Ask the Advisor – 12/11/2007
In today’s post, Hoboken411’s Financial Advisor discusses recent economic news making headlines.
Good Tidings & UnCheer?
“Financial markets can kiss goodbye any chance of a half-point cut,” Chief U.S. Macro-Economist from Bank of Tokyo’s Ellen Zentner said this past weekend.
With the release from the Labor Department last week, the nation gained a modest 94,000 jobs in November, pulling back considerably from the previous month in the clearest sign yet that the American economy was headed for a substantial slowdown. The jobs report, a religiously much-anticipated indicator of the health of the economy, also provided some comfort that the U.S. had not quite slipped into a recession and might not be weakening as rapidly as some experts feared. With business leaders expressing uncertainty about the prospects for further growth, a better view of the direction of the economy was not likely to emerge until next year. “The expansion is intact, but increasingly frayed,” mentioned Mark Zandi, Chief Economist at Moody’s Economy. The job creation numbers are indicative of a very fragile economy that will come undone unless conditions improve soon. The unemployment rate held a steady 4.7% for the third consecutive month, as households found strong growth in the number of people saying they found new jobs last month.
On Wall Street, markets barely moved Friday, absorbing the jobs data with ambivalence. The employment picture offered assurance that the economy was not plummeting and might continue to expand, sustaining corporate profits. But those very assurances sowed worry that the Federal Reserve would feel less pressure to ease interest rates aggressively when it convened last week. A number of market participants have urged a half-point cut, as well all know, in the Fed’s key throttle control over the banking system, which has dominated decision-making across all industries. Central bankers have signaled that they intend to try to avert a recession with looser credit, but remain wary of fueling inflation with an unnecessarily sharp cut in rates.
Research conducted and supported by The Wall Street Journal and MSNBC for week of December 10, 2007.
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