Fellow
Shortrunners,
Over the course of the next week and a half, thousands will converge upon Johannesburg, South Africa, for the United Nation's World Summit on Sustainable Development. The conference hopes to confront a range of issues from environmental protection to trade and economic growth. To be a little more precise, the UN's current secretary general suggested that the conference would represent an attempt to ameliorate the human condition. This would include setting up programs aimed at the improvement and provision of water and sanitation, energy, agricultural productivity, biodiversity and ecosystem management, and health care. At the same time, Johannesburg will be filled with another 10,000 police just to keep anti-globalization protestors from causing trouble. Despite the UN's stated good intentions, many protestors feel that the conference will focus less on the environment and more on expanding globalization.
As if the protestors weren't enough to contend with, there are a number of hurdles that will confront the delegates as well. Developed and developing nations are still in dispute over the current level of foreign aid and the democratization demands that are often tied to it. America's recent imposition of agricultural subsidies has also sparked animosity; it hurts global crop prices and thus greatly impacts the developing world which relies heavily upon its large agrarian sector. US steel tariffs, which just recently appear to be buckling to foreign pressure, are also a stumbling block for the US because they stand as a sign of hypocrisy given our promotion of free trade and markets.
A positive conclusion to the Johannesburg conference would certainly be good news for efforts towards sustainable development. It could also be crucial for US foreign relations, which could use some improvement. Given fears that America will invade Iraq, crude oil prices have risen above $30 a barrel, a blow to the typical American's pocket. As I've said several times before, martial political speech from the President is not likely to help oil prices or investor confidence. Added uncertainty will only raise fears of a double-dip and thus the likelihood of such an outcome. A sense of hesitancy will damage investment and consequently growth prospects. Indeed, the falling market is not the only sign that Americans are feeling the slowdown. Another figure this week showed that record numbers of Americans are turning to mortgages for financing, probably the result of historically low interest rates. With continuing economic weakness, rates aren't likely to sneak back up any time soon either.
Sincerely,
Daniel Hicks
Economic Releases
The data section
provides charts and data for the most important economic indicators.
Index of Leading Indicators:
1.2%
Release Date: 8/19
- The Conference Board's widely watched index of leading indicators declined 0.4% in July. The falling leading index does not bode well for future economic growth. At the same time, the Conference Board announced that it would undertake revisions to the index, normally done on an annual basis, to help capture a series of significant data revisions done at the BEA. According to economists at the Conference Board, about 0.3% of the decrease was due to weakness in the stock market.
Trade Balance:
-$37.16 Billion
Release Date: 8/20
- During June, the US trade deficit shrank slightly to -$37.16 billion for the month. Despite the decrease, the US trade deficit is still running at a historically large size. The decrease is surprising considering the recent run up in oil prices. A new rash of worry over the trade deficit has centered around waning international interest in US investments given our stock market's current woes.
Treasury Budget:
-$29.2 Billion
Release Date: 8/20
- Government expenditures exceeded receipts during July by a whopping $29.2 billion. The deficit was actually lower than many analysts were forecasting but still represents a drastic change from the surpluses the US was running in the not too distant past.
Jobless Claims:
389,000
Release Date: 8/22
- Jobless claims fell Thursday from an upwardly revised figure of 391,000 the week before. The index still appears to be trending upward. Meanwhile, continuing claims is telling another story, falling slightly. At any rate, the recent movements in jobless claims have been marginal enough to have little impact on the overall unemployment rate which came in at 5.9% in July.
ECRI Weekly Leading Index: 120.8
Release Date: 8/23
- In contrast to the Conference Board's Index of Leading Indicators, the ECRI's vision for the economy's future was somewhat brighter. In spite of the stock market's continued woes, the leading index is still suggestive of recovery.
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