Our Two Cents – Week of 1/16/12
While we saw Tom Brady lead the New England Patriots to an outstanding playoff victory, we watched world leaders attempt to continue restoring economic confidence through consumer spending, market performance and fiscal activism.
In the U.S., economic optimism continues to rise as America displays more signs of employment and consumer confidence. The National Retail Federation has predicted that U.S. retail rates will growth 3.4 percent to $2.53 trillion in 2012. NRF President Matthew Shay said Americans should be confident about consumer spending—“Our 2012 forecast is a vote of confidence in the retail industry and our ability to succeed even in a challenging economy. Over the last 18 months, retailers have been on the forefront of the economic recovery—creating jobs, encouraging consumer spending, and investing in America.” Additionally, U.S. retail Forex capital grew by $3 million in November 2011. Though the growth is surprisingly smaller than October, which grew by 30 million, experts believe lower volatility and the year-end slowdown might have contributed to the diminished growth.
Throughout the world, last week began with booming markets. The Italian market increased more than 2 percent, and France’s CAC-40 Index posted a bump of a little more than 1 percent. Even one of the weakest world markets—the Shanghai Composite—jumped more than 2 percent. Unfortunately for Europe, market confidence reversed by week’s end. Ratings services Standard & Poor’s downgraded credit ratings of nine countries—including Italy and France—as political and financial leaders continue to devise solutions to the euro crisis. The Jan. 13 downgrade resulted from the December warning that S&P might decrease credit ratings of 17 nations because politicians had been moving too slowly with reforms for the crisis. As a result of the news, European leaders have vowed to focus on “progress” to restore economic growth. Italian Prime Minister Mario Monti and European Council President Herman Van Rompuy met in Rome Jan. 16 to discuss economic restoration. Monti said S&P applauded Italy’s fiscal acts, and Van Rompuy said he believed leaders should refocus their aims by establishing “sustained, committed” efforts. Southeast from Italy in Greece, officials and residents discussed a possible return to the drachma if the country can’t save its membership in the euro zone. According to polls, nearly 80 percent of Greeks say they want to stick with the euro and avoid reinstituting the country’s former currency. Prime Minister Lucas Papademos has vowed to do whatever it takes to keep his nation in the euro zone.
- NRF Expects Retail Sales To Rise 3.4% in 2012, Forbes, Jan. 16, 2012
- Downgrade of Debt Ratings Underscores Europe’s Woes, New York Times, Jan. 16, 2012
- EU Leaders Focus on ‘Progress’ , Wall Street Journal, Jan. 16, 2012
- Greeks Worry Over A Possible Return To The Drachma, NPR, Jan. 16, 2012
- US retail forex capital grew by $3 million in November 2011, Forex Magnates, Jan. 13, 2012
- Asian Stocks Rise as U.S. Optimism Overshadows European Concern
- Markets Are Booming Around The Globe, Business Insider, Jan. 10, 2012
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