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What is the Outlook for the US Economy ?

What is the Outlook for the US Economy ?. Status of Key Economic Variables. OIL - Prospect of war with Iraq pushed prices briefly over $30 a barrel at mid-week. TRADE – the USA had a $130bn Q2 trade deficit, above the expected $126 bn. Economic Snapshot.

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What is the Outlook for the US Economy ?

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  1. What is the Outlook for the US Economy ?

  2. Status of Key Economic Variables OIL - Prospect of war with Iraq pushed prices briefly over $30 a barrel at mid-week. TRADE – the USA had a $130bn Q2 trade deficit, above the expected $126 bn.

  3. Economic Snapshot AUGUST 2002 ISM BUSINESS SURVEY AT A GLANCE

  4. Last weeks Greenspan Speech: Suggested the economy continues to face challenges, urged Congress to do a better job of trimming national budget deficit. "The economy appears to have withstood this set of blows well," including stock market declines and terrorist attacks "although the depressing effects still linger,“ Greenspan's speech and a Labor Department report of a five-month high for jobless claims led to a big sell-off on Wall Street. - "The market is now assuming the Fed won't do anything in September"

  5. Employment: Negative to Mixed on a jobs led recovery • U.S. unemployment dipped to a five-month low in August of 5.7%, down from July's 5.9% and lowest since 5.7% in March • While unemployment decreased, jobs growth of 39,000 was driven entirely by government hiring and was still a mere fraction of the 100,000 to 150,000 pace of growth that economists say will be needed to signal the job market is in a solid recovery • Long-Term Joblessness rose by 50% over the last year

  6. Industry Snapshot The Fed's own beige book study released Wednesday showed sporadic growth continues in various regions and industries, although it has slowed in recent weeks - particularly the manufacturing sector.

  7. America’s Property Bubble is the next sector to watch: America is now in the midst of a Property Bubble. • US house prices have "risen more in real terms since 1997 than in any previous five year period since 1945." • House prices have risen by 30% since 1995- three times the 10% rise in the rental index over that same period. This gap between house-price and rental inflation has never been wider. “If that’s not a bubble, I don’t know what is.” – Steven Roach Chief Economist, Morgan Stanley

  8. Positives for the US Economy • High consumer spending (vehicles, home furnishings) • Strong productivity trends • Low int. rate environment • Low inflation

  9. What are going to be the future problem areas? Shakeout has already occurred in a number of areas: • Nasdaq was the first to go • followed by Information Technology • and then Telecom Future correction are expected in the following: • Dollar bubble • Property bubble • biggest bubble of them all - the American Consumer

  10. Potential Destabilizes of US Economy • War with Iraq - Oil Price Spike and Geopolitical Stability • Deterioration in consumer spending • Slowdown in job growth • Stagnant or deteriorating corporate earnings that could lead to a slowdown in hiring and capital spending • Bursting of Property Bubble

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