Deller's two cents:  not much news this week, but what news there is is generally positive....the slow climb out of the recession is slowly picking up speed.

 

Economic Week in Review: Encouraging signs on the road to recovery

 

November 12, 2010

                             

                                   

Following last week's upbeat jobs report, the U.S. economy continued to show signs of improvement. In a relatively light week for economic news, the trade deficit narrowed in September and initial jobless claims hit their lowest level since July. For the week, the S&P 500 Index fell 2.2% to 1,199 (for a year-to-date total return-including price change plus dividends-of about 9.4%). The yield of the 10-year U.S. Treasury note rose 18 basis points to 2.76% (for a year-to-date decrease of 109 basis points). "Positive headlines on the jobs front are welcome at this point," said Vanguard economist Roger Aliaga-Díaz. "We are expecting a gradual and subdued recovery, but this is an encouraging indication that eventually we will get there."

 

Rising exports, weak dollar push trade deficit downward

 

The U.S. trade gap narrowed to $44 billion in September from a revised $46.5 billion in August. The size of the decline surprised many economists, whose consensus forecast for the month was a more modest drop, to $45.4 billion.

 

Factors contributing to the better-than-expected news included declining imports caused by a moderating pace of inventory accumulation, rising exports, and a weaker dollar.

 

While temporary factors-such as the recent surge in agricultural exports caused by the drought in Russia-were the primary drivers behind the narrowing trade gap, economists were encouraged by the good news.

 

"It's difficult to draw a trend from a single data point," said Mr. Aliaga-Díaz. "However, strong growth in emerging markets and a weak dollar are consistent with an improving U.S. trade balance." 

 

The economic week ahead

 

Economists will be busy next week, as several key reports come out, including retail sales and business inventories on Monday, the Producer Price Index and industrial production on Tuesday, and the Consumer Price Index and new-home sales on Wednesday. On Thursday, the Conference Board unveils its index of leading economic indicators for October.

 

--

Steven C. Deller

Professor and Community Development Economist Department of Agricultural and Applied Economics

515 Taylor Hall --- 427 Lorch Street

University of Wisconsin-Madison/Extension Madison, WI 53706

608-263-6251

"I started out with nothing and I have most of it left."

Seasick Steve