What have we learned about America?

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USA FlagEarly last week, I wrote that that string of reports that the United States will publish in the next few days will be the first economy in the world a kind of test for “health”. So, the test is passed. What did it show?

The United States is not left on the problem of “financial cliff”, as many people think. And it’s not only that the issue of the reduction of the state budget has not yet been resolved (although this is also a very important point). Another problem is that the tax increases, which is already in force since the beginning of 2013, it can put a “pig” to the U.S. The fact that the fear of “fault” led to the fall of the cost of business and government, I wrote recently. But in the fourth quarter of this fear has not resulted in a decline in consumer spending. But what will happen in 2013…

The December report on personal income and spending of the U.S. population showed that the incomes of Americans in December rose by 2.6% (eight-year record!). But while household spending rose only 0.2 percent!

About a sharp rise in personal income should be no illusions. It’s just a massive payment of dividends for 2012 so influenced the statistics: American companies are slow to pay to shareholders in December, before the tax increase. But the fact that Americans prefer not to spend the money on Christmas sales, and hide in the “money-box”, says a lot. And another record was set – the savings rate increased to a maximum of three and a half years. Very similar to the attempts to postpone the “rainy day”…

How will population of the USA behave now, when tax increase is already a reality? Begin to save even more? And if we will contract expenditure budget, which Republicans insist? I’m afraid that in this case, even if the U.S. can avoid a recession, the growth rate of U.S. GDP in 2013 will be close to zero…

The Fed did not become more optimistic

Recently analysts as having agreed, discussed the question of whether the Fed will not curtail its program of “quantitative easing” in the first half of 2013. Especially since the new composition FOMC may be more “hawkish” than previous…

But here’s the first meeting of the Committee in the new composition. And what happened? Nothing’s changed! As we learned from the accompanying statement, the Fed still intends to maintain its policy of low rates, while unemployment has fallen to the level of 6.5%, and will not pay attention to inflation, while it’s kept below 2.5% (currently corresponding PCE index stands at +1.3 %). But QE will continue as long as the Fed does not see “significant”(!) Improvement in the labor market. There are no more oppositionists to this course: Lacker played this role in the previous part, and now Esther George took the baton. But – there is safety in numbers, and one will not make George among eleven of easing.

So while expectations that QE3 not make it to the end of the year, seem to me somewhat romantic. No, it shows that the Fed this year will not stop printing money, spending most aggressive mitigation of all major central banks. That, of course, is negative for the dollar…

The U.S. labor market doesn’t make people happy

In January, the U.S. economy created just 157,000 jobs against 196,000 in December. This growth rate does not even reach the annual average of the previous year (181,000 a month). While more and the unemployment rate rose from 7.8% to 7.9%. Such a weak start of the year only increases confidence that the Fed this year will not reconsider its policy towards tightening.

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About Author

I have been friend with currency market since 2006. I hope that this friendship is not only useful to me, because over the years I have repeatedly provided analytical services to various companies and media outlets. I love fundamental analysis. Every day, I am convinced that the statistics is not boring numbers but fascinating reading, which, moreover, can predict the future. Technical analysis is also not neglected, especially as my hobby - finding effective algorithms for automated trading systems.