Struggle for Wall Street
Wall Street dropped during trading Thursday as investors shied away from some bullish corporate figures. The NASDAQ fell 0.57 percent (12.87 points), followed closely by a drop by the S&P 500 (0.42 percent, 4.60 points) and the Dow Jones (0.29 points, 30.72 points).
According to CNNMoney.com, Wall Street can look forward to another struggle today. The negative momentum from yesterday will certainly play a part in keeping markets down. However, the most important factor will likely be GDP data released by the Commerce Department.
According to Bloomberg News, the economy grew at a 2.4 percent pace in the second fiscal quarter. Growth is obviously better than contraction, but in this case the GDP figures in 2010 show nothing but a steady decline. We are doing far better today than we were at the end of the Bush administration (GDP growth in the fourth quarter of 2008 was -6.8 percent).
Nonetheless the United States is still struggling mightily to stay afloat. In the fourth quarter of 2009 the U.S. economy expanded at nearly 5.0 percent. In the first quarter of 2010 the economy still grew, but at just a 3.7 percent rate. Now, we are still technically growing but the rate of growth has slowed to a crawl. At this pace we will soon stagnate and perhaps revert back into negative territory.
Not surprisingly, according to Reuters, one factor in the slow economic growth is an increasing amount of imports coming into the country. Every good that is imported into the United States has its value added somewhere else. If we buy toys from China we get the toy, but China gets the money with which it can hire an employee. The same is true for cars, raw materials, or electronics. In the last fiscal quarter imports once again out-paced exports, leading to more money leaving this country to spur growth everywhere else.
The rest of the GDP figures released by the Commerce Department are rather encouraging – business investment, for example, is up 17 percent. But the trade issue will continue to drag on the economy until action is taken to balance it.
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