Fitch ratings service lowers forecast for China and India
Fitch Ratings lowered its 2012 growth forecasts for China and India on Friday, citing a deteriorating global outlook. CNBC reports that the September Global Economic Outlook said it expects China to grow 7.8 percent, down from the forecasted 8 percent. India’s growth forecast was lowered to 6 percent, down from the previous 6.5 percent estimate. Fitch believes that a slowdown in both countries will continue but recent action by the Chinese will lessen the danger of China making a hard landing. Asian markets were mostly positive on Friday while European markets are mixed, mostly down. The Dow closed on Thursday up 72 points to 13,485.
The Mexican tomato battle
Estimates are that one out of every two tomatoes consumed in the US come from Mexico, according to the New York Times. On Thursday, the US Department of Commerce said it might be willing to end a 16 year old agreement between the US and Mexico that has kept the price of Mexican tomatoes low for consumers. US growers have said the price is so low that they have been unable to compete. Mexico retaliated quickly saying that Obama was merely trying to win votes in the swing state of Florida, where most US tomatoes are grown. Mexico exports about $1.8 billion of tomatoes and it supports 350,000 Mexican jobs. Florida production in the US dropped from $500 million prior to the agreement with Mexico down to $250 million today. Fears are that this action will result in a full scale trade war with Mexico threatening other products and prices.
Natural gas prices rise 19 percent
Prices for natural gas rose to their highest level since December on Thursday, increasing the price by 19 percent, according to the Wall Street Journal. Stockpiles last winter grew more slowly than analysts expected and the onset of winter now looms. While US production of gas has climbed recently due to the onset of fracking and its ability to release vast stores of gas, US power producers have begun using more of the low cost fuel. Natural gas supplied 34 percent of the nation’s power in July, up from 29 percent a year earlier. Nuclear power plant outages also contributed to higher demand over the summer. Experts indicate that the rising prices now are somewhat technical in nature due to the speculation of supply available as the market gets closer to November when demand spikes.
Water costs increasing
In a study of 100 municipalities, USA Today has found that water costs have doubled for most and tripled for some. The study of water rates for the past 12 years found that costs doubled for more than 20 localities and increased rates will increasingly be passed on to consumers. Prices have not year crested because trillion dollars of costs to upgrade or repair pipes, reservoirs and treatment plants have not yet begun. In Atlanta, San Francisco, and Wilmington, DE, monthly costs topped $50 per month for consumers. Higher costs will continue to be driven by the cost of paying off debt on municipal bonds, increases in the cost of electricity, rising pension costs for water agency workers, tougher federal laws on clear-water mandates, and increased security to protect the water supply. Experts predict increases of 5 to 15 percent every few years.
French approve budget taxing corporations and the wealthy
France’s budget creates a new 75 percent tax on millionaires and tax rates on other high earning households will also increase dramatically, as reported by Reuters. The taxes will recoup 3 billion euros, or $39 billion. It will narrow the fiscal deficit to 3 percent of national output by next year, down from the current 4.5 percent. France did not cut any of its spending on its expensive public programs but merely froze spending. Public debt is at a record of 91 percent of the economy.
Enrollment in graduate programs drops
After surging in 2008, students are choosing not to attend graduate school. According to a report from the Council of Graduate Schools, new enrollment fell for the second year in a row. According to the New York Times, students are choosing not to attend graduate schools because of greater cuts to aid for graduate students and the dismal opportunity for jobs upon graduation. The number of student’s in master’s and doctoral programs, excluding law and medicine, dropped 1.7 percent from the fall of 2010 to 2011. Temporary residents, however, (those from other countries) increased their enrollment by 7.8 percent. Temporary residents make up 16.9 percent of all students in American graduate schools, particularly in technical areas. They represent 45.5 percent of all graduate engineering programs.
Catherine S. McBreen is President of Millionaire Corner. McBreen plans and develops content for Millionaire Corner. Catherine balances editorial content to meet the informational needs of both new and seasoned investors. She designs special monthly surveys on topical issues affecting the economic environment.
McBreen has a B.S. in speech communications from Northwestern University and a J.D. from DePail University College of Law. She is a member of the American Bar Association, the Illinois Bar Association, and the Chicago Bar Association.
Well-known for her expertise in the affluent and retirement arenas, McBreen is a frequent speaker at industry conferences. She has been quoted widely by the financial media, including The Financial Times, The Wall Street Journal, Research, Private Asset Management, On Wall Street, Reuters, Bloomberg News, The Dow Jones Newswires and Worth. Cathy has appeared as a guest on CNBC Closing Bell, First Business Morning News, Neal Cavuto at Fox Business News, ABC and CBS radio.
McBreen is co-author with Spectrem President George H. Walper, Jr. of the book "Get Rich, Stay Rich, Pass It On: The Wealth-Accumulation Secrets of America's Richest Families" (Portfolio, January 2008)
Catherine is the mother of four and is involved in many school and community events.