BGN Entrepreneur » shrinking economy

US Economy Shrinks

Sky — Fri, 01 May 2009 19:33:21 +0000

The world’s biggest economy—US economy, has suffered the worst slump ever since Dwight D. Eisenhower was president and Elvis was doing his national service. Following a 6.3% fall in the final three quater of 2008, the economy shrank a worse-than-expected 6.1% in the first three months of the year.
Figures came as reports emerged that at least six of the 19 largest US banks require additional capital. The government has been conducting ’stress tests’ to determine how much extra money the lenders need, however, these have been criticised for further undermining confidence. The GDP report yesterday contained a blizzard of grim data, but the weakness of businesses was particularly striking. Companies slashed investment in new equipment and software by 33.8%. Sagging defence spending pulled government expenditure down by the most ever since 1995.
The only positive thing in the report was an improvement in family incomes and spending, reflecting interest-rate cuts by the US Federal Reserve and demand after a grim holiday shopping season.

Battering for Darling’s Budget

Sky — Mon, 27 Apr 2009 03:56:08 +0000

After official figures showed that the recession was biting far deeper than predicted, Alistair Darling claimed yesterday that UK would climb out of recession by the end of the year was in shreds.
Two days after the Chancellor told MPs that he expected the economy would have contracted by 1.6 per cent in the first three months of 2009, figures released by the Office for National Statistics revealed that it had shrunk by 1.9 per cent, which makes a difference of almost £1 billion. UK’s economy is now shrinking at the fastest pace in 30 years. The drop in the last quarter is the worst since 1979 and is the first time that the economy has shrunk by more than 1 per cent in two successive quarters ever since records began in 1948. The £924 million discrepancy blows a further hole in Mr. Darling’s claim that the economy will contract by 3.5 per cent this year. That prediction has already been rubbished by the International Monetary Fund and by City economists, most of whom believe the real figure will be 4 per cent worse. It also casts further doubt on the Chancellor’s claim that the economy will grow by 1.25 per cent next year, a year in which most economists believe that it will, at best, stagnate.
Taxpayers are facing bigger bills as recession bites depper.

Worse Than Expected Figures

Sky — Wed, 04 Mar 2009 17:05:40 +0000

Today, shares across the UK, US and Europe tumbled after it emerged that in the fourth quarter of 2008, the US economy shrank at the fastest rate ever since 1982, which is far worse than the initial estimation of the US Government.
Between October and December last year, GDP declined at an annual rate of 6.2%, which was above initial estimates of 3.8%. According to the new worse than expected GDP numbers, the economy of US has actually contracted by 6.2%.
Responding to this, the FTSE 100 index in London today further plunged below the 4000 level, losing 127.35 points to 3788.29 and the Dow Jones industrial average in the US fell 132.45 points to 7049.63. Meanwhile, the Frankfurt’s Dax fell by 4.1% and French-listed stocks dropped 3.3% to 2654.52.

Homeowners Facing No Interest on Mortgages

Sky — Thu, 05 Feb 2009 17:57:32 +0000

The economy has sunk into recession amid a collapse in consumer confidence and a freeze on new lending. In the past two quarters, the economy had already shrunk by more than 2% and anxieties have mounted since the IMF predicted that the GDP of UK would fall by 2.85 in 2009, marking the worst UK performance in 60 years.
Today, interest rates were cut by 0.5% points to 1% in a bid to boost the economy. As the Bank of England cut the cost of borrowing for the fifth month in a row, thousands of homeowners are now facing the possibility of paying no interest on their mortgages.
From next month, about 1,500 customers who took out a tracker mortgages pegged at 1.01 points below the base rate with Cheltenham & Gloucester will be paying no interest at all on their home loans. It becomes the first time that a mortgage lender has been forced to reduce the interest on their home loans to zero.
According to Lloyds Banking Group, there is some problem with the new policy in practice. As the computer systems could not cope with zero, the bank would be temporarily charging 0.001%, or 8p a month for a borrower with a £100,000 mortgage. But, the money will be refunded later.