Entries filed under 'U.S. Economy & Policy'

    The Chinese Correction: The Case for Calm

    August 26, 2015 10:20 AM by Zane Brown

    Investor fear recently reached levels not seen since 2008. That’s not justified by current U.S. economic conditions.

    In an earlier blog post, Milton Ezrati, Lord Abbett Partner, Senior Economist and Market Strategist, addressed current investor fears about China’s slowing economy, and why those fears are overdone. We thought it would be worthwhile to look at recent history to put those fears into context.

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    Deflation: What's the Problem?

    July 24, 2014 11:44 AM by Lord Abbett Editorial Staff

    In the Eurozone, as elsewhere, heavily indebted countries will be hurt most.

    Economic growth in the eurozone continues to be weak, and inflation has been declining as well. Like most central banks, the European Central Bank is concerned about the possibility of deflation and is implementing policies to combat it. But is deflation really a problem?

    Financial journalist James Grant and others have argued that deflation is not the problem it’s made out to be. In fact, it is the natural result of improvements in efficiency that have resulted from computer technology and the Internet. If business costs have been reduced dramatically, it only makes sense that consumer prices would also come down. This kind of deflation is also known as a higher standard of living, says Grant.  

    So why do central banks consider deflation the enemy?

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    U.S. Economy: The Muddle Gets Deeper

    June 25, 2014 2:31 PM by Milton Ezrati

    While a far larger-than-expected decline in revised first-quarter GDP does not signal recession, it does point to continued subpar growth.  

    Though a downward revision in first-quarter U.S. gross domestic product (GDP) was widely expected, the actual change reported by the Commerce Department on June 25 was more severe—and troubling for that reason alone. Instead of the previous estimate of a 1.0% annualized rate of decline in real GDP reported on May 29, the revised data revealed a 2.9% decrease. Economists surveyed by Bloomberg projected a 1.8% drop.

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    Oil Spillover: Could the Iraq Conflict Dampen U.S. Growth?

    June 16, 2014 4:05 PM by Milton Ezrati

    Expectations of stronger second-quarter growth may have to be trimmed if gasoline prices rise sharply.  

    Given the deepening conflict in Iraq, it is remarkable that oil prices have not risen higher than the $107 per barrel (Bloomberg data) reached on June 16.  Whichever side has the advantage-—the government of Prime Minister Nouri al-Maliki, or the insurgency led by the Islamic State of Iraq and Syria (ISIS)—or whether the United States or Iran, cooperatively or unilaterally, intervene in the conflict, the prospect of ongoing fighting and chaos threatens to keep some or all of Iraq's ample oil supplies off the market. 

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    U.S. Economy Will Weather a Weak First Quarter

    May 29, 2014 12:22 PM by Milton Ezrati

    Shocking as the first-quarter GDP release looks on the surface, it still is no big deal.

    The Commerce Department’s release of revised first quarter GDP figures on May 29 offered a negative surprise.  Though the pattern of monthly data since the preliminary GDP estimate of 0.1% annualized real growth have led many to suspect that the figure could be negative, the reported decline of 1.0% went further than most any forecaster expected.  Yet, the picture still is one of temporary weather-related problems that have little bearing on the future. 

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