John Mauldin
John Maudlin, President of millennium wave advisors LLC, in an interview with the editor in chief of the business insider believes that forthcoming year is more about recession than prosperity. Although, the economy may start to grow once again but the insecurity in the minds of the people is far from getting over and the rate of unemployment is still quite high. The tax increase is going to be so huge. The government is chewing up money from the private companies and putting it into public centre enterprises. Thus this reduces the chances of mushrooming new jobs. It will be only in 2011 that we may witness the economy to grow smoothly. We are still aiming to find the new normal. (John Maudlin, T.V channel- Business insider)
Unemployment rate- The report caps a disastrous year for U.S. workers. Employers cut 4.2 million jobs in 2009. And the unemployment rate averaged 9.3 percent. That compares with an average of 5.8 percent in 2008 and 4.6 percent in 2007. Nearly 15.3 million people are unemployed, an increase of 3.9 million during 2009.( U.S. News Weekly Magazine, authored by CHRISTOPHER S. RUGABER,AP Economics Writer)
Consumer Price index - Commodity prices slumped as the dollar turned higher and a disappointing report on consumer sentiment also weighed on the market. The preliminary ReutersUniversity of Michigan consumer sentiment index rose to 72.8 from 72.5 in late December but came in weaker than economists had forecast. Crude oil fell 73 cents to 78.66 per barrel on the New York Mercantile Exchange. Gold prices fell.
Among banks, JPMorgan fell 76 cents, or 1.7 percent, to 43.93. Morgan Stanley fell 1.11, or 3.6 percent, to 30.09, while Citigroup Inc. fell 8 cents, or 2.3 percent, to 3.43.Three stocks fell for every one that rose on the New York Stock Exchange, where volume came to 674.9 million shares compared with 314.3 million shares traded at the same point Thursday. Trading was heavy Friday because of the expiration of options contracts on some stocks. The Russell 2000 index of smaller companies fell 9.93, or 1.5 percent, to 636.50.( Seattle times, authored By TIM PARADIS and IEVA M. AUGSTUMS AP Business Writers)
Gross domestic product- U.S. economic growth as measured by real gross domestic product will top 5 percent in 2010 and the unemployment rate fall below 9 percent, said longtime Wall Street strategist Byron Wien (Byron Wein, ww.reuters.com)
There are primarily two tools which the government employ to manage the economy. These are the Fiscal policy and monetary policy.
Fiscal policy The government makes an attempt to stabilize the economy by maintaining a balance between the taxation and its spending. The Federal Reserve, the independent U.S. central bank, deal with the flow of capital and any alteration in the credit policy (monetary policy), whereas the president and Congress negotiate federal spending and taxes (fiscal policy).
Monetary Policy The objective behind employing the monetary policy is to generate maximum non-inflationary output and churn out employment. Since the Federal Reserve Board is regulating the inflow of capital it can easily monitor the spending of the public. Interest rates are kept in check keeping in view the investments that are made by the megabuck magnates.