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Latest jobs data is blow to Obama as elections loom

In Uncategorized on August 7, 2010 at 11:21 am

WASHINGTON, Aug 6, 2010 (AFP) – The latest grim data on unemployment has dealt a new blow to President Barack Obama as he struggles to maintain his party’s majority in Congress in November elections.


Obama, who has been hurt by the Gulf of Mexico oil disaster, has been scrambling to highlight his economic management in helping lift the US economy out of its worst slump in decades.


But the latest data released Friday showed the recovery is sputtering: A Labor Department report showed 131,000 jobs were lost in July and the unemployment rate remained stuck at 9.5 percent, which is better than the worst levels this year but still painfully high.

(AFP file) A man uses a computer to fill out paperwork at an employment centre in Oakland, California.

The private sector created a modest 71,000 jobs for the month, which was not enough to offset the massive government layoff of 143,000 census-takers.


Overall economic growth slowed to a pace of 2.4 percent in the second quarter of 2010, and other economic indicators are soft, even though Obama points to four quarters of economic growth.


The White House has dismissed the likelihood of a double-dip recession but some economists warm of a Japanese-style economic stagnation.


Obama tried to put the best face on the most recent employment figures.


“Climbing out of any recession, much less a hole as deep as this one takes some time. The road to recovery doesn’t follow a straight line. Some sectors bounce back faster than others,” Obama said.


Obama said the data showed jobs growing in the private sector for seven consecutive months.


“That’s a good sign. Meanwhile our manufacturing sector that’s been hit hard for as long as folks can remember has added 183,000 jobs this year. That’s the most robust seven months of manufacturing growth in over a decade,” he said.


“But for America’s workers, families, and small businesses, progress needs to come faster. Our job is to make sure that happens.”


Obama said the latest figures underscored the need for final passage of a bill aimed at saving 160,000 teaching jobs, which has cleared the Senate, and for other measures favoring small business.


“We need to decide whether we’re willing to do what it takes to keep this economy moving in the right direction… but also to secure a clean energy future and accelerate our recovery and rebuild our economy around three simple words, ‘made in America.'”


But Republicans are waging their own campaign and blaming Obama for wasting a large part of the big 787 billion dollars in stimulus funding approved a year ago. It remains unclear whether the opposition party will be able to block any new stimulus efforts sought by the White House.


With the recovery appearing to falter, two key members of the Obama economic team are on their way out. Budget director Peter Orszag announced his departure in June and top economic aide Christina Romer said on Thursday she would return to teaching.


Obama continues to press his case, hitting the road to tout the rebound in the US auto sector, the finance reform and the huge health care reform measures approved this year.

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Source: SGGP

Economy rebounds, but major challenges loom

In Uncategorized on March 24, 2010 at 4:47 am

Despite the global crisis, last year can be seen as a successful year for Vietnam, with its GDP growing by 5.32 percent, the highest rate in Southeast Asia. However, there remain many big challenges the country faces in 2010.


Besides the impressive GDP growth, last year saw the country’s overall CPI kept at 6.8 percent, the lowest rate since 2004, and unemployment rate stand at 3 percent, the lowest in the world.


Owning to strengthened control over budget spending, the deficit was restrained at 6.9 percent of GDP, slightly lower than the 7-percent target and far lower than the projections by international financial analysts.








Customers at an Eastern Asia Commercial Bank branch in Ho Chi Minh City. The negotiable interest rate mechanism should be applied again to replace the ceiling interest rates on loans and deposits, to help stabilize the foreign exchange market, says Le Xuan Nghia, Deputy chairman of the National Financial Supervisory Committee. (Photo: Viet Bao)

As a result of the Government’s effective social welfare policies, the number of poor households fell to 12 percent from 14 percent in 2008.


The banking system was relatively stable, with an ROE of 13-14 percent. Average bad debt rate at banks was less than 2 percent.


Last year also saw many financial companies and financial leasing companies improve themselves in term of profitability and bad debt ratios. The insurance market and stock exchange have rebounded in terms of capital, liquidity and profit.


The above performances, resulting from the Government’s opportune policies on economic stimulus and macroeconomic stabilization, and great efforts by businesses, investors and consumers, have created favorable conditions for better economic achievements in 2010.


The revival in consumer demand the world over is also a good sign for Vietnam’s exporters.


This year, free trade agreements (FTA) between Vietnam and China, Japan, and possibly Russia, will be implemented, benefiting Vietnamese importers, exporters and producers, contributing to boost growth and generating jobs.


Trade deficit, exchange rate


It is a big challenge for the country to achieve a GDP growth of 6 percent this year. In 2009, the country’s GDP grew by 5.32 percent, of which 1.2 percent contributed by a 30 percent reduction of trade deficit (from US$17 billion in 2008 to $12.2 billion in 2009).  But in 2010, the situation has been reversed: trade deficit is forecast to rise by 20 percent and will make the growth rate reduce by 1 percent.


In other words, if the country wants to reach a GDP growth of 6.5 percent this year, it must see total consumer spending and domestic investment increase by 7.5 percent. To overcome this big challenge, it is necessary to apply flexible policies to boost public investment, credit and consumer spending.


Another problem is how to improve the foreign exchange market’s liquidity and to stabilize exchange rates.
 
Last year, the weak liquidity of the foreign exchange market mainly arose from the fact that the Government’s interest subsidy was offered only to loans in dong, which narrowed the gap between the interest rates on dong and foreign currencies, leading to difficulties in mobilizing and lending foreign currencies.


When the Government increased the official VND-USD exchange rate by 5.5 percent, boosted the prime rate by 1 percent and stopped offering interest subsidy for short-term loans, the liquidity of the foreign exchange was improved.


However, the difference between the State’s official exchange rates and those on the open market remained relatively high.


Therefore, if the exchange rates are not regulated flexibly based on market developments and if the negotiable interest rate mechanism is not applied again to replace the ceiling interest rates on loans and deposits, the instability of the foreign exchange market is likely to remain a big problem in 2010.        


Particularly, the US Federal Reverse is likely to increase its base interest rate in April. If this is the case, the value of US dollar will strengthen against other foreign currencies and liquidity in Vietnam will be weakened, affecting not only the financial market but also the efficiency of the national economy as a whole.


By Dr. Le Xuan Nghia, deputy chairman of the National Financial Supervision Committee





Source: SGGP Bookmark & Share