Tag Archive | "consumption"

US Market Greeted 2011 with Weak Retail Sales

Sales in the US retail market slowed abruptly in January, according to the official data released on Tuesday. The weak retail sales were brought about the huge snow storms that affected several parts of the country in the beginning of the year.

From December, sales only increased to 0.3 percent, which shows the slowest rise in the market in seven months. The figures were based on the Commerce Department data that was adjusted for the given time of year.

In fact, the sector adjusted the December rise to 0.5 percent, where it was initially estimated to be 0.6 percent.

The pace in retail sales, as well as food services missed out the 0.5 percent increase analysts foretold, even though many stores featured sharp discounts after the holiday season.

Since January 2010, retail sales have increased to 7.8 percent based on a 12-month period. By December, retail sales merely climbed to 0.3 percent, which was barely half of the rise expected. However, the numbers excluded the automobile sector whose sales vary per month.

Garden supplies and building material dealers were the most affected area in the market. Their sales dived to 2.9 percent because of relentless winter weather and the collapse in housing markets.

The weak start of the year came after an upbeat recovery in the 2010 post recession period. That time, retail sales increased to 6.6 percent, which was the largest yearly increase since 1999.

Consumer spending, whose main indicator is retail sales, determines two-thirds of the economic activity in United States. However, they do not get sales in the area of services, which signify two-thirds of the consumption in household by value.

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Bank of Canada Says Household Debt Might Subside to Manageable Level

Bank of Canada Governor Mark Carney sees the high levels of household debt decreasing to more manageable levels. However, Carney warned people to remain vigilant.

Carney said an interview with the Canadian Broadcasting Corporation that the time to give warning is when people can still do something about it, and the household debt side is part of that trend they are concerned about.

In addition, they expect that the pace of household borrowing will slow to something more manageable and consumption will grow more in line with income. The situation might become manageable, but Carney says they still have to collectively stay on top of it.

Carney’s interview with the broadcasting corporation was taped December 15; however it was aired on television on Wednesday.

In the interview, he also said that he had raised the key interest rate of the bank three times between the period of June and September to 1 percent since the economy of Canada performed relatively well in comparison with other advanced economies. Canada’s labor market also performed exceptionally well.

However, the major risk that could affect the Canadian economy in 2011 is the possibility for continued weakness in the U.S recovery. Yet, Carney informed it is unlikely for a double-dip recession to occur in the United States.

He also said that European crisis in debt might also directly affect the Canadian growth through the financial sector. Right now, Canada’s provincial and federal government debt levels are in good shape based on the global standards.

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Increased Peanut Consumption during Pregnancy May Later Develop to Allergy on Children

A study found that those children whose mothers consumed a lot of peanuts during pregnancy may be at greater risk to develop an allergy to the nuts. In addition, the more peanuts the mothers consumed, the greater the chances are for the children to develop it.

However, it still isn’t apparent if the mother’s consumption of peanuts can actually lead to the grave and potentially fatal allergy that seems to be on the rise, which is currently affecting about 1 percent of children.

The study was initiated by Scott Sicherer of Mount Sinai School of Medicine located at New York City, as well as a team of colleagues from five places across United States.

They studied 500 infants who likely had egg or milk allergy. However, these infants, aged between 3 and 15 months old, have no known peanut allergy, and most have not yet tried eating peanuts.

Researchers found that more than a quarter showed strong reaction in a “sensitivity test” with peanuts, and children of mothers who had eaten peanuts during pregnancy have about three times chance to show signs of the allergy.

However, the study reveals that consuming peanuts while the mother is breastfeeding did not appear to cause a significant effect on children.

Sicherer and his team explain that the children only underwent blood tests for peanut sensitivity. The test is not the same as those actually done to diagnose an allergy. The team is still continuing the study by following the children to identify what allergies may come and go.

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Emerging Economies Can Withstand a Weak Dollar, says Joseph Stiglitz

Joseph Stiglitz, a Nobel Prize winning economist, said that large emerging economies can still live with weak dollar rate as his defense for the need of new round of U.S economic stimulus on Thursday.

According to Stiglitz, US monetary policy seems to be working its way through “competitive currency devaluation.” This is caused by the recent weakening of the dollar rate that makes the value of U.S exports cheaper.

Additional U.S monetary easing will most probably cause another dollar weakness. This might cause a threat to emerging countries’ exporters.

These large, emerging countries include Brazil, China and India. As mentioned by Stigilitz, these three countries are still competitive enough to withstand the present dollar rate. However, there annoyance and concern about it is really understandable.

Brazilian Finance Minister Guido Mantega said earlier this week that “global currency war” has already started and several concerns about the currency devaluation are spreading fast among emerging economies.

The reason why U.S monetary stimulus was not able to spur lending since companies are also not investing given the fact that there is less consumer demand.

He says that an excellent solution to solve this problem is to create a second wave of stimulus intended to encourage investment instead of more consumption. The U.S government is not wise not to borrow at the current low interest rates in order to enhance the economy.

Indeed, Stiglitz is not very optimistic with regards to the U.S economy’s future. He says, numbers are pretty depressing and the increased percentage of long-term unemployment remains the real problem.

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