A Complete Picture of the Global Economy Was Provided Today
Eric is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Yesterday was a day of mixed economic news. The overall economic picture is positive, but contracting.
Ratings agency Fitch cut their growth outlook for Brazil from 3.5% to 2.8%. The iShares MSCI Brazil Index ETF (NYSEMKT: EWZ) fell 1.42% over the day. The ETF took a dive in the beginning of August and is currently down 24.37% year to date.
Shipper RailAmerica Inc. (NYSE: RA), which runs freight trains through 27 states in the U.S. and three provinces in Canada, reported year on year shrinkage in total freight by 2.6%. Lower values of freight may be an indicator of lower economic activity to come. The press release about the freight totals states:
“The largest increases were in Metallic Ores and Metals, Motor Vehicles and Forest Products….The largest declines were in Coal, Agricultural Products and Chemicals.”
ManpowerGroup (NYSE: MAN) released a report that signaled that although hiring outlooks were positive, they were down from a few months ago, with the most pronounced decline in China. The decline in China was attributed to the contraction of export markets in Europe, as well as the policies of the Chinese government, which is attempting to cool down the economy.
On top of all this the Federal Reserve released an interest rate decision today. The Fed made a decision to not change interest rates, and repeated that rates would stay low until at least mid 2013. The Fed then went on to say that unemployment was going to decline very slowly, and that overall the economy was continuing to expand slowly as global growth was slowing (for example, the happenings in China and Brazil mentioned earlier). They also warned of ‘downside risks’ stemming from ‘financial strains’ –a tongue in cheek reference to the Eurozone crisis.
So there you have it, a complete picture of the global economy from today: Positive growth, but tentative and vulnerable to the rumblings in Europe.
The author does not own any financial interest in the company mentioned. Forward looking statements in the article are the author's opinion, and no guarantee can be provided of their future validity.