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US Economy (First Half 2012)

Economic activity continued to recover over the first half of 2012; financial market conditions became somewhat more supportive of economic growth in the first quarter of 2012, the US economic data has been improved since the fourth quarter of 2011. The Gross Domestic Product (GDP) in the United States expanded 2.8 percent in the fourth quarter of 2011 over the previous quarter Consumer price increased noticeably in the first part of the year, reflecting in part higher prices for some commodities and imported goods as well as shortages of several popular models of automobiles. A significant portion Inflation Real consumer spending, which had brightened near the end of 2010, rose at a noticeably slower rate over the first five months of 2011; the inflation rate in United States was last reported at 3 percent in December of 2011.  House-hold purchasing power was constrained by the weak pace of nominal income growth and by rising fuel and food prices the housing market continued to be weighed down by the large inventory of vacant houses for sale. Meanwhile, this rise was associated with energy and food prices, reflecting the pass through to retail prices of surges in the costs of crude oil and a wide range of agricultural commodities. Recently, however, these commodity prices have apparently stabilized a development that should ease pressure on consumer energy and food prices in coming months. In the labor market, total nonfarm payroll employment increased by 200,000 in December. Over the past 12 months, nonfarm payroll employment has risen by 1.6 million. Employment in the private sector rose by 212,000 in December and by 1.9 million over the year. Government employment changed little over the month but fell by 280,000 over the year. The unemployment rate in the United States fell to 8.5 percent in December of 2011 In U.S. financial markets, strong corporate profits and investors’ perceptions that the economic recovery was forming supported a rise in equity prices and a narrowing of credit spreads Furthermore, safe-haven demands stemming from investor concerns about global economic growth and about developments in Europe, contributed to the decline in nominal Treasury yields. This has been replied by updated monetary and fiscal policies like issuing a new debt ceiling and attempting to adopt of Warren Buffett Tax Rule. However, after approving a new total debt limit in August 2011 in order to meet the government obligations and support the national market. This total debt of the federal government can increase in two ways. First, debt increases when the government sells debt to the public to finance budget deficits and acquire the financial resources needed to meet its obligations. This increases debt held by the public. Second, debt increases when the federal government issues debt to certain government accounts, such as the Social Security, Medicare, and Transportation Trust Funds. This increases debt held by government accounts. The sum of debt held by the public and debt held by government accounts is the total federal debt.  Anyway, the good performance of US economic activity and market recovery has led that the fund flowed from EU in the US capital markets with 6.5 Billion of Dollars.

Sources:  Fed Reserve, Bureau of Labor Statistics, EPFR global.

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