All posts by Alison Meadows

About Alison Meadows

Alison Meadows has a PHD in Economic Trends in Modern Times and is a known writer who focuses on hedge fund investments. Meadows, her husband, and three kids live in Boston, where she grew up and attended college. Contact Alison at alison[at]businessdistrict.com

Are We Falling Off the Fiscal Cliff?

Economy, ,
President Obama
President Obama Trying to Steer Country Away from Fiscal Cliff

Washington lawmakers have until Tuesday to come to an agreement which will cancel the across-the-board spending cuts and automatic tax increases. If not Americans can expect the economy to tumble off what has been so famously dubbed “the fiscal cliff.”

Falling over this cliff, economists affirm, will adversely affect financial markets around the world and send the US economy into a nose dive back into recession. Therefore Republicans and Democrats are working overtime, including holding a rare Sunday session, to come to an agreement whereby taxes are maintained at today’s levels for the nation’s middle class, while entitlement and other programs are cut according to the desires and needs of legislators.

“Now I think that over the next 48 hours, my hope is that people recognize that, regardless of partisan differences, our top priority has to be to make sure that taxes on middle-class families do not go up. That would hurt our economy badly,” Obama said in an interview.

Obama added an optimistic note that,

“Democrats and Republicans both say they don’t want taxes to go up on middle-class families. That’s something we all agree on. If we can get that done, that takes a big bite out of the ‘fiscal cliff.’ It avoids the worst outcomes.”

Obama has a plan even if the worst case scenario transpires and no agreement is reached.

“And if all else fails, if Republicans do in fact decide to block it, so that taxes on middle class families do in fact go up on January 1st, then we’ll come back with a new Congress on January 4th and the first bill that will be introduced on the floor will be to cut taxes on middle class families,” he said.

Oil Prices Climb in Face of Federal Reserve Meeting

Commodities, Economy, , , ,
Oil Up on Nymex

The price of oil lurched upwards on Tuesday despite the fear that the Chinese economic recovery may not be everything investors wished for. Driving the upward direction of oil is the hope of investors that the US Federal Reserve will implement new strategies which will help give the US economy a bit of a jump start.

The January delivery price for Benchmark crude was $85.80 per barrel, representing a 23 cent rise during late afternoon Bangkok time electronic trading on the New York Mercantile Exchange. The same contract had fallen only the day before by 37 cents on the Nymex, closing at $85.56.

Brent crude, which is used more to establish the price of international types of oil, was also up. On the ICE futures exchange in London the price was $107.66, an increase of 33 cents from the previous day’s closing price.

The Federal Reserve began a two day policy meeting on Tuesday. The results of the meeting are widely believed to be the purchase of more long-term Treasury bonds in an effort to replace the program which expires with the coming new year.

Black Friday Leaves Retailers Optimistic About Holiday Shopping Season

Consumerism, Economy, ,
Shoppers Crowd Store on Black Friday

Every year the holiday shopping season opens up on what is known as “Black Friday,” the day after Thanksgiving. A bit like the groundhog on February second that foretells how many weeks are left of winter, the success of Black Friday is said to predict the mood of shoppers and what retailers can expect in sales during that crucial winter rush to buy gifts for Christmas and other seasonal holdidays.

This year analysts and businesses were pleased with Black Friday’s turnout, especially with the sharp rise in online shopping. The stores that did the best, such as Wal-Mart and Macy's, were those that have a strong online presence coordinated in tandem with their physical stores and mobile channels, creating for shoppers a  more holistic experience.

"The more you can make a shopper shop multiple channels, they are at least twice as likely to be a loyal shopper and spend tons of money," Patty Edwards, chief investment officer at investment firm Trutina Financial, said.

Observers noticed that although there may be more shopping, individual shoppers were also practicing some restraint in the face of the flood of deals offered during the Black Friday weekend.
According to shoppers’ responses to a Reuters/Ipsos poll, 52 percent of BF shoppers said they stayed within their budgets and 34 percent they actually spent less than what they had planned to spend. Over-budget shoppers totaled only 14 percent of those answering the survey.

Of the 404 respondents to the poll that shopped on BF, 33 percent said that this year’s deals were better than last year’s; 39 percent said the deals they found were the same, and only 15 percent said that this year’s deals were worse.

Analysts are cautioning that just because sales this year appear to be off to a good start it might be premature to judge the rest of the shopping season by figures from just one weekend. The good start will have to be maintained throughout the rest of the shopping season in order for it to have the impact on the entire year: holiday season shopping can account for as much as one-third of annual sales and 40 to 50 percent of annual profits.

Holiday shopping also has a huge impact on the economy as a whole, since consumer spending accounts for approximately 70 percent of all economic activity. There has been a slow but steady improvement in employment statistics, but fears of the approaching “fiscal cliff” that is threatening the entire economy is keeping analysts alert to retail sales and buying patterns of consumers.
 

After Helping Obama Clinch Battleground States, Organized Labor Makes Demands

Economy, , , , ,

Key leaders of organized labor were rejoicing at the end of election night, as exit polls showed that labor’s enormous voter turnout turned the tide in favor of Obama in the key battleground states of Ohio, Nevada and Wisconsin.

These leaders, such as AFL-CIO President Richard Trumka are hoping their president will present as a more liberal, union-friendly, leader who will push their agenda from the White House.

Richard Trumka

“There are things the president can do, and we’ll be expecting that leadership from President Obama,” Trumka told reporters after the election.

At the top of labor’s expectations is a definitive tax-hike for America’s wealthiest citizens. Labor leaders also hope that Obama will not make any deals with Republicans over the approaching “fiscal cliff” the country is scheduled to fall off of, when safety nets such as Social Security and Medicare experience across-the-board budget cuts.

Labor leaders have other issues on their agenda as well. They would like to see new rules that could help increase their shrinking membership lists, including new investment in infrastructure which would create more construction jobs for trade unions. More liberal requirements for immigrants to become citizens could pave the way for 11 million undocumented Latino workers to flood the ranks of the labor unions. Other reforms could also make it easier to organize unions in certain spheres.

It might not be so simple for organized labor to get their way, however. Business groups which are opposed to these changes will continue, as they have in the past, reforms that will help unions get new members.

“My primary concern is in the regulations,” said Randel Johnson, vice president at the U.S. Chamber of Commerce for labor issues. “We are afraid that on employment issues, the administration will stay firmly to the left and follow the lead of the unions.”

Faced with Fiscal Cliff Down the Road, Obama Gets to Drive

Economy,

With the tension of the election finally behind him, newly re-elected President Obama can now focus on the great challenge in front of him; the fear of falling off the great “fiscal cliff.” Confronted with a stew of tax hikes and spending cuts which are calculated to siphon off about $600 billion from the economy unless some deal is made with Congress, Obama has a lot to think about when the victory parties and acceptance speeches are history.

There are two essential but separate issues to lose sleep over: the coming expiration of individual tax cuts at the end of 2012; and tens of billions of dollars in spending cuts which will hit practically every agency like a sledgehammer, due to kick in on January 2, 2013.

Driving off the cliff could send shock waves to US markets, sending the country back into recession mode, with reverberations across the globe. It is clear that how Obama handles this crisis, especially given that Republicans won control of the House of Representatives, could make for exciting politics in the coming months.