Thursday, March 31, 2011

USA & Global Economy: Expansion Continued in March (GDP Charts) *Monthly Economic Review*

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USA and Global Economy: Monthly Economic Review


USA & Global Economy: Expansion Continued in March

The immediate concern for both the USA and Global economy continues to be high oil prices as a result of the Arab revolutions. As noted last month, the current economic expansion will be at risk if high oil prices persist into spring.

Although the Arab democracy movements, EU sovereign debt crisis, the Japan natural disaster, and USA deficits and increasing debt continue, both the USA and Global economy expanded onwards. Of course, all is not well:
1) the USA financial system continues with problems and weaknesses, including a foreclosure fiasco and crisis
2) the USA unemployment and underemployment remains high, USA weekly unemployment claims continue at 400,000+
3) USA real estate continues in a market depression
4) the USA cannot stop deficit spending therefore the USA has an ever increasing national debt
5) the USA local and state governments are in fiscal crisis
6) 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 years. However, the USA GDP has grown for 6 consecutive quarters through Q4 2010. Currently the risk of a double dip recession appears much diminished, if not totally nonexistent. A stalling of the USA economic expansion in 2011 is now more probable, but the most likely immediate scenario appears to be a Q1 2011 GDP growth of approximately +3.0% QoQ. Anything less will be a setback.

Below are March blog post headlines from Boom Doom Economy,  Financial Controls, Baidu Planet, and Matrix Markets summarizing select economic data and news, in approximately 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. Much is lagging economic data from February and even January. However, it does appear that economic expansion did continue in both the USA and on a Global scale.

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 March will now begin and should indicate continuing economic expansion. Q4 2010 was better than initially projected for the USA and Global economy. Whether the pace of the economic expansion will continue on to Q1 2011 or will slow is the concern now and is clouded by the high oil prices, the Japan natural disaster, and ongoing Middle East turmoil.

USA Positive Economic Data and News
USA Weekly Unemployment Claims Under 400K for 3rd Week (Charts) *4-week average continues under 400K*
● USA CEO Confidence Hits Record High *Economic Outlook Index at nearly 10-year high*
● S&P 500 Regains 1300! (Chart) *Above 20 & 50 day averages*
● USA 2010 Annual GDP Revised Upwards to +2.9% (GDP Charts) *2009 GDP was -2.6%*
● USA GDP Revised Upwards to +3.1% for Q4 2010 (GDP Charts) *Qtly GDP $14.87 trillion annualized is all-time high*
● USA Weekly Leading Index Dips to 129.3 (Charts) *Annualized growth rate dips to +6.5%* [continues at encouraging level]
● USA Monthly Leading Economic Index Continues Upwards (Chart) "Pointing to economic expansion*
● USA Monthly Food & Retail Sales at All-Time High! (Charts) *February sales continue upward trend*
● Federal Reserve: "USA Economic Recovery on Firmer Footing" (GDP Chart) *Labor market improving gradually*
● Fed Beige Book: "USA Economic Activity Continued to Expand" (Review) "Labor markets modestly improved"
● USA Services Sector Growth at Post-Recession High! (Chart) *Non-Manufacturing Index expands for 15th month*
● USA Manufacturing PMI Highest Since May 2004! (Chart) *Economy expanded for 21st month*

USA Neutral and/or Negative Economic Data and News
● USA Consumer Confidence at 3-Month Low (Charts) March: "Sharp decline in expectations"
● Bank Failure Friday: FDIC Seizes 1 Bank (Charts) *2011 Totals: Failures 26, Cost $1.85 Billion*
● USA Industrial Production Dips (Charts) *Just below post-recession peak* [of concern, but still positive]
● USA Consumer Sentiment Plunges in March (Charts) *Rise in gas prices lowers optimism*
● USA Consumer Credit Increases in January (Charts) *Revolving credit at another cyclical low* [Unsecured credit lending is tight]
● USA Unemployment Rate Drops to 8.9% (Charts) *Jobs growth +192K in February* [Report mostly useless with contradictions]

Global Positive Economic Data and News
● China Monthly Leading Economic Index Increases (Chart) *Just below post-recession high*
● China Growing at Top Speed (Video) "Breathtaking pace of change"
● Global Manufacturing PMI at 2nd Highest All-Time! (Chart) *20th month of expansion*
● Global Economic Output Highest Since April 2006! (Chart) *February marks 19th month of expansion*
● Global Services Sector Growth Highest Since April 2006! (Chart) *19th month of expansion*

Global Neutral and/or Negative Economic Data and News
● Sovereign Fiscal Responsibility: The Best & Worst Nations (List) *USA in Worst 10*
● China Manufacturing Index Plunges (Chart) February: "Output rises modestly" [increasing at slower rate]
● High oil prices as a result of the Arab revolutions could materially slow the economic expansion


USA GDP by Quarter

USA GDP % by Quarter (Chart) The chart below is the annualized percentage change of the Real 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% was a bounce upwards and the 2010 Q4 +3.1% continues the small, marginally adequate, 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 the Bureau of Economic Analysis from 2005 Q1 through 2010 Q4 (final 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 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 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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