Sikka on why Indians shouldn’t worry about jobs

Vishal Sikka

With a new World Economic Forum study warning about a net loss of over five million jobs in next five years because of the fourth industrial revolution, IT giant Infosys CEO Vishal Sikka on Wednesday said there are huge employment opportunities in India but there is a need to impart right skills and training.

Speaking at a session on ‘The Promise of Progress’ on the job market impact of the fourth industrial revolution, Sikka said there would certainly be disruptions but the new technology would not necessarily create imbalances if right kind of education, connectivity and training is provided to the people.

“There was a big startup event this weekend and it showed there are huge opportunities available in India.

“Do we prepare people for where the world is going to be? We need to impart skills. “There has to be disruptions. It should be about what the world is going to be and not what the world used to be,” he said.

Sikka dismissed suggestions that the new technology and connectivity would create imbalances.

“If we take a longer and deeper view, the more people have access to jobs, there is more likelihood that the imbalances will go away,” he said.

Noting that connectivity has to be viewed as a human right, he said, “if we equip people in the right way, there is no need to worry”.

“I am convinced the longer term solution in education, connectivity and creating right skills.

“What we need to do is promote entrepreneurship and put in place right kind of policies,” the Infosys chief added.

India did well in year of global economic turmoil: Finance Minister Arun Jaitley

Finance Minister Arun Jaitley dismissed grumblings about the economy not having taken off as "cynicism - a way of life in India".NEW DELHI: Voicing “great satisfaction” over performance of the Indian economy in “a year of turmoil and volatility” globally, Finance Minister Arun Jaitley today dismissed grumblings about the economy not having taken off as “cynicism — a way of life in India”.

Looking back at 2015, Jaitley said India has been the bright spot with growth prospects of 7-7.5 per cent despite global slowdown and adversities, and expressed optimism that the growth rate which is “quite good” would improve further in the months to come.

India has responded well to the challenge posed by the slowdown in global economy, he said, but acknowledged that “there are areas (in which) we have to respond faster”.

“As the year ends, I look back with a sense of great satisfaction,” Jaitley told PTI in an interview, during which he underlined that India’s fiscal fundamentals are “extremely sound”.

Outlining his priorities for the New Year, the Finance Minister said he would continue with structural reforms and the priorities would include GST, rationalising direct taxes, further easing the system of doing business.

“After having done that, I would like to concentrate essentially on three things – more money for physical infrastructure, more money on social infrastructure and lastly more money on irrigation because that is a neglected sector.”

Asked about murmurs that the economy has not really taken off, Jaitley dismissed such grumblings as without merit and said that “the revenue collections do not go up without the economy taking off”.

“Cynicism is a way of life in India. You can question any other data but you cannot question the actual rise of revenue and the actual rise of revenue is showing that the economy is doing better,” he said.

Asked whether the Indian industry was also prone to such cynicism, Jaitley said, “Well, I think a section of the Indian industry has overstretched itself and those who have overstretched themselves see this as a universal problem.”

Besides global headwinds due to slowdown in China and weakness in commodity markets, India also had to face domestic challenges in form of two continuous weak monsoons and slower private sector investment, making the management of the Indian economy a “great challenge for us,” Jaitley said.

“Private sector investments continued to be slow because the private sector had overstretched itself… they had surplus capacity and demand was slow.”

The government responded well to these challenges by stepping up public investment, which has been complemented by 40 per cent rise in FDI and a rebound in consumption, he said.

The government has utilised the savings from low oil prices for infrastructure spending, resulting in sectors like highways, rural roads and railways getting a significant step-up of investment. Port areas have also been targets of private sector investments, he said.

“As a result, despite the global slowdown and adversities, India became the bright spot in the global economy with a growth prospect of 7-7.5 per cent. It is lesser than our targetted 8 per cent. I have no doubt if we have had a normal monsoon, we would have been close to the target.”

Jaitley said the services sector continues to be strong, while “revival of manufacturing and the IIP (Index of Industrial Production) are high points of this year”, which is also reflected in record rise in indirect tax collections.

“Inflation remains under control, the repo rate (the policy interest rate decided by RBI) has come down this year by 125 basis points. Foreign exchange reserves were as good as always. Compared to the rest of the global economies, we were far more stable vis-a-vis the dollar,” Jaitley said while summing up the macroeconomic trends for 2015.

“The year 2015 has been an extremely challenging year as far as economy is concerned, because the world economy has been going through a downturn,”he said, while adding that imports as well as exports have shrunk due to decline in prices and shrinking of the global trade.

“International trade has contracted. So both imports and exports have shrunk. In India context, the shrinkage is more in value (terms) because the prices are low and to some extent in volumes because of the shrinkage of global trade,” he said.

Jaitley further said that the government has continued with its reform process including on fronts like FDI norms and ease of doing business, while some of the old taxation issues are being resolved “one by one”.

“The rationalisation of subsidies in a big way has taken place. The methodology of distribution of natural resources has become extremely fair… These are important positives which have emerged as far as our economy is concerned.”

On way ahead for the Indian economy, Jaitley said a “fast moving economy” will help generate more revenues for investing in physical and social infrastructure as well as irrigation.

“I have already been constrained by a 42 per cent (tax) collections going to the states on recommendation of the Finance Commission. Next year, I am constrained by Rs 1,02,000 crore extra spending because of the Pay Commission. So, I have to always keep counting my balance resources,” he said.

On some states requesting deferring the Pay Panel recommendations due to lack of resources available with them, Jaitley said a committee of secretaries was already working on the implementation.

“The Pay Commission has already raised the expectations of government servants and defying that expectation is very difficult. I don’t grudge the government servants being paid more because after all they are supposed to work harder and work honestly.”

Asked whether it would be implemented from January 1, Jaitley said, “The expert committee will decide (that). The Secretaries Committee is already working on the matter”.

Asked whether there have been any disappointment, Jaitley said, “I would say fighting a slowdown is a challenge, it can never be a disappointment and we have responded to the challenge”.

On areas where the government needs to respond faster, he said these include various structural changes.

“We need to bring our direct taxes at par with what is happening elsewhere in the world… I had hoped that we complete the process of GST this year,” Jaitley said, while putting the blame on Congress for delaying this reform with its “plain and simple obstructionism”.

“In fact, a national party adopting a disruptionist role and getting a sadistic pleasure in stalling a reform which could add to India’s GDP is a disappointment.

“It used disruption in order to obstruct and I think it is a very bad precedent for India’s Parliamentary democracy if this is followed in state legislatures, if this is followed by future opposition parties, I think it would be a bad trend to set.”

Jaitley further said the Parliament itself would have to find alternative methods of approving legislation if the Congress party does not change its tactics.

Asked about such alternatives, he said, “I hope it does not come to a stage where all legislations are passed in a din or you rely on money legislations, you rely more on executive decision making”.

Stating that some of the legislations have been passed even without discussion, Jaitley said it was not the “ideal way how laws should be passed”.

On his comments about the role of Rajya Sabha, Jaitley said, “I have frankly not argued for a fresh look at Rajya Sabha. Rajya Sabha is essential and part of India’s basic structure. The structure of Rajya Sabha cannot be altered.”
Asserting that he would never suggest altering this structure, Jaitley said, “I am only on the impact on Parliamentary democracy if the indirectly elected house continues to veto a directly elected house”.

“… Rajya Sabha as a house which is supposed to maintain a check and balance, can once in a while disagree with a legislation passed by the Lok Sabha. It can be referred to a joint session, but every other law they cannot disagree with. It cannot happen too frequently.
“And if the indirectly elected house, for political and collateral reasons, vetoes a directly elected house, it does not augur well,” he said.

Talking about the system in other countries, Jaitley said, “In Britain, they follow a pattern that the Upper House can send it (a bill) back once for reconsideration to the Lower House and if the Lower House, which works on a mandate and which has been elected on a manifesto, second time approves it, the Upper House always accepts it.”

Asked whether that can be followed in India too, he said, “That could be accepted as a possible precedent.”

On rising bad loans of banks, Jaitley said it was “a problem inherited from the previous regime”.

“We are addressing each one of the sectors – the highways, the infrastructure contracts, the discoms. There is a lot of activity on each and all of these fronts. There is a system of recapitalisation of banks, but the problem is large and therefore, we will have to continue this effort and probably even improve on these efforts,” he added.

EUR/USD falls slightly, amid mixed economic data on both continents

EUR/USD fell by more than 0.40% on Wednesday but closed above 1.09EUR/USD fell mildly on Wednesday halting a three-day winning streak, as currency traders reacted to a flurry of mixed data on both sides of the Atlantic.

The currency pair traded in a broad range between 1.0871 and 1.0958, before settling at 1.0910, down 0.0047 or 0.43% on the session. EUR/USD has been virtually flat since the Federal Reserve ended a seven-year zero interest rate policy last Wednesday when itapproved its first rate hike in nearly a decade. During a volatile month of trading, the euro has gained more than 3.25% in value against is American counterpart.

EUR/USD likely gained support at 1.0538, the low from December 3 and was met with resistance at 1.1352, the high from Oct. 22.

The dollar held onto gains from the morning session amid a weak batch of data in the euro zone. In France, third quarter GDP was revised down by 0.1% to 1.1% annually, providing a harbinger of potential slowing economic growth in the final quarter of the year. The subdued reading was accompanied by downbeat data in the U.K. where GDP increased by 2.1%annually in the third quarter, decelerating from yearly growth of 2.3% in the previous quarter. It marked the worst third quarter in the U.K. since 2013.

In the U.S, the Department of Commerce’s Bureau of Economic Analysis (BEA) said U.S.personal income ticked up by 0.3% in November, marking the eighth consecutive month that the figure moved higher. Analysts forecasted gains of 0.2% last month, following a robust increase of 0.4% in October. It came amid an acceleration in wages and salaries for government workers and an $11.6 billion bonus paid to United Auto Workers employees, one of the nation’s largest unions.

As the labor market continues to tighten, nearing full employment, wages and salaries have also increased exponentially. In November, wages rose by 0.5% following gains of 0.6% a month earlier. The strong gains in personal income should support consumer spending and bolster economic growth over the next year. Consumer spending, which represents roughly two-thirds of U.S. economic activity, increased by 0.3% in November, after remaining flat a month earlier.

In terms of inflation, the Personal Consumption Expenditure (PCE) price index remained flat in November, below consensus expectations for a 0.1% gain. On a yearly basis, though, the PCE price index increased by 0.4%, above 0.2% annual gains. The Core PCE index, which strips out volatile food and energy prices, inched up by 0.1% last month, in line with consensus estimates. Over the last year, core prices are up 1.3%, unchanged from October’s reading. Core PCE prices, the Fed’s preferred gauge for inflation, have fallen below its targeted goal of 2% for every month over the last three years.

The relatively strong inflation data, however, could compel hawkish members of the Federal Open Market Committee (FOMC) to push for another rate hike during the first quarter of next year. In its December monetary policy outlook, the FOMC forecasted that its benchmark Federal Funds Rate could rise by 1.0% over the next 12 months to 1.5% by the end of 2016. On Wednesday, the CME Group’s (O:CME) FedWatch placed the probability of a quarter-point hike in March at 53.6%.

The U.S. Dollar Index, which measures the strength of the greenback versus a basket of six other major currencies, rose by more than 0.45% to an intraday high of 98.66, before closing at 98.38. Earlier this month, the index eclipsed 100.00 to reach its highest level in more than 12 months.

Weak Business Spending Plans Point to Slower Economic Growth

FILE - In this March 13, 2015 file photo, workers inspect the new aluminum-alloy body Ford F-150 trucks before they get painted at the company's Kansas City Assembly Plant in Claycomo, Mo. The Commerce Department releases its September report on durable goods on Tuesday, Oct. 27, 2015. (AP Photo/Charlie Riedel, File)WASHINGTON — A gauge of U.S. business investment plans fell for a second straight month in September, pointing to a sharp slowdown in economic growth and casting more doubts on whether the Federal Reserve will raise interest rates this year.

Other data released Tuesday showed consumer confidence slipped this month amid worries over a recent moderation in job growth and its potential impact on income. Housing, however, remains the bright spot, with home prices accelerating in August.

That should boost household wealth, supporting consumer spending and the broader economy, which has been buffeted by a strong dollar, weak global demand, spending cuts in the energy sector and efforts by businesses to reduce an inventory glut.

The drift of data suggests that the first time the Fed will raise rates will be in the spring.

The continued weakness in business spending, together with the slowdown in hiring, could make it difficult for the Fed to lift its short-term interest rate from near zero in December, as most economists expect. The U.S. central bank’s policy-setting committee started a two-day meeting Tuesday.

“The drift of data suggests that the first time the Fed will raise rates will be in the spring,” said Steve Blitz, chief economist at ITG Investment Research in New York.

Non-defense capital goods orders excluding aircraft, a closely watched proxy for business spending plans, slipped 0.3 percent last month after a downwardly revised 1.6 percent decline in August, the Commerce Department said.

These so-called core capital goods were previously reported to have dropped 0.8 percent in August. The data was the latest dour news for manufacturing, which has borne the brunt of dollar strength, energy sector investment cuts and the inventory correction.

Manufacturing accounts for 12 percent of the economy.

In a separate report, the Conference Board said its consumer sentiment index fell to 97.6 this month from a reading of 102.6 in September. Consumers were less optimistic about the labor market, with the share of those anticipating more jobs in the months ahead slipping.

There was a drop in the proportion of consumers expecting their incomes to increase and more expected a drop in their income. The downbeat assessment of the labor market follows a step down in job growth in August and September.

Softer Growth

Data ranging from trade to retail sales and industrial production have all suggested a significant loss of momentum in the third quarter.

Housing continues to outperform the economy. A third report Tuesday showed the S&P/Case Shiller composite index of home prices in 20 metropolitan areas increased 5.1 percent in August from a year ago after rising 4.9 percent in July.

U.S. stocks were trading lower, while the dollar was little changed. Prices for U.S. government debt rose.

According to a Reuters survey of economists, gross domestic product likely expanded at a 1.6 percent annual rate in the third quarter, slowing from a brisk 3.9 percent pace in the second quarter. The government will publish its advance third-quarter GDP estimate Thursday.

The dollar has gained 15.4 percent against the currencies of the United States’ main trading partners since June 2014, undermining the profits of multinational companies such as Procter & Gamble (PG) and 3M (MMM).

At the same time, a plunge in oil prices has squeezed revenues for oil field companies such as Schlumberger (SLM) and diversified manufacturer Caterpillar (CAT).

Schlumberger, the world’s No.1 oilfield services provider, said this month it didn’t expect a recovery in demand before 2017 and anticipated that exploration and production spending would fall for a second consecutive year in 2016.

“It is hard for firms to commit to expanding plants and upgrading equipment in a global economy that continues to deliver so many speed bumps,” said Diane Swonk, chief economist at Mesirow in Chicago.

Shipments of core capital goods, which are used to calculate equipment spending in the government’s GDP measurement, rose 0.5 percent last month after a downwardly revised 0.8 percent drop in August. Core capital goods shipments were previously reported to have dropped 0.4 percent in August.

A 2.9 percent decline in transportation equipment spending helped to weigh down overall orders for durable goods — items ranging from toasters to aircraft that are meant to last three years or more — which fell 1.2 percent last month.

Durable goods inventories fell 0.3 percent, the largest drop since May 2013, while unfilled orders declined 0.6 percent.

Inventories Hurt 3Q GDP, Domestic Demand Strong

General MotorsWASHINGTON — U.S. economic growth braked sharply in the third quarter as businesses cut back on restocking warehouses to work off an inventory glut, but solid domestic demand could encourage the Federal Reserve to raise interest rates in December.

Gross domestic product increased at a 1.5 percent annual rate after expanding at a 3.9 percent clip in the second quarter, the Commerce Department said Thursday.

The inventory drag, however, is likely to be temporary and economists expect growth to pick up in the fourth quarter given strong domestic fundamentals.

“The guts of the report were healthy, they still show strong underlying momentum in the economy and that puts a December rate hike firmly on the table.

“The guts of the report were healthy, they still show strong underlying momentum in the economy and that puts a December rate hike firmly on the table,” said Thomas Costerg, a U.S. economist at Standard Chartered Bank in New York.

The Fed on Wednesday described the economy as growing at a “moderate” pace and hinted at a December rate increase by making a direct reference to its next policy meeting. The U.S. central bank has kept benchmark overnight interest rates near zero since December 2008.

Stocks on Wall Street and prices for U.S. Treasury debt fell on the data. The dollar weakened against a basket of currencies.

The economy has struggled to sustain a faster pace of growth since the end of the 2007-09 recession, with average yearly growth failing to break above 2.5 percent. This year, it has faced headwinds from a strong dollar and deep spending cuts by energy firms following a collapse in oil prices.

Businesses accumulated $56.8 billion worth of inventory in the third quarter, the smallest since the first quarter of 2014 and down sharply from $113.5 billion in the April-June period. There were declines in manufacturing, wholesale and retail inventories.

The small inventory build sliced off 1.44 percentage points from third-quarter GDP growth, the largest since the fourth quarter of 2012.

“That inventory drawdown represents a bit of a healthy purge that should set the economy up for stronger growth in the coming quarters,” said Jim Baird, chief investment officer for Plante Moran Financial Advisors in Kalamazoo, Michigan.

Consumer Save the Day

The blow from inventories was, however, blunted by bullish consumers, who are getting a tailwind from cheaper gasoline and firming housing and labor markets.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, grew at a 3.2 percent rate after expanding at a 3.6 percent pace in the second quarter. A measure of private domestic demand, which excludes trade, inventories and government spending, rose at a sturdy 3.2 percent pace.

Spending is likely to remain supported by a fairly healthy labor market and low inflation, which is boosting household purchasing power. Income at the disposal of households increased 3.5 percent in the third quarter after rising 1.2 percent in the prior quarter.

“The consumer remains the main engine of economic growth. We expect this dynamic to remain in place,” said Jesse Hurwitz, an economist at Barclays in New York.

A separate report from the Labor Departmentshowed new applications for unemployment benefits last week hovering near levels last seen in late 1973.

With the dollar strengthening, export growth decelerated in the third quarter. The drag was, however, offset by a slowdown in imports, especially automobiles, leaving trade’s impact on growth neutral.

Ongoing spending cuts in the energy sector also undermined growth. A plunge in oil prices has prompted oil field companies like Schlumberger (SLM) and Halliburton (HAL) to slash investment.

Schlumberger said this month it didn’t expect a recovery in demand before 2017 and anticipated that exploration and production spending would fall again in 2016.

Spending on mining exploration, wells and shafts tumbled at a 46.9 percent rate after dropping at a 68 percent pace in the second quarter. Investment in nonresidential structures contracted at a 4 percent pace, also weighed down by weak spending on commercial and healthcare structures.

Despite strong domestic demand, dollar strength and cheaper gasoline dampened inflation.

The personal consumption expenditures price index rose at a 1.2 percent rate after rising 2.2 percent in the second quarter. Excluding food and energy, prices increased at a 1.3 percent pace, slowing from a 1.9 percent rate in the second quarter.

Weak Economic Data Cloud December Rate Hike Possibility

Shoppers On The Magnificent Mile Ahead Of Consumer Confidence Figures
WASHINGTON — U.S. consumer spending in September recorded its smallest gain in eight months as personal income barely rose, suggesting some cooling in domestic demand after recent hefty increases.

The Commerce Department data and another report Friday from the Labor Department also showed weak inflationary pressures, which would argue against the Federal Reserve raising interest rates at the end of the year.

U.S. central bank policymakers this week put a rate hike in December on the table with a direct reference to their final meeting of the year. The Fed has kept benchmark overnight interest rates near zero since December 2008.

It will be difficult for the Fed to justify a rate hike at a time when income, consumption and inflation are trending lower…

“It will be difficult for the Fed to justify a rate hike at a time when income, consumption and inflation are trending lower, leaving a December rate hike less likely than prior to the data,” said Jay Morelock, an economist at FTN Financial in New York.

Consumer spending, which accounts for more than two-thirds of U.S. economic activity, edged up 0.1 percent last month after rising 0.4 percent rise in August. September’s consumer spending data was included in Thursday’s third-quarter gross domestic product report.

Consumer spending rose at a brisk 3.2 percent annual pace in the third quarter, helping to lift GDP growth to a 1.5 percent rate. Consumption has increased at a rate of more than 3 percent in each of the last two quarters.

Third-quarter growth was constrained by business efforts to whittle down an inventory bloat, a strong dollar and ongoing spending cuts by energy companies.

Stocks on Wall Street were trading marginally lower, while prices for longer-dated U.S. government debt rose. The dollar fell against a basket of currencies.

Weak Inflation

When adjusted for inflation, consumer spending rose 0.2 percent in September after increasing 0.4 percent in August, suggesting consumption will continue to support the economy through the rest of the year.

That view also was bolstered by a separate report showing the University of Michigan’s consumer sentiment index rebounded in October from September. Consumer spending growth, however, is unlikely to maintain the brisk pace witnessed in the second and third quarters in the absence of a significant rise in income.

Income ticked up 0.1 percent as wages and salaries fell last month, especially in manufacturing, after rising 0.4 percent in August.

“Stronger income growth is needed to support stronger consumer spending,” said Jennifer Lee, a senior economist at BMO Capital Markets in Toronto.

With spending sluggish, inflation was weak last month. A price index for consumer spending slipped 0.1 percent, the first decline since January, after being flat in August.

In the 12 months through September, the personal consumption expenditures price index rose 0.2 percent, the smallest increase since April, after increasing 0.3 percent in August.

Excluding food and energy, prices rose 0.1 percent for a fifth straight month. The so-called core PCE price index rose 1.3 percent in the 12 months through September after a similar gain in August.

Inflation has persistently run below the Fed’s 2 percent target. A report from the Labor Department showed the Employment Cost Index, the broadest measure of labor costs, increased 0.6 percent after a 0.2 percent gain in the second quarter.

In the 12 months through September, labor costs held steady at 2 percent, below the 3 percent threshold that economists say is needed to bring inflation closer to the Fed’s target.

“We are still in a modest compensation-gain environment and that implies inflation is not likely to accelerate sharply soon,” said Joel Naroff, chief economist at Naroff Economic Advisers in Holland, Pennsylvania.

“The labor market may be tight but firms appear to be in no great hurry to raise compensation.”

Economic Data Seen Supporting December Interest Rate Hike

Trade Gap
WASHINGTON — U.S. private employers maintained a steady pace of hiring in October and a jump in new orders buoyed activity in the services sector, suggesting the economy was strong enough to support an interest rate hike from the Federal Reserve in December.

The economic outlook was further brightened by another report Wednesday showing the trade deficit hit a seven-month low in September as exports rebounded, a tentative sign the worst of the drag from the stronger dollar may be over.

You have a set of data thus far that tells the Fed that things are in good shape going into the fourth quarter and is giving them the green light to go.

Fed Chair Janet Yellen told lawmakers Wednesday the U.S. economy is “performing well” and aDecember rate hike could be justified.

“You have a set of data thus far that tells the Fed that things are in good shape going into the fourth quarter and is giving them the green light to go,” said Jacob Oubina, senior U.S. economist at RBC Capital Markets in New York.

The ADP National Employment Report showed private payrolls increased 182,000 last month on top of the 190,000 jobs added in September. Job gains last month were broad-based, though manufacturing lost 2,000 positions.

The ADP report, which is jointly developed with Moody’s Analytics, was released ahead of Friday’s more comprehensive employment report from the Labor Department.

According to a Reuters survey of economists, nonfarm payrolls increased 180,000 in October, well above the average gain of 139,000 jobs for August and September.

Economists say the expected October job gains would be seen as sufficient for the Fed to raise its benchmark overnight interest rate from near zero at its Dec. 15-16 policy meeting. The unemployment rate is forecast to be steady at 5.1 percent.

In a separate report, the Institute for Supply Management said its non-manufacturing index rose to 59.1 last month from a reading of 56.9 in September. A reading above 50 indicates expansion in the sector, which accounts for more than two-thirds of the U.S. economy.

A gauge of new orders received by services industries rose a sturdy 5.3 percentage points to 62 and employment increased to 59.2 percent from a reading of 58.3 in September. Fourteen services industries reported growth last month. Only mining reported a contraction.

“It suggests that the service sector has hardly skipped a beat despite signs of weakness in other parts of the economy,” said Millan Mulraine, deputy chief economist at TD Securities in New York. “The U.S. economic recovery is off to a very strong start in the fourth quarter after the subpar performance in the third quarter.”

The economy expanded at a 1.5 percent annual rate in the July-September period, hurt by a slow pace of inventory accumulation and ongoing spending cuts by energy firms.

The dollar rose Wednesday against a basket of currencies, getting an additional boost from Yellen’s comments. U.S. stocks and prices for Treasury debt fell.

Improving Fortunes

The economy’s improving fortunes also were underscored by a report Tuesdayshowing auto sales hit a seasonally adjusted annualized rate of 18.2 million vehicles in October, the best performance for that month since 2001.

That was reinforced by a third report on Wednesday from the Commerce Department showing the trade gap fell 15 percent to $40.8 billion in September, the smallest deficit since February. Lower crude oil prices also helped to curb the import bill.

The dollar has gained 16.8 percent against the currencies of the United States’ main trading partners since June 2014, undercutting export growth. Lackluster global demand also has put a damper on exports.

Exports in September rose 1.6 percent to $187.9 billion, with exports of services hitting a record high. There were increases in exports of capital goods and automobiles. Exports of industrial supplies and materials, however, were the lowest since October 2010.

Imports fell 1.8 percent to $228.7 billion, the lowest level since February. They had received a boost in August from Apple’s new iPhone model. Imports of industrial supplies and materials fell to near a six-year low.

Petroleum imports were the lowest since May 2004, reflecting increased domestic energy production and lower oil prices. Petroleum prices averaged $42.72 a barrel in September, down from $49.33 in August and $92.52 in September 2014.

Imports from China hit a record high in September, leaving the politically sensitive U.S.-China trade deficit at an all-time high of $36.3 billion. That was up 3.8 percent from August.

Economic Good Tidings for Which We Are Grateful

Happy Thanksgiving greeting cardAs Thanksgiving approaches, we think about all of the people and things in our lives that we are thankful for — but how often do we think about being thankful for our economic good fortune? The 24-hour news cycle can make it seem like we are in a constant state of economic crisis. However, with some holiday perspective, we can see some of the more positive aspects of the US economy.

Do you need some help getting into the optimistic mode? We are here to help. Consider the following bits of good economic news to put you in a thankful frame of mind.

  • Shrinking deficit — We may still be increasing our debt, but at least we are headed in the right direction by decreasing our deficits. The Congressional Budget Office reports that the budget deficit for fiscal 2015 was $435 billion. That is down from $483 billion in 2014, and well below the trillion-dollar deficits of 2009-2012. As much as the sequestration was ridiculed, it can take some credit for the decreasing deficit via throttling back government spending.
  • Job growth — According to data from the Bureau of Labor Statistics, the United States has reported a greater number of jobs every month since early 2010 — 68 straight months of job growth in the private sector. Unemployment has reached 5 percent, the lowest it has been since February of 2008. It may be slow growth, but it is still growth, and that is certainly something to be thankful for if you have been unemployed at any time over the last few years.
  • Low gas prices — The oversupply of crude oil has sent gas prices plunging to levels not seen in years. As of this writing, the national average price for a gallon of gas is $2.20 and is predicted to dip all the way to $2.03 in December before rising slightly. Compare that to the average national gas price of $3.68 per gallon in 2012. Even better, prices are expected to stay relatively low at least through 2016 with a $2.38 per gallon average.
  • Healthy stock market — Stocks took a mid-year plunge resulting in a correction (a 10 percent loss in value), but the market has rebounded since then. It is back to the values at the beginning of the year with the Dow Jones Industrials near 18,000. For perspective, think back to Black Monday on October 19, 1987, when the Dow plunged 22.6 percent to reach a low mark of 1,738.70. Since then, the Dow has grown tenfold in value. You would have to go back almost four decades to find another tenfold increase in stock value.
  • Low inflation — Low oil prices played a large role in 2015’s near-zero inflation rate, but the rate has been relatively low for a long time — averaging close to 2.8 percent over the last 30 years. For a contrast, consider 1970-1982 when inflation averaged 7.7 percent and hit a peak of 14.8 percent in March 1980. Inflation eats away at your purchasing power over time, and forces you to earn even greater returns on your investments to meet your goals for savings and retirement.

History tells us that all of these positive conditions will change at some point, so enjoy these economic upsides while we have them. It is easy to be a cynic and a pessimist about the overall economy, but why dwell on the downside? Join the glass-half-full club and you will find plenty of things to be thankful for, whether the subject is economic factors or other life situations. We at MoneyTips wish you all a Happy Thanksgiving.

5 Steps to Plan Your Retirement

Happy couple smiling on beach
Only 1 in 3 Americans in their 50s has ever tried to plan for retirement, according to a National Bureau of Economic Research study. And a third of those who try to plan admit that they either gave up or failed miserably. The result: Barely 20 percent of pre-retirees have a useful plan for retirement.

But making a plan isn’t all that difficult. Remember, it’s not written in stone, so you don’t need to get bogged down in details, and you don’t have to worry about getting everything right. It’s like making an outline for an essay. The outline gives you a rough idea of where you’re going. But you don’t actually write the essay until you start living your way through retirement. Here are five items to include in your retirement outline.

1. Manage your expectations. One rule of thumb says you’ll need 70 percent of your pre-retirement income to live comfortably in retirement. But that’s just a general rule. If you want to travel, join a golf club or help send your grandchildren to college, you might need more. But many people live on less, especially if they move to a less expensive area of the country and follow a simpler lifestyle.

2. Account for your changing expenses. Housing expenses tend to go down as we age, as our mortgage gets paid off and maybe we downsize to a less expensive home. Most other expenses also decrease, including costs for food, clothes, recreation and insurance. But medical care is one expense that goes up. According to the Center for Retirement Research at Boston College, a retired married couple spends up to $260,000 over their lifetimes for out-of-pocket health expenses, including long-term care. And don’t forget to factor in inflation, which has recently been running near zero, but will more likely average 3 to 4 percent over the course of your retirement.

 3. Don’t shortchange your life expectancy. Surveys show that over half of pre-retirees underestimate how long they’re going to live. Women underestimate more than men. According to the Social Security Administration, the average 65-year-old male can expect to live to age 84, and the average female will make it to 87. But you really need to plan for more than that. One out of five 65-year-old males and one out of three females will live to age 90. Your savings may run out, but Social Security won’t. That’s one reason to delay taking benefits as long as you can, up to age 70, so they accumulate for a larger payout later in life. But it’s not just the money. You may have more time than you think. So sitting around and relaxing may not be all you want to do in retirement. You likely have time to start a business, travel the world, develop a new skill and find a new hobby.

4. Be ready for a reality readjustment. You may have a plan, but sometimes things don’t work out the way you expect. For example, there is a considerable gap between when people think they’re going to retire, and when they actually retire. The median expected retirement age is 65, according to a Gallup poll. But the actual retirement age is 61, because layoffs and health issues cut many careers short. The Gallup poll also found that 70 percent of American workers think they will continue to work in some capacity after they retire, but it turns out that many people can’t find a suitable job. Only about 25 percent of retirees work in retirement. So whether your plans involve working or something else, do a little advance homework to see if your retirement dreams match up with reality.

5. Don’t be too proud to get help. First of all, you should find a lawyer to draft your will as well as any health directives you may need. Then, whatever your ideas about retirement, start discussing them with your spouse or significant other. You might want to buy a boat and sail around the world, while your partner may want to settle down and babysit grandchildren. A plan is just a pipe dream until you start talking and heading in the same direction. Talk over your plans with your children and friends so they know what you’re thinking. They may have some ideas or advice for you. And finally, if the world of finance seems too complicated, don’t hesitate to consult an accountant or financial adviser to help turn your retirement dreams into retirement reality.