August 31st, 2009 2:57 PM by Mel Samick
The recent appointment of Ben Bernanke for a second term as the Chairman of the Federal Reserve was no surprise, as a large part of the credit for steering the economic ship towards a safe harbor undoubtedly goes to him.
Indeed, reports suggest tangible improvements on several fronts. Prices of single family homes rose by 1.4 percent in June, recording an increase for the second month in a row. New home sales were up 9.6 percent at an annualized rate to 433,000 units in July. Inventory is now 7.5 months of sale, down from 8.5 a month earlier. News from the manufacturing sector was also positive, with orders for durable goods -- notably autos, capital goods and aircrafts -- surging in July. Leading tech manufacturers such as Intel project a higher growth in coming quarters. The rise in the consumer confidence index by 7 points in August was also a positive signal. It was heartening to note that the real GDP shrank by only 1 percent in the second quarter, following historic declines in the past few quarters.
Having said that, it is only fair to acknowledge that there are two sides to each coin. The specter of uncertainty still looms large. Unemployment claims still remain high at 570,000, with the job market not yet showing signs of revival. The unemployment rate is expected to cross 10 percent in the not-too-distant future. Personal income remains flat, while spending rose only marginally in July. Even more significantly, the federal budget deficit is expected to balloon to a rather difficult-to-count $9 trillion. That needs to be brought down slowly with minimal impact on economies across the globe. The government has to find new avenues to earn revenue other than tax increases and ensure job generation on a longer-time horizon.
The focus for this week will be on reports of the employment situation and job market, construction spending, pending home sales index and Treasury bills auctions.
Saving is here to stay. Have you ever wondered about the cost of printing extra pages? According to a study by a non-profit organization, an estimated 17 percent of the pages printed are wasted. When discouraged, this translates to an estimated savings of $17 billion per year on office printing alone, not to mention saving of approximately 30 million trees. Do try to keep that in mind as your work day progresses.