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Old 07-14-2010, 08:41 PM
 
12,017 posts, read 12,768,057 times
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It's been 1+ years since passage of the stimulus, and this is what we have to show for it...

Fed expects weaker growth, more unemployment - Jul. 14, 2010

Quote:
The Federal Reserve has become more pessimistic about the economy.

The Fed's latest forecast, included in the minutes of the central bank's June 23 meeting released Wednesday, is the latest sign of growing concern that the recovery is losing steam.
Quote:
Only a few months ago, many economists thought the Fed would no longer need to consider moves to stimulate the economy. Instead, the Fed was expected to start worrying more about the possibility of inflation.
But the Fed now predicts the unemployment rate would be between 9.2% to 9.5% this year, slightly worse than the 9.1% to 9.5% range it forecast in April. Unemployment was 9.5% in June, but has averaged 9.7% over the first half of the year.
The Fed also lowered its outlook for the job market in the coming years. It now forecasts unemployment will stay between 8.3% to 8.7% next year, up from its earlier estimate of a range of 8.1% to 8.5%.



The central bank indicated it expects unemployment in 2012 to still be at a relatively high rate of between 7.1% and 7.5%. The Fed had previously said the unemployment rate could drop as low as 6.6% in 2012.
The Fed's outlook for the economy, as measured by the gross domestic product, was also cut. GDP is now projected to grow between 3.0% and 3.5% this year, down from an earlier forecast of 3.2% to 3.7%. In the first quarter, GDP rose at an annual rate of 2.7%.
The Fed expects the economy to grow between 3.5% and 4.2% next year, down from its earlier expectation of growth as much as 4.5%.
Is it any wonder the companies are hoarding cash like crazy?

The Buzz: Cash is king. Too bad businesses are hoarding it. - Jul. 14, 2010

Quote:
"The economy is continuing to slog through the mud. Companies see declining retail sales and tight credit from banks and there's no need to do anything with their cash," he said.

So expect companies to keep their powder dry and continue boosting cash levels. And while it's encouraging that corporate balance sheets are healthy, it's hard to get too excited about that.

Cash may be king but it only makes a difference for the economy when companies actually spend it.
"There is a real disconnect here. Companies seem unwilling to hire people and invest," said Adrian Cronje, chief investment officer of Balentine, an investment firm based in Atlanta. "That needs to occur for this recovery to turn into a real expansion."
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Old 07-15-2010, 07:10 AM
 
Location: Virginia Beach, VA
5,517 posts, read 9,612,809 times
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This is for anyone who believes that the benevolent capitalist pig creates jobs out of the goodness of their hearts.

I guess dividend rates will be nice for a while then. Too bad average Joe wont see much from that outside of possibly moves in their 401k.
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Old 07-15-2010, 08:01 PM
 
48,507 posts, read 90,776,770 times
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Bascailly the corporations are just hunkered down with Obama polices like everyone else. That is why the savings rate is climbing. The fed expects it to grow to 1980's levels in year to come.
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Old 07-15-2010, 08:05 PM
 
12,017 posts, read 12,768,057 times
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Quote:
Originally Posted by Randomdude View Post
This is for anyone who believes that the benevolent capitalist pig creates jobs out of the goodness of their hearts.
and you think jobs are created by the 9-to-5'er who just shows up and goes through the motions?
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Old 07-15-2010, 09:22 PM
 
Location: Great State of Texas
86,067 posts, read 78,812,160 times
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I don't blame them. The economy is very unstable. Loans are hard to come by. Why build up inventory if consuming is down. Very uncertain future as far as taxes and just the business environment in general.

Plus..companies with cash will be able to swoop in and buy the weaker ones (or their assets) at basement bargain prices.

The strong companies will survive and be able to be the first ones out of the gate when the tide turns. Yes cash is king and that saying also goes for Joe Mainstreet.

Those with cash to spend, when the time is right, will have opportunities to choose from.
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Old 07-15-2010, 09:27 PM
 
12,017 posts, read 12,768,057 times
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Quote:
Originally Posted by HappyTexan View Post
I don't blame them. The economy is very unstable. Loans are hard to come by. Why build up inventory if consuming is down. Very uncertain future as far as taxes and just the business environment in general.

Plus..companies with cash will be able to swoop in and buy the weaker ones (or their assets) at basement bargain prices.

The strong companies will survive and be able to be the first ones out of the gate when the tide turns. Yes cash is king and that saying also goes for Joe Mainstreet.

Those with cash to spend, when the time is right, will have opportunities to choose from.
Deflation is great if you're a cash hoarder. There is definite deflation in real estate right now, no matter how low interest rates seem to go.
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Old 07-19-2010, 02:14 PM
 
Location: Virginia Beach, VA
5,517 posts, read 9,612,809 times
Reputation: 2562
Quote:
Originally Posted by chopchop0 View Post
and you think jobs are created by the 9-to-5'er who just shows up and goes through the motions?
No, they are created by demand, largely from the goods that the 9-5er demands.

A business owner will not just create jobs. In capitalism, labor is a an investment, like anything else. If the business doesnt see an expected return on labor, they dont hire anyone, that simple.

The capitalist pig provides the means to employment, but he doesnt "create" or "give out jobs". He employs capital to make and sell a good that has market demand.
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Old 07-19-2010, 02:44 PM
 
92,481 posts, read 90,021,947 times
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last 2 recessions took 4-5 years for unemployment to reach pre-recession levels again... why anyone is surprised nothing changed much in one year is beyond me,,......
this time is even worse as alot were self employed in the real estate and mortgage brokering business. they arent even counted in the unemployment numbers as they slip right under the radar....
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Old 07-19-2010, 03:00 PM
 
Location: Charlotte, NC
1,420 posts, read 2,305,816 times
Reputation: 1360
The stimulus was a JOKE. Recovery is a joke too. Good luck to all those out there looking for jobs.
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Old 07-19-2010, 03:22 PM
 
12,035 posts, read 9,805,038 times
Reputation: 11030
They have a huge hole that the stimulus can barely fill because two bubbles collapsed simultaneously and the economy was tied to both, states with their underfunded pensions and the homeowners who have no equity to spend.

The 5-yr NOL carrybacks injected cash into weak companies in weak sectors (carmakers, homebuilders, etc.) who don't need to increase capacity. Auto sales are down from 16m/yr to 12m/yr. There's 7 million homes in the shadow inventory.

IN addition, anything we consume is to a large degree from overseas. I recall that a large portion of the money parked in the US belongs to foreign trading partners and their banks.
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