Some entrepreneurs aren’t in business to present a new idea; they’re there because they love the thrill of entrepreneurship. These individuals aren’t necessarily looking to revolutionize anything. All they want is a business resistant to the ebb and flow of the economy. For some, the current events in the US are feeding fears of an impending recession. Reasonable or irrational speculation, only time will tell. In this article, Adam Ferrari – CEO of Ferrari Energy – details seven industries considered recession-resistant.
Technology
Innovative technology is at the forefront of the global economy. We love our widgets, and technology holds out the promise of making our lives evermore productive, enjoyable, safe, and healthy. A prolonged recession could be expected to dampen high-end, less essential technology products. Still, household and business staples such as phones, TVs, and computers will continue to sell with additional competitive pressure.
Energy
Our need for reliable energy is constant. This reliance is not dependant on economic conditions. Innovative energy solutions can be expected to experience waning interest. Still, legacy energy sources such as oil, natural gas, coal, wind power, and solar will continue to meet the country’s needs.
Pet products
Maybe not the most obvious candidate for this list, but people are not any more likely to stop caring for their pets under poor economic conditions than they are their family members.
Healthcare and Senior Services
Hopefully, even more than pets, people will not decrease their healthcare expenditures under anything less than the direst economic conditions. People continue to age and become ill and will need medical services. These are the least discretionary services.
Construction
Even in an economic recession, construction will continue. It may look different than it does under bright financial news, but it will continue nonetheless. If new homes sales slump, upgrades and remodel work usually increases.
Security
Poor economic conditions affect scofflaws just as they do law-abiding citizens. Poor economic conditions historically have been accompanied by an increase in crime. The need for security, both physical and cyber, will not decrease in a financial downturn. The more cost-effective a security solution is, the better it will fair in these conditions.
Food and Beverage
People need to eat no matter the stock market. Every other category will suffer before food and beverage. The more basic the food item, the more stable it will prove to be. Exotic items are more susceptible to economic conditions.
To find the common denominator for all of the above industries or to identify others, ask, “what will people need, even if the economy tanks?”
About Adam Ferrari
Adam Ferrari is an accomplished petroleum engineer and is the founder of a private oil and gas company, Ferrari Energy. Throughout various roles in the oil and gas industry, Adam was inspired to learn more about property rights and the inner workings of petroleum exploration and extraction. After gaining expertise in the energy sector, Adam obtained knowledge of the financial industry through his time at an investment banking firm. He then pivoted to bootstrapping his own business from the ground up as he blended his energy and finance knowledge.
No one knows exactly when the next recession will hit. It could be five years from now, five months from now, or it could take shape as a result of the recent coronavirus scare. One thing’s for sure, though. A financial downturn will happen eventually and another recession is on the way. Unlike previous recessions, though, many current professionals operate as freelancers. Working as a freelancer provides a number of advantages, but it can also be quite challenging in some ways as well. Here, we’ll explain everything that freelancers need to know to manage their finances during a recession:
Start Saving Now
It’s never too early –– or too late –– to start saving up for
the future. While “traditional” nine-to-five employees may benefit from
employer-supported 401ks and health insurance, freelancers have no such safety
net. That’s why it’s crucial to build up a substantial savings fund now. Living
paycheck-to-paycheck might work out if you can rely on a steady stream of
income. But if a recession affects your ability to generate personal revenue,
then it’s imperative to have enough capital saved up to cover essential
expenses.
Lean on Relationships
The best freelancers don’t wait around to find work. During a
recession, it’s unlikely that many companies will actively search for extra
support. And jobs that do get posted on sites like Upwork will probably go
quickly. As such, it’s a smart play for freelancers to develop positive working
relationships with business leaders in their field. This will allow them to
check in and get the inside track on projects or assignments during lean
periods. In business, who you know
matters almost as much as what you
know.
Expand Your Skill Set
Working in a niche field can be a solid way to start your career as a freelancer. However, if you want to improve your viability, you’ll have to expand your skill set so that you can take on new jobs as they hit the market. This could include almost anything –– from learning about the RFP process to enhancing your writing abilities. Don’t hesitate to learn new things because they could come in handy one day!
Talk to an Expert
Unless you’ve spent years studying economics, you may not understand everything there is to know about managing resources during a recession. Indeed, it is possible to not only survive a recession, but to thrive under such conditions. You just have to have a plan in place and know how to execute it. It makes a lot of sense for freelancers to enlist the help of a financial planner. They can create contingency strategies and explain how to create an effective investment portfolio regardless of the state of the market.
Bottom line: don’t be afraid to reach out for help if you need
it!
Japan’s economy has shrunk 0.8% on an annualized basis in Q3 of 2015 and fell back into recession.
The preliminary data means the world’s third-largest economy has contracted for a second consecutive quarter, marking a technical recession.
Japan’s economic growth was expected to decline after it fell a revised 0.7% in Q2 on weak domestic demand.
The country has been in recession four times since the global financial crisis.
Photo EPA
On a quarterly basis, growth fell 0.2% in the third quarter from the previous one, weaker than forecasts of a 0.1% decline.
The seasonally adjusted figure was also much lower than expectations of a 0.2% drop.
According to economists, the weak data will put more pressure on the government and central bank to continue to stimulate the economy.
Japanese companies continue to be wary of using their record profits to raise wages and invest in the economy – a major challenge for Prime Minister’s Shinzo Abe’s “Abenomics” policies.
Business spending fell 1.3%, against forecasts of a 0.4% decrease. It also marked the second quarter in a row of declines.
However, private consumption, which accounts for 60% of the economy rose 0.5% from the previous quarter.
Consumer spending has picked up from the hit it took last year from an increase in sales tax in April, which contributed to the recession in 2014.
Despite the declining growth, the government is positive that a recovery is underway.
In reaction to the growth figures, the benchmark Nikkei 225 index was down 1.1% to 19,372.98 points in early trade in Tokyo.
Brazil’s economy has entered recession after official figures showed it contracted by 1.9% between in Q2 2015 compared with the previous three months.
Analysts had expected a contraction, but the number was worse than expected.
Q1 2015 output was also revised down to show a 0.7%, rather than a 0.2%, contraction.
Brazil, the seventh-largest economy in the world, has seen economic growth fall sharply in recent times.
This is due in part to low commodity prices and sluggish global growth.
High interest rates – currently 14.25% – have also affected consumer spending, an important element of Brazil’s economy, while this year, the government has introduced stringent austerity measures designed to tackle high levels of debt.
Government spending, including on unemployment benefits, has fallen sharply, while taxes have risen.
In Q2 2015, household spending fell by 2.1% compared with the previous three months. The biggest falls came in the industrial sector, where construction output fell 8.4%
Transport, storage, postal services, financial services and insurance all saw falls in output.
Compared with a year earlier, Brazil’s economy as a whole shrank by 2.6%.
The technical definition of a recession is two consecutive quarters of economic contraction.
Russia’s economy will fall into recession in 2015 as Western sanctions, in response to the country’s role in eastern Ukraine, and falling oil prices begin to bite, the Russian government has warned.
The country’s economic development ministry estimates the economy will contract by 0.8% next year.
It had previously estimated the economy would grow by 1.2% in 2015.
Russia’s reliance on tax revenues from the oil industry makes it particularly sensitive to price movements.
Household disposable incomes are also forecast to decline by as much as 2.8%, compared with a previous estimate that they would grow by 0.4%.
The sharp revision in Russia’s economic forecast is the first admission from the government that the economy will contract.
“The current prognosis is based on a drop in GDP by 0.8% in 2015, against the previous prognosis of growth by 1.2%,” deputy PM Alexi Vedev said.
On December 1, the rouble suffered its biggest one-day fall since 1998.
The currency slid almost 9% against the dollar before rallying after suspected central bank intervention. The currency has already lost 40% in value this year.
The Russian finance ministry has also not ruled out spending more than 500 billion roubles from the budget’s Reserve Fund next year.
The 2015-2017 budget allows for spending of up to 500 billion roubles next year from the Reserve Fund, but Maxim Oreshkin, head of the finance ministry’s long-term strategic planning department, said it was possible the government could spend more to support the economy.
Maxim Oreshkin added that if the average oil price were $80 per barrel in 2015, the finance ministry’s forecast for a fall in GDP was in line with the economy ministry’s prediction of a 0.8% contraction.
He also said that a scenario in which the oil price averaged $60 a barrel in 2015 was pessimistic, and at that price, the Russian economy would contract as forecast in the central bank’s “stress scenario”.
The bank published its stress scenario last month, saying that at $60 per barrel, GDP would decline by 3.5% to 4%.
The price of oil has fallen nearly 40% since the summer because of oversupply caused by rising US shale oil production.
Demand has also fallen, particularly in China, the world’s second largest consumer of the commodity, where industrial production has slowed in recent months.
The fall in the oil price has been causing concern for several members of the oil cartel, as most require a price above $80 a barrel to balance their government budgets and many need prices to be above $100 a barrel.
The French government has revealed the country’s public debt will hit a record 95.1% of GDP in 2014, above previous estimates, and up from 93.4% in 2013.
The figure was revealed as the country unveiled its budget for next year.
The debt should fall back in 2015, and repeated its aim to bring the public deficit below 3% that year, the EU’s deadline for doing so.
The government also said there will be some tax increases for households, but other tax reductions for businesses.
In addition, the budget focuses on tightening public spending, with some 15 billion euros in savings planned, as part of a plan to cut some 18 billion euros off the deficit.
France public debt will hit a record 95.1 percent of GDP in 2014
Debt servicing costs will rise to 46.7 billion euros, compared with 45 billion euros in 2013.
The 2014 budget is based on a growth forecast of 0.9%, lowered from a previous 1.2% forecast, with just 0.1% in growth forecast for this year.
But an economist has warned that next year’s growth figure was no cause for optimism.
“We can’t talk about a recovery as long as economic growth is around 1%,” said Eric Heyer, an economist with the French Observatory for Economic Forecasts.
“Since today, we produce less than five years ago, we are still in recession. That’s the real definition of a recession.
“The real rebound will be when we have a production level well above 2007 and when the economy has started to create jobs again. That’s not in the government’s scenario.”
In other measures, there will be a change in corporate tax policy, with a new levy being introduced based on operating profits.
The much-heralded 75% tax rate on salaries of more than 1 million euros a year will be introduced.
However, this tax will be paid by firms rather than employees.
France is the eurozone’s second largest economy after Germany.
Meanwhile, France will issue 174 billion euros in medium and long-term debt in 2014, compared with an estimated 169 billion euros this year.
The House of Representatives voted to cut nearly $4 billion from food stamp funding even after Democrat Rep. Jackie Speier used some congressional dinner expenses as ways to try to shame them into supporting the funding.
The 217-210 vote on Thursday was a win for conservatives and it was approved even though Democrats were united in opposition.
The bill’s savings would be achieved by allowing states to put broad new work requirements in place for many food stamp recipients and to test applicants for drugs.
The bill also would end government waivers that have allowed able-bodied adults without dependents to receive food stamps indefinitely.
Democratic Representative Jackie Speier used her time on the floor to talk about the $3,588 that one of her Republican peers spent on meals during a trip to Russia and how another had a dining budget of $137.42 per day on a visit to Argentina, where she said he “probably had a fair amount of steak”.
Jackie Speier didn’t name the men that she was making references to, but CNN later identified them as Rep. Steve King who went to Buenos Aires and Rep. Frank Lucas who went on the trip to Russia where “he probably drank a fair amount of vodka and probably even had some caviar”.
Even though Jackie Speier brought a bottle of Smirnoff, some caviar and a plate of steak on the floor with her, it apparently didn’t drive the point home as the cut was approved even with 15 Republicans voting against the measure.
House conservatives, led by Majority Leader Eric Cantor from Virginia have said the almost $80 billion-a-year program has become bloated.
he House of Representatives voted to cut nearly $4 billion from food stamp funding
More than 47 million Americans are now on food stamps, and the program’s cost more than doubled in the last five years as the economy struggled through the Great Recession.
Democrats said the increase during tough economic times showed the program was doing its job.
“This bill is designed to give people a hand when they need it most and most people don’t choose to be on food stamps. Most people want a job … They want what we want,” Eric Cantor said on the floor just before the bill passed.
Finding a compromise – and the votes – to scale back the feeding program has been difficult. The conservatives have insisted on larger cuts, Democrats opposed any cuts and some moderate Republicans from areas with high food stamp usage have been wary of efforts to slim the program.
The White House has threatened to veto the bill.
The new work requirements proposed in the bill would allow states to require 20 hours of work activities per week from any able-bodied adult with a child over age 1 if that person has child care available.
The requirements would be applicable to all parents whose children are over age 6 and attending school.
Every Democrat voting on Thursday opposed the bill. Many took to the floor with emotional appeals.
Democratic House Minority Leader Nancy Pelosi said the bill is a “full assault on the health and economic security of millions of families”.
Going further, Texas Rep. Lloyd Doggett called it the “let them starve” bill.
White House spokesman Jay Carney said Thursday that House Republicans are attempting to “literally take food out of the mouths of hungry Americans in order to, again, achieve some ideological goal”.
The Congressional Budget Office says that if the bill were enacted, as many as 3.8 million people could lose their benefits in 2014.
Around 1.7 million of those would be the able-bodied adults who would be subject to work requirements after three months of receiving food stamps.
The 1996 welfare law put that limit into law, but most every state has been allowed to waive that requirement since the Great Recession began in 2008.
The Census Bureau reported this week that just over half of those who received food stamps were below poverty and 44% had one or more people with a disability.
By state, Oregon led the nation in food stamp use at 20.1%, or 1 in 5, due in part to generous state provisions that expand food stamp eligibility to families.
Oregon was followed by more rural or more economically hard-hit states, including Mississippi, Kentucky, Maine, Michigan and Tennessee.
Wyoming had the fewest households on food stamps, at 7%.
Eurozone has emerged from recession after a record 18 months of economic contraction.
According to the Eurostat agency, eurozone’s GDP grew by 0.3% in the second quarter of 2013, slightly ahead of forecasts.
The growth was widely expected after the German economy rose 0.7% between April and June.
However, the overall figure masks the mixed economic fortunes among the countries that make up the 17-country eurozone area.
Germany and France both posted stronger-than-expected growth, expanding 0.7% and 0.5% respectively.
Portugal, among the smallest and the weakest eurozone economies, showed the fastest growth, at 1.1%.
Eurozone has emerged from recession after a record 18 months of economic contraction
The country was one of three that had to take a multi-billion-euro bailout.
But Spain, which had to seek outside support for its struggling banking sector, saw its economic output fall by 0.1% on the quarter.
Italy and the Netherlands both saw output drop by 0.2%.
European Commission Vice-President Olli Rehn said the figures suggested the European economy was gradually gaining momentum, but added there was no room for complacency.
“There are still substantial obstacles to overcome: the growth figures remain low and the tentative signs of growth are still fragile,” he said.
“A number of member states still have unacceptably high unemployment rates; the implementation of essential, but difficult reforms across the EU is still in its early stages. So there is still a very long way to go.”
Analysts from Capital Economics said: “The return to modest rates of economic growth in the eurozone as a whole won’t address the deep-seated economic and fiscal problems of the peripheral countries.”
The figures reaffirm Germany’s position as the powerhouse behind the eurozone.
Germany narrowly avoided recession earlier this year, but GDP in the second quarter of 2013 was driven up by demand from both consumers and businesses.
The improvement comes just weeks before a federal election that will see Chancellor Angela Merkel stand for a third term in office.
The OECD has revised its growth forecasts for the eurozone and called on the European Central Bank to consider doing more to boost growth.
The organization says the eurozone will shrink by 0.6% this year, widening the gap between it and faster-growing economies such as the US and Japan.
Meanwhile, the European Commission has given France two more years to complete its austerity programme.
France fell back into recession in the first three months of the year.
Spain, Poland, Portugal, the Netherlands and Slovenia have also been given more time to complete fiscal tightening.
The move suggests a shift away from a focus on austerity in Europe.
In its twice-yearly Economic Outlook, the OECD said prolonged economic weakness in Europe could damage the global economy.
The OECD, which represents 34 advanced economies, forecast average growth across its members of 1.2% this year and 2.3% in 2014.
It painted a troubled picture of the eurozone economy. The forecast of a 0.6% contraction in GDP is down markedly from the 0.1% contraction forecast just six months ago.
It said eurozone unemployment would continue to rise from its current rate of 12%, stabilizing in 2014.
The OECD has revised its growth forecasts for the eurozone and called on the European Central Bank to consider doing more to boost growth
It blamed continuing austerity measures, weak confidence and tight credit conditions. It hinted that the European Central Bank (ECB) might want to expand quantitative easing (QE) as a measure to encourage stronger growth.
It warned the continuing weakness in Europe “could evolve into stagnation, with negative implications for the global economy”.
The US and Japan have seen a greater focus on stimulus measures compared with Europe, where austerity measures have taken precedence.
Japan is forecast to grow relatively strongly this year, adding 1.6% to its GDP on the back of extraordinary economic stimulus measures introduced by the government this year.
But the OECD said there was considerable uncertainty over whether that recovery would continue into 2014, when the government is expected to cut spending.
In the US, where growth of nearly 2% is forecast for this year, the OECD said quantitative easing measures might need to be “gradually reduced”.
China is not included in the OECD club, but the organization expects its annual growth to be about 8% over the next two years.
The OECD’s chief economist, Pier Paolo Padoan, told Reuters that the eurozone remained the dominant area of concern.
“Europe is in a dire situation,” he told the news agency.
“We think that the eurozone could consider more aggressive options. We could call it a eurozone-style QE.”
France has entered its second recession in four years after the economy shrank by 0.2% in the first quarter of 2013, according to official figures.
The country’s economy shrank by the same amount in the last quarter of 2012. A recession is defined as two consecutive quarters of negative growth.
France has record unemployment and low business and consumer confidence.
German figures, also released, showed its economy, the eurozone’s strongest, grew by just 0.1% in Q1 2013.
France entered its worst recession since World War II in 2009. Although it was thought to have been in recession in 2012, these figures have now been revised to show only one quarter of negative growth.
The news comes on the first anniversary of Francois Hollande being sworn in as president.
Earlier this month, the European Commission warned that France would enter recession this year and said the eurozone’s economy would shrink by 0.4%.
France has entered its second recession in four years after the economy shrank by 0.2 percent in Q1 2013
The European Central Bank (ECB) cut interest rates at its last meeting to a record low of 0.5% in an attempt to stimulate growth.
In France, the rate of unemployment is running at 10.6% and is forecast to rise further next year.
Its deficit is also expected to rise sharply, the commission says, to 3.9% of GDP – well above the EU deficit target of 3%.
But French unemployment is below the eurozone average, which was 11.4% in 2012 and is expected to hit an average of 12.2% this year. In both Greece and Spain, it is expected to peak at 27%.
France this week passed a range of measures aimed at stopping the rise in unemployment by reforming the country’s labor laws.
These include measures to make it easier for workers to change jobs and for companies to fire employees.
The French economy has performed better than other eurozone members, including Spain and Italy, but it has not moved as quickly to reform its economy.
One of the new bill’s main measures is to allow companies to cut workers’ salaries or hours temporarily during times of sluggish economic performance, something that is common in Germany.
The figure for German growth, the largest and still the strongest economy in the 17-strong eurozone, was far weaker than expected. Economists had expected to see growth of 0.3% in the first quarter.
Annual figures from the Statistics Office also show the German economy has shrunk by 1.4% when compared with a year ago.
But in a statement it said this was partly due to severe winter weather: “The German economy is only slowly picking up steam. The extreme winter weather played a role in this weak growth.”
A new EU summit is getting under way in Brussels with issues of jobs and growth expected to dominate its agenda.
The eurozone as a whole has been in recession for more than a year and unemployment is now just under 12%.
France and some other countries want more flexibility in the budget targets set by the EU Commission, as austerity has provoked widespread protests.
France and Spain, hit hard by the debt crisis, expect to miss their budget deficit targets this year.
But Germany’s Chancellor Angela Merkel remains determined to keep Europe focused on budget discipline, to prevent any resurgence of market jitters about eurozone stability.
Cyprus, whose major banks are crippled by debts, wants to secure an international bailout of up to 17 billion euros ($22 billion). There is unlikely to be a deal on that at the Brussels summit, as EU finance ministers are still working on the details.
A eurozone summit will follow the main EU summit late on Thursday. Foreign policy issues, including relations with Russia, will be the focus on Friday.
Proposals to deepen eurozone integration will dominate an EU summit in June. The first “building block” of that will be a banking union, which will give the European Central Bank (ECB) far-reaching supervisory powers.
A new EU summit is getting under way in Brussels with issues of jobs and growth expected to dominate its agenda
There is a big debate in the EU about whether austerity is making the prospects for recovery worse.
The debate has been given new impetus by last month’s Italian election, where an anti-austerity protest movement led by the comedian Beppe Grillo performed very strongly.
This is expected to be the last EU summit for outgoing Italian PM Mario Monti, an unelected technocrat who had firm backing from Brussels but got just 10% in the election.
Some economists argue that in current circumstances austerity can actually make government borrowing rise, partly because of the impact that declining production has on tax revenue and welfare spending.
There is a drive in the EU to pursue tax evaders, including some big corporations who exploit the complexity of commercial law to reduce their tax bill.
The European Commission has said Spain, France and Portugal have failed to cut overspending to agreed targets.
Spain’s government deficit was 10.2% of the country’s economic output in 2012, well above the agreed 6.3% target, and will stay far above target into 2014.
Meanwhile, the Commission joined other major international organizations in admitting that the eurozone economy would contract in 2013.
It is forecast to shrink 0.3%, making the governments’ task even harder.
Previously, the Commission had expected the 17 economies in the eurozone would collectively enjoy 0.1% positive growth this year.
Delivering its winter forecast, Commission Vice-President Olli Rehn said that the eurozone was nonetheless expected to rebound in the last three months of this year, registering 0.7% growth in the fourth quarter.
The Commission is concerned about a “surprise” fall in Portugal’s economy, which fell 3.2% in 2012 and is forecast to contract by another 1.9% in 2013.
The European Commission joined other major international organizations in admitting that the eurozone economy would contract in 2013
Most economic forecasters have been revising down their European growth estimates, after the global economic recovery showed signs of faltering in the final quarter of 2012.
For example, in January the International Monetary Fund (IMF) said it expected the eurozone to fall into “mild recession” in 2013, having previously predicted growth.
It also predicted that the UK would grow 1% in 2013, compared with the 1.1% previously forecast.
The World Bank also revised down its global growth forecasts earlier in January.
But European Central Bank (ECB) president Mario Draghi believes the eurozone will begin recovering in the second half of this year.
And this week, Germany’s Bundesbank said Europe’s biggest economy would avoid recession and return to growth in the first quarter of 2013, after shrinking 0.6% in the last three months of 2012.
It expects Germany to continue growing throughout 2013.
Germany’s economy grew by 0.7 percent in 2012, a sharp slowdown on the previous year
Germany’s economy grew by 0.7% in 2012, a sharp slowdown on the previous year, preliminary figures show.
The figure was well below the 3% growth seen in 2011 and suggests the economy contracted in the fourth quarter.
“In 2012, the German economy proved to be resistant in a difficult economic environment and withstood the European recession,” the federal statistics office Destatis said.
Some analysts believe the German economy will enter recession itself.
Destatis said economic activity “slowed down considerably” in the second half of the year, and particularly in the final quarter.
“The full-year growth figure [of 0.7%] implies a contraction of around half a percentage point in the fourth quarter,” the office’s top statistician Norbert Raeth said.
Last month, Germany’s central bank, the Bundesbank, cut its growth forecast for this year to 0.4% and warned that the economy may have contracted in the final three months of 2012, and may do so again in first quarter of 2013.
The eurozone economy as a whole is already in recession, having contracted in both in the third and fourth quarters of last year.
For 2012 as a whole, Destatis said foreign trade was “very robust”, with exports up 4.1% on 2011. Imports grew by 2.3%. The positive trade balance was “once again the main driving force for economic growth in Germany”.
Household expenditure increased by 0.8%, while government spending was up 1%.
The figures also showed that while the service sector of the economy expanded, industry and construction contracted.
Destatis will publish official fourth-quarter growth figures on February 14.
President Barack Obama has cut short his holidays in Hawaii and is flying to Washington to try to reach a deal to avoid the so-called “fiscal cliff”.
Unless a compromise is found, tax increases and huge spending cuts come into force on 1 January, threatening to tip the US back into recession.
However, Democrats and Republicans are still at loggerheads over the issue.
Meanwhile, the US Treasury is to take extraordinary measures to delay reaching a 31 December borrowing limit.
In a letter to Congress, Treasury Secretary Timothy Geithner said it would take accounting measures to save about $200 billion to prevent reaching the $16.4tn borrowing limit.
Timothy Geithner said this would prevent the government from reaching the borrowing limit for about another two months.
President Barack Obama has cut short his holidays in Hawaii and is flying to Washington to try to reach a deal to avoid the fiscal cliff
This $16.4 trillion is the amount the government is allowed to borrow to finance its operations.
Barack Obama is expected to meet Republican leaders again to try to negotiate a solution, although no new date has been announced.
Failure to do so could damage the US and global markets, and threatens to send the US economy into recession.
The two sides remain far apart on the fiscal cliff’s $600bn in tax rises and spending cuts, but analysts say a short-term deal may be agreed that will postpone the cuts until spring.
On Wednesday, the Republican House of Representatives Speaker John Boehner called on the Democrat-led Senate to come up with legislation on how it would avoid the cliff, and pass it to the House for consideration.
However, a senior administration official said it was up to Republican leaders not to stand in the way of an agreement.
Despite this, there is little sense of urgency in the capital – the corridors of Congress are silent.
Timothy Geithner, the US treasury Secretary, has said there will be no deal to avert a “fiscal cliff” unless Republicans accept a tax hike for the wealthy.
But House Speaker John Boehner has dismissed a 10-year plan, which aims to raise $1.6 trillion through tax rises and spending cuts, as “silliness”.
The two men met on Thursday as time runs out to broker a deal.
Economists warn planned tax rises and spending cuts due to take effect on January 1st could trigger a recession.
Timothy Geithner, negotiating for the White House, has drafted a plan that includes more spending to help for the unemployed and struggling homeowners, as well as cuts in Medicare and other benefits.
On Friday President Barack Obama warned of a “Scrooge Christmas” if soon-to-expire tax breaks for households earning below $250,000 were not renewed as part of the deal to avert the fiscal cliff.
But John Boehner, negotiating for the Republicans who control the House of Representatives, said talks with the administration had so far gone “almost nowhere”.
Timothy Geithner and John Boehner’s appearances on a number of Sunday television talk shows showed how entrenched their positions were.
US treasury Secretary Timothy Geithner has said there will be no deal to avert a fiscal cliff unless Republicans accept a tax hike for the wealthy
“There’s not going to be an agreement without rates going up. There’s not,” Timothy Geithner told CNN’s State of the Union.
He called on Republicans to make a counter-offer to the Obama administration’s plan.
But John Boehner said he was “flabbergasted” by Timothy Geithner’s proposals – which he said asked Congress to give up its power to set the nation’s debt limit.
“What do you think would happen if we gave the president $1.6 trillion of new money?” John Boehner asked Fox News Sunday.
“He’d spend it.”
John Boehner says asking the top 2% of US taxpayers to pay more would deal a “crippling blow” to a fragile economy, and has criticized the Obama administration’s proposed spending cuts as inadequate.
The White House has suggested it would not support any deal that did not increase tax rates on the wealthiest.
The fiscal cliff would suck about $600 billion out of the economy.
The measures were partly put in place within a 2011 deal to curb the yawning US budget deficit.
What is the fiscal cliff?
Under a deal reached last year by the White House and the Republicans, existing stimulus measures – mostly tax cuts – will expire on 1 January 2013
Cuts to defence, education and other spending will then automatically come into force – the “fiscal cliff” – unless Congress acts
The economy does not have the momentum to absorb the shock from going over the fiscal cliff without going into recession
Eurozone unemployment rate hit to a new high of 18.49 million in September, the EU statistics agency has said.
The number of people out of work rose by 146,000, pushing the unemployment rate up to 11.6%. This compares with 10.3% a year earlier.
The highest unemployment rate was recorded in Spain, where 25.8% of the workforce is out of a job, and the lowest of 4.4% was recorded in Austria.
In Spain and Greece, more than half the workforce aged under 25 has no job.
The lowest youth unemployment rate of 8% was recorded in Germany, where 5.4% of the overall workforce is out of work.
The eurozone as a whole is struggling to generate the economic growth needed to stimulate employment. Its economy shrank by 0.2% between April and June, with Italy and Spain stuck in recession and France registering no growth for the past three quarters.
The notable exception is the German economy, Europe’s biggest, which grew by 0.3% in the second quarter.
Growth there is expected to slow when preliminary figures for eurozone GDP between August and October will be published on 15 November.
Across the wider 27-nation European Union, unemployment rose by 169,000 to 25.75 million people, Eurostat said, with the unemployment rate rising slightly to 10.6%.
Latest official figures show that unemployment in Greece hit a record 25.1% in July, with the level among young people reaching 54.2%.
Greece’s statistical authority said 1.26 million Greeks were jobless in July, with more than 1,000 jobs lost every day over the past year.
With austerity cuts continuing and Greece likely to enter another year of recession, the level may rise further.
The worst-affected 15-24 age group, however, includes those in education.
According to Greece’s statistics agency the total unemployment rate rose from 24.8% in June. In July 2008, a year before Greece’s financial crisis broke, there were about 364,000 registered unemployed.
“This is a very dramatic result of the recession,” said Angelos Tsakanikas, head of research at Greece’s IOBE economic research foundation. He did not expect employment to pick up for at least a year.
The Greek economy is surviving on international bailouts, but Athens has been forced to impose tough austerity measures in return for the money.
Finance Minister Yiannis Stournaras will hold talks on Thursday evening with representatives of the European Union, International Monetary Fund and European Central Bank about signing off the release of more funds.
There was some evidence on Thursday that the government’s strategy is working on one front, at least. Finance Ministry figures showed that the deficit-cutting effort is on track despite lower-than-anticipated revenues.
The ministry figures showed that the January-September deficit was 12.64 billion euros, lower than the 13.5 billion-euro target.
New car sales in the US posted the best month in more than four years, with Toyota Motor showing the biggest rise.
Toyota saw sales rise 42% in September. Honda reported a jump of 31%, while Chrysler sales increased 12%.
Analysts said buyers in the US were taking advantage of low interest rates and cheap financing.
The US car industry’s recovery has been a boon to the US economy in recent months.
Industry-wide sales were up 12.8% in September compared to a year earlier, to 1.19 million cars and light trucks.
Calculated on an annualized basis that is 14.94 million vehicles, the highest rate since March 2008 according to Autodata.
Analysts said the increased demand for passenger vehicles comes after consumers in the US delayed buying new cars during the recession which went on till 2009.
That pushed the age of vehicles on the road up, and now those consumers are looking for replacement cars.
“I think in general with the economy chugging along at about 1.5% to 2% that we are gradually seeing people come back,” said Ford chief economist Ellen Hughes-Cromwick.
Japanese carmakers continue to show the biggest gains as they rebound from a supply shortage caused by the earthquake and tsunami in March 2011.
US President Barack Obama says European leaders must make difficult decisions to steer the eurozone away from crisis.
Speaking at the White House, Barack Obama said the US would support Europe implement the hard solutions needed to solve the ongoing debt crisis.
He said a deep new recession in Europe would have an impact on the US economy.
Greece’s future in the eurozone was a matter for the Greek people, he said, but “further hardship” must be expected if it choose to leave the euro.
Barack Obama says European leaders must make difficult decisions to steer the eurozone away from crisis
Outlining a series of “specific steps” Europe needed to take to ensure stability within the eurozone, the president was at pains to say he would not “scold” Europe.
Barack Obama said European leaders needed to stabilize the continent’s financial system and inject capital into weak banks “as soon as possible”.
“The solutions are hard, but there are solutions,” Barack Obama said, saying the US was offering advice, but that “these decisions are fundamentally in the hands of Europe’s leaders”.
Barack Obama also reprised his calls for the US Congress to pass the remaining parts of his own jobs plan, in order to strengthen the US economy against possible shocks from Europe.
Spain’s retail sales dived in April, showing the biggest fall since the figures started being collected in 2003.
Sales fell 9.8% last month compared with the same month last year, after adjusting for calendar differences, according to official figures from the National Statistics Institute.
The fall was much worse than had been expected, and marked the 22nd consecutive month of declining sales.
Sales had fallen by 3.8% in March.
Spain’s retail sales dived in April, showing the biggest fall since the figures started being collected in 2003
Without adjusting for calendar effects, retail sales fell 11.3% in April having dropped 4% in March.
It is the latest bad news from the Spanish economy, which saw the level of risk attached to its government bonds hitting record levels on Monday after it emerged on Friday that banking group Bankia was going to need a bigger bail-out than had been expected.
Spanish shoppers are being discouraged by government austerity measures, rising taxes and Europe’s highest rate of unemployment.
Employment in the retail sector was down 1.2% in April from the same month in 2011.
The unemployment rate is over 24%, while the economy is back in recession having contracted in the last three months of 2011 and the first three months of 2012.
On Tuesday, a report from the Bank of Spain predicted that the recession would continue in the second quarter of 2012.
“Available indicators for the second quarter are still scarce but they do anticipate that activity will continue contracting in this period,” the report said.
The Office for National Statistics in UK has announced that the country’s economy has returned to recession, after shrinking by 0.2% in the first three months of 2012.
A sharp fall in construction output was behind the surprise contraction, the Office for National Statistics (ONS) said.
A recession is defined as two consecutive quarters of contraction. The economy shrank by 0.3% in the fourth quarter of 2011.
Wednesday’s figure is an early estimate and is subject to at least two further revisions in the coming months. It is compiled using 40% of the data gathered for later revisions.
The UK economy was last in recession in 2009.
Prime Minister David Cameron said the figures were “very, very disappointing”.
“I don’t seek to excuse them, I don’t seek to try to explain them away,” he said at Prime Minister’s Questions.
“There is no complacency at all in this government in dealing with what is a very tough situation, which frankly has just got tougher.”
David Cameron said it was “painstaking, difficult” work, but the government would stick with its plans and do “everything we can” to generate growth.
Labour leader Ed Miliband said the figures were “catastrophic” and asked David Cameron what his excuse was.
“This is a recession made by him and the chancellor in Downing Street. It is his catastrophic economic policy that has landed us back in recession,” Ed Miliband said.
UK economy returns to recession after three years
The ONS said output of the production industries decreased by 0.4%, construction decreased by 3%. Output of the services sector, which includes retail, increased by 0.1%, after falling a month earlier.
It added that a fall in government spending had contributed to the particularly large fall in the construction sector.
“The huge cuts to public spending – 25% in public sector housing and 24% in public non-housing and with a further 10% cuts to both anticipated for 2013 – have left a hole too big for other sectors to fill,” said Judy Lowe, deputy chairman of industry body CITB-ConstructionSkills, said.
Some have questioned the validity of the ONS’s figures, particularly on the construction industry, which has been particularly volatile in recent quarters.
But Joe Grice, chief economic adviser to the ONS, said the construction data was based on a survey of 8,000 companies and had been carefully checked and double checked.
The latest figures supported the view that the economy had been “flattish” in the past few quarters, he added.
Over the last year and a half, the economy has fluctuated between quarters of growth and contraction.
Bank of England governor Sir Mervyn King has previously warned that the economy will continue to “zig zag” this year.
He had forecast growth in the first quarter but then a contraction in the second quarter, when the extra bank holiday for the Queen’s Diamond Jubilee is expected to reduce output.
“It is clearly not good news, the missing link in the economy has been confidence,” said Graeme Leach, chief economist at the Institute of Directors.
“These are relatively small falls, so we shouldn’t be too alarmist.
“[But] regardless of the figures, it is the message that comes out to business – to be cautious – exactly when we want them to be a little more aggressive in terms of recruitment and investment.”
However, some pointed to other recent business surveys, which painted a more positive picture of the economy.
“These figures are at odds with the experiences of many UK businesses, which continue to operate with guarded optimism,” said David Kern, chief economist at the British Chambers of Commerce.
He added that he expected the preliminary estimate to be revised upwards when more information became available.
The estimate for construction output is based on published data for the first two months of the quarter, and an estimation for the third month.
But the ONS pointed out that, while there was “a tendency for upward revisions” to construction, March would need to be “exceptionally strong” in the construction sector to produce growth in the quarter.
The first estimate of GDP for the last three months of 2011 showed a contraction of 0.2%, which was later revised to a contraction of 0.3%.
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