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Markets News Afternoon: Bernanke says it's likely US recession has ended - - foresees weak economy; Shares rise in Europe and US
By Finfacts Team
Sep 15, 2009 - 4:36:11 PM
US Federal Reserve chairman Ben Bernanke said today that it's likely the US recession has ended, but he reiterated that tight credit conditions and a soft labour market will prove to be a challenge.
From a technical point, the "recession is very likely over at this point," Bernanke said in a question-and-answer session at the Brookings Institution in Washington DC.
The Fed chairman added that even if recovery is underway, it's still going to feel like a very weak economy because credit conditions remain tight and any decline in the unemployment rate will probably only happen gradually. He said that one risk is that the economy will grow in the second half of 2009, but not enough to trigger a rapid recovery.
If there is only moderate economic growth, "employment will be slow to come down," he said."It will come down, but it will take some time."
US health care costs
CNN reports that despite a drop in inflation, the annual cost of employer-sponsored family health insurance coverage has risen 5% this year to $13,375, according to a new survey released Tuesday.
Employers picked up the lion's share of that tab. Companies paid an average of $9,860, while their workers picked up the other $3,515, according to the 2009 survey of employers from the Kaiser Family Foundation and Health Research & Educational Trust. Kaiser is a nonprofit, nonpartisan health policy research foundation.
For individual coverage, annual premiums rose more modestly, up an average of 2.6% to $4,824. But those increases came as prices fell roughly 1% this year because of the recession.
US markets
Reports of retail sales and New York-area manufacturing were better than expected Tuesday. But wholesale-level inflation was surprisingly strong.
The US Census Bureau announced today that advance estimates of US retail and food services sales for August, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $351.4 billion, an increase of 2.7% from the previous month, but 5.3% below August 2008. Business sales rose 0.1% in July.
The producer price index for finished goods rose 1.7% on a seasonally adjusted basis in August, the US Labor Department said, after falling 0.9% in July.
PPI was down 4.3% from August 2008.
US businesses kept cutting inventories in July, reducing excess built up during the recession.
The Dow is up 13 points to 9,640.
The Nasdaq is up 0.31% and the S&P 500 has added 0.30%.
UK Prime Minister Gordon Brown is set to admit Tuesday that public spending cuts will be needed. Lord Digby Jones, former director general of the CBI, told CNBC public services need to be more efficient and administration staff should be cut instead of front-line staff:
On the New York Mercantile Exchange, oil for October delivery is trading at $68.91 up 5 cents from Monday's close. In London, Brent crude for October delivery is trading at $66.75 a barrel.
Currencies
The euro is trading at $1.4591 and at £0.8889.
For live currency updates, check the right-hand column of the Finfacts home page.The dollar traded at a record low $1.6038 per euro on July 15, 2008.
