At the end of last year, I speculated whether the housing market was starting to recover. While the evidence was limited, signs of improvement in early 2012 have emerged. The pressing question now is: will this trend continue? This week brings several significant updates on housing metrics that may shed light on this issue.
● The Race for What’s Left: The Global Scramble for the World’s Last Resources
By Michael T. Klare
Interview with the author on Democracy Now!
The discussion focuses on soaring fuel prices, a key topic in the Republican presidential campaign of 2012. Since the start of the year, regular gasoline prices have surged 16 percent to exceed $3.80 per gallon. Earlier this week, President Obama attributed part of this rise to his Republican opponents, citing fears of conflict with Iran as a contributing factor. Meanwhile, Republican candidates have exploited the situation to criticize Obama’s rejection of the Keystone XL tar sands pipeline and his policies on increased domestic oil drilling. Michael Klare argues that high oil prices are likely to persist because the majority of the world’s remaining oil is hard to access.
According to a recent report from the Federal Reserve, industrial production remained unchanged in February. While this is disappointing, the year-over-year growth in industrial production showed a slight increase, which is a positive sign.
The market’s expectations regarding inflation and growth remain closely interconnected. This emerging “new abnormal” persists, as suggested by the rising implied inflation based on the yield spread between nominal and inflation-indexed 10-year Treasuries. Alongside the rise in the stock market, this correlation has puzzled some analysts, while others simply overlook it. Regardless of recognition, understanding this relationship is crucial.
Last week, new jobless claims dropped significantly by 14,000, reaching a seasonally adjusted total of 351,000. This marks a second occurrence of this post-Great Recession low, replicating the figures from mid-February.
Paul Krugman points out that Amity Shlaes has misread Milton Friedman’s teachings on monetary policy, as I similarly addressed earlier this month. However, I find myself at odds with him when he asserts that “this time, the Fed undertook all the actions that Friedman criticized it for not doing during the 1930s. The fact that this wasn’t sufficient disproves Friedman’s assertion that adequate Fed intervention could have prevented the Depression.” I’m perplexed.
This piece marks the second part of our review focused on ETFs that can emulate the Global Market Index, a passive benchmark representing the principal asset classes. In the previous edition, we explored broad U.S. equity funds. This time, our attention shifts to a concise selection of investment-grade U.S. bond funds that encompass the spectrum within this segment of the capital markets.
Retail sales have shown notable improvement thus far in 2012, as reported by the Census Bureau. February saw a solid 1.1% increase in sales on a seasonally adjusted basis, marking the strongest monthly growth since last September. Additionally, there is encouraging news regarding the annual retail sales trajectory: for the first time in five months, the year-over-year percentage change in retail sales increased, indicating that the concerning downward trend in consumer spending may be reversing.
Today at 8:30 a.m. eastern, we await the update on February retail sales, which will provide new figures for considering the recent slowdown in personal consumption expenditures. Here’s a glance at some insights and predictions:
Retail Sales in U.S. Probably Rose in February by the Most in Five Months
Bloomberg | Mar 13
It is anticipated that retail sales in the U.S. saw considerable growth in February, spurred primarily by the highest automobile demand since 2008, with economists estimating a 1.1 percent increase following a 0.4 percent rise in January. Excluding automobiles, purchases may have surged by 0.7 percent.
“The rally in risk assets appears to be losing momentum,” warns The Economist. While that may be a forecast, recent trends have been notably vigorous, demonstrated through a review of the major asset classes using our typical list of ETF proxies.
### Conclusion
As 2012 progresses, the economic landscape reveals fluctuating growth indicators, particularly in retail sales and the job market. Monitoring these metrics will be essential in assessing whether recent positive trends can be sustained amid ongoing challenges.
