Monday, June 9, 2008

US Economic Woes

Earlier in the year, I posted - Why is US economy facing a recession?

Since then, the economy has managed to avoid entering into a recession; but, recent statistics suggest an economic slowdown is gathering pace

  • Rise in joblessness. Unemployment rate increased from 5% to 5.5.%. Over 350,000 people have lost their job this year (real estate and construction have been badly hit)
  • Rise in Oil prices close to $140 a barrel. This has reduced consumer's disposable income; it is has even caused a fall in demand for petrol - something very rare in the UK.
  • Rise in Mortgage arrears.
  • Rising inflation, raising prospect of increased interest rates to reduce demand.
Stagflation

The economy is experiencing an example of stagflation - rising inflation and rising unemployment.
see also: falling house prices - rising oil prices

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