Rising after reaching the brinks of recession is to be further prolonged especially as rising commodity prices is deterring further disposable income.
Spending that accounts for 2/3 of the economy is a matter to support growth as the monetary and fiscal policies were aimed at helping Americans to continue spending in to support growth while helping them withhold their living standards after thousands of Americans lost their homes and their wealth in the wake of the mortgage market collapse.
Today's weakly jobless figures reflected ongoing softening in the labor market that should prevail for a longer period and as Bernanke said more weakness is to emerge in the sector. Claims dropped the least in two weeks by 5,000 from the weak before to 381,000, which are still approaching the upper red line zone of 400 thousand claims which is very reflecting to weak economic conditions. Meanwhile continuing claims declined to 3060 thousands the lowest since April yet still much above last year's average.
The House Democrats are almost surely close to pass a bill that will help support unemployed American by extending continuing claims by 13 weeks added to the current 26 weeks. Which might help provide citizens with more money to support them as they job hunt which is enough time span for the economy to have started to pick up pace and demand employment.
Meanwhile added to the woes from NY empire state manufacturing Philadelphia Fed index expressed further weakness in the manufacturing sector as the contraction expanded in June to -17.1 after -15.6 and opposed to expectations of improving slightly to -10.0.
The manufacturing sector is sure still suffering, as the negative figures suggest more businesses are reporting worse conditions than better. Sub-indices showed that new orders declined further to -12.4 from -3.7, as for inflationary fears as price-paid leaped to 69.3 from 53.8 burdened with surging raw materials prices a designed question regarding business pricing expectations suggests that 65% plan of rising their prices. That is added pressure the Feds are surely does not want to tolerate as they described it as inflation expectations.
As fears are that inflation is to cripple growth markets expect the Feds to start rising rates sooner than previously anticipated this year after absorbed as hawkish stance from Fed members and Bernanke himself, while they support a stronger dollar to tame surging imported inflation especially that of commodities.
The Conference Board index of Leading Indicators suggested that the economy have passed the contraction phase and may even not contract in the latter half of the year, and probably is on the track for rising. The Index or May rose slightly with 0.1% inline with the previous month as the index is designed to reflect the economic state in the course of the coming three to six months.
The market remained puzzled among the mixed signals from the US economy as still they do not see solid base rise for growth while surely rising fears to price stability a scenario when combined is of the worst to be facing the Feds as the balancing act gets tougher by time. Rest ashore that we need more confirmation on both sides for us to set the extent and timing of the next fed move yet surly the next week's FOMC decision is surely steady rates which will be the first after seven consecutive rate cuts...