Economy Update

Every day the current events around the world have some sort of effect on the U.S. economy for better or worse. From new home sales to the economy of Japan, these current events have an impact, small or large, on the U.S. as an economy and as individuals.

One thing that should be concerning is that the United States’ oil consumption has increased to 500,000 barrels per day during this year alone. The amount of domestic rigs has fallen from around 1,600 to right about 600. Showing that domestic supply has fallen but demand has not. This means that quite a few U.S. dollars are going to be going to OPEC and other foreign oil suppliers. With the U.S. markets already in a mud pit, the last place we want American money to go is overseas.

One thing that is specific to Southern California residents is the weight of the Japanese recession. Japan’s retail sales are down 0.2% in September while their industrial production increased 0.1% in the same month. Japan has been the top foreign investor into Los Angeles county and the second largest trading partner with the region this year alone. The Japanese trade with the port of Los Angeles is down by 1% while the trade with the port of Long Beach is down by 11%, according to WorldCity Inc., a Coral Gables, Fla., research firm. Japan accounted for 10% of Southern California’s imports. Although it isn’t drastic, this blow is certain to be felt in the U.S. economy, specifically for Southern California residents.

In August, the housing market predicted a modest increase in new home sales of about 20,000 from last year to this year. Instead of an increase, new home sales dropped from 529,000, to 468,000. This is especially alarming because these numbers are drawn from relatively small sample sizes which are then annualized, which means that even a change in a few hundred units is significant, let alone a few thousand. Although these are only projected units and aren’t necessarily facts, it’s definitely not evidence of growth in the economy.

These among many other current events are important to be aware of and know how they can potentially affect you and your livelihood. Knowing that you’re prepared for these potential and inevitable economic blows is priceless. Make sure you know that your money is safe today.