 7.7 million people working in the financial services sector – which is facing huge downsizing pressures.
The retail sector employs 14.4 million people, but this sector is under stress due to lower sales and pressure on margins.
Another 20 million people work for US state and local governments, but many of these institutions are grappling with budgetary problems.
And there are 5.7 million people working in the embattled construction industry.
As Rosenberg notes, "The bottom line is that any improvement we are going to see in that 11.5 million manufacturing workforce is going to have to be pretty impressive in order to cushion the blow from what is likely to be downsizing in the combined 48 million workforce in the lower levels of government and the retail, financial and construction sectors."
The combination of hefty debt burdens and weak employment conditions means that US consumers are not likely to start spending any time soon.
In fact, many are worried that bankruptcies are set to rise as consumers find their income is not enough to meet the interest payments on their debt.
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Hilary and Christina carpet-fest
Not sure what the local papers are saying (for two reasons, my Spanish sucks and I am not in Bs As) about the second major international policy f-up in the last week or so.
A stop in Argentina was not on Hilary's itinerary. I suspect that Bill was on board and wanted some Bs As 'strange.' Whatever the reason, her visit to Bs As is appalling. I am not opining on any issue related to the sovereignty of Falklands, rather one of US foreign policy. Last I checked, Great Britain was an ally of ours--not just an ally, perhaps our best and most important ally.
There was no driving reason for the US to stick its nose into the issue, especially in a manner that allies us with Hugo Chavez and puts us in opposition to one of our most important allies. What has Christina done for the US?
I am pretty sure that the attached picture includes two of the most unattractive women ever posted to this forum. All that plastic surgery would have been better spent on giving hot young women bigger breasts.
Christina looks like she is saying "yes, those buck teeth really are unfortunate. Why don't you call my private dentist and see if he can't fix them?" Hilary can't hear a thing. She's guffawing (just like Bill would) grabbing her shoulder and thinking "hmm, your kinda toned for a woman of your vintage. I've never eaten penguin before."
