State of Our Economy – April 2011

Ok, so here it is … the month of April 2011. Pretty much more of the same. The biggest items that have me concerned at the price of oil and the value of the dollar.

The Bad

  • Standard & Poor lowered the long term debt rating of the United States from neutral to negative. This means our long term financial stability is unreliable. This could in turn lead to higher interest rates when the government borrows money. In other words, when the government issues bonds to raise money to pay for stuff, those bonds will have to have a higher interest rate to lure investors to buy them. This means the United States will have to pay investors more money to borrow money.
  • Congress is flinging rhetorical poo at the wall when it comes to raising the debt ceiling. According to our brilliantly elected officials, people are going to be eating cat food, loosing limbs, and peeing in the woods if we raise the debt ceiling, or if we don’t raise the debt ceiling. So what they are telling us is, we’re screwed either way.
  • Price of oil is now over $113 a barrel.
  • Average price of diesel fuel is $4 per gallon. The average price for regular gasoline is $3.74 per gallon.
  • Those filing for unemployment benefits rose by 27,000 people to an adjusted rate of 412,000.
  • The Dollar has fallen to a 3-year low against a bucket of foreign currencies.
  • The Dollar his a 15-month low against the Euro.
  • Price of imports and exports increased last month (source: Bureau of Labor and Statistics)
  • Home prices continue to fall.
  • Factory activity on the east coast has sharply put on the brakes.
  • Unemployment benefits did not meet expectations, rising slightly to over 400,000. However, unemployment decreased in 34 states.
  • The debt ceiling has been reached. Without budget cuts or an increase taxes, the government will have to raise the debt limit to sustain its current spending levels.

The Good

  • This is sort of good news … I suppose … Congress agreed to fund the Federal Government for last year. Yes, they agreed to pay for last year. Nice of them, eh?
  • Gold is now above $1500 an ounce … which I guess is good if you own any.
  • The unemployment rate fell is 2/3 of the States.
  • New home construction increases by about 7.2%

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