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21 Dec 2007 Three-and-a-Half Shopping Days Left!

Posted at 16:24h in The Friday Brief by Sam Bass Jr.

As economists grapple with where this economy is going the American consumer continues to surprise and amaze. The latest government figures, released today show that consumer spending rose considerably more than forecast in November. Purchases gained 1.1% in November, well ahead of .7% estimate. That is the highest rate of increase since the 1.2% increase in May 2004. It helps allay fears that the economy is falling so fast it cannot avoid recession.

14 Dec 2007 Fed and Government Firepower is Diminishing

Posted at 16:28h in The Friday Brief by Sam Bass Jr.

TheUSeconomy will have to gut it out from here without additional help from the Fed or the government. Today’s inflation report shows that the Federal Reserve had little flexibility to lower beyond the quarter of a percent they announced on Wednesday fearing inflation and a falling dollar. As to government actions; early signs are that credit bailout efforts will fall short of easing tight credit. InWashington, political wrestling has already stalled and likely killed relief from the alternative minimum tax. There appears scant hope that a Democratically controlled House and Senate will continue Bush’s tax cuts. So the combined prospects of higher taxes, tighter credit, already high gasoline, falling house prices, slowing consumer demand, and higher prices on everything else if inflation takes hold, almost surely will be enough to stall theUSeconomy.

07 Dec 2007 “The report of my death is an exaggeration”

Posted at 15:42h in The Friday Brief by Sam Bass Jr.

Mark Twain’s famous response to a reporter who had been sent to determine whether he remained alive appropriately describes a US economy that simply refuses to succumb. Above the din of pessimistic whining one can almost hear the bull snorting and grunting in defiance.

30 Nov 2007 Is the Fed Coming to the Rescue?

Posted at 15:56h in The Friday Brief by Sam Bass Jr.

The economy is drifting very close to the edge now and what would have taken a gale force wind a few months ago might well be accomplished with little more than a wisp now. You might remember that in last weeks’ Brief we posed the question as to whether the Fed had lowered rates enough to sustain economic expansion. We noted that future reductions might be constrained because of growing threats of inflation as well as a dramatically sinking dollar. But without them, we noted the odds were greater that the economy would falter. The past several weeks’ revelations of worsening banking and credit problems, combined with a host of economic releases showing deterioration have changed the tone of the Fed dramatically.