Oct 13 2013

Government shutdown impacting American confidence. US Government Shutdown searches.

Americans are definitely interested in the government shutdown.  Beyond the basics of interfering with the economy and inching us closer to a default in mid-October, the government shutdown is front and center in the minds of Americans.  This wasn’t the case the last time we encountered a potential government shutdown.  Although it appeared that we would head down the same road we did not.  This time however, the government has shutdown and is actually causing real repercussions in the economy.  Visit many government websites and you will be greeted by some message indicating the impact of the shutdown.  Ironically Congress is still being paid during this time which is comical.  This is like shutting down a company and expecting the executives to be paid during that time.  It is hard to say how much longer this will go on but already, the impact will be felt for weeks and months to come as the public becomes more aware as to how difficult it is to arrive at any sort of consensus in Congress, even if it means a default.

Take a look at the surge in interest:

The American public is paying very close attention.
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Sep 20 2013

Will rising rates cause more banks to lend to US consumers? Depends on where you look.

One item that may push banks into lending more to regular consumers is the rise in rates.  Rates and constricted margins have made it largely unattractive to lend to American consumers.  Many Americans are in the process of slowly deleveraging and with rates at very low levels, margins may not be enticing enough for banks to make the plunge.  That has been one approach as to what is going on with lower rates in the market.  Yet with the Fed hinting at a taper coming online sooner rather than later, the market has been in a seesaw of ups and downs.  Loan growth has been rather slow over the last few years and there has certainly been a peak in what has been loaned out to consumers.  Yet higher rates may shift more demand into lending as rates become more attractive.

loans and leases YoY
Time will only tell but for now, the Fed is still guiding the markets with their policies.

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Aug 15 2013

Cisco and Wal-Mart cutting back as economy slows down

Both Cisco and Wal-Mart are putting on the brakes to the unlimited recovery theme. Cisco is chopping their workforce by 4,000 employees or 5% of their entire crew. They are focusing on increasing the bottom-line which seems to be a them roaming throughout the economy. Corporate profits are up but much of the gains are largely coming from companies trimming down on wages, employees, and other factors that are likely to make a positive impact on most employees. Is this good? Good for who is probably the better question. Executives have become so narrowly focused on ripping to shreds their employees that then wonder why places like Wal-Mart are now issuing sales warnings. This is a big deal. The entire notion that trickle down economics is positive only works if things actually trickle down. There seems to be some problems with this entire theory when the only method of expanding your bottom line is firing workers.

The stock market has been on a tremendous rally largely by this kind of activity but at a certain point you need your consumer base to grow and expand. Cutting down wages doesn’t really seem like the best way to grow the economy and increase income inequality even more so driving us to a new Gilded Age.

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