Weather Woes Sow Worry
on Wheat by Liam Pleven and Biman Mukherji, The Wall Street Journal,
September 13, 2012, Section 3, page 1, www.wsj.com Significant droughts this summer devastated corn and soybean crop production in the United States and now the concern has shifted to wheat. However, this problem is not solely manifested within the U.S. It has grown on a more global scale. This past Wednesday, the U.S. Department of Agriculture lowered its previous estimates of global wheat production by 5.2% in 2012-2013. If the weather continues to remain dry, this could mean a global hike in wheat prices, which will translate to a hike in all food products that use wheat. Since wheat is a staple food around the world and major source of nutrition for the poor, a price spike could increase the number of people who go without food. This will also have a negative impact on the economy because less and less people will be purchasing wheat products.
Fed Acts to Fix Jobs
Market by Jon Hilsenrath and Kristina Peterson, September 14, 2012, Section
1, page 1, www.wsj.com In the wake of the recent decline in annual household income, the Federal Reserve has decided to take action in order to help boost the economy. They have launched an aggressive bond buying program which will consist of open-ended commitments to buy mortgage-backed securities and a promise to keep interest rates low for years. This will hopefully lessen the burden on lower-income families and encourage them to spend that money saved on other products in the industry.
Crude Oil Climbs to
4-Month High by Dan Strumpf, September 15, 2012, Section 2, Page 4, www.wsj.com After the Federal Reserve announced their new bond buying program, oil prices reached a four-month high and briefly topped $100 a barrel. The Federal Reserve's announcement caused the dollar to slide, which hiked up the price of dollar-denominated commodities, such as crude oil. Oil prices rose 2.6% this month in anticipation of the Fed's actions. Oil is a product that will always be in demand, unless green energy becomes more popular. If oil prices do not decline soon, this will cause an issue for many companies and consumers because prices of products will rise. It will also hurt the automobile industry because if oil is so expensive, less people will be encouraged to drive.
Consumers Offer Upbeat
Outlook Despite Toll of Rising Gas Prices by Josh Mitchell and Shelly
Banjo, September, 15, 2012, online, www.wsj.com Despite the rising gas prices, the overall consensus of Americans towards the economy is positive. A gauge of consumer confidence was released Friday which showed its highest reading since May. However, separate government reports on price inflation and retail sales were not as enthusiastic, revealing that the increase in gas prices was still a concern. Obviously, our economy is not completely in the clear, but it definitely has improved from where we were a few years ago. There is definitely improvement to be had, but a seemingly positive attitude towards the economy will promote consumers to purchase more goods which in turn will help further our economy's progress.
Number of the Week:
Top 20% of Earners Take Home 51% of All Income by Conor Dougherty,
September 15, 2012, online, www.wsj.com Annual household income dropped this week and reports have been released showing that 51.1% of all income is going towards the top 20% of earners. This is widening the gap between the middle class and the upper class. As more families more into lower income categories, another possible cause are the baby boomers who are beginning to leave the work force and move into retirement. Since this is such a large group, the negative impact on average household income will continue to decline. As Medicare grows, this will place a burden on the younger generation and the government since this is a government and tax supported program.
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