- Data from this week further supported the case that the economy expanded only gradually in the third quarter.
- The trade balance widened slightly in August as exports fell more rapidly than imports, which were buoyed by an increase in petroleum prices.
- Initial jobless claims for the week ending Oct. 6 looked great on the surface, plunging to the lowest level in more than four years. However, the difficulty in adjusting claims during the first week of the quarter and the fact that most of the decline stemmed from one state is keeping us skeptical.
The Race to the Bottom Continues
- Over the last week, Australia, South Korea and Brazil once again joined the worldwide race to the bottom by lowering interest rates further in an attempt to minimize the slowdown in worldwide economic activity.
- Developing countries still have some monetary policy leeway and can become more creative by implementing more heterodox monetary policies going forward as developed countries have done. However, they will probably have to rely more on fiscal policies than monetary policies.