Tag: Economy

Moody’s Changes Outlook from ‘Negative’ to ‘Stable’

For the first time since 2008, Moody’s has upped its outlook of the U.S. banking system as a result of improving economic conditions that compensate for low interest rates.

Moody has changed its outlook to ‘stable’ from its former status of ‘negative’ which has lasted nearly half a decade.

According to BigPond News, Moody’s says “sustained GDP growth and improving employment conditions will help banks protect their balance sheets, and after another year of reducing credit-related costs and restoring capital, U.S. banks are now even better-positioned to face any future economic downturn.”

The agency added that low interest rates will have the most impact on financial performance over the next 12-18 months.

traducción español

Moody cambia la perspectiva de ‘Negativo’ a ‘Estable’

Por primera vez desde el 2008, Moody ha elevado su perspectiva del sistema bancario de los Estados Unidos como resultado de las mejoras en las condiciones económicas que compensan las bajas tasas de interés.

Moody ha cambiado su perspectiva a ‘estable’ de su pasado estado de ‘negativo’ que ha durado casi media década.

De acuerdo con BigPond News, Moody dice “el crecimiento sostenido del GDP y las mejoras de las condiciones de empleo ayudará a los bancos a proteger sus balances, y después de un año de reducción de costos relacionados al crédito y restaurar capitales, los bancos de los Estados Unidos están ahora aún mejor posicionados para afrontar cualquier recesión económica.”

La agencia agregó que las bajas tasas de interés tendrán el mayor impacto en el rendimiento financiero durante los próximos 12 a 18 meses.
English translation

Ally’s Auto-Finance Business Expects Gains in 2013

According to Ally Financial Inc.’s CEO, the company will repay the government by 2014 thanks to its auto-finance business.

CEO Michael Carpenter explained that Ally will be able to make a large payment this year. As the second-largest remaining investment by the U.S. Treasury’s bailout fund, Ally still has $14.6 billion outstanding from the Treasury’s Troubled Asset Relief Program.

“We are 100 percent confident that we can repay the American taxpayer completely,” Carpenter said. “Whether that’s this year or next year, I don’t know. But it’s in that time frame.”

In an effort to increase company focus on autos and its online retail bank, Ally has been selling assets outside of the United States as well. Its auto unit has also expanded, providing used, leasing and subprime financing offerings early this year, before agreements with General Motors and Chrysler expire.

Housing Prices on the Rise, Expected to Boost Consumer Spending

Housing prices in the U.S. have climbed to their highest rates in over six years, a strong indicator that the real estate market will have a large part in U.S. economic growth in 2013.

According to recent data, the S&P/Case-Shiller index rose 5.5% since the last quarter of 2011, the most significant growth since the summer of 2006. The progress is expected to continue as mortgage rates hover around a record low while property values rise. Experts believe this will boost consumer spending and sentiment, despite this month’s payroll tax increase.

Millan Mulraine, an economist at TD Securities, explains: “Rising home prices are providing an important cushion.” Lower confidence and reduced paychecks “will slow consumer spending this quarter, but the effect will abate in coming months,” she added. “The souring in moods is a reflection of the brinkmanship in Washington and the higher payroll tax.”

Michael McKee, economics editor at Bloomberg, discusses the recent developments in home prices here.

IMF and U.S. Worried As Recession Looms Closer

The United States are struggling with internal and external stressors, as critics claim that failure to implement a new plan will result in another worldwide recession.

George Osborne, U.K. Chancellor of the Exchequer, said “People are concerned.” He added that there “was quite a lot of discussion” at the annual IMF meeting this week.

The current plan lingers around the idea of the U.S. incurring $100 billion in automatic spending cuts, as well as over $5 billion in expiring tax reductions in January. This week, the IMF claimed such a deal will undoubtedly tighten fiscal policy by 4% of GDP, the most since the 40s.

“It’s a very serious situation for all of North America and for the entire world,” said Jim Flaherty, Canadian Finance Minister. “It means we’ll all go into recession. So it’s important this gets dealt with.”

Big-Name Retailers Extend Hours for Holiday Shoppers

Big-name retailers are upping their appeal to last minute holiday shoppers by offering extended hours, sometimes even staying open for more than 24 hours straight.

Macy’s was the first to announce such a policy, broadcasting last week that its stores will be open in the 48 hours leading up to Christmas Eve. The department locations will open on Friday, Dec. 21st through Sunday, December 23rd.

Other retailers are following in Macy’s footsteps, hoping to draw last-minute gift buyers and other shoppers.

Toys “R” Us announced that its stores would remain open for 88 hours straight in preparation for Christmas Eve. It also kept its Times Square location open for 24 hours for the past few weeks, and will continue to do so until Christmas. Target is also extended its hours.

Macy’s chief stores officer explained:

“We hope to make it easy for our customers across the country to finish their shopping at any time of day or night, and with the benefit of the great deals and value they count on from hour One Day Sales when must see here.”