October 5, 2011
By: Dan Piller and Adam Belz
Consumers may catch a break on the price of gasoline and baked goods and sweets as the Thanksgiving-Christmas season approaches, thanks to a sudden tumble in worldwide commodity markets.
The consumer price outlook has brightened, in part, because commodity speculators have fled the energy and grain markets in the face of fears of a global recession triggered by the European debt crisis, says Tomm Pfitzenmaier of Summit Commodity Brokerage.
The price of regular gasoline dropped Tuesday to a national average of $3.41 a gallon. It is down about 15% since peaking in May near $4 a gallon. The Department of Energy forecasts gas prices won’t rise sharply until spring. Crude oil has fallen from more than $100 a barrel just before Memorial Day to less than $76 Tuesday.
Flour prices have risen more than 50% this year, according to Jeremy Reichart, vice president of Orchestrate Management, which operates several restaurants and a food market in Des Moines. But they should fall in coming months, as the price of wheat has tumbled 25% since last summer, according to the Chicago Board of Trade.
The price of wheat shot up from less than $6 a bushel in early 2010 to about $9 by the beginning of this year on worldwide shortages.
But Russia, Ukraine and even India, which had to deal with drought and shortages last year, are back selling wheat in world export markets.
On the sweets front, the price of cocoa is down about 15% from record levels since midsummer, according to the International Cocoa Organization, raising the possibility that manufacturers’ costs for making chocolate might ease.
Not all the consumer price news is good. Food prices rose in August, according to the latest U.S. government report. And while motorists and lovers of pasta and baked items might see prices coming down, beef lovers should brace for continued high prices.
Prices for hamburger and choice beef cuts have risen 15% to 20% this year, according to the Department of Agriculture. Cattle supplies began 2011 at 50-year lows because of high feed costs and have grown tighter as ranchers reduce their herds in response to drought and record heat.
September 15, 2011
By: Will Longbottom
The EU Commission today warned that economic growth in the eurozone will come to a near standstill by the end of the year due to the European debt crisis and turmoil in the financial markets.
In its latest economic forecast, the commission said the financial gloom is likely to persist until spring next year, but it would not result in a double dip recession.
Economic growth in the 17 euro countries will be only 0.1 per cent in the fourth quarter – down from 0.2 per cent in the third.
For the second half as a whole, the commission said it had revised down its prediction from its spring forecast by half a percentage point.
The worsening debt crisis and financial market volatility has dampened economic activity says the forecast.
Olli Rehn, the EU’s economic and monetary affairs commissioner, said: ‘The outlook for the European economy has deteriorated.
July 15, 2010
By: Martin Crutsinger
Federal Reserve officials have a slightly dimmer view of the economy than they did in April, reflecting worries about how the European debt crisis could affect U.S. growth and job prospects.
Fed officials said Wednesday in an updated economic forecast that they think the economy, as measured by the gross domestic product, will grow between 3 percent and 3.5 percent this year. That’s a downward revision from a growth range in their April forecast of 3.2 percent to 3.7 percent.
The Fed’s latest forecast sees the unemployment rate, now at 9.5 percent, possibly staying at that figure or in the best case falling to 9.2 percent. In the April forecast, the Fed had a slightly lower bottom number of 9.1 percent.
The Fed said in the minutes of its June 22-23 meeting that its lower economic projections reflected “economic developments abroad” — a reference to the debt crisis that began in Greece and threatened to spread to other European countries.
While reducing the forecast for growth and employment, the Fed also saw less of a threat from inflation.
The Fed predicted that a key inflation gauge that’s tied to consumer spending would show prices rising 1 percent to 1.1 percent this year. That’s down from an April forecast that consumer prices would increase by 1.2 percent to 1.5 percent.
The absence of inflationary pressures gives the Fed leeway to keep interest rates low to try to bolster growth as the economy recovers from the deepest recession since the 1930s.
The new forecast was compiled at the last meeting of the Fed’s interest rate-setting Federal Open Market Committee on June 22-23. At that meeting, the FOMC, which is composed of Fed board members and the 12 Fed regional bank presidents, kept a key rate at a record low of 0 to 0.25 percent, where it’s been since December 2008.
The Fed’s new forecast made only minor changes to its outlook for growth, unemployment and inflation. But those changes underscored a view that economic prospects were slightly weaker.
The factors the Fed cited were household and business uncertainty, weak real estate markets, a tough job market, waning fiscal stimulus and still-tight lending by banks.
The Fed in April had said only a minority of Fed officials thought it would take more than five or six years to reach the Fed’s goals for maximum employment with low inflation. But in the new minutes, the Fed changed that to say that “most” expected it to take “no more than five or six years.”
Beyond this year, the Fed forecast growth in 2011 to be in a range between 3.5 percent to 4.2 percent. The upper limit of that range was reduced from 4.5 percent in the April forecast.
The expectation for the unemployment rate next year was also nudged higher to a range of 8.3 percent to 8.7 percent. That was up from a range of 8.1 percent to 8.5 percent in April.
To obtain its forecast ranges, the Fed excludes the three highest and three lowest forecasts of Fed officials for each economic variable.