Emerging from the doldrums
The pace of US growth recovered sharply in the third quarter, peaking at its highest rate in two years and lending credence to forecasts that the country is on track for greater economic stability as 2016 draws to a close.
The economy expanded at a 2.9 percent annualised rate in the third quarter, up from 1.4 percent in the second quarter, which topped predictions of a more modest rate of 2.6 percent and reflected a spike in exports as well as an increase in federal spending, according to the US Commerce Department.
That said, consumption growth – another key indicator of the health of the economy – dropped back over the same period to just 2.1 percent, down from more than double that figure in the previous quarter, and falling a long way short of the expected 2.6 percent benchmark.
Room at the top?
Ever get the feeling that it’s about time you changed some of your fixtures and fittings? Well it’s a message that corporate governance advisor ISS is trying to get across to the shareholders of some of the United States’ top companies – including Alphabet and Berkshire Hathaway – as it begins to apply pressure for a little light boardroom ‘refreshment’.
As part of its latest annual survey, ISS is canvassing opinions on boards where long-serving directors hold sway or where new members are about as rare as hens’ teeth. The outcome could help to shape changes in its investor voting guidelines in the future.
Credit tightening – a sign of the times?
For a society that runs largely on credit, when loans start drying up, the wheels of commerce grind to a shuddering halt.
In a survey recently conducted by the Federal Reserve, signs are emerging that lines of credit are being increasingly squeezed, with loans to businesses on commercial and industrial (C&I) and commercial real estate (CRE) being subject to tougher standards over the second quarter of 2016 than in the past three quarters.
Businesses looking for C&I loans to buy new equipment or relocate are finding it harder to access the credit they need as banks continue to tighten their criteria for lending, especially for medium- and large-sized companies.
Rates on hold
The announcement by the Federal Open Market Committee (FOMC) to hold US interest rates steady in July came as no surprise to market analysts who had felt that the threat of economic uncertainty and the imminent presidential election would prevent the Federal Reserve from making any hasty decisions to hike the rate in the short term.
A fresh rate hike on the horizon?
It’s thought that the Federal Reserve will signpost more interest rate hikes this year, six months after it increased rates for the first time in almost ten years.
In their April meeting, Fed members voted overwhelmingly to keep interest rates unchanged amid concerns about the sluggish growth of US economy in the first quarter, Britain’s potential exit from the EU and uncertainty over China. After the Fed raised rates in December, it was expected to repeat the process four times this year, a forecast which has since been adjusted to two hikes.
Have neoliberal economic policies had their day?
In a recently released report, economists from the International Monetary Fund have issued their strongest warning to date that the austerity measures promoted by countries including the UK and Germany aren’t helping to grow the global economy.
The IMF article contains a strong critique of the neoliberal strategies that have been a dominant force for the last 30 years. It argues that while the expansion of global trade has saved millions from poverty and the privatisation of state-owned enterprises has inevitably led to more efficient provision of services, at the same time reducing the fiscal burden on governments, the approach has failed to deliver in other areas.