Monday, January 31, 2011

USA & Global Economy: Recovery Continued in January (GDP Charts) *Monthly Economic Review*


USA & Global Economy: Manufacturing and Services Sectors Continued Expanding after the Summer Slump

USA & Global Economy: Recovery Continued in January
* Monthly Economic Review *

Although the EU Sovereign Debt Crisis continues, there is an Egyptian uprising, and also general discontent in the Arab World, both the USA and Global Economy showed continued economic recovery after the Summer Slump. Of course, all is not well: the USA financial system continues with problems and weaknesses, including a foreclosure fiasco and crisis, the USA unemployment rate remains high, USA weekly unemployment claims continue at 400,000+, the USA real estate is in a market depression, the USA cannot stop deficit spending, the USA has an ever increasing national debt, and the Federal Reserve continues quantitative easing aka monetizing and devaluing the U.S. Dollar. There does appear to be a Day of Reckoning for the USA on the horizon, although no one really knows when. The aftermath of the Credit Bubble and Great Recession will linger for a long time. However, the USA GDP is growing faster than projected and the risk of a double dip recession now appears much diminished, if not totally nonexistent.

Below are January blog post headlines from Boom Doom Economy,  Financial Controls, and Baidu Planet summarizing select economic data and news, in reverse chronological order. This is not a comprehensive list of key economic data. It is selected economic data that gives a general idea of the overall economic conditions, with the exceptions noted in the preceding paragraph. Further below is the historical and projected USA GDP per the U.S. Bureau of Economic Analysis. Also further below is the projected GDPs for the USA, Japan, the Euro Area, and Total OECD per the latest OECD economic outlook. The economic data for January will now begin and should indicate continuing economic recovery and expansion. Q4 2010 has been a better than initially projected quarter for the USA and Global Economy. Whether the pace of the economic recovery will continue on to Q1 2011 or will slow is the concern now.

USA Positive Economic Data and News
USA 2010 Annual GDP Estimated at +2.9% (Annual GDP Chart) *2009 GDP was -2.6%*
USA GDP Q4 2010 Estimated at +3.2% (Quarterly GDP Charts) *2010 Annual GDP +2.9%*
USA Weekly Leading Index at 6-Week Low (Charts) *Growth rate at 3-week low*
USA Consumer Confidence at 8-Month High! (Chart) "Consumers have begun the year in better spirits"
USA Industrial Production at 28-Month High! (Charts) *16th monthly increase in past 18 months*
USA Monthly Food & Retail Sales at All-Time High! (Charts) *December sales continue upward trend*
USA Unemployment Rate Decreases to 9.4% (Charts) *103K jobs created in December*
USA Non-Manufacturing Index Pops +2.1% in December (Chart) *At post-Great Recession high, 12th month of expansion*
USA Manufacturing PMI Up in December! (Chart) *7-month high, 17th month of expansion*

USA Neutral and/or Negative Economic Data and News
Bank Failure Friday: FDIC Seizes 4 Banks (Charts) *2011 YTD: Failures 11, Cost $1.19 billion*
USA Weekly Unemployment Claims Surge to 454K (Charts) *Highest since October*
Federal Reserve: USA Economic Recovery Is Continuing (GDP Chart) *Insufficient for significant improvement in labor market*
USA Consumer Sentiment Drops in January (Charts) *Rising gasoline prices dampen mood*
USA Total Consumer Credit Increases for 2nd Month (Charts) *Revolving credit down 27th consecutive month*
Federal Reserve Releases December FOMC Minutes (Video) *USA economic recovery not decreasing unemployment*

Global Positive Economic Data and News
World Productivity Returned in 2010 (GDP Charts) *Projected slightly lower in 2011*
Global All-Industry Output Index at 8-Month High (Chart) *Global GDP growth accelerates*
Global Services PMI at 41-Month High! (Chart) "Important momentum & balance to global recovery"
Global Manufacturing PMI Up in December! (Chart) "Robust improvement in overall operating conditions"

Global Neutral and/or Negative Economic Data and News
Global Sovereign Risk: The Top 10 Most Risky Nations (Lists) *Q4 2010 Credit Risk Report*

USA Earnings Season Q4 2010

Earnings season started in January for Q4 2010. Below are related blogs post headlines from Osprey Flyer, Financial Controls, Matrix Markets, Google Investor, and Apple Reporter. This is not a comprehensive list of companies, of course, but a selected list yet some are considered bellwether corporations for their particular sector. Overall, the corporate earnings season has been good, if not very good. No overall weaknesses via quarterly earnings reports in any sectors suggest the USA economy recovery is faltering or stalling. Some banks in the financial sector continue struggling from the 2008 USA Financial Crisis.

Positive Corporate Earnings
Microsoft Reports Record Earnings per Share in Q4 (Financial Charts, Review) *Lower gross margin only negative* MSFT
Google Reports Excellent Q4 Earnings (Financial Charts, Review) *Another record-setting quarter!* GOOG
Apple Reports Legendary Financial Results! (Financial Charts, Review) *Record revenues & earnings; margins increase!* AAPL
Wells Fargo Reports Improved Earnings in Q4 (Financial Charts, Review) *Credit losses continue decreasing* WFC
VMware Reports Record Earnings in Q4 (Financial Charts, Review) *Outlook disappoints* VMW
JPMorgan Reports Good Q4 Financial Results (Financial Charts, Review) *EPS $1.12* JPM
Intel Reports Excellent Q4 Financial Results (Financial Charts & Review) *EPS $0.59* INTC

Neutral and/or Negative Corporate Earnings
S&P 500 Drops on Egyptian Uprising (Charts) *Economic news, corporate earnings pushed aside*
Bank of America Reports Huge $1.2 Billion Loss (Financial Charts, Review) "Headwinds still remain" BAC
Morgan Stanley Reports Modest Q4 Improvement (Financial Charts, Review) *EPS $0.41* MS
Goldman Sachs Reports Mixed Q4 Earnings (Financial Charts, Review) *Revenues down, Earnings up* GS
Citigroup Reports Lackluster Q4 Earnings (Financial Charts, Review) *EPS $0.04* C

USA GDP by Quarter

USA GDP % by Quarter (Chart) The chart below is the annualized percentage change of the GDP (seasonally adjusted at annual rate) from the preceding quarter (QoQ), the most common GDP measure. As can be seen, there was a negative dip into the Great Recession beginning 2008 Q2, a rebound peaking in 2009 Q4, a downward trend in 2010 Q1 and Q2. The USA economy appeared to be at a crossroads at 2010 Q2: a continuing downwards trend towards zero growth or a bounce upwards from there? The 2010 Q3 +2.6% (third estimate) was a bounce upwards and the 2010 Q4 +3.2% continues the uptrend. The Federal Reserve via the Federal Open Market Committee has resorted to QE2, a second round of quantitative easing, plus indirect quantitative easing in an attempt to boost the economy, increase the GDP, and bring down the unemployment rate. The chart covers the last 24 quarters of the USA GDP as reported by BEA from 2005 Q1 through 2010 Q4 (advance estimate).

OECD: GDP Growth Projections by Quarter

OECD: GDP Growth Projections by Quarter (Chart) Below is the OECD GDP Growth Projections by Quarter for the USA, Japan, the Euro Area, and the entire OECD. These are annualized percentage growth rates. The chart is for 10 quarters, from Q3 2010 through Q4 2011. The USA lowest quarter is +1.9% in Q4 2010 (now) and the highest is +3.7% in Q4 2012 (2 years from now). The Japan lowest quarter is +0.6% in Q2 2011 and the highest is +2.7% in Q1 2011 (next quarter). The Euro Area lowest quarter is +1.3% in both Q4 2010 (now) and Q1 2012 (next quarter). The highest quarter is +2.2% in both Q3 2012 and Q4 2012 (2 years from now). The Total OECD lowest quarter is +1.7% in Q4 2010 (now) and the highest is +3.2% in Q4 2012 (2 years from now). No negative GDP quarters are projected nor on the graph.


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