As Putin rejoices at his new-found wealth in Crimea after it was annexed (in a duff referendum where there was either ‘now’ or ‘later’ up for grabs to join the Russian Federation), the USA is wiping its tears with things that are closer to home and causing a great deal more grief than far off Ukraine. That was obviously shown with President Obama’s half-hearted ‘string’ of 11 Russian oligarchs that will have their accounts frozen in the USA. So what’s the USA getting upset about? Only the fact (as has been predicted for months and now years) that the USA is not on any road to recovery and never has been. Weak inflation, Housing data that’s falling and sluggish growth (if that can be called growth).
USA: Not Even Tepid
The US economy is neither hot nor cold. It’s just the US economy. It’s boringly tedious. It’s going nowhere. If at least it were crashing we would be able to say something. If it were at most booming or expanding, we might have cause for joy. But, no, it’s static, boringly static, staid and uneventful. Rather watch paint dry and sit and witness the economic roll of film getting stuck in the cog wheels and doing nothing.
• February saw an increase in the Consumer Price Index of just 0.1% and that’s the second month in a row.
• The only thing that increased immensely was food, going up by the largest amount in over two years.
• This was off-set by a reduction in gas prices.
• In February 2014 prices increased on the year-on-year figure by only 1.1%.
• January’s year-on-year figure stood at 1.6%.
• The Federal Reserve has been fixing an inflation rate of 2% in its sights.
• Housing starts also fell 0.2% in February (to 907, 000 units).
• House prices as well as lack of properties on the market have meant that buying activity has been held back.
• The largest segment of the housing market (single-family homes) saw groundbreaking increase by 0.3% in February.
• The multi-family segment fell by 1.8%.
President Obama announced the wonderful (so-called) Buffet tax that would stand at least 30% on the incomes generated by millionaires, treating capital gains as simple revenue and that would limit tax deductions to just 28% of income. Although, Wall Street didn’t bat an eyelid and certainly had nothing to worry about. President Obama announced the ‘newspeak’ tax for the pleasure of the 99%, the masses drudging to work. But, that very same evening he went to dinner for a fund-raising event at one of the richest private equity executives in New York, one of the 1%. Wall Street didn’t stop the champagne flowing that night, because it seemed all like simple talk for the crowds banking on the bank doors. Keep the masses quiet and you control them feeding them with little titbits of news that will make them interested, but that you don’t have to put into practice.
The Federal Reserve Policy Meeting has just started and the figures were released during that. That means that the benchmark overnight rates will be sticking at zero while inflation is muted. Will they continue with tapering? Hardly seems possible while the economy is still to all intents and purposes in dire straits. They are expected to taper again by $10 billion by the time it all ends on Wednesday (the meeting that is). We shall see if they go through with it.
Some economists have seen the US rise in the stock market linked to the fact that there was little change in the housing sector in February according to figures released by the Commerce Department. Some are saying that the housing sector is stabilizing after declining less than expected from January. The bad weather seems to be over and the construction workers will be heading back to the building sites. But, perhaps there should be no question of rejoicing on such little activity in the sector and it’s hardly because the snow has thawed that the US housing market is crawling out of its ‘hell that froze over’. Why shouldn’t they be optimistic? After all, the Federal Reserve will always be there to bail them all out.
Janet Yellen stated in February that the US economy was strong enough to be able to stand tapering. US equities have entered a bull market that has been on-going since March 9th 2009. Now we are rejoicing because things are not actually getting any better, but because they are stagnating. A 6 year high for equities and an S&P 500 that is up 177% from a 12-year low should be little excuse not to have revamped the economic situation.
What, honestly, is there to hang the bunting out for?
Originally posted: USA: Economic Thumbs-Down