US economy may face bigger risks due to oil, Mideast unrest

[UpInArms]

http://news.yahoo.com/s/afp/20060716/bs_afp/useconomyoilunrest

WASHINGTON (AFP) - The upsurge in Middle East violence and resulting spike in crude oil prices poses new risks to the US economy, which is already cooling from higher interest rates and other factors, experts say.

With concerns rising about an expansion of the conflict now involving
Israel and Lebanese-based Hezbollah, oil prices have hit fresh peaks, increasing a variety of costs at a time when many analysts have been calling for a "soft landing."

Recent reports on retail sales and consumer sentiment suggest the world's biggest economy is already retreating from its strong 5.6 pace of growth in the first quarter. But a jolt from energy costs could make the landing a lot bumpier.

"Given the unnerving developments in the Middle East, the prospects for 80-dollar oil and record gasoline prices, a clearly deteriorating job market in the US and the steady erosion in the stock market, it stands to reason that households will be much more cautious about spending in the future," said Bernard Baumohl, executive director of the Economic Outlook Group.

"The US has suddenly become vulnerable to a much more serious downturn in the second half of the year. Could geopolitical events suddenly turn a soft landing into a recession? Absolutely."

...more...

[malaise]

1. Every 500lb bomb landing in Lebanon

was made in the US. Clearly the US government does not care about its citizens. We already know that Bushco and the Military-industrial complex does not value the lives of the people of the Middle East.

[HysteryDiagnosis]

2. The U.S. has a right to protect herself.... by whatever means

necessary.

Torturing human beings: :thumbsup:

Abu Ghraib: :thumbsup:

Haditha: :thumbsup:

Highway of Death: :thumbsup:

Shock and Awe: :thumbsup:

Sanctions: :thumbsup:

DU: :thumbsup:

Cluster Bombs: :thumbsup:

White Phosphorous: :thumbsup:

Stolen Elections: :thumbsup:

Killing the Wounded: :thumbsup:

Mass Graves: :thumbsup:

War Crimes: :thumbsup:

[xchrom]

4. ...

:thumbsup:

[malaise]

6. Can't say it better n/t

[fasttense]

3. But the US is still painting happy faces on the economy.

"Some analysts say the economy is already seeing a mild form of "stagflation," or stagnant conditions with rising prices."

Those stagnant conditions are middle class wages losing value because of inflation.

"The stock market has been tumbling and bond yields falling, presaging for some a slowdown that is more serious than previously anticipated.
Other analysts say these fears are overblown and that the US economy had held up in the face of numerous shocks.
Global Insight economists Nigel Gault and Brian Bethune said in a report they are raising their forecast for second quarter growth from 2.3 percent to 3.3 percent in "a testimony to the underlying resilience of the economy in the face of some pretty nasty shocks."
Brian Wesbury at FT Advisors said the economy's underlying strength is better than it appears.
"We expect retail activity will pick up in the second half of this year as a strong job market and rising incomes offset the impact of elevated energy prices," he said. "Our forecast for real GDP growth in the third and fourth quarter remains at 3.5 to 4.0 percent."

Sure retail activity will pick up because all those hundred of thousands of dollars in tax cuts going to the richest 1% is sure to trickle down....eventually.

[dipsydoodle]

7. You need about $10 a gallon at the pump

for the public to take notice and start asking questions.

[Toots]

11. It's coming

Don't forget all things made from plastic which is made from petroleum as well. Virtually everything you buy in the US is trucked and that will cause all prices to rise. Everything except wages of course.

[dipsydoodle]

13. Never quite made that bit out

not sure if what's used in plastics etc needs the same amount of refining. But yes - all goods reliant on oil for their manufacture would increase in price further aggravated, as you said, by increased transportation costs.

Road transport is less of a problem in the UK - drive too far and you fall in the sea. :)
Having said that our road transport guys are real well organised when it comes to price increases which they don't consider justified. They can successfully run rolling road blocks on motorways and grid lock London. In the past they've made Blur and Co back down where its tax/duty related. Incase you wondered - yes the drivers get public support.

[Toots]

14. Basically I was talking about Americans starting to hurt

Most of our war stuff is made from plastic and we are spending most of our money on war stuff in the US. Other countries invest back into their citizens by way of health care or mass transportation etc. We invest in war. Our leaders are very much involved in "War Profiteering" and could not care one bit about the citizens of America. Plastic is huge in America and that is why I brought it up especially as it is made from oil. Europeans bring their own bags when they go shopping Americans use plastic bags provided by the store. In Canada if you request a bag they charge extra so most bring their own tote bags there as well.

[rodeodance]

15. until a critical mass is really suffering--we will doodle on as before.

[unblock]

5. bush will make carter's "stagflation" a joke

we're already approaching peak oil prices from the 70s (what, about $95/bbl in today's dollars?)
worse, prices are NEAR that peak price and have been for longer period than in the 70s.

moreover, the economy is already cooling down (and has sucked for most americans anyway) just as inflation is finally becoming acknowledged. if the fed feels it "necessary" to jack up interest rates by more than 1 or 2 more hikes, then the economy will really suffer under the weight of both sustained high energy prices and higher interest rates.

[modrepub]

8. Go on vacation for a week and all hell breaks out

It was much nicer lounging on the lake in Washington County, ME and not reading the newspaper or internet for a week. So what do these bozos think their going to accomplish this time? Isn't there a military saying "Don't give the enemy what they want"? All the terrorist want is an open fight. It accomplishes nothing other than spiking oil prices, raising their resources ($) and attracting people to their cause.

My sister told me that one day we'd be waxing nostalgically about $3/gallon gas. I didn't think it would come so soon.

[RUMMYisFROSTED]

9. Just a note:

I could make the economy "grow" at 5.6% if I borrowed 3 trillion dollars. The stupefying thing is the economy isn't doing better than it is.

[moblsv]

17. nail on the head.

This is exactly what people need to understand. This economy is a borrowed "fake" recovery. This debt is not just the national borrowed money but also personal debt. We have borrowed from the middle and lower classes as well.

By some estimates, including such factor as personal debt, we are in debt well over 100% of our GDP. If we use past history as an indicator (Britain's decline, Spain's decline) we are in a debt range that is very dangerous.

[RUMMYisFROSTED]

18. It's trite but "Borrow and Spend Republicans."

Not much else one can call it. :shrug:

[many a good man]

10. Bush: U.S. Economy Remains'Envy of World'

From Fox News (sorry about the Fox link!)

Remember, this is from a man who thinks the present "democracy" in Iraq should be the envy of the world, too.

Saturday, July 15, 2006

ST. PETERSBURG, Russia — President Bush, in Russia for a meeting of the world's economic powers, on Saturday credited his"pro-growth policies"for new U.S. budget deficit figures that are lower than earlier estimates.

"By pursuing pro-growth policies and restraining government spending, we will keep our economy the envy of the world,"Bush said in his weekly radio address.

Earlier in the week, the White House released figures estimating that the difference between what the government spends and what it collects in revenue for the budget year ending Sept. 30 will be $296 billion, an improvement over the $423 billion that was predicted in February.

The figure would be a slight improvement over last year's deficit of $318 billion.

[shrike]

12. 'Least he can blame the Middle East

And not his own policies. That'll make him happy.

[rodeodance]

16. finger pointing/whinning is the mantra of this WH.

[DELUSIONAL]

19. raising fuel prices will make Americans aware of

conflicts beyond the daily drive to work.

I am amazed that the cost of transportation isn't showing up that much yet in the supermarket etc.