|
ECONOMIC
ENERGY
Last updated: Feb. 15, 2011
Look for oil prices generally to remain in the $85-$95 range
(West Texas Intermediate, WTI) in the weeks ahead. Barring
disruption of the flow of oil piped through Egypt or blockage of
Suez Canal shipping lanes used by oil tankers, occasional dips below
that range or spikes above $100 per barrel will likely be
short-lived and/or confined to more sparsely traded contracts. For
example, Brent, or North Sea European, crude oil futures climbed
over the $100/bbl. level on news of rising tensions in Egypt.
However, on the New York Mercantile Exchange, Brent crude oil
trading averages 1,000-2,000 contracts per day compared with more
than 300,000 contracts a day for WTI. A recent dip in the price of
WTI was spurred by a report from the Energy Information
Administration that stocks at Cushing, Okla., dropped by almost 1
million barrels, but most analysts attributed the drop to snowy
weather there, not heavier usage of the fuel.
The fact is, global supplies are plentiful for current and upcoming
demand in the short term. Oil stocks in the U.S. are up by about 14
million barrels from year-ago levels and stocks of gasoline are up
by 8.1 million barrels. Moreover, the oil passing through Egypt
accounts for only about 2% of the world’s supply. And the odds of
turmoil spreading to Saudi Arabia and other Arab states with
significant oil production are fairly low. Furthermore, OPEC is
currently sitting on unused capacity of 7 million-8 million barrels
per day that could be released into the global supply chain fairly
easily.
It’s worth noting, though, that while traditional metrics of supply
and demand continue to be important in the market, energy prices are
largely driven by speculative trading these days. Such trading keeps
prices artificially higher than market supply-and-demand
fundamentals alone would dictate. Hedge funds account for more than
15% of the transactions on the New York Mercantile Exchange.
Meanwhile, expect the price of gasoline at the pump to edge up
slightly in coming months.
At a national average of $3.13 per gallon, the price is up almost
45¢ from this time last year, topping the $3-per-gallon mark despite
the slow winter driving season. In April and May, heading into the
summer driving season, the price could top $3.50 per gallon.
Diesel fuel will also slowly increase in price
as the economy improves and the need for truck deliveries rises with
the production of more goods. Look for a price jump from about $3.43
per gallon now to around $3.60-$3.80 by spring. |
BUSINESS SPENDING
Last updated: Jan. 28, 2011
Increased business spending will provide a healthy
kick to the economy in 2011. Although companies have
already restocked inventories depleted during the
recession, investment in equipment and software is
likely to match last year’s gain of about 15%. At the
same time, spending on buildings will level off,
following a three-year steep decline.
Credit a souped-u course, some of that spending
will be “borrowed” from next year -- moved forward to
take advantage of the tax break and therefore reducing
growth in 2012 spending.
Although conditions are improving in construction,
high vacancy rates for offices, industrial space and
retailing will keep a lid on spending for the year.
Demand for new space won’t rise until job growth
increases substantially, not likely until next year.
Durable goods orders fell in December, reflecting a
slower pace in business spending growth in the second
half of 2010 than in the first half. Most of the decline
came from civilian aircraft. Orders for machinery and
motor vehicles were strong, but most sectors were flat
or down, including computers and electrical equipment.
Read more:
http://www.kiplinger.com/businessresource/economic_outlook/#ixzz1EcWv3tnA
Become a Fan of Kiplinger's on Facebook
BUSINESS SPENDING
Last updated: Jan. 28, 2011
Increased business spending will provide a healthy
kick to the economy in 2011. Although companies have
already restocked inventories depleted during the
recession, investment in equipment and software is
likely to match last year’s gain of about 15%. At the
same time, spending on buildings will level off,
following a three-year steep decline.
Credit a souped-up tax break approved by Congress in
early December for some of the increase on equipment
spending. Lawmakers OK’d a provision that allows
businesses to expense 100% of the cost of assets put
into use this year. Of course, some of that spending
will be “borrowed” from next year -- moved forward to
take advantage of the tax break and therefore reducing
growth in 2012 spending.
Although conditions are improving in construction,
high vacancy rates for offices, industrial space and
retailing will keep a lid on spending for the year.
Demand for new space won’t rise until job growth
increases substantially, not likely until next year.
Durable goods orders fell in December, reflecting a
slower pace in business spending growth in the second
half of 2010 than in the first half. Most of the decline
came from civilian aircraft. Orders for machinery and
motor vehicles were strong, but most sectors were flat
or down, including computers and electrical equipment.
Read more:
http://www.kiplinger.com/businessresource/economic_outlook/#ixzz1EcWv3tnA
Become a Fan of Kiplinger's on Facebook
BUSINESS SPENDING
Last updated: Jan. 28, 2011
Increased business spending will provide a healthy
kick to the economy in 2011. Although companies have
already restocked inventories depleted during the
recession, investment in equipment and software is
likely to match last year’s gain of about 15%. At the
same time, spending on buildings will level off,
following a three-year steep decline.
Credit a souped-up tax break approved by Congress in
early December for some of the increase on equipment
spending. Lawmakers OK’d a provision that allows
businesses to expense 100% of the cost of assets put
into use this year. Of course, some of that spending
will be “borrowed” from next year -- moved forward to
take advantage of the tax break and therefore reducing
growth in 2012 spending.
Although conditions are improving in construction,
high vacancy rates for offices, industrial space and
retailing will keep a lid on spending for the year.
Demand for new space won’t rise until job growth
increases substantially, not likely until next year.
Durable goods orders fell in December, reflecting a
slower pace in business spending growth in the second
half of 2010 than in the first half. Most of the decline
came from civilian aircraft. Orders for machinery and
motor vehicles were strong, but most sectors were flat
or down, including computers and electrical equipment.
Read more:
http://www.kiplinger.com/businessresource/economic_outlook/#ixzz1EcWv3tnA
Become a Fan of Kiplinger's on Facebook
BUSINESS SPENDING
Last updated: Jan. 28, 2011
Increased business spending will provide a healthy
kick to the economy in 2011. Although companies have
already restocked inventories depleted during the
recession, investment in equipment and software is
likely to match last year’s gain of about 15%. At the
same time, spending on buildings will level off,
following a three-year steep decline.
Credit a souped-up tax break approved by Congress in
early December for some of the increase on equipment
spending. Lawmakers OK’d a provision that allows
businesses to expense 100% of the cost of assets put
into use this year. Of course, some of that spending
will be “borrowed” from next year -- moved forward to
take advantage of the tax break and therefore reducing
growth in 2012 spending.
Although conditions are improving in construction,
high vacancy rates for offices, industrial space and
retailing will keep a lid on spending for the year.
Demand for new space won’t rise until job growth
increases substantially, not likely until next year.
Durable goods orders fell in December, reflecting a
slower pace in business spending growth in the second
half of 2010 than in the first half. Most of the decline
came from civilian aircraft. Orders for machinery and
motor vehicles were strong, but most sectors were flat
or down, including computers and electrical equipment.
Read more:
http://www.kiplinger.com/businessresource/economic_outlook/#ixzz1EcWv3tnA
Become a Fan of Kiplinger's on Facebook
BUSINESS SPENDING
Last updated: Jan. 28, 2011
Increased business spending will provide a healthy
kick to the economy in 2011. Although companies have
already restocked inventories depleted during the
recession, investment in equipment and software is
likely to match last year’s gain of about 15%. At the
same time, spending on buildings will level off,
following a three-year steep decline.
Credit a souped-up tax break approved by Congress in
early December for some of the increase on equipment
spending. Lawmakers OK’d a provision that allows
businesses to expense 100% of the cost of assets put
into use this year. Of course, some of that spending
will be “borrowed” from next year -- moved forward to
take advantage of the tax break and therefore reducing
growth in 2012 spending.
Although conditions are improving in construction,
high vacancy rates for offices, industrial space and
retailing will keep a lid on spending for the year.
Demand for new space won’t rise until job growth
increases substantially, not likely until next year.
Durable goods orders fell in December, reflecting a
slower pace in business spending growth in the second
half of 2010 than in the first half. Most of the decline
came from civilian aircraft. Orders for machinery and
motor vehicles were strong, but most sectors were flat
or down, including computers and electrical equipment.
Read more:
http://www.kiplinger.com/businessresource/economic_outlook/#ixzz1EcWv3tnA
Become a Fan of Kiplinger's on Facebook
BUSINESS SPENDING
Last updated: Jan. 28, 2011
Increased business spending will provide a healthy
kick to the economy in 2011. Although companies have
already restocked inventories depleted during the
recession, investment in equipment and software is
likely to match last year’s gain of about 15%. At the
same time, spending on buildings will level off,
following a three-year steep decline.
Credit a souped-up tax break approved by Congress in
early December for some of the increase on equipment
spending. Lawmakers OK’d a provision that allows
businesses to expense 100% of the cost of assets put
into use this year. Of course, some of that spending
will be “borrowed” from next year -- moved forward to
take advantage of the tax break and therefore reducing
growth in 2012 spending.
Although conditions are improving in construction,
high vacancy rates for offices, industrial space and
retailing will keep a lid on spending for the year.
Demand for new space won’t rise until job growth
increases substantially, not likely until next year.
Durable goods orders fell in December, reflecting a
slower pace in business spending growth in the second
half of 2010 than in the first half. Most of the decline
came from civilian aircraft. Orders for machinery and
motor vehicles were strong, but most sectors were flat
or down, including computers and electrical equipment.
Read more:
http://www.kiplinger.com/businessresource/economic_outlook/#ixzz1EcWv3tnA
Become a Fan of Kiplinger's on Facebook
BUSINESS SPENDING
Last updated: Jan. 28, 2011
Increased business spending will provide a healthy
kick to the economy in 2011. Although companies have
already restocked inventories depleted during the
recession, investment in equipment and software is
likely to match last year’s gain of about 15%. At the
same time, spending on buildings will level off,
following a three-year steep decline.
Credit a souped-up tax break approved by Congress in
early December for some of the increase on equipment
spending. Lawmakers OK’d a provision that allows
businesses to expense 100% of the cost of assets put
into use this year. Of course, some of that spending
will be “borrowed” from next year -- moved forward to
take advantage of the tax break and therefore reducing
growth in 2012 spending.
Although conditions are improving in construction,
high vacancy rates for offices, industrial space and
retailing will keep a lid on spending for the year.
Demand for new space won’t rise until job growth
increases substantially, not likely until next year.
Durable goods orders fell in December, reflecting a
slower pace in business spending growth in the second
half of 2010 than in the first half. Most of the decline
came from civilian aircraft. Orders for machinery and
motor vehicles were strong, but most sectors were flat
oruding computers and electrical equipment.
Read more:
http://www.kiplinger.com/businessresource/economic_outlook/#ixzz1EcWv3tnA
Become a Fan of Kiplinger's on Facebook
BUSINESS SPENDING
Last updated: Jan. 28, 2011
Increased business spending will provide a healthy
kick to the economy in 2011. Although companies have
already restocked inventories depleted during the
recession, investment in equipment and software is
likely to match last year’s gain of about 15%. At the
same time, spending on buildings will level off,
following a three-year steep decline.
Credit a souped-up tax break approved by Congress in
early December for some of the increase on equipment
spending. Lawmakers OK’d a provision that allows
businesses to expense 100% of the cost of assets put
into use this year. Of course, some of that spending
will be “borrowed” from next year -- moved forward to
take advantage of the tax break and therefore reducing
growth in 2012 spending.
Although conditions are improving in construction,
high vacancy rates for offices, industrial space and
retailing will keep a lid on spending for the year.
Demand for new space won’t rise until job growth
increases substantially, not likely until next year.
Durable goods orders fell in December, reflecting a
slower pace in business spending growth in the second
half of 2010 than in the first half. Most of the decline
came from civilian aircraft. Orders for machinery and
motor vehicles were strong, but most sectors were flat
or down, including computers and electrical equipment.
Read more:
http://www.kiplinger.com/businessresource/economic_outlook/#ixzz1EcWv3tnA
Become a Fan of Kiplinger's on Facebook
BUSINESS SPENDING
Last updated: Jan. 28, 2011
Increased business spending will provide a healthy
kick to the economy in 2011. Although companies have
already restocked inventories depleted during the
recession, investment in equipment and software is
likely to match last year’s gain of about 15%. At the
same time, spending on buildings will level off,
following a three-year steep decline.
Credit a souped-up tax break approved by Congress in
early December for some of the increase on equipment
spending. Lawmakers OK’d a provision that allows
businesses to expense 100% of the cost of assets put
into use this year. Of course, some of that spending
will be “borrowed” from next year -- moved forward to
take advantage of the tax break and therefore reducing
growth in 2012 spending.
Although conditions are improving in construction,
high vacancy rates for offices, industrial space and
retailing will keep a lid on spending for the year.
Demand for new space won’t rise until job growth
increases substantially, not likely until next year.
Durable goods orders fell in December, reflecting a
slower pace in business spending growth in the second
half of 2010 than in the first half. Most of the decline
came from civilian aircraft. Orders for machinery and
motor vehicles were strong, but most sectors were flat
or down, including computers and electrical equipment.
Read more:
http://www.kiplinger.com/businessresource/economic_outlook/#ixzz1EcWv3tnA
Become a Fan of Kiplinger's on Facebook
BUSINESS SPENDING
Last updated: Jan. 28, 2011
Increased business spending will provide a healthy
kick to the economy in 2011. Although companies have
already restocked inventories depleted during the
recession, investment in equipment and software is
likely to match last year’s gain of about 15%. At the
same time, spending on buildings will level off,
following a three-year steep decline.
Credit a souped-up tax break approved by Congress in
early December for some of the increase on equipment
spending. Lawmakers OK’d a provision that allows
businesses to expense 100% of the cost of assets put
into use this year. Of course, some of that spending
will be “borrowed” from next year -- moved forward to
take advantage of the tax break and therefore reducing
growth in 2012 spending.
Although conditions are improving in construction,
high vacancy rates for offices, industrial space and
retailing will keep a lid on spending for the year.
Demand for new space won’t rise until job growth
increases substantially, not likely until next year.
Durable goods orders fell in December, reflecting a
slower pace in business spending growth in the second
half of 2010 than in the first half. Most of the decline
came from civilian aircraft. Orders for machinery and
motor vehicles were strong, but most sectors were flat
or down, including computers and electrical equipment.
Read more:
http://www.kiplinger.com/businessresource/economic_outlook/#ixzz1EcWv3tnA
Become a Fan of Kiplinger's on Facebook
FORECAST
INFLATION
Last updated: Jan. 14, 2011
Inflation will pick up modestly this year,
rising to about 2% for 2011, measuring from December 2010 to
December 2011. The Consumer Price Index rose 0.5% in December,
leaving inflation over the past 12 months at 1.5%. Though gasoline
price increases are capturing plenty of attention, the spurt has
come just in the past couple of months. For 2010, gasoline rose
13.8%, well below the 53.5% increase the previous year, when the CPI
increased 2.7%.
Core inflation, which strips out energy and food prices, will rise a
bit this year. A growing economy will translate into higher rents,
which are a major component of the core. The core CPI increased 0.1%
in December and just 0.8% over the past 12 months. That’s the
slowest pace since this data set began in 1958, and the chief reason
Federal Reserve Chairman Ben Bernanke remains unconcerned about the
prospect of higher inflation.
But the economy is gradually absorbing the sum of the excess
resources.
The number of jobs in the private sector, for example, is
increasing, albeit slowly, leading us to believe that inflation will
increase mildly in the coming year, though still remain very low.
Indeed, the components of the CPI show a mixed picture. For
instance, while gasoline prices are jumping, medical prices also
increased, but just 0.3%. Over the past 12 months, prices increased
for medical care and used cars, while they declined for new cars,
apparel, footwear and recreation. Food overall rose 1.5% last year,
with strong gains in meat, poultry, fish, eggs and dairy products.
Going forward, there is still enough slack in the economy to keep a
lid on price increases this year.
One exception will be gasoline, now about $3.10 for a gallon of
regular, heading toward $3.50 a gallon by mid-year. Elsewhere,
makers of beer, coffee, tires and breakfast cereals, among others,
aren’t able to pass along much of the rise in commodity prices,
which rose 20% to 100% in some cases last year. But firms are
nudging up prices a little.
More economic forecast information can
be found at
Kiplinger.
|
2011
EMPLOYMENT
Last updated: Feb. 4, 2011
Don’t be misled by the meager 36,000 gain in net new jobs in Jan.
Odds are that major storms across much of the country in Jan.
distorted the picture. With many businesses closed, results from the
survey of employers -- asking about changes in their payroll numbers
-- are unreliable. Similarly, the big drop in the jobless rate, from
9.4% in Dec. to just 9% in Jan., is likely off-base. The same storms
that kept employers from their workplaces probably also kept job
hunters from beating the pavement last month. That temporarily
depresses the share of the labor force that is actively seeking
employment but can’t find it.
A clearer signal of improvement are the upward revisions in Nov. and
Dec. job growth:
An increase of 18,000 to 121,000 net new jobs in December and a jump
of 22,000 for a total gain of 93,000 in November.
We still expect about 2 million net new jobs this year.
Although productivity gains continue, the pace is slower. So as
economic growth picks up to about 3.5% this year, more hiring will
be necessary to meet demand. Still, by year-end, the unemployment
rate isn’t likely to dip much below 9%. During what’s being called
the Great Recession, about 8.75 million jobs were lost, starting in
Dec. 2007. Net job creation didn’t resume until early 2010, and a
mere 990,000 workers were added to payrolls last year -- barely
enough to absorb recent college graduates and others entering the
job market.
In order for the unemployment rate to drop one full percentage
point, GDP growth would need to be 4% for a full year. As Ben
Bernanke, Federal Reserve Board chairman, told the National Press
Club this week, “Until we see a sustained period of stronger job
creation, we cannot consider the recovery to be truly established.”
Of special concern are the 6.2 million people -- almost half the
total of unemployed -- have been out of work for six months or
longer. Even as growth accelerates, their job prospects dwindle:
It’s harder for the long-term unemployed to get a job than for new
entrants to the work force.
|
