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With OPEC Meeting Looming, and Emerging Markets Growing, Oil Prices May Only be Temporary

Sep 8th, 2008 | By William Patalon III | Category: Financial News, Politics & Economics

Economically Speaking

If it’s not one thing, it’s another. Just when the one-time frightening inflation picture began to ease up a tad (on declining commodities prices), a few key reports caused investors to sour on the economy’s prospects for future growth. The retail picture remained bleak and back-to-school discounts did nothing to lure consumers back into the malls. Same-store sales in August were softer than expected, with only discounters like Wal-Mart Stores Inc. (WMT) posted promising results. Mall clothiers like Abercrombie & Fitch & Co. (ANF), department stores like J.C. Penney Co. Inc. (JCP), and luxury retailers like Nordstrom Inc. (JWN) each struggled from lackluster activity in August.

Of course, many consumers remained concerned about their jobs, as the unemployment rate soared to 6.1%, the highest level in almost five years. Additionally, over 80,000 non-farm jobs were lost in August, bringing the total for the year to about 550,000 vanished jobs. August represented the eighth consecutive month of a declining labor market. Meanwhile, the housing sector is showing no signs of rebounding, as construction spending fell for the 16th straight month. A total of 9% of borrowers were reported as either delinquent on their mortgages or already in foreclosure.

On a positive note, the services sector surprisingly expanded in August, the first such showing in three months. The U.S. central bank’s Beige Book confirmed what most everyone already knew: The U.S. economy is slowing across most regions, but falling commodities may bring some inflation relief. Both the European Central Bank (ECB) and the Bank of England chose to leave their short-term rates unchanged, removing some pressure from the Federal Reserve here in the United States to raise its Federal Funds rate in the near future.

Weekly Economic Calendar

Date Release Comments
September 1 Labor Day Market Holiday
September 2 Construction Spending (07/08) Lowest level in activity in 7 years
ISM - Manu (08/08) Revealed no real sector expansion or contraction
September 3 Factory Orders (7/08) 5th consecutive increase in orders
Fed Beige Book Slower growth, but with some relief from inflation
September 4 Initial Jobless Claims (08/30/08) Surprising increase in weekly claims
ISM - Services (08/08 Slight sector expansion
September 5 Unemployment Rate (08/08) Highest level since September 2003
Nonfarm Payroll Additions (08/08) More jobs lost in August than expected
The Week Ahead
September 8 Consumer Credit (07/08)
September 11 Initial Jobless Claims (08/6/08)
Balance of Trade (07/08)
September 12 PPI (08/08)
Retail Sales (08/08)

Source: With OPEC Meeting Looming, and Emerging Markets Growing, Oil Prices May Only be Temporary

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More on this topic (What's this?)
How Oil is Actually Priced: Be Worried
Read more on Oil Prices at Wikinvest

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By William Patalon III

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About the Author

William Patalon IIIWilliam (Bill) Patalon III is the Managing Editor and Senior Research Analyst for Money Morning, and is also the Managing Editor for The Money Map Report. Patalon's work has appeared in Kiplinger's personal finance magazine, USA Today, and The South China Morning Post, among other publications.

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Money Morning is the leading source of investment research on the global markets. Its free daily service provides news, research, investment opportunities and insights on international investing -- most of it well before it appears in the mainstream financial media.

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