Spending and Income Data Confirms Fed Economic Outlook

There is good news for consumers because the latest consumer spending and income report should attribute to holding the interest rates. Contrary to this expectation, Ben S. Bernanke, the Fed’s chairman warns that inflation is continuing to remain “uncomfortably high.” He further claims that if anything, inflation will continue to escalate rather than decrease. Further going against Bernanke’s opinion, personal spending advanced far more than expected last month. There was an overall rise in spending for the year of 5%. What seems to be contributing to the discrepancy between the two opinions is that people’s spending is much too difficult to predict. Shoppers to tend to indulge when it comes to the high sales days. But it does not mean that people are overall purchasing more and instead it seems people may be more prudent with their spending this year. Also with the housing market continuing to decrease this year, shopping will need to compensate for the loss. In my opinion, shoppers will get carried away with spending as they usually do which will then compensate for the housing sales loss, and will ultimately prevent inflation from increasing.

The New York Times, Jeremy W. Peters Friday, December 1, 2006

Price Index Drops 0.5% a 2nd Time

There was a .5 percent drop in consumer prices for October. The same things occurred in the month of September. This trend suggests that declining energy prices and a slowing economy is containing inflation. The primary factor driving the prices index was given to energy prices, from fuel price to the gas bill. The drop assisted in validating the Federal Reserve to cease in raising interest rates since June. Industrial production, including the output of manufacturers, mines, and utilities, also contributed to the inflation data, contrary to what the economists expected. It is unlikely that the Federal Reserve will need to increase interest rates to keep inflation under control any time soon. Blue and white-collar’s hourly wages will reflect the price index drop as well. The is the first substantial boost for workers in years. Energy seems to be the factor driving the increase in the last year and decrease in the past few months. It may have sparked a trend in that clothing costs, the price of used cars, hotel rooms, and airline fares have also decreased.

I think this decrease is exactly what everyone deserves at this point in time. I know that the sudden increase last year was more than some people could handle. It affected everyone and it is pleasant to finally have some relief, especially during the holidays.

The New York Times, Eduardo Porter and Jeremy W. Peters Friday, November 17, 2006

Declining Bill for Oil Imports Improves U.S. Trade Balance

Due to Americans importing less oil, the gaping trade deficit shrank in September. There was a 6.8% decline from August to September for the imbalance of exports and imports. This decline in the steepest that has taken place in nearly two years. However, due to high oil prices in August the decline appears to be greater than it actually was. The Unites States trade situation continues to be imbalanced. As most people are familiar with, trade with China accounts for the greater portion of the deficit. China accounted for a total of $23 billion on an unadjusted basis. The number is so high from China imports that it contributes to about a fourth of the trade deficit. On a positive note, the imbalances of trade with Europe, Africa, and South America have narrowed in recent months.

It is expected that global growth will remain strong and serve as an ongoing support for the U.S. economy, said the chief of the United States economy. Assuming that there will be no world wars anytime soon , depending on other countries for economic support seems to be working well thus far for the U.S. It seems slightly unstable to be so dependent, but I guess it balances out in that they are dependent on us as well.

The New York Times, Jeremy W. Peters Friday, November 10, 2006

Fearing Slow Holiday Sales, Wal-Mart Cuts Prices

Holiday shopping is starting sooner every year. One of the contributors to this commencement is Wal-mart’s reduction in prices. In attempt to counteract the slow sales this season, Wal-mart has already greatly decreased many electronic prices. This presents much more competition for rivals such as target, best buy, and circuit city. The sharp price-cuts were officially announced today. Even though this may seem like a good move for Wal-mart, they are practically forfeiting billions of dollars in holiday sales compared to previous years. A positive aspect for Wal-mart is that they will far exceed their competitors. The idea is to attract customers to their store prior to the day after Thanksgiving sales, which could make them lose money to their competitors. This shift for Wal-mart to focus back on it’s pricing has to do with the failure to persuade it’s customers to purchase more clothing and furniture. Target dominates the market in this area.

After learning about the Wal-mart sweatshops in class, I almost cringe at reading this article. Wal-mart has more money than countries and they are still trying to aim higher. What it also sad is that many people are oblivious of the sweatshops and will continue to shop there. In many lower-income families, it is necessary for them to shop there, because it’s what they can afford.

The New York Times, Michael Barbaro Friday, November 3, 2006

U.S. Economic Growth Slowed in 3rd Quarter

The deflation of the housing market is holding the economy back. The growth is slower than it was since 2003. Economists were not even expecting for the growth to be this slow. The commerce department’s report shows that the small growth is indeed a substantial one, mostly due to the slump in housing. Residential construction had it’s biggest decline in fifteen years. With the economy’s shift into low gear, it is unlikely that the federal reserve will resume raising interest rates any time soon. A positive aspect of the slowed growth is that it will hinder inflation. Falling fuel prices are continuing to aid the economy’s growth. The Bush administration is claiming that the economy is resilient to slowdown because of the lower inflation as well as consumer spending. Democrats are saying that the low percentage growth is fact and that the president cannot just assume the economy is in good standing when in fact it is not.

The weakness in housing seems to be an effect of the baby boomers. Many of those in the baby boomer cohort are now beginning to retire. Within the next few years, many will be selling their houses to live in retirement homes. It seems that there is not a high enough replacement level to compensate for this. Therefore, I would not doubt if the housing market continued to hold the economy back for years to come.

The New York Times, Jeremy W. Peters Friday, October 27, 2006

Oil Falls to New '06 Lows on Doubts About OPEC Cut

Today oil prices dropped to one of the lowest in 2006 at only fifty-seven dollars a barrel compared to July records of seventy-eight dollars and forty cents a barrel. OPEC (Organization of Petroleum Exporting Countries) ministers have agreed to reduce output by 1.2 million barrels per day. The change is expected to result in about a half million barrels per day of production taken out of the market. What concerns the OPEC ministers is high fuel stocks in consumer countries, particularly the United States. Also the demand for OPEC oil could drop in 2007 as their competition is brought online. The drop in prices in recent months has positively impacted consumer attitudes as well as spending in the United States. Businesses will benefit over the holidays with consumers focus not being on the money they are spending on gas.

Regardless of the current status, it seems to me that within the next few years, prices will inevitably increase again. It’s great that things are all “hunky dory” right now, but I think it would be prudent to put some money aside incase there was a sudden spike again.

The New York Times, Reuters Friday, October 20, 2006

Fed Reports Resilience in Economy

The article begins by stating the improvement in the economy in the past month or so. People are being affected by this improvement in different ways. A few being at the gas pump, which is leaving everyone with some more money in their pockets, and in the stock market. It was also reported that even though it appears there is moderating growth in the economy, things are relatively stable at this point. Also a positive note, price inflation and decrease in consumer spending does not seem to be an issue in most parts of the country. In the next trade deficit report the falling fuel prices should greatly impact it, considering that this was one of the major reasons for the widening trade gap in August. Trade imbalance with China specifically was another aspect in the trade deficit.

What seems to be the case to me is that in order to prevent inflation from occurring again in the future, America needs to find a way to stop being so dependent on imports. Being so dependent on others provides an opportunity for them to be put in control. Clearly I am not an expert and have no idea what it would take to reach a point where our dependence could be lowered. However, in the article it stated how our exports have grown, but not enough to compensate for the import growth. So it seems that we need to increase our exporting in order to counterbalance the import inflation.

The New York Times, Jeremy W. Peters Thursday, October 13, 2006

Here's how socialism helps the rich

Sowell claims that socialism actually does more damage to the poor than to the rich. The idea is that the rich can find a way to get what they what, when they want it, and how they want it. The rich can hire upscale lawyers to fight city hall. Also city hall may feel the need to keep them happy because upscale taxpayers benefit them. Furthermore, the rich often donate sums of money to political campaigns. Another form of socialism for the rich protects their communities from even the dangers of a free market. They are protected from outsiders purchasing property near them, even when they are willing to pay prices determined by supply and demand.

I can understand Sowell's point that socialism could contribute positive outcomes for the upper class. One of the things that most people hold dear is their home. The community in which that home is in is also something that people hold dear. It would be highly unlikely to ever see a mansion adjacent to a trailer. Being able to maintain a haven and everything that encompasses it is something that would keep many people happy. Especially when that is not the case for everyone in the world, even the working middle class.

News & Record, Greensboro, NC Thomas Sowell Thursday, October 5, 2006

Bush says he’s pressing for end to dependence on foreign oil

President Bush points out that we are dependent on oil from some parts of the world that do not like the United States. The longer we are dependent on that type of energy, the less likely people can maintain their good, high-paying jobs. Democrat chairman, Howard Dean commented that “America’s working families have seen their incomes drop, and their worker protections and health care benefits come under assault.”

Personally, I don’t see why it has taken so long to make this insightful observation. Depending on other countries for something that Americans could not live without is not a good idea in itself. Without a sufficient amount of oil, Americans lives would change drastically. The average American likely depends on some form of transportation that is dependent on oil for at least two things throughout their day. The most common use I would imagine would be getting to and from work. I can’t imagine what people would do if we ran into a bind again and did not have sufficient amounts of oil. When Katrina happened, there was chaos at the pumps. It seems likely that now that people have witnessed what happens in times like that, things would be even more in turmoil.

News & Record, Greensboro, NC Wire Reports Tuesday, September 5, 2006

It's hot fuel for us, cold cash for Big Oil

The article tells of a man named Lesley “Lucky” Duke. Duke is one of the few Americans that is actually informed of how energy in gasoline works. The idea is that temperature has a great affect on how much energy is present in the gasoline that we are pumping into our vehicles. The government standard agreed upon nearly a century ago claims that fuel will be sold at 60 degrees. Duke decided to test this standard by measuring the temperature of the fuel as he pumped the fuel into his truck’s tank. His thermometer finally reaches a temperature of 93 degrees Fahrenheit. This difference in temperature is costing fuel consumers much more than we would assume. With the increase in temperature, the gasoline expands, therefore giving us less energy per gallon. Some estimates in the difference is getting 392 miles for fuel at 90 degrees Fahrenheit, and 400 miles at 60 degrees Fahrenheit. The idea is that since fuel pumps are not adjusted to account for expansion of hot fuel, U.S. consumers are spending about $2.3 billion more this year.

Initially when I read the article I was appalled. The more I considered what was taking place I came to the conclusion that I should have assumed something like this was taking place. The sad thing is that most Americans have no clue this is even occurring. At this point with the economy the average person is probably assuming that they are getting gypped. However, I think it is unethical to not make more Americans aware of the standard temperature of gasoline and how it is affecting them.

News & Record, Greensboro, NC Steve Everly Thursday, August 31, 2006

Floida stocks up as storm nears

Residents in Florida were urged to become prepared for tropical storms instead of waiting until they become hurricanes. Tropical Storm Ernesto was the reason for the precautions to be taken. With this awakening, many people seemed to be listening to the advice the gas pumps and grocery stores became packed.
Probably what aided in the awareness to become more prepared was that the storm was due to hit shore on the anniversary of Hurricane Katrina. We all know that as the anniversary of Katrina neared, more and more specials appeared on television, reminding us of the devastation that occurred and has still not even begun to be fixed. I guess the precautions taken could be considered to help businesses in the areas that were threatened. So in that aspect, fear has positive outcomes. On the other hand, as storms near the area, no one is going out to spend money so businesses are losing money. I guess it all evens out in the end. I do think it’s a positive thing that the world is at this point not jaded when it comes to the possible damage that can occur due to a natural disaster. Many times I think people used to feel that they would be fine and did not need to worry. Nowadays people seem to have a more realistic view of what can happen and who it can affect.

News & Record, Greensboro, NC Doug Cox Tuesday, August 29, 2006

Gas prices drop 20 cents, may go lower

As probably assumed by the title, the article presents the statistics of gas prices for the triad area. It says that within 10 days, gas prices have drop more than 20 cents a gallon. The article further explains that motorists can expect a possible additional drop of 25 cents a gallon in the next year. This prediction is based on the ideal that the economy would not be affected by any weather or international disruptions.

However, motorists must still be weary of where they buy gas. Prices around the triad can vary by more than 30 cents a gallon. The article recommends to consumers to shop around for the cheapest prices to “make the overprices stations pay for trying to increase their margins.”
I personally feel, along with everyone else in the world, that a drop in gas prices was long overdue and it is gladly excepted. Cheaper travel will produce so many benefits. People can drive to see their family without spending a fortune. This will be particularly appreciated during the holidays. I think one of the hardest setbacks for everyone last year during the initial increase was that there was no time to prepare for such an event. Without any forecast for an increase in gas prices, people had no time to cutback on things and begin to reassess their budgets. The drop in gas prices over the next year will hopefully provide great relief to all who suffered so badly last year.

News & Record, Greensboro, NC Donald W. Patterson Saturday, August 19, 2006

A lesson in ghetto economics

Michelle Castile
The article provides a detailed explanation to the ghetto communities as to why there stores have higher prices and lower quality of products and service. The premise that some residents have in the ghetto community is that the reason for this unfair treatment has to do with exploitation or racism by the Jews, Koreans and Arabs running the stores. Sowell begins to explain how this is an incorrect assumption by explaining how economics work. It is fact that stores located in low-income neighborhoods tend to have higher prices. Some reasons for these higher prices are: crime, shoplifting, vandalism and riots. The store owners are forced into spending more money on security and insurance for their stores, while consequently raising their prices.
I fully praise Sowell’s article because not only does it inform the ignorant but it provides possibly ways to improve the situation as well. One of my biggest problems with this situation is that a person voiced their opinion with no previous knowledge on the subject and therefore caused others to agree with them, only exacerbating the current situation. Now that the true reasons have been made available to the ghetto communities, it is possible that either the communities will stop blaming the store owners, do their part to help lower the costs by reducing the crime, or even both. I am aware that this would be considered a long shot for a ghetto community in Harlem for example. However, those that have the knowledge are just as much to blame if they do not share it with the uninformed. This is exactly what Sowell has done and I think it is a small step towards improving at least the false premises that the residents in these communities share.
News & Record, Greensboro, NC Thomas Sowell Thursday, August 31, 2006

Pipelines to bring down gas prices

Pipelines to bring down gas prices
Michelle Castile

The article begins with the chairman of regulator Ofgem attempting to give hope that energy costs could possibly be lower this upcoming winter. The reason leading to this premise is that UK gas supplies will be under less pressure this year. Aiding in this hopeful situation as well is that the pipelines from Norway and the Netherlands will be completed and ready for use. Also claimed is that unforeseen events will not occur this year and they did last year leading to shortage. Energy minister, Malcolm Wicks opposes the chairman’s notion, claiming that we will see a repeat of last year’s gas shortage.
I will be the first to admit that I am not expert when it comes to looking at economics. However, when I read this article I couldn’t help but think that the chairman’s viewpoints seemed naïve. To claim that unforeseen events will not occur cannot be accurate. It is near impossible to be prepared for every situation and to assume that dispute will not occur. There is no way to tell when an unforeseen event will occur , because that’s exactly when it is, an unpredicted event. I do understand that new pipelines could attribute to a difference in supplies. However, when I read the contradiction proposed by Wicks, my presumption is pessimistic in that another gas shortage is inevitable.

LexisNexis No author known August 25, 2006 http://www6.lexisnexis.com/publisher/EndUser?Action=UserDisplayFullDocument&orgId=574&topicId=100045996&docId=l:421630591&start=5