Bill Losey’s Weekly Economic Update for Nov. 15th, 2010

A BIT OF OPTIMISM AMONG CONSUMERS
The initial November Thomson Reuters/University of Michigan consumer sentiment survey was released Friday. The index rose to 69.3, surpassing the 69.0 forecast by economists polled by Reuters. (Last month’s final reading was 67.7.) On average, respondents expected inflation of 3.0% across the next 12 months, compared to 2.7% in last month’s survey. Will this public perception give retailers a signal to subtly raise prices?

WILD WEEK FOR GOLD & OIL
Oil futures hit a 25-month peak last week, and then fell $2.93 on Friday (and $1.97 on the week) to a Friday close of $84.88 per barrel on the NYMEX. Oil lost 2.27% last week for its worst week since mid-September. After cracking the $1,400 ceiling last week, gold fell $37.70 on Friday; it was down 2.28% on the week and settled at $1,365.40 per ounce Friday on the Comex.

WHITE HOUSE EYES SAVINGS; USPS CALLS FOR HELP
A White House deficit commission has proposed $200 billion in spending cuts by 2015 in order to reduce the federal shortfall. Some of the listed recommendations include saving $13.2 billion by cutting federal payrolls by 10%, saving $16.0 billion by doing away with all earmarks, and saving $9.2 billion by freezing noncombat military pay at 2011 levels until 2015. On Friday, the U.S. Postal Service claimed it would go broke by the end of 2011 without service cutbacks and postal rate increases, announcing an $8.5 billion loss for the latest fiscal year.

EQUITIES STRUGGLE
Two factors weighed heavily on stocks last week: anxieties about China raising interest rates, and worries about the debt burdens of Ireland, Portugal, Greece and Spain. So from November 8-12, the three major U.S. indices performed as follows: DJIA, -2.20% to 11,192.58; S&P 500, -2.17% to 1,199.21; NASDAQ, -2.36% to 2,518.21.