Friday, March 19, 2010

Economics Group Weekly Economic & Financial Commentary Wells Fargo Securities $WFC

U.S. Review
Continued Economic Recovery, Low Inflation

Global Review
Greece Not Out of the Woods Yet

•Although euro-zone finance ministers offered a few more details this week, a lending package for Greece is still woefully short on specifics. We still don’t know how much money other countries are willing to pony up. “Bailing out” Greece is unpopular in most countries, so politicians are reluctant to discuss details at this point.

•In our view, the crisis will continue to simmer on the backburner for some time. Until a concrete lending program is announced or economic growth strengthens significantly, investors likely will remain worried about Greek fiscal prospects.

In our 2010 annual outlook we forecasted a growth rate of 2 percent plus for 2010 and overall consumer inflation of around 2 percent as well. This week’s economic releases support that outlook.

On the real economy side, three economic releases this week—industrial production, the Philadelphia Fed index and the leading economic index—all support the view of continued economic growth. Over the last three months, industrial production has grown six percent plus with continued solid gains in information processing equipment. Cold weather—isn’t it always cold in February?—pushed up utility output for a third straight month. Taking a different slice of the data, consumer goods and business equipment have been up over the last three months while construction supplies continue to decline.

WeeklyEconomicFinancialCommentary_March192010 _3_

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