Last week, we were treated to the proverbial 800-pound gorilla of economic readings -- the monthly employment report. By comparison in the animal kingdom, this week's readings should barely register on the scales as fruit flies.
Having seen key readings on the job market, manufacturing and the services sector, and digesting the statement from the Federal Reserve, it is generally believed that we continue to see moderate growth in the economy. The feared double-whammies of federal tax cuts and the increase in payroll taxes haven't been as ferocious as imagined.
This week's readings include (all times eastern):
- March Consumer credit from the Federal Reserve, 3 p.m. Tuesday.
- New jobless claims from the Labor Department, 8:30 a.m. Thursday.
- Federal budget statement from the Treasury Department, 2 p.m. Friday.
See, we told you there wasn't much.
Zeroing in on the deficit
The Treasury budget statement tends not to influence the financial markets, but the ongoing budget saga in Washington, D.C., reflects the inability of President Barack Obama's administration and Congress to forge broad agreement on short-term and long-term challenges. The budget statement captures the short-term picture, while many worry that the long-term debt picture isn't being seen as a priority for elected officials.
Last time around, the Treasury reported the deficit for the first half of the fiscal year stood at $600 billion. For March, the deficit was $107 billion.
Good news story
Despite all of the butting heads in Washington, the deficit has been going down. Budget expert Stan Collender, with Qorvis Communications, says, "We've been in an unspoken austerity period for several years." As proof, he notes that "federal involvement in the economy has been declining, as both a percentage of (gross domestic product) and as nominal numbers." Collender says that's taking the pressure off for more immediate fixes or a so-called grand bargain.
Worry about the long term
Clearly placed within the camp that's worried about the broader picture is economist Robert Brusca with Fact and Opinion Economics. Brusca says, "We're doing the same thing as Europe with our budget situation. Everybody is kicking the can down the road." He says the forecasts for trouble, in part because of unfunded liabilities for Social Security and Medicare, are among the reasons why employers haven't hired more than they have. "Fixing the out-year deficits is the way we can give the economy a boost," Brusca says.
Back to unemployment claims
The story of the weekly jobless claims has been positive. Fewer people have been laid off, prompting fewer people to seek unemployment assistance. In last week's snapshot, the Labor Department said the number of Americans filing first-time claims for unemployment assistance fell last week to 324,000, the lowest since January 2008. The other part of the job market equation, namely hiring, hasn't been quite as positive.
This week in business history
With all of the attention recently on our own Federal Reserve, we might forget about other central banks around the world. While the Fed has demonstrated its independence from the political world, the Bank of England has only been independent for a little over a decade. On May 6, 1997, the BOE was set free from political control by then-Chancellor of the Exchequer, Gordon Brown.
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