by John Foster. Email John.
Golden Roller coaster:
US economic news this week was good, but not as good as hoped, adding to concerns there might be more quantitative easing. Atlanta Federal Reserve President Dennis Lockhart said he feels differently. “The U.S. economy remains fragile, but things would have to get a lot worse for the Federal Reserve to launch another round of monetary stimulus.” The Federal Reserve released its “Beige Book” summary with positive news about the U.S. economy. The auto industry sales and growing manufacturing of tech goods are the main reasons for the upswing. The news was not all positive, however. A large portion of the report focused on high gasoline prices and effects on industry. “This confirms that it’s a strengthening economy, and that takes pressure off the Fed,” economist Eduardo Martinez said. This is the first positive Beige Book seen in a year’s time.
Worries about Spain:
The economic issues in Spain continue to worry experts. With a growing budget deficit and a 23 percent unemployment rate, the outlook is grim. But there are hopes for recovery. Spain’s prime minister has a plan to reduce debt and shore up the banks. There have been positive signals. Deutsche Bank economist Gilles Moec said, “We’ve seen more progress in a few days than in four months.” The Spanish troubles are even making waves in French politics. The ongoing debt crises in the eurozone are seen as a boost for French President Nicolas Sarkozy. Although he trailing in most polls, the growing uncertainty within the region is boosting his appeal after his work with German Chancellor Angela Merkel in handling the Greek debt issues. However, Sarkozy does trail challenger Francois Hollande in most polls. Sarkozy said, “If we return to spending without control, we will find ourselves in the same situation as Spain.” The main worry is that if Spain were to default, which other nations are starting to fear, then the $1 trillion already in the coffers will not be enough to protect the eurozone. Spain’s problems are viewed by some analysts as far worse than those of Greece. Continue reading