The Detroit city government is weeks away from running out of the cash it needs to operate, according to an initial report from the emergency manager overseeing its finances.

The report from Kevyn Orr, the bankruptcy attorney appointed by the state in March, lays out a bleak financial position for the city.

“The city has effectively exhausted its ability to borrow,” he writes in the report, adding that the city “is clearly insolvent.” To avoid running out of cash before the end of its fiscal year on June 30, it must “defer payments on its current obligations,” including more than $100 million in pension payments that are due.

“No one should underestimate the severity of the financial crisis,” Orr said in a statement. “The path Detroit has followed for more than 40 years is unsustainable and only a complete restructuring of the city’s finances and operations will allow Detroit to regain its footing.”

He said this report was a baseline from which to develop that restructuring plan. It does not use the term “bankruptcy,” but Orr hasn’t ruled that out.

Detroit is struggling under at least $15 billion in debt, due to years of borrowing to pay its bills as tax revenues plummeted. The population of the city has fallen by nearly 30% since 2012, and there are currently over 100,000 vacant lots and buildings. Together, this has meant a drastic drop in revenue from both income and property taxes.

Detroit is struggling to come up with annual debt payments of about $246 million, which eat up almost 20% of the its general fund budget. Orr says the city needs relief from the money it owes, suggesting that investors holding its debt could end up taking haircuts.

But investors won’t be the only ones hit by Orr’s efforts to restructure the city’s finances. He is considering changes in healthcare coverage for government employees and retirees, as well as in its pension plans. He’s also looking at further changes in pay rates and staffing, on top of the layoffs and 10% pay cut that have already been implemented.

The city’s unemployment rate has fallen in recent years with a rebound in the auto industry, but at 18.3% it is still nearly triple where it stood at in 2000 and more than double the national rate.
 

http://money.cnn.com/2013/05/13/news/economy/detroit-insolvent/index.html?hpt=hp_t3

Article #1 – Consumer Sentiment in U.S. Fell to Three-Month Low in April

Article #2 – Growth Falls Short Of Forecasts, Weakness Ahead

Article #3 – Spring Slowdown Paints Ugly Picture For Jobs: ADP

Article #4 – ‘Real’ Jobless Rate Still Above 10% In Most States

Article #5 – U.S. Homeownership Rate Falls to Lowest Since 1995

Article #6 – German Euro Founder Calls For ‘Catastrophic’ Currency To Be Broken Up

Article #7 – “The Bull Market is Very Much Intact” for Gold: World Gold Council

Article #8 – Stodgy Netherlands Is Nation That’ll Blow Up Euro

Market Watch
May 08, 2013
By Matthew Lynn
 

LONDON (MarketWatch) — Which euro-zone country is most deeply in debt? The profligate Greeks, with their generous state-funded pensions? The Cypriots and their banks stuffed with dodgy Russian money? The recession-hit Spaniards or the boom-and-bust Irish?

None of the above. Actually, it is the sober, responsible Dutch.

Consumer debt in the Netherlands has hit 250% of available income, one of the highest levels in the world. In Spain, by comparison, it has never gone above 125%.

The Netherlands has turned into one of the most heavily indebted countries in the world. It has slumped into recession and shows very little sign of coming out of it. The euro crisis has been dragging on for three years now but so far has only infected the peripheral nations within the single currency. But the Netherlands is a core member of both the euro and the European Union. If it can’t survive in the euro zone, then the game really will be up.

Holland has always been one of the most prosperous and stable nations with Europe — and one of the most pro-EU. It was a founding member of the union, and it was among the most enthusiastic supporters of the launch of the single currency. With a rich, export-oriented economy, and plenty of successful multinational companies, it had much to gain, one would suppose, from the creation of the single economy that was meant to come into being once the euro was successfully launched.

But instead it has started to play out a depressingly familiar script. It is blowing up in exactly the same way that Ireland, Greece and Portugal did — except on a slightly longer fuse.

Low interest rates, set mainly to benefit the German economy, and lots of cheap capital led to a property boom and an explosion of debt. From the launch of the single currency to the peak of the market, Dutch house prices doubled, making it one of the most overheated markets in the world.

Now that has crashed spectacularly. House prices are falling as fast as they did in Florida when the American housing boom turned sour. Prices are now 16.6% lower than they were at the peak of the bubble in 2008. The National Association of Estate Agents predicts another 7% drop this year. Unless you bought your home back in the last century, it will now be worth less than you paid for it — and even worse, probably less than you borrowed on it as well.

As a result, the Dutch are now sinking under a tide of debt. At more than 250%, household debt is even higher than in Ireland and 2 ½ times the level in Greece. Already one bank was rescued by the government, and with house prices still collapsing there may well be more to come. The Dutch banks have 650 billion euros outstanding on real estate that is rapidly falling in value — and if there is one thing we know for sure about the financial markets it is that when the property markets collapse, the financial system is not far behind.

The credit-rating agencies — not usually the first organizations to catch up with events — have started to take notice. In February, Fitch cut the stable rating it had on the Netherlands’ debt. The country is still triple-A rated but only by the skin of its teeth. The agency pinned the blame on falling house prices, rising government debt and doubts about the stability of the banking system — the same toxic mix familiar from other crisis-hit euro-zone nations.

The economy has now sunk into recession.

Unemployment is rising and hitting two-decade highs. The jobless total has doubled in just two years, and in March alone it went from 7.7% to 8.1% — a faster rate of increase than even in Cyprus. The IMF predicts that the economy will shrink by 0.5% in 2013, but those projections have a nasty habit of being too optimistic.

The government is missing its deficit targets, despite imposing deep austerity measures as recently as last October. Just like other euro-zone countries, Holland now seems locked into a vicious cycle of rising unemployment and declining tax revenues, leading to yet more austerity — and even more cuts and unemployment. Once a country gets set on that track, it is very hard to get out of it again — and certainly not within the confines of the euro.

Up until now, the Netherlands has been Germany’s key ally in imposing austerity across the continent as the answer to the currency’s problems. But as the slump worsens, Dutch support for an endless diet of cuts and recession — and perhaps the euro itself — will start to evaporate.

The other collapses in the euro zone have been on the periphery of the currency. They have been marginal nations, and their problems could be presented as an accident, rather than as exposing systemic flaws in the way the currency was put together.

The Greeks spent too much money. The Irish allowed their property market to run out of control. The Italians always had too much debt in the first place. But there can’t be any excuses for the Netherlands: It obeyed all the rules.

It has always been clear that the euro crisis would reach its terminal phase when it reached the core. Many analysts assumed that would mean France. And yet, while France is hardly short of problems (unemployment is rising relentlessly, and the government is doing everything it can possibly think of to make the economy less competitive), it is still a wealthy country. Its debts may be high, but they have not yet spun out of control or started to threaten the stability of the banking system.

The Netherlands is starting to reach that point. It may take another year, perhaps two. But the slump is gathering in pace, and the financial system looks less stable by the day. In fact, Holland will be the core country that goes bust first — and that will be a crisis too far for the euro.
 

http://www.marketwatch.com/story/stodgy-netherlands-is-nation-thatll-blow-up-euro-2013-05-08?link=home_carousel

Article #1 – Consumer Sentiment in U.S. Fell to Three-Month Low in April

Article #2 – Growth Falls Short Of Forecasts, Weakness Ahead

Article #3 – Spring Slowdown Paints Ugly Picture For Jobs: ADP

Article #4 – ‘Real’ Jobless Rate Still Above 10% In Most States

Article #5 – U.S. Homeownership Rate Falls to Lowest Since 1995

Article #6 – German Euro Founder Calls For ‘Catastrophic’ Currency To Be Broken Up

Article #7 – “The Bull Market is Very Much Intact” for Gold: World Gold Council

Article #9 – City Of Detroit Is Financially ‘Insolvent’

In mid-April we saw gold plummet to just below $1400 an ounce, its lowest price since March 2011. The precipitous drop in April put the yellow metal technically in bear market territory, with people trying to figure out where it’s headed next.

Fast-forward to last Friday when gold closed above $1470.

Marcus Grubb, managing director of investment at the World Gold Council, told The Daily Ticker at the Milken Institute’s 2013 Global Conference it’s headed in one direction: up.

“We feel the bull market is very much intact even if there’s a lot of uncertainty at the moment for investors,” Grubb says. “There’s some switching into equities in the United States going on – this has affected gold to some degree – but we don’t believe you’re seeing this great rotation as it’s called.”

(Keep in mind that the World Gold Council is the market development organization for the gold industry. Its self-described purpose is to provide industry leadership while stimulating and sustaining demand for gold.)

Grubb argues that gold’s decline was driven by a very big short sale in the futures market in New York, and he asserts that we’re seeing a recovery as physical demand rebounds. He cites consumers in India and China currently paying a premium for physical gold as two examples.

The World Gold Council doesn’t give price targets, but Grubb says the organization believes gold will return to pre-April levels because the long-term drivers of demand are firmly in place.

Grubb concedes that if investors are becoming more confident in the U.S. economic recovery that may change his outlook for gold. But he explains in the accompanying video why investors should continue to hold gold in their portfolios as insurance or a hedge (against, for example, inflation, currency debasement, or financial instability).

He also admits that during some recent tumultuous events, gold hasn’t always performed as a safe haven.

There are “times when gold is a safe haven and times when it moves with other risk assets like equities,” he says.
 

http://finance.yahoo.com/blogs/daily-ticker/bull-market-very-much-intact-gold-world-gold-150619344.html?vp=1

Article #1 – Consumer Sentiment in U.S. Fell to Three-Month Low in April

Article #2 – Growth Falls Short Of Forecasts, Weakness Ahead

Article #3 – Spring Slowdown Paints Ugly Picture For Jobs: ADP

Article #4 – ‘Real’ Jobless Rate Still Above 10% In Most States

Article #5 – U.S. Homeownership Rate Falls to Lowest Since 1995

Article #6 – German Euro Founder Calls For ‘Catastrophic’ Currency To Be Broken Up

Article #8 – Stodgy Netherlands Is Nation That’ll Blow Up Euro

Article #9 – City Of Detroit Is Financially ‘Insolvent’

The Telegraph
May 05, 2013
By Ambrose Evans-Pritchard
 

“The economic situation is worsening from month to month, and unemployment has reached a level that puts democratic structures ever more in doubt,” he said.

“The Germans have not yet realised that southern Europe, including France, will be forced by their current misery to fight back against German hegemony sooner or later,” he said, blaming much of the crisis on Germany’s wage squeeze to gain export share.

Mr Lafontaine said on the parliamentary website of Germany’s Left Party that Chancellor Angela Merkel will “awake from her self-righteous slumber” once the countries in trouble unite to force a change in crisis policy at Germany’s expense.

His prediction appeared confirmed as French finance minister Pierre Moscovici yesterday proclaimed the end of austerity and a triumph of French policy, risking further damage to the tattered relations between Paris and Berlin.

“Austerity is finished. This is a decisive turn in the history of the EU project since the euro,” he told French TV. “We’re seeing the end of austerity dogma. It’s a victory of the French point of view.”

Mr Moscovici’s comments follow a deal with Brussels to give France and Spain two extra years to meet a deficit target of 3pc of GDP. The triumphalist tone may enrage hard-liners in Berlin and confirm fears that concessions will lead to a slippery slope towards fiscal chaos.

German Vice-Chancellor Philipp Rösler lashed out at the European Commission over the weekend, calling it “irresponsible” for undermining the belt-tightening agenda.

The Franco-German alliance that has driven EU politics for half a century is in ruins after France’s Socialist Party hit out at the “selfish intransigence” of Mrs Merkel, accusing her thinking only of the “German savers, her trade balance, and her electoral future”.

It is unclear whether the EU retreat from austerity goes much beyond rhetoric. Mr Moscovici conceded last week that the budget delay merely avoids extra austerity cuts to close the shortfall in tax revenues caused by the recession.

The new policy allows automatic fiscal stabilisers to kick in, but France will stay the course on the original austerity. “It is not about relaxing the effort to cut spending. There will no extra adjustment just to satisfy a number,” he said.

Mr Lafontaine said he backed EMU but no longer believes it is sustainable. “Hopes that the creation of the euro would force rational economic behaviour on all sides were in vain,” he said, adding that the policy of forcing Spain, Portugal, and Greece to carry out internal devaluations was a “catastrophe”.

Mr Lafontaine was labelled “Europe’s Most Dangerous Man” by The Sun after he called for a “united Europe” and the “end of the nation state” in 1998. The euro was launched on January 1 1999, with bank notes following three years later. He later left the Social Democrats to found the Left Party.
 

http://www.telegraph.co.uk/finance/financialcrisis/10039329/German-euro-founder-calls-for-catastrophic-currency-to-be-broken-up.html

Article #1 – Consumer Sentiment in U.S. Fell to Three-Month Low in April

Article #2 – Growth Falls Short Of Forecasts, Weakness Ahead

Article #3 – Spring Slowdown Paints Ugly Picture For Jobs: ADP

Article #4 – ‘Real’ Jobless Rate Still Above 10% In Most States

Article #5 – U.S. Homeownership Rate Falls to Lowest Since 1995

Article #7 – “The Bull Market is Very Much Intact” for Gold: World Gold Council

Article #8 – Stodgy Netherlands Is Nation That’ll Blow Up Euro

Article #9 – City Of Detroit Is Financially ‘Insolvent’

The U.S. homeownership rate fell to the lowest in almost 18 years, reflecting rising demand for rentals and investor purchases in the housing market.

The share of Americans who own their homes was 65 percent in the first quarter, down from 65.4 percent a year earlier and the lowest level since the third quarter of 1995, the Census Bureau reported today. The vacancy rate for rented homes dropped to 8.6 percent from 8.8 percent a year earlier, while vacancies for owner-occupied houses fell to 2.1 percent from 2.2 percent.

Investors are buying single-family homes and renting them out to capitalize on demand among families unable to qualify for a mortgage. Their purchases, many made with cash, are helping to support the housing recovery and pushing up prices. Home values in 20 cities increased 9.3 percent in February from a year earlier, the most since May 2006, according to the S&P/Case- Shiller index released today.

“Credit conditions are still tight and investors are taking advantage, in the interim, of favorable yields,” Paul Diggle, property economist for Capital Economics in London, said in a telephone interview. “They’re making hay while the sun shines.”

Diggle said the homeownership rate will continue to fall throughout the year. It peaked at 69.2 percent in June 2004, spurred by easy credit.

“Tight credit, tight for-sale inventory, the challenge of saving for a down payment, and more rental single-family supply all helped lower the homeownership rate,” Jed Kolko, chief economist for Trulia Inc., a San Francisco-based online real estate information service, said today in a statement.

The number of homes on the market in March was down 16.8 percent from a year earlier, the National Association of Realtors said last week.

The number of occupied residences increased to an estimated 114.6 million in the first quarter from 114.1 million a year earlier, according to the Census Bureau. The number of renter- occupied homes rose to 40.1 million from 39.5 million. Owner- occupied residences slipped to 74.5 million from 74.6 million.
 

http://www.bloomberg.com/news/2013-04-30/u-s-home-vacancies-fell-in-first-quarter-from-prior-year.html

Article #1 – Consumer Sentiment in U.S. Fell to Three-Month Low in April

Article #2 – Growth Falls Short Of Forecasts, Weakness Ahead

Article #3 – Spring Slowdown Paints Ugly Picture For Jobs: ADP

Article #4 – ‘Real’ Jobless Rate Still Above 10% In Most States

Article #6 – German Euro Founder Calls For ‘Catastrophic’ Currency To Be Broken Up

Article #7 – “The Bull Market is Very Much Intact” for Gold: World Gold Council

Article #8 – Stodgy Netherlands Is Nation That’ll Blow Up Euro

Article #9 – City Of Detroit Is Financially ‘Insolvent’

Two months from now, revised government estimates are likely to show that the economy is even bigger than the currently stated $15 trillion.

And while the numbers may make some blink or gasp, the mere size of gross domestic product won’t hide the reality that in terms of actual growth, this is also the worst economy in 83 years.

GDP growth is in the midst of its longest sub-3 percent annual growth rate since 1929, the beginning of the Great Depression, according to Bespoke Investment Group. The economy hasn’t topped 3 percent since 2005—before Federal Reserve Chairman Ben Bernanke took over—and is unlikely to do so this year.

So even if projections are correct that the economy is about 3 percent bigger than thought—say, another half-trillion dollars—the U.S. is still stuck in the slow-growth morass it has endured since the beginning of the Great Recession.

Nowhere is that more apparent than in employment.

Though employment has risen by 1.3 million over the past year, unemployment that counts the discouraged and underemployed, as well as the jobless (often called the “real” unemployment rate) has remained stubbornly high, at 13.8 percent of the workforce, according to the most recent count.

In fact, a state-by-state look at the numbers, released a few days ago and current through the first quarter, shows that just six states have real rates below 10 percent.

The best of the lot is North Dakota, at 6.2 percent, while the worst is in beaten-up Nevada, with a real rate of 19.6 percent.

Over the past year, the rate actually rose in six states (Alaska, Delaware, New Hampshire, New Jersey, New York and Pennsylvania) and was unchanged in three (Connecticut, Mississippi and Oregon).

While the government said the GDP revisions will present a more encompassing look at the economy, critics are howling that the changes are an attempt to mask weak growth and rationalize more debt.

“It shouldn’t come as a surprise they are going to change the way this number is reported,” said Michael Pento, founder of Pento Portfolio Strategies.

“When GDP numbers are chronically bad [averaging just 1.45 percent in the last two quarters] and the labor force participation rate is perpetually falling, our government will do the same thing they did for the inflation data—tinker with the formula until you get the desired result,” he said.

Under the new math, the government will add research and development spending, as well as the capital value of all books, movies, records, television programs and plays produced since 1929.

In jacking up the economy’s size, the revisions also will skew the ratio of debt to GDP, considered important in determining government spending.

Of course, the recent attempt at debunking a critical study of the ratio by Carmen Reinhart and Kenneth Rogoff also has dimmed the prospects for government debt-cutting. The two economists asserted that a 90 percent debt-to-GDP ratio restrained growth, but the data set they used has been challenged as faulty.

The new GDP calculations, combined with the souring on the Reinhart-Rogoff conclusions, likely will add to the thirst to keep Washington’s debt machine purring.

Pento points out that no matter what the government does, it can’t mask that revenue collections have been nearly stagnant over the past six years—a metric that as much as anything else outside of employment indicates true growth, or the lack thereof. And that has come as public debt has soared by $7 trillion.

“The fact is that the U.S. economy isn’t growing fast enough to significantly increase the revenue to the government, but our debt is still soaring,” Pento said. “It’s a shame they won’t just implement real measures to grow the economy like reduce regulations, simplify the tax code and balance the budget.”

The Bureau of Labor Statistics reports the April job creation numbers Friday.

As could be expected from the weak recent data, economists are beginning to trim their forecasts to show that the pace of employment growth was anemic.

Rewriting economic history won’t change that.
 

http://www.cnbc.com/id/100691168a

Article #1 – Consumer Sentiment in U.S. Fell to Three-Month Low in April

Article #2 – Growth Falls Short Of Forecasts, Weakness Ahead

Article #3 – Spring Slowdown Paints Ugly Picture For Jobs: ADP

Article #5 – U.S. Homeownership Rate Falls to Lowest Since 1995

Article #6 – German Euro Founder Calls For ‘Catastrophic’ Currency To Be Broken Up

Article #7 – “The Bull Market is Very Much Intact” for Gold: World Gold Council

Article #8 – Stodgy Netherlands Is Nation That’ll Blow Up Euro

Article #9 – City Of Detroit Is Financially ‘Insolvent’

The gloomy news continued for jobs as ADP reported Wednesday that private companies created just 119,000 new positions in April.

That was well below expectations and confirmation that the labor market is slowing heading into late spring and early summer.

Economists surveyed by Reuters expected the ADP report to show the private sector created 150,000 jobs in April, down from 158,000 in March.

“Nearly every industry has seen slower growth since the beginning of the year,” Moody’s economist Mark Zandi said on CNBC. “Smaller businesses are experiencing much weaker growth.”

Moody’s Analytics conducts the survey in conjunction with ADP.

The report comes two days before the government releases its nonfarm payrolls growth count for April. Economists recently have been nudging down their projections, which are pegged around 150,000 after March’s dismal 88,000 reading.

The weakness from the ADP report could cause expectations to dim even further.

March’s originally reported 158,000 job gain saw a downward revision to 131,000.

Small businesses accounted for 50,000 of the new positions in April, but Zandi noted that the sector is seeing a slowdown likely attributable to the onset of the Affordable Care Act national healthcare plan.

Companies with more than 50 employees will fall under the umbrella of the plan, also known as Obamacare.

“The data seems to be suggesting healthcare is having an impact,” Zandi said.

Services accounted for almost all the job creation, at 113,000, while goods-producing made up the other 6,000, with both numbers representing the slowest growth in seven months. Manufacturing lost 10,000 positions while construction added 15,000.

Trade, transportation and utilities added 29,000 and professional businesses services grew by 20,000.

Wall Street took notice of the survey, with the stock market off to a lower open at the start of trading.
 

http://www.cnbc.com/id/100693906

Article #1 – Consumer Sentiment in U.S. Fell to Three-Month Low in April

Article #2 – Growth Falls Short Of Forecasts, Weakness Ahead

Article #4 – ‘Real’ Jobless Rate Still Above 10% In Most States

Article #5 – U.S. Homeownership Rate Falls to Lowest Since 1995

Article #6 – German Euro Founder Calls For ‘Catastrophic’ Currency To Be Broken Up

Article #7 – “The Bull Market is Very Much Intact” for Gold: World Gold Council

Article #8 – Stodgy Netherlands Is Nation That’ll Blow Up Euro

Article #9 – City Of Detroit Is Financially ‘Insolvent’

U.S. economic growth regained speed in the first quarter, but not as much as expected, heightening fears an already weakening economy could struggle to cope with deep government spending cuts and higher taxes.

Gross domestic product expanded at a 2.5 percent annual rate, the Commerce Department said on Friday, after growth nearly stalled at 0.4 percent in the fourth quarter. Economists had expected a 3.0 percent growth pace.

“It wasn’t the bang-up start to the year we had hoped for, and the signals from March suggested that we will only decelerate from here,” said Avery Shenfeld, chief economist at CIBC World Markets Economics in Toronto.

Part of the pick-up in activity reflected farmers’ filling up silos after a drought last summer decimated crop output. Removing inventories, the growth rate was a tepid 1.5 percent.

Still, most areas of the economy contributed to growth, with the exception of government, the trade sector and investment by businesses in offices and other commercial buildings.

While consumer spending increased solidly, it came at the expense of saving, which does not bode well for future growth.

A separate report showed worries about finances sapped consumer morale in April. The Thomson Reuters/University of Michigan’s final reading on the overall index on consumer sentiment fell to 76.4 last month from 78.6 in March.

U.S. stocks opened lower on the data, while prices for Treasury debt rose and the dollar weakened against the yen.

The GDP report offers ammunition for the Federal Reserve to maintain its monetary stimulus. The U.S. central bank, which meets next week, is widely expected to keep purchasing bonds at a pace of $85 billion a month.

“They are going to mark down their economic assessment. The second quarter is tracking closer to 1 percent,” said Jacob Oubina, an economist at RBC Capital Markets in New York.

Data ranging from employment to retail sales and manufacturing weakened substantially in March after robust gains in the first two months of the year, and the factory sector appears to have slowed further in April.

Many forecasters expect the economy’s softness to persist into the third quarter until signs of a convincing revival emerge.

COUNTING ON CONSUMERS

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, increased at a 3.2 percent pace – the fastest since the fourth quarter of 2010. It grew at a 1.8 percent rate in the fourth quarter of last year.

The increase in spending came despite the return of a 2 percent payroll tax and higher gasoline prices. Households, however, had to cut back on saving as incomes dropped at a 5.3 percent rate, the steepest descent since late 2009.

The saving rate – the percentage of disposable income households are socking away – fell to 2.6 percent, the lowest since the fourth quarter of 2007, from 4.7 percent in the final three months of last year.

Despite the spike in gasoline prices, inflation pressures were benign. Inflation rose at a 0.9 percent rate, the smallest increase since the second quarter of 2012 and a sharp slowdown from the 1.6 percent pace logged in the fourth quarter.

A core measure that strips out food and energy costs rose at a 1.2 percent rate.

The lack of inflation should come as welcome relief for American households, but it could cause some nervousness at the U.S. central bank, which may see it as a symptom of the economy’s weakness. The Fed aims to keep inflation close to 2 percent.

Government spending fell at a 4.1 percent pace, with declines at both the federal and the state and local levels. Government spending has declined for 10 of the last 11 quarters.

“The decline in government spending over the past two quarters is the biggest six-month contraction since the Korean war ended,” Paul Ashworth, chief U.S. economist at Capital Economics in Toronto said in a research note.

Business spending on equipment and software slowed sharply, growing at an only 3.0 percent rate after a brisk 11.8 percent pace in the fourth quarter.

Economists caution that it is too early to blame the cooling in business investment and other more recent signs of economic softness on the $85 billion in mandatory government spending cuts, known as the sequester, that began on March 1.

Homebuilding marked an eighth straight quarter of growth, though the pace moderated from the fourth quarter. Housing added to growth last year for the first time since 2005 and its recovery should help ensure the economy does not contract.

While export growth rebounded, it was outpaced by imports, resulting in a trade deficit that cut off half a percentage point from output.
 

http://www.reuters.com/article/2013/04/26/us-usa-economy-idUSBRE93P04P20130426

Article #1 – Consumer Sentiment in U.S. Fell to Three-Month Low in April

Article #3 – Spring Slowdown Paints Ugly Picture For Jobs: ADP

Article #4 – ‘Real’ Jobless Rate Still Above 10% In Most States

Article #5 – U.S. Homeownership Rate Falls to Lowest Since 1995

Article #6 – German Euro Founder Calls For ‘Catastrophic’ Currency To Be Broken Up

Article #7 – “The Bull Market is Very Much Intact” for Gold: World Gold Council

Article #8 – Stodgy Netherlands Is Nation That’ll Blow Up Euro

Article #9 – City Of Detroit Is Financially ‘Insolvent’

Confidence among consumers fell in April to a three-month low as Americans grew more pessimistic about the outlook for the economy.

The Thomson Reuters/University of Michigan final index of consumer sentiment declined less than forecast, to 76.4 from 78.6 a month earlier. The median projection in a Bloomberg survey was 73.5 after a preliminary April reading of 72.3.

The figures indicate consumer spending may cool after climbing in the first quarter by the most since the end of 2010 and slow the pace of economic growth. Safeway Inc. (SWY) is among companies noting that shoppers, faced with higher payroll taxes and limited job growth, remain cost-conscious even as rebounding home prices help stabilize household wealth.

“We are seeing slightly softer growth but on the other hand household wealth looks pretty good,” Gus Faucher, senior economist at PNC Financial Services Group in Pittsburgh, said before the report. “The economy is continuing to expand but we do have some drags.”

Another report today from the Commerce Department showed the economy expanded in the first quarter at a 2.5 percent annualized rate, up from the 0.4 percent pace in the final three months of 2012. Household purchases, which account for about 70 percent of the economy, advanced at a 3.2 percent annualized rate, the most since the fourth quarter of 2010.

Forecasts for consumer sentiment in the Bloomberg survey ranged from 70 to 80. The index averaged 64.2 during the recession that ended in June 2009 and 89 in the five years prior to the 18-month slump.

Bloomberg Survey
The Michigan survey contrasts with Bloomberg’s measure of sentiment, which held close to a five-year high last week. The Bloomberg Consumer Comfort Index was minus 29.9 in the week ended April 21, down from minus 29.2, which was the highest since January 2008. Households were the most optimistic about their finances in 10 months, the comfort index showed.

The Michigan survey’s current conditions index, which measures Americans’ view of their personal finances, fell to 89.9 in April from 90.7 last month. The preliminary reading was 84.8.

The index of expectations six months from now dropped to 67.8 this month from 70.8 in March. The preliminary April reading was 64.2.

A report earlier showed retail sales fell last month by the most since June, showing household spending ended the first quarter on softer footing. The 0.4 percent decrease followed a 1 percent gain in February, Commerce Department figures showed today in Washington. Department stores and electronics dealers were among the weakest showings.

Labor Market
The labor market also cooled, adding 88,000 jobs last month, the smallest increase since June, the Labor Department reported April 5. Average hourly earnings were unchanged in March from the prior month, the weakest showing since October.

At Safeway (SWY), the second-largest U.S. supermarket chain, customers are shopping with price and budgets in mind, Chairman and Chief Executive Officer Steve Burd said.

“I still believe that it’s a very sluggish recovery,” Burd said on an April 25 earnings call. “I don’t really think you have a really strong economy until consumer confidence is, hits 90. We haven’t seen 90 in probably over five years. So I think consumers are still affected by that and trying to be very careful with how they spend their dollars.”

At the same time, the housing market’s recovery is driving up property values and improving household balance sheets, a source of strength for spending and the economy. Stocks also are adding to net worth, while cheaper prices at the gas pump give consumers more money to spend on other goods and services.

Home Construction
“We’re now seeing a really nice growth factor in new construction,” Jeff Fettig, chairman and chief executive officer at Whirlpool Corp. (WHR), said on an April 24 earnings call. “We’re starting to see the pickup from existing home sales, but pure, pure discretionary is still very, very weak.”

Consumers in today’s confidence report expect an inflation rate of 3.1 percent over the next 12 months, compared with 3.2 percent in March. Over the next five years, Americans expect a 2.9 percent rate of inflation.
 

http://www.bloomberg.com/news/2013-04-26/michigan-consumer-sentiment-fell-to-76-4-in-april-from-78-6.html

Article #2 – Growth Falls Short Of Forecasts, Weakness Ahead

Article #3 – Spring Slowdown Paints Ugly Picture For Jobs: ADP

Article #4 – ‘Real’ Jobless Rate Still Above 10% In Most States

Article #5 – U.S. Homeownership Rate Falls to Lowest Since 1995

Article #6 – German Euro Founder Calls For ‘Catastrophic’ Currency To Be Broken Up

Article #7 – “The Bull Market is Very Much Intact” for Gold: World Gold Council

Article #8 – Stodgy Netherlands Is Nation That’ll Blow Up Euro

Article #9 – City Of Detroit Is Financially ‘Insolvent’

However, according to UBS economist Maury Harris in USA Today, America is close to “unleash a spending spree. Years of self-denial give way to pent-up demand.” His canary in the mine shaft is what he sees in consumer sentiment: “Harris estimates that in the next five years, catch-up consumption will boost annual consumer spending growth by a half point to above 3% from about 2%.” Really? Are we in the summer of actual recovery? Am I feeling some “green shoots” beginning to grow?

Harris maybe spitting against the wind on this one. As Jeremy Grantham, chief strategist of the $100 billion GMO money managers, remarked to InvestmentNews, which for 90,000 professional investment advisers, is the newspaper of record, “3% annual GDP growth is history.”

The result is a long stretch of Japan-style deflation, and is something that very few people are looking forward to. While rising rates are certainly a nightmare for borrowers, there are ways to prepare for what is to come. Did someone say “Own gold?”

In his recent newsletter, Pimco’s Bill Gross advised: “You’re going to lose money investing … because the central banks say so.” This rally is Fed-powered and it’s their game. Soon the Fed will be forced to stop printing cheap money because when interest rates go up it will cease being cheap money and will become expensive money.

The big players who have benefitted from the mountains of cheap money say the crash “won’t happen soon.” There may be reason not to believe them. They’re playing the game with trillions of dollars, and they are beginning to prepare for “when rates take their first turn higher,” and when that happens interest rates will soar “swift and steep.” At that point it will be too late to prepare for higher interest rates.