Home » Economic News » Economic News Articles in the Great Recession – Archive for Week of 01-29-2012

Economic News Articles in the Great Recession – Archive for Week of 01-29-2012

In predicting for 2012 that the U.S. economy would get worse and that the world would continue to drift deeper into the Great Recession, I also said that the small unemployment improvements that everyone crowed about over the holiday season would unravel as temporary workers were laid off. That did happen for the first couple of weeks of January, as you can see even in this report of the final week, but then it reversed in the middle of this last week of January in a significant way. Employment did much better than I or anyone else expected.

Notice, however, that I did not base my prediction of a worsening US economy on unemployment nor did I say the economy would worsen anytime in the first half of the year. Instead, I based my prediction on a worsening situation for the euro zone that would bounce back to US shores toward the end of the year, crippling any gains made in the US early in this year. In fact, I ventured so far as to say it would “be tempting to see the new year’s first economic reports about U.S. factory production and employment gains as a sign that the snow that has overspread our economy is melting.”

Now, in the news for the final days of January and first days of February, you can see just how tempting that was. Hoards of investors, news reporters and economists this past week caved to the temptation and started immediately to revise all their opinions about 2012 being a tough economic year for the US. They’re fickle. I maintain they are premature in their euphoric reversals of their own flimsy predictions — predictions so flimsy even those who made them do not have faith in them.

In spite of the turnaround in economic news reporting last week (which you’ll see below), and inspite of how economists all over the world are reversing their former outlooks, I stayed the course. (Those economists have been wrong at every major turn of this crisis so far anyway and missed predicting the entire Great Recession.) If you look at this week’s news, you’ll see that the stock market rally created by all of that hope has already snapped. That’s how premature the euphoria was. You’ll see that last weeks rally ended for exactly the reasons I said good cheer would prove premature: Europe has once again stalled on resolving the Greek crisis, which is only the first of many other crises Europe will be faced with this year that are part of its larger euro crisis.

The other basis I gave for predicting that the US economy would worsen toward the end of the year is that the Iranium situation would continue to march toward greater turmoil in a region of the world that can, more than any other, trigger grave economic consequences. So far, the world continues in lockstep toward war in the Middle East with Iran giving no signs that it will budge and inch due to economic sanctions.

What you’ll see in the following overview of last week’s news is a considerable volatility over these exact issues, with jobs first getting worse, as I said they would, then suddenly rebounding, causing the stock market to soar. You’ll see Iran began to take up more and more of the news space.

It was a big-news week with some major swings:


Economic indicators tracked in the week’s headlines

  • Consumer Confidence Unexpectedly Falls in JanuaryMore Americans are worried about the country’s weak job market. The index of consumer attitudes dropped to 61.1. Economists had expected a reading of 68.0. [The economists are, as always during the Great Recession, way overoptimistic.]
  • Dollar rallies against yen, euro after US jobs data The dollar rallied against the yen and euro on Friday, sending both to session lows after a report showed a larger-than-expected gain in US jobs, which investors perceived as reducing the likelihood of further quantitative easing by the Federal Reserve.
  • Dow Average Caps Longest Slump Since August U.S. stocks sent the Dow Jones Industrial Average to its longest retreat since August, as reports showed consumer confidence trailed economists’ estimates and business activity cooled. “The European crisis is … just never ending.”
  • Job Cuts Jumped 28% in JanuaryThe number of job cuts announced by employers jumped 28 percent in January, led by retailers and financial firms. Cuts are largely due to restructurings and store closings.
  • Jobs strength lifts Nasdaq to 11-year high A January surge in hiring lifted U.S. stocks on Friday, with the Nasdaq index hitting an 11-year high, as the data boosted hopes the world’s largest economy has turned a corner, and the unemployment rate dropped to nearly a three-year low of 8.3%
  • Rising Deficits Pose Major Threat to Economy: Bernanke Rising federal budget deficits are posing a “serious” threat to the U.S. economy and are likely to cause a crisis if not brought under control, Federal Reserve Chairman Ben Bernanke told Congress Thursday.
  • S&P Warns of Cuts; Another US Downgrade Coming? Concerns over the size of United States debt reared their head once again as ratings agency Standard & Poor’s warned that health care costs for a number of highly-rated Group of 20 countries, including the U.S., could hurt growth prospects and harm th
  • US economy creates 243,000 jobs in January The US economy saw highest total of new jobs in nine months (243,000). Economists had forecast an increase of about 150,000 jobs. The unemployment rate dropped to 8.3%, which was the lowest rate in nearly three years.
  • US factories grow at fastest pace since June; construction spending up for 5th straight month U.S. factories grew in January at the fastest pace in seven months, boosted by a rise in new orders. And builders ended a poor year for construction by spending more on homes and projects for the fifth straight month.
  • US Stocks Climb 1%, Led by Banks; Amazon Skids Stocks extended their gains Wednesday, adding to their robust rally from the previous month, as investors digested a handful of domestic economic news and after some better-than-expected reports from Europe and China.

Euro crisis updates in the economic news this week

  • Euro zone jobless hits highest level since birth of euroJoblessness among countries sharing the single currency rose to 10.45% in December, on a par with an upwardly revised November figure. “We’re looking at a further increase over the coming months, so that is worrying … this could lead to political unrest.”
  • European Budget Deal MAY BE Near, but Much Left UndoneEuropean leaders were poised Monday to agree to tougher new measures to enforce budget discipline in the euro zone, but still showed few signs of producing a solution for the sovereign debt crisis or a credible plan to revive fragile economies.
  • Greek fury over plan for EU budget control Greece’s finance minister angrily rejected a German plan to impose a budget overseer on Athens in return for a new €130bn bail-out, saying it would improperly force his country to choose between “financial assistance” and “national dignity.”
  • Investors face more than 70 pct loss in Greek deal Investors participating in a deal to slash Greece’s massive debt would face an overall loss on their bond holdings of more than 70 percent, a person involved in with the negotiations said early Tuesday, explaining why it is taking so long to come to agreement.
  • More quantitative easing likely in UK after fall in money supply The Bank of England said that UK consumers repaid credit card debts in December & corporate borrowing fell at its fastest rate since the summer of ’09. The broad measure of the money supply dropped by 1.4%, the biggest one-month decline on record.
  • Pundits fear perfect euro storm despite official optimism Despite attempts by political and business leaders to suggest the eurozone has turned a corner, the prevailing view of pundits is things can only get worse and a “perfect storm” is brewing.

Housing economic crisis articles

  • FHA Headed Toward Collapse?The Federal Housing Administration is deeply insolvent and headed toward a financial crash like that of Freddie Mac and Fannie Mae in 2008, according to the American Enterprise Institute. Some dismiss the conservative think tank’s analysis as overblown.
  • Home prices drop more than expected in November: S&P The index 0.7%, more than economists had expected. The decrease added to the 0.7% decline in October. “The consensus view was that the … decline in home prices was slowing, and in fact what we’ve seen at the end of the year is that [it] … is accelerating.

The Iranium reaction in the news

Articles of Justice during this Great Recession

Occupy Wall Street / Occupy Movement news articles

Other economic updates / news articles

  • Deficit Again Expected to Top $1 Trillion The federal deficit will top $1 trillion for the fourth consecutive year in fiscal 2012 as the economy continues to grow at a sluggish pace. The unemployment rate will remain above 8% both this year and next year and above 7% until 2015.
  • More Than Half Of Americans Say Tax Capital Gains Like Work The top 0.1 percent of Americans are netting half of all capital gains, and the capital gains tax is the lowest it has been in decades, making the richer richer than ever encouraging them to make money only off of investments, not off manufacturing.

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