Bad

Publié le par Jean-Pierre Chevallier

Bad


The latest figures published yesterday by the Fed are bad: M2-M1 rose by 8% (year o year) since 2 weeks,

Chart 1:
2008.02.15.US.1.M2M1.gif
 (Click here to enlarge the graph)

The stocks market collapse, which was amplified during the week on January, 21 (with Société Générale) prompted Americans to reduce their consumption expenditure to increase their savings because they fear that their situation will deteriorate in the future .

The demand falling, supply adjusts. GDP growth is low: 2.5% year on year, or 0.6% over the previous quarter to an annualized rate, as the fourth quarter 2007,

Chart 2:
2008.02.15.US.2.FRM07.gif
(Click here to enlarge the graph)

This is a reversal of the positive trend of the previous 4 weeks confirmed by M2 which increased by 6.6% year on year,

Chart 3:
2008.02.15.US.3.M2.gif
(Click here to enlarge the graph)

If Americans behavior do not change quickly, the recovery can be achieved only from the second quarter 2008 because the decrease of Fed target have positive effects only 6 months after it began to lower its rate, i.e. in September 2007,

Chart 4:
2008.02.15.US.4.FRM05.gif
(Click here to see enlarge the graph)
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