Economy still showing many signs of weakness
There has been little change in the financial markets during the past week. Major stock market indices remain at overbought levels and we continue to expect a downward correction. So far positive comments from President Obama and others have managed to hold the markets in a sideways pattern. While it is possible we could see markets break out to the upside, right now the long-term downtrend remains in place.
The latest Federal Reserve report released this week proved to be a bit of a disappointment. Everyone is hoping for some definite signs that U.S. economic activity is improving. What we got instead was a report that noted that five of the 12 Federal Reserve districts experienced “a moderation in the pace of decline.” In other words, in many cases the economy is still getting worse, but not as fast as previously.
The Beige Book report is published eight times per year. It gets its name from the color of the cover of the report. Each Federal Reserve Bank gathers information on current economic conditions in its district through reports from bank and branch directors and interviews with key business contacts, economists, market experts, and other sources. The Beige Book summarizes this information by district and sector. A summary of the 12 district reports is prepared by a designated Federal Reserve Bank on a rotating basis.
For anyone interested in reading the full summary or the complete report, here is the link:
http://www.federalreserve.gov/fomc/beigebook/2009/20090415/default.htm
If you have not ever done so, I would encourage you to visit the Federal Reserve web site at:
The site holds a wealth of information about Federal Reserve activities as well as many resources for consumers. For example, today there is a link to a speech given by Federal Reserve Chairman Ben Bernanke at Morehouse College in Atlanta. He talks about the current financial and economic crisis and what the Fed is doing to try to resolve the problems. In his concluding remarks he said:
“The current crisis has been one of the most difficult financial and economic episodes in modern history. Recently we have seen tentative signs that the sharp decline in economic activity may be slowing, for example, in data on home sales, homebuilding, and consumer spending, including sales of new motor vehicles. A leveling out of economic activity is the first step toward recovery. To be sure, we will not have a sustainable recovery without a stabilization of our financial system and credit markets. We are making progress on that front as well, and the Federal Reserve is committed to working to restore financial stability as a necessary step toward full economic recovery.”
The site also includes a credit card repayment calculator. It allows consumers to enter an amount of credit card debt, the interest on that debt, and then it tells how long it will take to pay it off if only minimum payments are made. Just for fun, I entered $5,000 at an interest rate of 21%. At an estimated minimum payment of $100 a month, it would take 64 years to eliminate the debt. Over that time, there would be $29,398 paid in interest. That should help explain why credit card companies do not want you to pay off your balances.
F.S.
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