U.S economy lacks fundamentals throughout this week

The world’s leading economy will witness an absence of fundamentals throughout this week following a hectic two weeks of major news reported from the manufacturing, services, housing and labor sectors which all showed that recovery is still undergoing but in a slower pace than expected whereas some areas in the economy are still trying to find stability from the after math of the worst financial crisis in decades.

Looking back at the performance of the U.S economy, conditions has improved compared with the beginning of 2009 whereas the economy suffered a deep recession while conditions started to improve by the second half of 2009 and continued to expand over the past six months, which managed the U.S economy to report strong growth in the advanced reading of the fourth quarter GDP.

The manufacturing sector managed to grow in August 2009 and continued to expand throughout the past month thus providing support to economical growth, the services sector also helped with the matter along with the industrial and the housing sector that seemingly found the bottom of the deep hole it fell into.

This week’s news will focus on spending patterns for the economy as a whole along with consumer spending presented by retail sales reports along with the trade balance of the U.S and the Monthly budget statement, starting with the trade balance deficit of the united states it has been growing where in the month of November it reached $36.4 billion while analysts predict that the deficit narrowed in the month of December to $35.3 billion.

Analysts also project that the monthly budget statement will show a lower deficit in the month of January reaching $60.0 billion from the previous reported estimate of $63.5 billion, but given the fact that President Obama’s Federal Budget blueprint for the year 2011 of $3.86 trillion will produce more deficit in the upcoming years thus the number is highly projected to stay high in the upcoming months to effect the recovery process along with the Dollar’s status as the world’s leading currency.

In addition, Retail sales for the month of January will be released this week, where it showed a bigger than expected drop in the month of December, a holiday season peak, meanwhile analysts project that the report will show a rebound in sales and rise in the month of January by 0.3% from the previous 0.3% drop, along with a rise in Retail Sales excluding auto prices reaching 0.4% from the previous 0.2% drop, in addition Retail Sales excluding autos and gas are projected to rise in January by 0.3% from -0.3 percent.

Retails sales accounts for 70 percent of spending, thus providing a clearer look for consumers’ spending patterns therefore rising retail sales in the United States means that spending and demand are improving, thus supporting economical growth, where spending accounts for nearly 70 percent of growth in the U.S.

The labor department will release its weekly jobless claims where it has been fluctuating over the past few weeks as employers still halt any kind of hiring amidst the current economical weakness and tight credit conditions. Obama proposed to use $30.0 billion of TARP money to help small businesses by providing them with tax cuts along with a tax credit of $5.000 for each new employee they hire, not forgetting that the earlier job bill helped save or create more than 600 thousand jobs over the past year alone as the U.S economy lost almost 8.4 million jobs in favor of the crisis.

Projections show that initial jobless claims might have dropped to 451 thousand in the week ending February 6, compared with the previous 480 thousand, while the number of Americans still receiving unemployment benefits dropped to 4.590 million from the previous 4.602 million.

The nonfarm report showed that the economy of the United States shed 20.0 thousand jobs in the month of January thus the effects of the global credit crisis still hammers down economical activities in the sector but the cheerful news came as the unemployment rate dropped to 9.7% from the previous 10.0 percent.

The labor sector is trying to find stability amid weak economical conditions where it will take more time to stabilize and start expanding, given the current economical conditions, the labor sector will need to wait at least till the end of the first quarter of this year to start witnessing a gradual improvement in conditions and expansion allowing it to follow the rest of the sectors into recovery.