Dow fell dramatically on Friday due to poor labor reports. World stocks are falling as well.
The U.S. recovery once again showed signs of stalling with an increase in the unemployment rate to 9.1% on Friday, up from 9% in April. Keep in mind that Spectrem Group research indicates that most households will not feel the Recession is over until the unemployment rate is below 7%. The Dow lost .8 on Friday, according to the Associated Press, closing at 12,151. High gas prices and increasing food costs are decreasing consumer spending. Dow futures are down 18 points for Monday.
OPEC anticipated to argue about oil supply
The OPEC nations are scheduled to meet in Vienna on Wednesday to discuss whether to increase oil supplies, according to the Wall Street Journal. It is believed that Saudi Arabia and Kuwait would like to increase supplies to meet anticipated increases in demand in the second half of 2011. UAE would probably support Saudi Arabia and Kuwait. Iran is suggesting that there is a high inventory and low prices and therefore supplies should not be increased. Saudi Arabia is not currently pumping at capacity. The OPEC nations pump 29.1 million barrels of oil each day and supply one third of the world's oil. This will be on of the few meetings where disagreement is anticipated.
Construction industry will have slower recovery
The construction industry will continue to have double digit unemployment for a long time, according to the Association for General Contractors of America, as reported in USA Today. While all employers in the U.S. added 1.8 million jobs since February, construction lost 4,000 jobs. In 2007, construction employed 5.5 million people, that number is currently at 2.2 million. Weak housing starts indicate the market will not change in the short term.
Most Americans do not anticipate income to increase
According to an analysis by Goldman Sachs of Michigan and Thompson Reuters consumer polls, fewer than 15% of U.S. households anticipate their income will be better a year from now, reports USA Today. Real hourly wages have dropped 2.1% in the last 6 months and is reducing consumer spending. Overall, Americans are pessimistic about future income growth.
Airline profits to fall
The International Air Transport Association (IATA) predicts that the airlines will decrease profits dramatically this year due to natural disasters, fuel prices and political unrest. The Associated Press reports that airlines are predicted to earn $4 billion in 2011, down from $18 billion in 2010.
Radiation release larger than reported
Japan has revised the estimates of the amounts of radiation released in the nuclear catastrophe caused by the March earthquake. The Wall Street Journal reports that the Nuclear Industry Safety Agency, the Japanese watchdog group, indicates that 770,000 terabecquerels of radiation were released compared to the 370,000 previously reported. This is still only 10% of the amount of radiation released from the Chernobyl disaster in which more than 5.2 million terabecquerels were released.
North Korean dictator tours China
North Korean dictator Kim Jong Il recently toured China via armored train, according to the USA Today. North Korea is reportedly seeking economic cooperation with China. China, however, is not willing to merely give aid but expects North Korea to develop its own economy. North Korea has never allowed foreign investors into the country. Its own news agency is reporting that it has formed an agreement with China to develop two towns along the Chinese border. Critics claim that the deal will not come to fruition. North Korea faces the likelihood of massive famine because the U.S. and South Korea have stopped supplying food to North Korea due to recent attacks on South Korea. Six million of the 24 million citizens are likely to be at the point of starvation and are reportedly eating twigs, leaves and grass.