US stocks head for moderately lower open

Stocks appeared headed for a moderate decline Wednesday as investors awaited another round of first-quarter earnings reports and hoped the numbers would help determine where the economy is headed.

Boeing Co. said its first-quarter earnings rose 38 percent and that its revenue advanced 4.1 percent. The company affirmed its 2008 profit forecast.

Some results arriving Wednesday painted a lackluster picture of certain sectors. Bond insurer Ambac Financial Group reported it swung to a loss of $1.66 billion from a profit of $213.3 million a year earlier. The loss came in part because of charges for bonds backed by soured mortgages. The stock is down about 9 percent in premarket, electronic trading.

Health insurer WellPoint Inc. posted a 25 percent decline in its first-quarter profit and lowered its full-year forecast because of higher medical costs.

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This article addresses the continued decline in the stock market which can be attributed and can contribute to the declines in the United States's economy. This article also addresses Wall Street's concern with how long this recession will last. This article simply delineates numerous stocks that declined which are an example of the declining US economy.

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Fears of Long Recession Rising

There is little debate about whether the U.S. economy is in a recession. The question is how painful and long the downturn will be.

There is a growing fear among some economists that the recession will be particularly bad.

"We just can't believe it's going to be short. The question is how bad can it get? The situation is moving more towards severe than towards mild," said Allen Sinai, chief global economist for Decision Economics.

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This article addresses the concern of the United States's economy and being in a recession. The article states that there is little argument that the US is actually in a recession, but the concern arises when the thought of how long we will be in this recession is mentioned. The article delineates all of the various influences of the recession and the things that have contributed to the downward spiral of the United States's economy.

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New Recession Worry: Bank Failures

As if the economy wasn't already fighting enough strong headwinds, the risk of capital shortfalls and outright failure of the nation's banks is rising.

The Federal Deposit Insurance Corp., the federal agency that backs bank deposits, last week reported the biggest jump in "problem institutions" it has seen since the savings and loan crisis of the late 1980s. While the extent of the problem is still low by historic standards, it identified 76 banks as in trouble - a 52% increase from a year ago.

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According to the article, there is an increased risk for bank failures in the United States due to the current state of the economy. The Federal Deposit Insurance Corporation (FDIC) cited that largest increase in "problem institutions" since the crisis of the 1980s; there has been a 52% increase in "problem institutions" from last year. Many people believe that these seventy-six are just a slight representation of the large number of bank that are on the verge of failing. Many regulators are expecting around two hundred banks to fail within the next few years. The FDIC reassured people that despite the large number of "problem institutions," not that many banks will actually fail if the same thing happens that did last year (fifty "problem institutions," only three failed). Despite this hope that not many banks will fail, the FDIC plans to hire twenty-five staffers so that they will be prepared if and when the bank failures occur. This article shows the current state of the economy in that many banks are on the verge of failure because they do not have adequate resources in order to survive; however, the leaders of organizations that influence the banks are remaining optimistic while still preparing for the worst.

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Wholesale Prices Surge in January

Inflation at the wholesale level soared in January by the fastest pace in 16 years, pushed higher by costs for food, energy and medicine.

The Labor Department said Tuesday that wholesale prices rose 1% last month, more than double the 0.4% increase that economists had been expecting.

The worse-than-expected performance was certain to capture attention at the Federal Reserve, which has chosen to combat a threatened recession by aggressively
cutting interest rates in the belief that weaker economic growth will keep a lid on prices.

But the combination of rising inflation and weaker growth raises the threat of "stagflation," the economic malady that plagued the country through the 1970s, when a series of oil shocks left households battered by the twin problems of stagnant growth and rising prices.

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This article concerns the rising inflation rates that the United States's economy has been experiencing. This increase is attributed to rising costs for food, energy, and medicine. This article also addresses the Federal Reserve's attempt to avoid a recession by drastically cutting interest rates hoping that the "weaker economic growth will keep a lid on prices." Because of these two decisions, there are concerns that the United States's economy will become stagnant, a fear they called "stagflation." There has also been an increase in wholesale prices which the government is going to attempt to fight with one of the previous mentioned methods. The Federal Reserve's role in fighting the stagnation, inflation, and interest rates shall be evident in the next few months to see the measures they take to change these three problems the United States's economy is experiencing.

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Bush: Economy faces risks but foundation sound

President George W. Bush said on Monday the U.S. economy was currently facing heightened risks, but its foundation was solid and its long-term outlook was strong.

"This report indicates that our economy is structurally sound for the long-term and that we're dealing with uncertainties in the short-term," Bush told reporters after signing his annual economic report to Congress.

The report did not alter the White House forecast that the U.S. economy would grow 2.7 percent in 2008, a far rosier picture than private-sector economists who have predicted growth of just 1.6 percent this year.

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According to this article, President Bush believes that the United States's economy is stable for the long run, but does face some risks for the short run. The government has created a stimulus package amounting to $152 billion that supplies tax rebates and business incentives in order to lower the risk of a recession. Bush plans to sign the stimulus package on Wednesday, February 13, and rebates should begin going out in May. This article also focuses on external relations with other nations that can boost our economy, such as free trade agreements with Colombia, Panama, and South Korea. This article concludes with the assertion that we must just allow the economy to adjust and that there is no need to panic. This shows that the United States has learned from the past, as in the Panic of 1907 and the Great Depression. It is best to allow the economy to adjust and level out itself, rather than panicking and taking such drastic measures as withdrawing all of your money from an account. If we all panicked, there would be the possibility of a similar occurrence as the Great Depression.

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