Tag archives for economy

Economic indicators are statistics about the economy which give us a perspective on how the economy is doing right now and a glimpse of where it could be heading into the near future. Depending on the health of the economy, as given by the indicators, investors choose the timing of their investments. If these statistics indicate tough times ahead for the economy, some investors might shy away from investing in the short-term till the economy starts showing signs of improvement.

The most popular economic indicators are as follows:

The Jobs/Employment Report –

On the basis of the results of two surveys – the Household Survey and the Establishment Survey – the employment report gives the unemployment rate figures for the previous month. These statistics are released at 8:30AM EST of the first Friday every month.

Consumer Price Index (CPI) –

This statistic is a interpreted as a measure of the price levels of goods and services purchased by consumers. It is regarded as the best measure of the rate of inflation in the U.S. The CPI figures for the previous month are released at 8:30AM EST around the thirteenth of every month.

Gross Domestic Product (GDP) –

This statistic comprises of several components such as the consumption, investment, net exports, government acquisitions, and inventories. These figures for the previous quarter are released at 8:30AM EST on the third or fourth week of the first month of the new quarter. These figures are revised in the second and third months of the quarter.

Housing Starts And Building Permits –

These are two separate measures. Housing starts is a measure of the number of residential units on which construction started the previous previous month. The word ‘start’ in this context is defined as the excavation of the foundation for the building (which is used primarily for residential purposes). Since building permits are not required in all states before beginning construction its important to pay more attention to the Housing start measure. The figures for the previous month are released at 8:30AM EST around the sixteenth of each month.

National Association of Purchasing Managers (NAPM) –

The NAPM report is a weighted average of the items including new orders, employment, production, inventories, prices, and import and export orders. This statistic primarily covers the manufacturing sector but is considered a leading indicator for other economic statistics. The figures for the previous month’s data are released every month at 10AM EST on the first business day of the month.

Producer Price Index (PPI) –

The PPI, another measure of inflation, measures the price of goods at the wholesale level. The figures of the previous month are released at 8:30AM EST around the eleventh of the month.

Retail Sales –

The retail sales number is a measure of the total receipts from retail stores. This is usually less than half of the total personal consumption figures because it excludes money spent on services. The figures for the previous month are published at 8:30AM EST around the thirteenth of every month.

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How Does The Tsunami In Japan Compare With Past Disasters? 

In the last couple months a lot of the worlds focus has been on the cataclysmic earthquake, tsunami and subsequent radioactive fallout in Japan and the tragic unrest in the Middle East and North Africa. While both here at home and abroad economists are struggling to predict the tumultuous effects on financial systems and the future path of business, currencies and investments. Even though it’s not an exact comparison there are many similarities between current events and those occurring during and after World War 2. Perhaps if we look at how economies reacted to similar events in the past we can determine where the future will lead.

First there are undeniable environmental and political similarities between now and the circumstances that existed more than 60 years ago. The massive tsunami that struck Japan on March 11th caused a massive loss of human life and also destroyed much of the countries infrastructure including damaging coolant pumps and causing explosions at various nuclear power plants. The damage to the power plants has contaminated surrounding water systems and nearby food sources with radiation 100,000 times above normal levels. Compared to the prolonged attacks and the atomic bombs dropped on Hiroshima and Nagasaki ending WWII, the total loss of human life may be far less than with the latest disaster. However the infrastructure of the country still has sustained significant damage. With roads, ports, power systems, water systems and other structures and services important to a nation’s overall health and survival.

After World War II, Japan made what turned out to be a wise decision to not rebuild their damage infrastructure, but instead completely replace it with the latest technology, building materials and advanced designs. Many will argue that the decision is partially responsible for making Japan a leader in technology today. One hinderance that Japan faces today is their lack of a military which the country was barred from maintaining due to the terms of their surrender after World War II. Which can be an essential component for both search and rescue operations and rebuilding infrastructure after a large natural disaster. Americans saw this with the Army Core of Engineers rebuilding levees after hurricane Katrina and cleaning up oil after the BP spill in the Gulf of Mexico.

How Did Japan’s Economy and Population React After World War II?

Immediately following Japan’s surrender in World War 2, Allied powers began a seven year occupation of the country. The occupation officially ended in 1952, while treaties prevented Japan from maintaining a military, the Japanese Defense Force was created in 1954. This helped to fuel rumors the US was using the occupation to push an anti-communism agenda. During these years the damage to transportation networks and factories made food very scarce and difficult to distribute to those who needed it. Rice production had fallen 27% and the fishing industry was down more than 40%. Government food rations allotted just 1050 calories a day per person.

However the occupying forces were somewhat responsible for what is widely considered one of the most miraculous economic recoveries in history. One advantage Japan enjoyed was that they were not required to pay any war reparations. In addition, in an effort to stabilize the Japanese economy the United States injected around 2 billion dollars into rebuilding and reorganization efforts. By today’s standards, allowing for inflation that would be in excess of 17 billion dollars.

The United States government, under the oversight of the Supreme Commander of the Allied Powers (SCAP), instituted many changes in the governing system of the country. Including establishing a democratic system, an educational system similar to the US, and prevention of militarism. Without the ability to build and maintain a military, less than 1% of the total GNP was now devoted to self-defense and what would have gone to the armed services instead went primarily to the industrial sector.

Partly by reason of government reforms and cash infusions Japan enjoyed one of the biggest economic recoveries and most prosperous decades in the history of any country. By 1952 wages had returned to prewar levels and were continuing to increase. From 1953 to 1960 Japan’s overall economy grew an average of 9.3%. Because of the increased investment in industry and technology and with a highly skilled, well educated labor force Japan was able to increase productivity 7.2% annually from 1953 to 1962.

The investments in industry also helped to increase steel production from 5 million tons in 1950 to 82 million tons by 1969. By 1956, Japan was the largest shipbuilder in the world and by 1970 over 50% of all ships were manufactured in Japan. Another rise in industry developed when the U.S. contracted Japan to make munitions for the Korean war effort. By 1965 manufacturing increased to four times that of pre-World War II levels.

This amazing recovery and growth is highlighted by Japans exports in 1950 being 820 million and imports 974 million and exploding to 16.7 billion in exports and just 12.7 billion in imports by 1969. This fostered an upsurge of Gross National Product (GNP) from 10.9 billion in 1950 to 202 billion in 1970.

The Japanese Yen and The Forex Markets

During World War II, the Yen followed a pattern of extreme instability and near the end of the war shifted between 70-400 Yen per US dollar. After the war, the price of the Yen was fixed to the US Dollar at Y360 to one. This form of pegging a currency to the US Dollar was instituted under the Bretton Woods system created in New Hampshire in 1944. The Bretton Woods system established the International Monetary Fund (IMF) and allowed various currencies to be switched into U.S. dollars which was then convertible to or backed by gold. This system continued throughout the American occupation and into the early 1970s until 1971 when the Vietnam war began to accelerate inflation in the U.S. and America started to run a trade deficit. With what was dubbed “Nixon Shock” gold was no longer pegged to the U.S. dollar and with one of the primary components of the Bretton Woods system gone, the Japanese Yen began to trade independently.

In the months since the tsunami the Japanese Yen has been very volatile by todays standards. Against the U.S. dollar it went down to around 76-78 which was the lowest it had been since post World War 2. If you are not familiar with foreign exchange markets or how currency is traded there are a couple things you should know. One, a lower yen price indicates a stronger yen. Secondly, this is damaging for Japan’s economy because it is heavily dependent on exports. A stronger Yen means that an equal amount of dollars are being exchanged for goods except once that money is repatriated it turns into less yen. In the last few weeks the Yen has jumped up to around 82-84 against the dollar thanks in part  to a G7 conference on March 17 that called for other countries to sell yen and buy U.S. dollars. In addition the central Bank of Japan has been printing money to the tune of 15 trillion yen and issued government bonds to exchange traded funds in amounts up to 10 trillion yen.

The extent of the damage of this years tsunami won’t be fully known for a long time. As of early April 2011 around 200,000 structures have been destroyed, 13,498 deaths and 14,739 were still missing. Four nuclear power plants comprised of 11 reactors experienced both major and minor problems. Transportation was affected, possibly not to the extent that it was disrupted during World War II, but more than 60 out of 70 of the JR train lines were damage. One 4 car train derailed and 23 stations on seven lines were washed out to sea. There was severe damage to Sendai Airport, one of the countries largest airports. Areas around the nuclear plants, the roads and railways are still unable to be inspected.

Similar to the years following World War II, the nation of Japan will need help from other nations to fully recover from this disaster. While Japan is a modern first world economy, printing your own money can only do so much. Initially, the rebuilding costs were estimated at 122 billion US dollars and now have been estimated at as much as 300 billion US dollars. As of early April the Japanese Red Cross is reporting donations of almost $1 billion US dollars, the American Red Cross $120 million US dollars, Taiwan $9.3 million and the Singapore Red Cross $3.15 million US dollars. With help and intelligent decisions from world leaders Japan can emerge stronger than it was before. For more information on how you can help visit the Yahoo News Blog here – http://news.yahoo.com/s/yblog_newsroom/20110311/wl_yblog_newsroom/japan-earthquake-and-tsunami-how-to-help

Sources of the statistics in this article #1.1 are credited at – http://www.assetinvesting.com/forum/Thread-Article-Sources

Traders and economists all look at economic indicators to help determine what direction the economy is going. Often, the reports you see on television and in news articles can be misleading or not tell the entire story. In order to know exactly what a report is saying about the economy you need to understand what data goes into each indicator and what it means for business, regulators and stocks.

One of the leading economic indicators is the durable goods report. This number is released by the U.S. Census Bureau around the 20th of every month and contains data for the previous month. Also known as the Advance Report on Durable Goods Manufacturer’s Shipments, Inventories and Orders, the report states new order data from over 4000 manufacturers of durable goods. Durable goods are generally higher priced products that have a “useful” life of more than three years. Some examples of durable goods would be cars or refrigerators. Non-durable goods would be gasoline or food.

Several valuable aspects of the report are that is supplies information on inventories, shipments, unfilled orders, industry breakdowns and other forward looking data. The industry breakdown is very meaningful because the overall number can be very volatile when sectors like airlines or military and government orders are factored into it. Durable goods such as airline and vehicle orders both from the government and the private sector usually come in bulk orders and can skew the number giving an unrealistic view of overall spending in the manufacturing component of the economy. Additionally, prices for these goods are generally much higher than in other sectors and can therefore dramatically change the final number. To get the most accurate view of the number many traders with remove defense and transportation orders from the overall number.

Since this number is so volatile and the report does not provide a statistical standard deviation, there are other methods that experienced traders and market watchers will use to get an accurate picture. When analyzing the number a trader should always use moving averages of varying time lengths to determine trends. Instead of comparing the number month to month, traders should use year over year comparisons and year to date estimates. Revisions to previous numbers are also included in the report and very large changes should be looked at closely.

So as an investor what should you take away from this report? Economists look at this report not only in the nominal terms of orders, but also as a condition of business as a whole. This number is a leading indicator of capital spending and industrial production and is a window into the manufacturing sector which is one of the largest components of the economy. The capital goods figures are representative of business upgrades that companies are spending money on and may show either an increase or decrease in the confidence they have in business conditions. This will affect sales at different points in the supply chain and hours worked in non-farm payrolls.

So how do the markets trade on this report? A weak durable goods number can be an indication of a weakening economy or dip in the business cycle so bonds will typically rally, while the stock market may fall. While a strong number should have an inverse effect and signify a strengthening economy. The value of durable goods and the increase or decrease in orders can also provide valuable insight into future earnings of companies specifically in the machinery, technology, transportation and manufacturing sectors.

The Philippines is no longer in danger of falling into a recession.

National Economic and Development Authority (NEDA) Deputy Director General Rolando Tungpalan made this brave announcement in a press briefing in Malacanang today, saying the economy will further improve with positive economic forecasts from the United States, the European Union (EU) and Japan.

“The economy has demonstrated greater resiliency,” Tungpalan said, noting that the United States and the EU are moving out of recession.

The US Federal Reserve, according to him, has also upgraded its outlook on the US economy from a contraction of 1.3 to 2 percent to 1 to 1.5 percent.

Tungpalan said there are transparent evidence of positive developments in the economy that included the latest data on overseas Filipino workers’ remittances showing continued growth, contrary to the earlier expectations of the Bangko Sentral ng Pilipinas.

OFW remittances in May this year grew 3.7 percent, debunking predictions of several analysts.

Tungpalan mentioned several other external factors to back up the government’s optimism on economic growth such as the expansion of the retail trade sector, specifically the growth in car loans by the banks and the expansion of major malls.

Auto loans grew 48 percent in May, up from the negative 6.6 percent growth last year.

Tungpalan noted a Department of Labor and Employment report that more jobs are now available in the information and communication technology (ICT) sector as well as reports from companies that they have started rehiring previous employees.

Add to this the positive outlook rating of Moody’s on the economy, he said.

Tungpalan forced that the government “expects positive growth but added that adjustment to this year’s 0.8 to 1.8 percent target growth will only be made with the release on Aug. 27 of the second quarter gross domestic product or GDP.

The NEDA official said the government will depend on the ICT and tourism industry, among other sectors, to boost the economy.

Tungpalan said the call center sector is a “bright spot” for new jobs and investments with the emergence of ICT hubs outside Metro Manila such as in Metro Laguna, Iloilo, Bacolod, Cagayan de Oro and Lipa City.

He also said the government will also look beyond voice calls and look for the opportunities offered by non-voice such as animation.

Tungpalan noted that the President’s Comprehensive Livelihood and Emergency Employment Program or CLEEP “continues to contribute to the resiliency of the economy.”

He also noted that China’s impressive 7.9-percent growth in the second quarter provides a huge opportunity for the Philippine economy in terms of expanding trade and investments.

China is among the major trading partners of the Philippines and with relations between the two countries continuing to be very strong, the country hopes to ride on the strength of China to move the economy forward.

“China continues to post strong growth. We reiterate the importance of engaging China for more trade, investment and tourism,” Tungpalan said.

However, this good news may be dampened by some threats that include water crisis, as it was forecasted that there will be drought later this year due to unusual weather patterns.

He added though that the President has instructed the Department of Agriculture (DA) “to soften expectations” as “water for food production is above (daily) water consumption.”

In today’s cabinet meeting, Tungpalan said the President ordered DA to “look at measures (to be undertaken) especially in the area of water management.”

This article is distributed by www.Cebu-Philippines.net. An up-to-date guide to Cebu Province Philippines and the Philippines. Providing current and relevant information about visa, airlines, hotels, resorts, Philippines economy, scuba diving, travel, health and wellness.

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The Secretary of the United States Treasury, Timothy Geithner, said this weekend that the worldwide downturn appeared to be ‘losing force’ but that to come out of it robust the United States and China would have to institute major economic reforms to produce a stronger foundation. According to Geithner, a flourishing transition to a stronger global economy will “need substantial mix ups to economic guidelines and financial regulation around the planet.”

Geithner, who has barely been heard from in a more notable sense ever since nomination, has been in China the previous few days to create closer fiscal ties with China after realizing that they are a major key to economic success. He told reporters that he was eager to gain the same economic associations with China that we enjoy with more than a few European nations.

In the talk he gave there, he praised the fiscal transition China has achieved at the same time as avoiding previous trade disputes the United States has had with them, hoping to advance a closer relationship. It looks as though he was wishing to help them bring the yuan,, the currency in China, to a higher economic rank. American manufacturers see the yuan at its current economic position as a major reason why trade between the two countries is lesser than proposed.

“The global recession seems to be losing power…. The financial system is starting to heal,” said Geithner. He went on to declare, “These are important signs of strength and assurance that we will succeed in averting financial failure and global depression, but they stand for only the first steps in laying the groundwork. The procedure of repair and alteration is going to take time.”

Timothy Geithner also claimed that the necessary reforms will include getting the United States budget shortage under control once the revival is securely in place, something the Obama administration has been talking about since the election. He said that China will need to generate strength in things like pension and health care in order to enlarge spending assurance there. For a long time, that has been considered significant if China is going to enlarge domestic creation. (Apparently that means the millions of products America buys from China every year is not sufficient.)

“Our joint test is to distinguish that a more fair and sustainable international recovery will require changes in the arrangement of growth in our two economies,” Geithner said. With 1.3 billion people, China ranks as the third largest economy behind the United States and Japan, sealing the requirement for a more combined revival process. Geithner said that China’s status in the global economy should be established better in institutions such as the International Monetary Fund.

In addition to gathering with some of his former teachers, Timothy Geithner was scheduled to visit an economist teaching course set up by his father who was once responsible of Ford Foundation programs in Asia.

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