Is the U.S. economy improving? That is what Federal Reserve Chairman Ben Bernanke would have us believe.
Federal Government Finances.
the national debt is completely and totally out of control. Since Barack Obama took office, the U.S. national debt has increased by nearly 4 trillion dollars .
Keep in mind that from George Washington to Ronald Reagan, the U.S. government accumulated only 1 trillion dollars in debt.
Between 2007 and 2010, U.S. GDP grew by only 4.26%, but the U.S. national debtsoared by 61% duringthat same time period.
State And Local Government Finances.
All over the United States, there are large numbers of state and local governments that areon the verge of bankruptcy .
For the moment, let'sjust focus on the state of Illinois.
Did you know that things have gotten so bad in Illinois at this point that the Illinois state government is lettingbills go unpaid for long periods of time on a regular basis?
It's true.
Right now they have billions in unpaid bills and they are facing a financial future that is so bleak that it is almostindescribable.
Unemployment.
Over the past decade,U.S. multinational corporations have been laying off millions of workers inthe U.S. and hiring millions of workers overseas to take their place.
The labor of American workers is rapidly losing value in a globalized economy. Big corporations have a tough time justifyingpaying ten times more to a worker in the United States when they are allowed to hire people for slave laborwages overseas.
Inflation.
Ben Bernanke may not admit it, but the truth is that the priceof just about everything is soaring.
For example, when Barack Obama took office, the average price of a gallon of gasoline in the United States was$1.83. Today it is about 3...
By making inflation appear lower, it would be easier for Congress to deny costof living increases to those on Social Security and other social programs.
How sad is that?
Economic Suffering
As American families find it increasingly difficult to pay the mortgage and put food on the table, many of them find themselves forced to put off other expenses. According to one recent survey, 26 percent of Americans have put off doctor visits because of the economy.
Other Americans can't make it at all without government assistance. As 2007 began, there were only 26 million Americans on food stamps. Today, thereare more than 44 million Americans on food stamps , which is an all-time record.
It is not good to haveso many Americans on food stamps, but it is probably better than the alternative.
If there were tens of millions of Americansthat could not feed themselves we wouldprobably already have economic riots in the streets.
Solutions?
So do our politicians have any solutions?

Hey Smart....I think it depends on who you ask...The "probability" for another recession in 2012 is decreasing and indicators are up across the board, but how reliable are they?....
Labor, consumer spending, manufacturing, and housing are all showing "tiny" signs of improvement ... Even so, I am certain we are years away from being able to honestly state the US is enjoying a strong, positive economy, years away....

Well I can't speak for anyone else but I am one step away from homeless so IMO no, it is not better.

Are these signs of an economy that is"strong, and getting stronger"? At best, much of this so-called "growth" has been a result of statistical manipulation, especially through the downward revision of previously publishednumbers.

Illusion Of Economic Recovery – Feelings & Facts
http://www.marketoracle.co.uk/Article33013.html
Of course, the US is NOT in recovery, from my point of view. The US cannot be in recovery as a collective economy because the economy itself is filled with propped-up financial enterprises that in turn support the failed, monopoly fiat-money system that the power elite for the moment insists on continuing.
that theidea the US economyis in a "recovery" and is generating additional jobs has taken root throughout the American media.

Yes, exactly what I was alluding to...Manipulated numbers are always present...and even more so in an election year..

Money Maketh The Economy

Where is The Money?

Who Has The Money?

From my personal perspective it is improveing. Gas prices are realy dragging things down for much of the economy. I am sure if we stopped brow beating Iran the prices would drop over night.

Yes agreed..stop browbeating Iran and get on with fixing America

Iran has nothing to do with gas prices. Gas prices are set by speculators who buy and sell oil barrels by the thousands....oh yeah and greed. They have also bought congress and told congress to allow price fixing and gouging.

Seriously? The threat of conflict in the middle east is driveing the price right now no doubt about it.

Let Iran sell its oil so production outpaces demand and the price comes down, I think the 1% calls that the free market.
c

That's an excuse they use to jack up oil prices just like when a hurricane is announced gas prices go up.

It kills me to admit it, but you're pretty close with this post....It is not the THREAT of conflict, it is the continuing ME conflict(s) and the resulting 2010 sanctions that are driving prices up, in other words terrorist activity!...When the supply out of Libya was interrupted this allowed Iran to do two things, sell stockpiled crude and raise prices...Iran has not increased production because the sanctions make it impossible for them to get the required technology and expertise....IRAN IS SELLING OIL BEST, believe this!....Crude represents close to 85% of their total exports.....

Until Iran renouces the use of a nuclear device.

We have no choice.

they have made war talk.

One must allways be cautious of such.

edit* Iran has a right to devices. I was specifically referring to a device that becomes a mighty thunder of war...

Dust, rot, and death follow the use of such things for years after.

Аgreed.

What terrorist activity? The fact that Irans survival depends on it selling oil is all the evidence I need to understand a war is not in their best interests. A war only serves Israeli and US interests. Lets hope the Iranians who have signed th nuclear non proliferation treaty will not be demonized and be our latest victim, we cant afford it.

as if the Oilproducers would let that happen!
If the price of Crude comes down,they reduce Production,and Up goes the Price!

Doubt that the Saudis and other Producers are going to pump themselves into the Poor-House!

Jobs in my area have become so scarce.

They made plans to construct a Hockey arena in three years (this was now 2 years ago). Once news of this hit the streets, they are already no longer hiring. They haven't even built the effing thing yet.

Everyone I've ever known has moved away or resorted to what I have, working online.

..years away you say?

How?

Prices and costs keep going up.
Jobs are becoming more and more scarcer.
Soon, it'll be like 25.00 for a gallon of milk.
That may be just figurative or an exaggeration..
..but when you lack a job or funds..
...it's sure gonna feel like it.

GDP
Last updated: January 27, 2011
The U.S. economy will grow about 2.3% in 2012, a bit faster than the 1.7% pace in 2011.

Consumers are finally loosening the purse strings after four years of saving more to restore wealth lost in the housing crash and the 2008 stock market drop. Even those with sizable debt are now willing to dip into savings to buy essentials, including big-ticket items such as cars when their clunkers reach the end of the road.

Job creation is picking up, and businesses are investing in new equipment to expand production after several years of slowly increasing production to work off spare capacity. Fears of a severe financial crisis in Europe are lower. U.S. exports to Europe will get trimmed but not slashed as the recession there continues to shape up as mild and not severe. Finally, housing will be a small plus to the economy after subtracting from growth the past few years.

Unfortunately, growth isn't accelerating as it normally does in a recovery. The economy grew at an annual rate of 2.8% in the last quarter of 2011, but the pace will slow again early in 2012 and pick up only slightly by the end of the year. A sustained recovery still is not under way, more than two years after the end of the Great Recession.

And, of course, the economy remains vulnerable to possible shocks -- war, terrorism, an oil price spike or a natural disaster. One or more of these could tip the U.S. into another recession.

There is little prospect of a major fiscal or monetary stimulus, or of any other development that might boost growth. The payroll tax credit, even if extended to last for all of 2012, merely maintains current tax rates. President Obama and the leading GOP presidential candidates have all indicated that they are opposed to more stimulus, at least during the election season. And a majority of Federal Reserve Board members oppose a major new monetary stimulus unless the economy worsens substantially.


Dept. of Commerce: GDP Data
EMPLOYMENT
Last updated: February 3, 2012
It was welcome news, but January’s surprisingly strong report of 243,000 more jobs won’t be sustained. Unemployment will end 2012 about where it was last month — 8.3%.

Job creation will average about 175,000 a month in the coming year, only a little faster than the workforce will grow. We expect private employers to create a net of about 2.28 million jobs in 2012, while federal, state and local governments cut about 180,000 positions.

Paradoxically, unemployment will tick up a bit in the next few months as the speedup in job creation lures discouraged workers back into the job market. Then it will fall a few tenths of a percent by year-end.

The labor market faces some high hurdles. Overseas growth is slowing in Asia, and Europe is sliding into a recession. In the U.S., housing demand remains weak, reflected in a gain of only 21,000 construction jobs net last month. And revenue-strapped local governments continue to lay off workers while businesses are slowing down their purchasing of new equipment after a tax credit has ended. As a result, gross domestic product will grow only about 2.3% in 2012, well short of the 4% or more that is typical in a recovery.

Growth also remains fragile and vulnerable to shocks, like last year’s earthquake in Japan and the political paralysis in Europe and the United States over controlling government debt, both factors that have dampened the recovery.

January’s gains were widespread. The private sector in total added 257,000 jobs while governments cut 14,000. Most notable was an increase of 50,000 in manufacturing due largely to making cars and other durable goods. A good sign of continued strength is the jump in car sales last month. That will give U.S. and foreign carmakers a reason to keep production high and to plan more hiring.

One down note: Hourly earnings ticked higher but continue to lag inflation, rising 1.9% over the past 12 months. Sluggish pay gains will put a crimp in consumer spending and delay the economy from reaching its potential. In fact, if January’s job growth number were matched every month going forward, it would be about 2019 when the U.S. returned to what is considered full employment — a 6% jobless rate.


Dept. of Labor: Employment Data
INTEREST RATES
Last updated: February 3, 2012
Medium- and long-term interest rates, near record lows, won’t increase much, if at all, until 2013.

The 10-year Treasury note, the benchmark for medium-term rates, will remain stuck near 2% for much of 2012. Home mortgages, averaging about 4% for a 30-year fixed rate loan, will inch up a few tenths of a percent by 2013, as the housing market hits bottom and improves slightly.

In September, concerned about slow economic growth, the Federal Reserve announced it would sell up to $400 billion in medium-term bonds and buy an equal amount of longer-term debt, putting downward pressure on long-term rates. This will continue into 2012, but it won’t prevent rates from edging upward as the economy grows modestly.

The Fed announced at its January meeting that it was adjusting its expectations for raising interest rates. Previously, it had said it expected to keep its benchmark rate for overnight loans near zero until mid-2013. Last month it said that rate will stay low until 2015. The decision reflects the judgment that a solid economic recovery is probably several years away and that inflationary pressures will be minimal until then.

Separately, the Fed adopted an explicit target for inflation of 2% a year, formalizing something that the central bank had done informally for some time. The idea is that it would alter interest rates to keep inflation from running much above or below this target, but in reality the Fed has tolerated inflation near 1% for extended periods, and did nothing in 2011 when inflation was running at 4% for much of the year.

The new deadline on targeting interest rates has limited practical effect, since a large number of the Fed policymakers who adopted the goal will not be in office by the end of 2014, including possibly Chairman Ben Bernanke, whose current term ends in January of that year. Bernanke said after the January meeting that the Fed had a “limited ability” to predict economic conditions three years away and thus stick to its promise, but in the near term the new goal will help keep rates in check in 2012.


Federal Open Market Committee
BUSINESS SPENDING
Last updated: January 26, 2012
Solid growth in business investment in 2011 will slow in 2012, as businesses show some caution in committing to putting money down on big-ticket items.

This spending by business — which comprises investment in buildings, equipment and software — will grow by 6% in 2012, after expanding by 8% in 2011. That’s not bad in an average year, but it's a disappointing pace after the steep fall of the Great Recession, which slashed such investment by 19%. Even after a 17% gain in 2010, business investment is still running behind the level reached in 2007.

Business spending of 6% in 2012 won't spur much hiring – growth of 10% a year or more will be needed. We expect the economy will add about 150,000 jobs a month in 2012, short of the 200,000 or so needed to sustainably lower the unemployment rate.

Some factors point to an improving business environment in 2012. The recent infusion of capital into the European banking system eases concerns about a global financial crisis. And Congress seems to be moving toward a full-year extension of the payroll tax cut, which would remove a cloud over consumer spending.

Orders for durable goods — those lasting three years or more — surged at the end of 2011 and finished up 10% for the year. The rise of 4.1% in November and 3% in December will continue at a somewhat slower pace in 2012, but one promising sign for overall economic growth is that buyers of durable goods are adding to their inventories, a signal that they see stronger demand ahead.


Census Bureau: Durable Goods Report
Census Bureau: Business Inventories
Census Bureau: Construction Activity
INFLATION
Last updated: February 17, 2012
Modest economic growth in the U.S. and a slowdown in the rest of the world spell lower inflation this year, easing pressure on the Federal Reserve to raise interest rates anytime soon. Look for the Consumer Price Index to increase by only about 2% in 2012, following a rise of 3% last year. That was the largest annual rise since 2007 and helped slow economic growth to a crawl in the first half of last year.

Core inflation -- which excludes food and energy prices, which tend to be volatile from month to month -- will start falling in the next few months. Although overall inflation has been dropping since September, core inflation has been rising. The 2.3% rate over the 12 months through January was the highest since mid-2008 and a level that would give the Federal Reserve pause if the economy were growing more swiftly.

Energy prices, which fell 8% in the second half of 2011, will likely rise 8% to 10% by summer, the effect of seasonal demand and supply concerns on crude oil prices. We expect food prices to continue the recent slowing trend after increasing 4.7% in 2011. Price hikes for rent, medical services, prescription drugs and education will also pick up some speed this year, though that trend will be partially offset by decelerating increases in prices for apparel and new cars.

Increases in prices of wholesale goods will also ease this year, climbing about 3% in 2012 after a 4.8% jump last year. The slower pace in producer price increases will result largely from slower global economic growth, weighed down by a recession in Europe.


Consumer Price Index Table
Dept. of Labor: Inflation Data
ENERGY
Last updated: February 17, 2012
Look for West Texas Intermediate (WTI) crude oil — the benchmark for U.S. oil pricing — to trade in the $100- to $105-per-barrel range into early spring, though occasional sharp ups and downs will continue to be part of the landscape.

But a huge overhang of supply of natural gas will keep prices relatively low — good news for consumers and businesses that rely on it for heating, or for the production of chemicals and other goods.

At Henry Hub, the pricing point for natural gas futures on the New York Mercantile Exchange, the price dropped a whopping 72¢ to $2.34 per million British thermal units between January 6 and 20. Prices quickly spiked to $2.67 after the announcement of output cutbacks by Chesapeake Energy, a major gas producer, but then stabilized around $2.70 when other producers declined to follow Chesapeake’s lead. Gas should trade between $2.40 and $2.70 in coming months, thanks to continued mild winter weather and high stock levels.

Meanwhile, the recent volatility in the oil market, which pushed prices over $100 per barrel recently, doesn’t indicate any looming imbalance in supply and demand. Rather, it's the product of hedge funds and speculators who play an increasingly larger role in oil trading. Any hint of market disruption sends them scrambling, causing prices to swing.

Most recently, traders have bid up the price of oil because of the Iranian threat to close the Strait of Hormuz if Israel or western nations take aggressive action to shut down Iran’s nuclear development program. The strait links the Persian Gulf with the Indian Ocean; roughly 20% of the world’s oil supply passes through it daily. Any shutdown, however temporary, would cause prices to spike sharply.

Conversely, traders also remain worried that European debt woes will worsen in 2012, causing economic growth on the Continent to slow and further cutting into global oil demand. But at least for the moment, fears of supply disruptions in the Middle East are winning out over fears of slower economic growth.

The national average price of gasoline, now $3.53 per gallon, is up from both last week and last month. It will likely climb higher as the summer driving season nears, with regular unleaded selling for between $3.80 and $4.00 per gallon by early June.

For truckers and other consumers of diesel fuel, more bad news. At $3.94 per gallon, diesel is holding on to a relatively high price, largely because exports are on the upswing. And prices will trend upward heading into summer, well above $4.00 per gallon.

The cost of heating oil, now $4.03 per gallon, is sure to stay high, even if the winter weather remains relatively mild in much of the country. It will likely retail between $3.90 and $4.10 per gallon for the remainder of the winter heating season.


Dept. of Energy: Price Statistics
HOUSING
Last updated: February 17, 2012
Housing is on the upswing, but expect only modest gains in sales, prices and construction in 2012, as the effects of the burst housing bubble linger, dampening optimism. As a result, home construction, usually a big engine in economic recovery, still won't have much horsepower this year, contributing to lackluster economic growth and little improvement in the unemployment rate.

By midyear, home prices will finally be poised to begin a slow, but sustained, climb back up, as buyers become convinced that the bottom has been reached. Between now and then, prices may drop an additional couple of percentage points, but will likely make that back by the end of the year. Down more than a third since 2006, prices, on average, won't recover to previous highs for years.

Look for existing-home sales to edge up about 3% in 2012 to 4.4 million -- about twice last year's gain -- as still-low mortgage rates and stabilizing prices tempt buyers and sellers into the market. No such luck for new-home sales, which will remain flat at about 310,000 this year. That's down from 1.5 million before the crash. The inventory of unsold new homes is falling, but it's still too high to spur a gain in sales.

Buoyed by a healthy jump in multifamily building, housing starts will reach 720,000 this year, up from 607,000 in 2011. Still, that's a far cry from the 2 million starts a year racked up before the bubble burst. Moreover, builders will remain hesitant to start new single-family homes until new-home sales pick up. Single-family-home starts dipped 1% in January, even as overall starts rose 1.5% because of multifamily construction.

Six years on, the housing bust still weighs heavily on the market and the economy. Low mortgage rates help, but more lenders are requiring a down payment of 20% and imposing other, more rigorous terms, discouraging some first-time buyers. A third of pending deals are falling through, largely because of appraisals coming in below the negotiated price. Meanwhile, the loss of $7 trillion in home values since 2005 makes homeowners feel poorer and discourages consumer spending, which accounts for two-thirds of U.S. economic activity.


Dept. of Commerce: New-Home Sales
National Assn. of Realtors: Existing- Home Sales
Dept. of Commerce: Housing Starts
RETAIL
Last updated: February 15, 2012
Expect retail sales to grow by a healthy 6% or so in 2012, as job creation picks up and consumers gain confidence. That’s somewhat slower than the 7.4% pace in 2011, but still a net positive for the economy this year, strengthening the recovery. And despite the lower pace of growth, in absolute terms retail sales will rise nearly $252 billion this year. The pace last year was better, but only because 2010 retail sales were still stunted from the recession.

One particular reason for optimism: the January rise in core retail sales, which excludes cars, gasoline and building supplies. More often than not, retail sales slide in the first month of the year, following an end-of-year surge from holiday spending. This year, aided by the redemption of gift cards accumulated during the holidays and unseasonably warm weather across the country, core sales rose 0.7% in January. Overall sales racked up a 0.4% increase, dampened by a significant, probably temporary, decline in auto purchases. (After strong gains at the end of 2011, buyers took a short break from visiting showrooms in January.)

Consumers will carry that propensity to buy throughout the year, helping to boost consumer spending by 2.3% for the year, about the same pace of growth as in 2011. Growth is unlikely to get much stronger than that because consumers still need to pay off credit cards and rebuild savings, keeping a check on spending. Also, take-home income will grow only very modestly.


Dept. of Commerce: Retail Data
TRADE
Last updated: February 10, 2012
Look for the U.S. trade deficit to widen again this year, climbing over the $600-billion mark. With both imports and exports growing less swiftly than last year, the deficit will increase by only 8%-9%, as opposed to a nearly 12% jump in 2011.

The recession facing Europe and slower growth in emerging markets mean export demand is likely to lag a bit early in the year. But look for a rebound in the second half, when we expect Europe will find a solution to its fiscal problems. A gain in the neighborhood of 12% is likely for the year. (Exports increased 14.5% last year.) Meanwhile, increasing U.S. demand for automobiles and consumer goods will help imports rise at about the same 12% pace as exports, but from a much higher starting point. 2011 imports totaled $2.7 trillion, compared with just $2.1 trillion for exports.

A $3-billion surge in imports that pushed the monthly trade deficit to nearly $49 billion in December -- roughly 21% higher than a year earlier -- was due mostly to higher auto imports. While such a large jump isn’t likely to become the pattern, monthly deficits have been trending higher and we expect them to continue on that path this year. The increase in U.S. exports in December was less than half the upward bump in imports.

Also in the cards for 2012: A record-breaking year for trade with China -- again. In 2011, U.S. exports to the Asian giant hit nearly $104 billion, while imports climbed to within spitting distance of $400 billion. The record-high figures -- and the resulting $295.5 billion deficit -- are likely to be eclipsed this year, as U.S. consumers loosen the purse strings a bit and China ratchets up purchases of U.S. cars and advanced technology goods.


Dept. of Commerce: Trade Data