Israel's construction un-bust
The headlines have been screaming that the Israeli economy is in recession -- as if anyone needed to be told that. The reason why this is a news item is because the data for GDP growth in the first quarter of 2009 (published on 17/5) showed, to no-one's surprise, that this key measure of economic activity shrank at an annualised pace of 3.6% in January-March 2009. The fact that this was the second successive quarter of negative economic growth confirms that Israel (too) is in a recession - because two straight down quarters is the standard definition of a recession. Beyond that statistical fact, there was no real news. The declines registered in all the main components of GDP had been presaged by the regular flow of economic data over the previous weeks and months. Thus we learnt afresh that imports and exports dropped sharply - with imports declining faster, so that the trade deficit actually improved - and also that private consumption and investment both fell. Investments were one of the sectors hammered hardest: 'gross fixed capital formation', as investment is termed in the GDP jargon, fell at an annual rate of 27.8% in the first quarter. That sounds horrendous, and it is, but it means that if the rate of decline from the previous quarter, of 7.8%, was maintained for four straight quarters, then investment would have fallen by 27.8% in a year. Fortunately, that is unlikely. The race to the bottom - and what lies beyond
Thursday February 20, was another important day in the markets - especially the US. The main reason is that the Dow Jones Industrials Index closed below its November lows. In technical parlance, this is known as 'making a new bear market low' and, by so doing, the market has 'confirmed' that the bear market is still in force. That confirmation was reinforced by the fact that the market fell further on Friday, rather than bouncing back. This reflects technical analysis principles which demand that every trend has to 'confirm' itself every so often, by pushing to new extremes, whether on the upside or downside. If that doesn't happen, the trend ultimately ceases to be in force and the market may be described as in a 'sideways trend', until such time as it makes a big move in the opposite direction to the previously-dominant trend - at which point it is legitimate and correct to define a new major trend as being underway. |
 |
 
Combined feed for all JPost.com blogs
Top Rated Posts
Tags:Blogroll |
Comments (1)
