Bernard Baumohl
Bernard Baumohl
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Our imports increase as long as the economy grows. But there's certainly a concern that our exports are down despite the fact that Asian and European economies have begun to rebound. Maintaining the high deficit is dangerous because that means a huge debt, and if our creditors lose confidence in the U.S. economy and begin selling dollars, which drives down the value of the currency, that could spark a serious inflation threat.
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If you take a snapshot of the economy right now, you could certainly say that we're in a sweet spot.
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The sharp pullback in economic growth during the final three months of 2005 shows the law of gravity has not been repealed. When consumers are burdened with heavy debt loads, rising interest rates, higher energy costs, no personal savings and household income growth that falls below inflation, something had to give. This retrenchment in spending was generally foreseen, though economists weren't sure on the timing and magnitude.
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The stress on household finances in coming weeks will be the greatest since the last recession in 2001,
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Bond traders are concerned that the economy may be growing too fast, given where we are in the business cycle.
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The tech industry is creating its own shakeout,
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When consumers are burdened with heavy debt loads, rising interest rates, higher energy costs, no personal savings and household income growth that falls below inflation, something had to give.
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While the DOJ maintains long-standing, black-and-white parameters to seek out monopolies, the FCC tends to undertake a far more subjective and changeable analysis.
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We have unmistakable signs that households are becoming more cautious about spending.
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On the other hand, Greenspan seems satisfied that his tightening has had a lasting effect. He's likely to stand pat for the rest of the year.
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With household finances already under considerable stress, one has to wonder if another round of rate hikes will lead to a more severe cutback in consumer spending.
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With borrowing costs on the rise and the wealth effect from real estate assets diminishing, something has to give.
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It's fairly safe to say that the trade deficit may have peaked now that oil prices are falling and the U.S. economy is showing signs of slowing down.
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There is a real sense of foreboding about the economy now that Katrina has struck with full force. This storm will be the most devastating ever for the U.S. oil and refining industries.