No Jobs, No Wage Growth, Markets In Turmoil

Filed under: News,The Economy |

From The Conference Board: No job growth, a slight decline in wage growth, and a lack of confidence resulted in weak retail sales in August. There is little reason to expect improvement in any of these factors in September. And that underlines how weak the economy remains. It is not in recession and there is a chance that a recession may not develop. But economic growth is so weak, it feels recessionary to consumers and business alike. What’s more, the outlook of both consumers and business is that conditions are not improving. And there’s little in the data stream to make anyone feel more positive as the third quarter draws to a close.

THE SITUATION ABROAD
The debt crisis in Europe continues to roil markets across the globe. There is no shortage of risks. At heart, the risk is that some bond holders will not fully paid. High government debt (in Italy it is 108% of GDP, and slow growth (not more than 1% in Italy) becomes problematic when the guarantees to cover the debt are called into question.

And it isn’t even just about country debt. The risk goes as well to the banks holding the debt, and banks who have money tied up in banks that are holding the debt. In turn, this raises the question of a backstop for all this debt. The question as well goes to increased bank capitalization and supervision. Markets may not quiet until answers to these answers come clearer into view.

FACT OF THE WEEK
13 million. The total number of unemployed persons this summer across the OECD countries was 44.5 million. This is about 13 million more unemployed than before the Great Recession began.

Estimates of global GDP for 2012 are generally in a range of 4.0 to 4.5 percent, though much of Europe and North America is expected to grow no more than 2 percent. Still, the total number unemployed has slowly declined and with that much global growth, should continue to slowly decline through 2012.

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