Warren Buffett says U.S. economy gradually improving

OMAHA, Neb., Mon May 6, 2013 — Warren Buffett said on Monday the U.S. economy is gradually improving, helped by the efforts of Federal Reserve Chairman Ben Bernanke to stimulate it.

Speaking on CNBC television, Buffett said the economy is benefiting from improvement in areas that had not previously performed well, particularly homebuilding.

He also said the improved economy is helping create increased traffic for NetJets, Berkshire’s private plane unit.

“The economy is moving forward, but at a slow pace,” he said. “Demand has come back, but slowly.”

Buffett said low benchmark interest rates, including overnight rates that have been effectively zero since late 2008, can help stimulate demand.

“When interest rates are low, and people expect them to stay low for a while, it pushes up the value of all other assets,” he said. “Interest rates act like gravity for all other asset prices.”

Buffett called Bernanke “a gutsy guy” who has “done very, very well in terms of what he has done for the United States.”

Last week, the Fed said it will continue to buy $85 billion of bonds per month to keep interest rates low and spur growth, and said it will step up purchases if needed.

The economy grew at a 2.5 percent annualized rate in the first quarter.

Buffett spoke on CNBC after Berkshire’s annual shareholders meeting over the weekend here.

U.S. economy to grow 2.5 percent this year: Fed’s Evans

CHICAGO, Mon Jan 14, 2013 — The U.S. economy is expected to grow by 2.5 percent in 2013, improving to 3.5 percent growth in 2014, Chicago Fed President Charles Evans said at the Asian Financial Forum in Hong Kong.

Evans also forecast the U.S. unemployment rate would be 7.4 percent this year, easing to about 7 percent in 2014.

Last month, Fed policymakers said they expected GDP growth of between 2.3 and 3.0 percent this year, and 3-3.5 percent in 2014.

FedEx to add 20,000 seasonal workers; sees shipping up 13 percent

MEMPHIS, Tenn., Mon Oct 22, 201 – FedEx Corp said on Monday it plans to hire 20,000 seasonal workers, the same as last year, to handle holiday shipping volume that it expects will be up more than 13 percent.

An ongoing increase in e-commerce and last-minute orders amid a slow-growing economy will mean more deliveries for companies like FedEx that can handle fast shipments.

FedEx, which is closely watched as an indicator of consumer demand and economic health, anticipates handling more than 280 million shipments during the holiday season between Thanksgiving and Christmas.

The company said the impact of an increase in holiday shipments was included in its fiscal 2013 earnings outlook.

For the second time this year, FedEx cut its forecast for global growth in 2013, citing slower growth in China, recession in some European economies and high energy prices.

FedEx can add the same number of seasonal workers as last year because it has been hiring staff throughout 2012, especially at the Ground and SmartPost divisions that will handle the bulk of the holiday volume, said T. Michael Glenn, executive vice president of market development and corporate communications.

December 10 is expected to be its busiest day ever with some 19 million shipments – a 10 percent increase from last year. E-commerce will drive the shipping volume on so-called “Green Monday,” which falls on the second Monday of December and kicks off the heaviest online shipping week of the year.

Geithner welcomes India’s new drive for reform

WASHINGTON, Tue Oct 9, 2012 – U.S. Treasury Secretary Timothy Geithner welcomed New Delhi’s new-found appetite for economic reform on Tuesday, barely three months after Washington had voiced concern about India’s deteriorating investment climate.

Hailing the latest reforms as “significant,” Geithner told a news conference with Indian Finance Minister P. Chidambaram in New Delhi that the policies offered “a very promising path to improving growth outcomes for the Indian economy.”

India’s economic growth has slowed to its lowest in nearly three years and earlier on Tuesday the International Monetary Fund (IMF) sharply cut its projection for GDP growth to 4.9 percent in 2012, one of the lowest official forecasts so far.

“The recent reforms advanced by Prime Minister (Manmohan) Singh and Minister Chidambaram will help provide a foundation for stronger economic growth, an increase in investment, and more widespread gains in income,” Geithner said.

Regulatory uncertainty and policy gridlock have battered foreign corporate investment towards India over the past year, adding to dramatic slowdown in growth.

Fed shooting for stronger jobs rebound: Bernanke

INDIANAPOLIS, Mon Oct 1, 2012 – Federal Reserve Chairman Ben Bernanke on Monday delivered a broad defense of the central bank’s controversial bond-buying stimulus plan, saying its actions are necessary to support a flagging economic recovery.

Bernanke pushed back against the accusations that the Fed’s policy is laying the groundwork for inflation in the future or enabling the government to run large budget deficits.

He said that while the country’s unusually weak economic performance had forced the Fed to resort to less conventional tools after bringing interest rates all the way down to effectively zero, the Fed’s goals of price stability and maximum sustainable employment have not changed.

“These goals mean, basically, that we would like to see as many Americans as possible who want jobs to have jobs, and that we aim to keep the rate of increase in consumer prices low and stable,” Bernanke told the Economic Club of Indiana.

He reiterated the Fed’s commitment, made at the September meeting where it announced a new, open-ended program of asset purchases, to keep a heavy dose of monetary stimulus in place even after the economic rebound appears to gain traction.

“As long as price stability is preserved, we will take care not to raise rates prematurely,” Bernanke said.

Chrysler’s Ram 1500 pickup truck relying on fuel economy, price

DETROIT, Fri Aug 24, 2012 – Chrysler Group LLC is betting that better fuel economy and a moderate 1 percent increase in price from last year’s models will help its line of 2013 Ram 1500 pickup trucks gain ground on industry leaders from Ford and Chevrolet.

The first redesign since 2009 for the biggest-selling vehicle in the Chrysler lineup has led to a pickup truck with more technology and less weight to go along with the usual pickup truck marketing features of power and towing ability, analysts who have driven the new Ram 1500 said.

The Ram 1500 goes on sale in the United States in October.

The starting price will be $23,585, including destination charges, Chrysler said on Friday. The highest-priced version in the Ram 1500 lineup will be a four-wheel-drive “Laramie Longhorn” crew cab at $48,415, including destination charges.

Chrysler, majority-owned by Italy’s Fiat SpA, won’t be able to topple the top-selling Ford Motor Co. F-150 or the No. 2 General Motors Co. Chevrolet Silverado in U.S. sales, but this improved Ram offering may narrow the gap, said analysts.

Edmunds.com director of vehicle testing, Dan Edmunds, said the Ram 1500, even an improved offering, faces an uphill battle against Ford and GM because pickup truck customers have fierce brand loyalty.

“There’s definitely some technical benefits and there’s some real benefits to the customer,” Edmunds said. “They’ve got a good solid product here. The question is – does it overcome years of brand loyalty? That’s hard to say.”

Fed’s Dudley: Too soon to say economy out of danger

SYRACUSE, New York,. Thu Apr 12, 2012 – The disappointing performance of the U.S. labor market in March shows it is too early to conclude the economy is out of the woods, despite months of encouraging economic data, New York Federal Reserve Bank president William Dudley said on Thursday.

The Fed is gathering more data to determine whether last month’s non-farm payrolls report, which showed the economy added way fewer jobs than expected, was just a weather-related setback or a sign the recovery is losing momentum again, Dudley said.

An influential voting member of the U.S. central bank’s monetary policy committee, Dudley appeared to leave the door open to additional stimulus measures as he noted that the economic data also “looked brighter at this point in 2010 and again in 2011, only to fade later in those years.”

Signs that the economic recovery was losing steam have encouraged the Federal Reserve to launch in the past few years two rounds of monetary stimulus measures known as quantitative easing. Bets on a third round have again increased following the latest jobs report.

“The somewhat softer March labor market report that was released last Friday may reflect the earlier positive influence of the mild weather on job creation in January and February, although other less sanguine interpretations are also plausible,” Dudley said in prepared remarks to be delivered at a conference in Syracuse, New York.

On Thursday, the Fed’s vice chair Janet Yellen said further monetary easing could be warranted if the economy proceeds at a slower-than-expected pace.

Automakers see slower U.S. sales growth in 2012 because of weak economy

DETROIT ― Automakers expect lower sales growth in the United States in 2012 because the economy remains weak, even though U.S. auto sales in December were strong.

General Motors Co’s. U.S. sales in December rose about 5 percent, while sales at Ford Motor Co. and Chrysler jumped 10 percent and 37 percent, respectively.

U.S. new-vehicle sales are an early indicator each month of consumer spending, and the United States is the world’s second-largest auto market behind China.

Automakers are headed for full-year 2011 sales of about 12.8 million vehicles, 10 percent higher than 2010. U.S. auto sales have been a relative bright spot, with many cash-strapped consumers forced to purchase cars and trucks to replace vehicles that have been on the road for a decade or longer.

GM, Ford and Volkswagen AG, which reported a 36 percent gain in December, all said growth would increase at a lower rate in 2012.

GM and VW expect 2012 U.S. sales in the range of 13.5 million to 14 million vehicles, which implies growth of between 5 and 9 percent. Ford sees a range of 13.2 million to 14.2 million, excluding medium and heavy-duty trucks.

“The momentum coming out of the fourth quarter gives us confidence that the low end of that forecast is less likely,” Ford economist Ellen Hughes-Cromwick said on a conference call.

Industry research firm TrueCar.com expects 2012 U.S. auto sales to reach 14 million vehicles.

That is still much lower than the nearly 17 million in U.S. annual auto sales averaged in a 10-year period through 2007. In 2008, recession began to take hold and a year later GM and Chrysler filed for bankruptcy.

“Over the course of the fourth quarter of 2011, clear signs emerged that U.S. consumers are more confident and that other underpinnings of our economy are either stable or slowly improving,” GM U.S. sales chief Don Johnson said in a statement.

“It’s now clear that auto sales should continue to grow in 2012, barring a shock to the system,” he added.

Fed must act now to boost economy, Evans says to college group

MUNCIE, Ind. ― The Federal Reserve must take immediate action to inject new life into a moribund U.S. recovery, or risk letting the nation settle into a permanently lower growth path, a top Fed official said on Monday.

“There is simply too much at stake for us to be excessively complacent while the economy is in such dire shape,” Chicago Fed President Charles Evans said in remarks prepared for delivery to the Ball State University Center for Business and Economic Research. “It is imperative to undertake action now.”

Evans, known for his dovish views on inflation, was the only Fed policy maker to dissent last month on the decision to leave monetary policy unchanged. Then, as today, he called for further easing to boost the recovery.

The U.S. central bank has “clearly” missed on its mandate to foster maximum employment and is in danger of undershooting its 2 percent inflation goal for the foreseeable future, Evans said.

Without new monetary stimulus, Evans warned, the U.S. could become mired in a 1930s-like Depression, impairing economic growth permanently as the skills of the unemployed atrophy and businesses defer new investment.

To avoid such a scenario, Evans argued, the Fed should promise to keep interest rates near zero as long as unemployment remains “somewhat above its natural rate,” so long as inflation does not threaten to rise above 3 percent.

While 3-percent inflation may sound “shocking,” he said, research shows that central banks should fight liquidity traps by allowing inflation to run above target over the medium term.

Since high U.S. unemployment is probably due to the effect of a liquidity trap rather than a structural shift in the economy, Evans said, added monetary stimulus is justified.

And if, he said, it turns out that the real problem was indeed structural and easier policy sparks a rise in inflation, the Fed can simply tighten policy before it threatens to reach the hyperinflationary levels of the 1970s.

“We would also know that we had made our best effort,” he said.

Bullard: Fedederal Reserve will act if economy weakens further

ST. LOUIS ― The Federal Reserve will act if the economy weakens further and has the tools to do so, a top Fed official said on Friday.

St. Louis Fed President James Bullard said he expects the economy to grow modestly over the next year — though the sluggish pace leaves it vulnerable to shocks.

“Should economic performance deteriorate, monetary policy will respond,” Bullard said, according to slides of a presentation he was scheduled to make . “The Fed is not now, or ever, ‘out of ammunition’.”

With interest rates near zero, Bullard said, the Fed can support the economy through inflation and inflation expectations and asset purchases are a “potent tool.”

Dealers polled by Reuters earlier this month gave a median chance of 32 percent that the Fed will embark on a third round of quantitative easing.

The Fed said last week it plans to buy $400 billion of longer-term Treasuries and sell the same amount of shorter-term Treasuries by the end of June 2012, in an effort to lower longer-term borrowing costs.

It also said it would support the mortgage market by reinvesting principal payments from its mortgage-related debt into mortgage-backed securities.

Bullard said policy should aim to be more rules-based than it has been since the crisis hit and return to a meeting-by-meeting approach by the Federal Open Market Committee.

“The policy approach over the last several years, with announcements of large dollar amounts, fixed end dates, and rapidly changing tactics, seems fairly discretionary,” he said.

“Returning to a more rules-based approach may provide needed stability to the U.S. macroeconomy.”

Bullard repeated his view that promising to keep rates low for a specific period of time has a number of drawbacks, including the possibility of its hurting Fed credibility.

He also warned against tying monetary policy to the unemployment rate, as Chicago Fed President Charles Evans has suggested.

Unemployment rates have a “checkered history” in advanced economies over the last several decades, he said. In Europe over the last 30 years, for example, the unemployment rose and stayed high.

“If such an outcome happened in the U.S. and monetary policy was explicitly tied to unemployment outcomes, monetary policy could be pulled off course for a generation.”