We've got a lot to cover here. Take a deep, cleansing breath, hold it....... count to 10....... and sloooooowly release.......... OK. Here it goes:
The 1st Quarter GDP numbers had been revised downward
(surprise, surprise) from 1.9% to 0.4%. The 2nd Quarter GDP numbers were initially 1.3%. Well,
guess what?:
The U.S. economy grew at a meager 1 percent annual pace this spring, slower than previously estimated. The downward revision will likely increase fears that the economy is at risk of another recession.
Fewer exports and weaker growth in business stockpiles led the Commerce Department to lower its estimate for the April-June quarter from its previous rate of 1.3 percent growth. That means the economy expanded only 0.7 percent in the first six months of the year.
The report continues:
Most economists aren't forecasting a recession. JPMorgan Chase projects the U.S. economy will grow only 0.9 percent this year and 1.7 percent in 2012, much lower than the bank's estimates just a few weeks ago. Other economists have made similar downgrades.Nine of the past 11 recessions since World War II have been preceded by a period of growth of 1 percent or less, economists note.
Morgan Stanley had also cut it's
global forecast less than two weeks ago
(so did Goldman Sachs):
Morgan Stanley slashed its global growth forecast for 2011 and 2012, saying the U.S. and the euro zone were "dangerously close to a recession", and criticized policymakers in Washington and Europe for not acting more decisively to contain the sovereign debt crisis.
The bank cut its global gross domestic product growth forecast to 3.9 percent from 4.2 percent for 2011, and to 3.8 percent from 4.5 percent for 2012.
First, data on unemployment claims, manufacturing and existing home sales lent weight to the case that the U.S. economy is slowing. (Of course, other data released this week, such as the leading economic index and retail sales suggests the U.S. economy continues to plow along at a positive, but not satisfactory, rate.)
Second, Morgan Stanley and Goldman Sachs downgraded their forecasts for global growth in 2011 and 2012. Stocks are leveraged bets on growth. The big firms that populate the Dow Jones Industrial Average and the S&P 500 now get a very large chunk of their revenues, and much of their growth, from overseas. The prospect of a growth slowdown in China and India is far more daunting to investors than the possibility that U.S. and European growth could fall.
Third, there are continuing problems emanating from the euro zone. Growth seems to have stalled in both France and Germany, the engines of the continent's economy. The big fear this week is that French and German banks might suffer a two-fold blow. They're heavily exposed to government and private-sector debt in Greece, Spain and Italy — countries whose ability to repay debts is being questioned. And they're also heavily exposed to consumers and businesses in their suddenly flat home markets.
Of the three problems listed above, it's the last that I find most troubling.
He ends his report with this:
Europe is dishing up a toxic brew: a rigid currency, fiscal contraction, begrudging aid from the central bank, and a long history of enmity between its constituents. That's a recipe for collective paralysis, not for the sort of bold collective action that is required to halt banking crises. Pundits have floated the idea that Europe could solve its problems by issuing eurobonds. And it's true that selling bonds that are guaranteed collectively by European countries would allow countries to escape the tender mercies of the bond markets. But that plan, which would require true collective action, has been rejected.
The reality is that Europe today resembles the U.S. states during the Article of Confederation period — an agglomeration of allies and frenemies, unwilling fully to cast their lot with one another. European policymakers aren't inclined to take advice from American political thinkers. But they'd be well-advised to heed the warning Benjamin Franklin issued at a time when collective action was being considered: "We must all hang together, or assuredly we shall all hang separately."
Bernanke today says
the Fed ain't gonna do anything right now. No QE3...yet. And he already stated previously that interest rates will remain the same for two more years
(until mid-2013). So what else could he really say or do, anyway? Nothing but sitting on his thumbs, I guess.
As
Gateway Pundit also reports (via CSN News), "
The percentage of young people employed was the lowest ever for a July since the government started tracking the numbers in 1948."
“They all earn their GPA,” said Darcy in an interview with "Fox and Friends." “So we asked them if they’d be interested in redistributing the GPA points that they earned to students who may be having trouble getting a high GPA.”
Darcy, who films his encounters with teachers and fellow students, doesn’t have much luck selling this theory.
He said many students on college campuses support high taxes on the rich, but when put into relative terms, cringed at the thought of spreading around their academic wealth.
In a video posted on Exposingleftists.com, one student said, “If I do give GPA points to students that don’t deserve it, it isn’t fair, I work for what I have.”
Heads of over 100 major companies have joined Starbucks Corp. CEO Howard Schultz in a pledge to boycott political donations until Congress and the president agree on a long-term debt and deficit plan, Schultz announced in a letter Wednesday."Remarkably, the initiative triggered a national dialogue and a groundswell of support," Schultz wrote, adding that in the 10 days since releasing his pledge, he "heard directly from thousands of concerned citizens and was astounded by the volume of support we received through calls, emails, social media exchanges and various other public votes of confidence."
That included over 100 business leaders who signed on to Schultz' initiative, including Myron Ullman of JC Penney, Duncan Niederauer of NYSE, and Walter Robb, co-chief executive of Whole Foods, Tim Armstrong of AOL, Mickey Drexler of J. Crew Group, and billionaire investor Pete Peterson.
Nearly one in 10 midsize or large employers expects to stop offering health coverage to workers once federal insurance exchanges start in 2014, according to a survey from a large benefits consultant.
Towers Watson also found in a survey completed last month that an additional 20% of companies are unsure about what they will do...
In fact, a survey of employers published by McKinsey in June found that as many as 30 percent will definitely or probably drop coverage once the exchanges begin, and among those with a “high awareness” of the new rules post-ObamaCare, that number rises to 50 percent. And why not? If you can cut costs by paying a fine instead of buying insurance for workers, why not push them off onto the exchanges and let taxpayers pick up the slack?
Speaking of ObamaCare, remember when Rep. Joe Wilson caught flack for yelling, "You lie!" during The One's State of the Union address when Obama insisted that illegal aliens will not benefit from ObamaCare?
...the Health and Human Services Department awarded millions to “migrant and seasonal farm worker” health care — a spokeswoman in the department was cited last week saying patients would not be asked about immigration status and an department official confirmed Monday that the centers receiving the grant money must offer primary care to “all residents” in a given area.
Wilson, on his campaign website, declared the funding announcement proved him right. Though most farm workers are here legally, the Pew Hispanic Center estimates that about a quarter of them are undocumented.
More to come in today's second post.
