Thursday, November 20, 2008

New life?

Although our markets continue to weaken and jobs in our economy are hard to find we have hope with a new president stepping into office in January. Barack Obama promises to help our country get out of this mess we are in, he wants to steadily bring back troops from over seas and he plans to share the wealth in the country to the needy. Although realistically we cannot expect big changes to occur over night he promises to act quickly. Last week claims for unemployment benefits jumped to a 16 year high proving that our labor market is weak and weakening rapidly. I believe that in order to begin changing our economy the labor market must begin to flourish and begin putting money in people's pockets. If we do not have money to spend then our economy is not moving and the money flow is standing still. The people need money to buy things to get businesses going the businesses need banks to borrow money for their business, everything revolves around the cash flow in the economy.

This process of digging our economy out of a hole begins with Obama's tax cut efforts for working families and continues with tax relief for small businesses as well. With these to couole of things we can begin to believe and have cconfidence that we are going to be ok. The creation of new jobs will have to begin taking place for us to be able to move forward. My co-workers and I are always taking about how our money is not buying as much stuff as it used to so we believe that is why people cannot go out and purchase goods and services becasue the money is not out there to spend. Top automobile industries are struggling to sell cars, homes are not being sold, loans are not being issued with the same frequency. I think American just want a change from what we have had going on the past couple of years and we are all looking at Obama to be the savior.

Hopefully our economy can get back to the days when Clinton was in office, when people were buying and selling comfortably. Even though things change like the war for example people want that type of feeling where they can buy services and products with confidence not having to worry about high taxes and high gas prices. The money that has been spent in war overseas can start being invested and put elsewhere, where people are getting more out of it. Obama's efforts to get the U.S out of Iraq can solve some of these problems but it will not be easy for the man. There are always going to be critics that do not like what someone is doing but I have confidence that Obama will turn our economy around in a couple of years.

Thursday, October 30, 2008

how can we improve our economy?

After the Feds second interest rate cut in a month Wall Street is feeling better. The governments GDP report has also showed that the economy contracted in the third quarter by less than expected. Although the numbers show that the nation's economic output since 2001, the Commerce Department said that gross domestic product fell at a rate of 0.3 percent annual rate instead of the expected 0.5 percent.

In my previous blogs I have been discussing how bad our economy has been and how we are in a recession, this blog I am trying to lighten the mood and talk about the good that is going on atleast for now. Wall Street seems to be going up as on Tuesday the Dow Jones industrial average got a 889 point surge. With the actions the government has taken to lift our economy and the GDP figures not as bad as anticipated, investors are drawing some confidence. Chief economist, Michael Strauss from Commonfund contends that we are seeing a transition from "don't buy" to "maybe we buy somethin".

Even though the stock market has been rising little by little investors just want to see the market holdup and be more consitent. The rule of thumb for a recession is back to back quaters of a decline in GDP we have suffered our first one this quarter and hoefully we do not have a second one in the final quarter of 2008. If we want to prevent a deep recession we, consumers, need to start spending money again. Banks need to loan money again, and unemployment numbers need to go down. Consumer spending accounts for about 70% of GDP and it has fallen 3.1% this quarter, the biggest drop since 1980.

With unemployment and low bank confidence the economy is not going to be spending money as it needs to. The goverment is taking steps in the right direction by supplying banks with money and the Fed interest rate cuts to try to spark the economy. I just hope that they can continue working on it and I am confident that times will hopefully change soon for the better.

Thursday, October 16, 2008

recession?

After the U.S government passed a bill to help bussineses in distress it seem like we are still headed in the wrong direction economy strength wise. Noone is expecting change this quickly but thing are just not improving as expected. I guess we can start asking ourselves not wether we are in a recession but rather how long will this recession last for. As credit is drying up thanks to the market freeze and consumer confidence is shot it is inevitable that we are in fact in the state of recession in my eyes. Financial panic began when fannie mae and freddie mac became national. Ben Bernanke, the chairman of the fed, does not label this a reccesion but he does believe that the economy will operate below potential for some time.
As a consumer I am very worried not only about my consumption but when will businesses begin to gain their confidence. Until that happens our economy will not be at full strength because they are not willing to spend money. With many financial istitutuions going down like Washington Mutual and Wachovia people are questioning the viability of other global financial istitutions. Noone want to do business with companies that may soon be out of business. Interbank lending has been severly cut back and the libor average has reached extreme highs. Employment fell by 160,000 in september while vehicle sales fell to lows unseen since the early 1990's. People are countinuing to see the house market prices go down and are realizing that their investments are worth less than they were a year ago.
Our economy is in complete disarray and more action will be surely needed if we want to crawl out of this hole. We need to continue looking at consumer and business confidence levels as well as bank's ability and willingness to loan money to consumers so that our economy can start moving again.

Thursday, October 2, 2008

Economy!

Our government has recently proposed a bailout plan for our hurting economy. As the stock market crashed people around the country are worried about what a plan like this could do to tax payers. Gas prices are already at ridiculous prices and Americans are dreading having to pay any more money on anything. With the money market down employment is hard to come by as well as loans for those people looking to borrow money from banks ot other credit unions.

The senate overwhelmingly voted the 700 billion dollar plan in to action on Wednesday making it the biggest federal intervention in our economy since the Great Depression. They have changed the bill from the initial proposition making it clear that tax payers and businesses will be provided with protection and incentives. Americans at first were not happy about the proposed wall street bailout plan but something must be done eventually.

The revised bill incudes millions of dollars in tax breaks for middle class tax payers, $3 billion dollars for rural schools over the next 5 years. Barack Obama realizes that the bill is not perfect but he also states that "from my perspective we need to do something to prevent an economic crisis from turning into a catastrophe." After The Dow Jones Industrial Average plunged 777 points on Monday, draining $1.2 trillion off the value of U.S stocks something needed to be done. Millions of Americans lost up to 10% of their assets in one day which is not good at all.

A senator from Tennessee described this recent downfall as a "wreck in the middle of the economic highway" I think this is very suitable for what the economy is going through. If we cannot not get our economy over this wreck then what is going to happen in our future? All we can do is wait and see. Add your comment to this blog and let us know what you think about what is happening in our financial industry

Thursday, September 18, 2008

First Thoughts!

Although I am not yet a home owner I feel the pain of home owners all over the country, with the housing market down, extreme gas prices, and the recent tumble of the stock market you ought to feel their pain as well. I am relatively young and I don't have much experience in the stock or housing markets but it is impossible to ignor or not pay attention to what is going on. As a finance major my concerns about our economy are building up as much as the concerns of many people across the nation. Small to mid sized business owners are feeling the effect of the recent credit crunch that banks have started to apply. In an article in the USA Today they refer to the recent sale of Merrill Lynch to Bank of America, and the collapse of investment bank Lehman Bros. as top contributers to the recent era of tight credit. As a result of this credit crunch Americans can look forward to lost jobs, higher percentage rates on loans and pretty much a change in livestyle. Even though nearly 50% of Americans believe that our economy will be growing a year from now.

Finance Tip of the Day