Japan’s earthquake sends shock waves around the Globe Ken Mahoney
On Friday, an 8.9 earthquake rocked Japan and generated a 30-foot-high tsunami that devastated the northeastern coast. In consideration of the widespread destruction, human suffering is the issue of primary concern at this time. Simultaneously though, it is crucial to consider the economic impact of this natural disaster. What affects are we already experiencing?
Though Japan’s recession-burdened stock markets dropped, the expected scope of the rebuilding effort sent U.S. stocks climbing on expectations for increased demand for materials. Interestingly, we also saw a $3 a barrel drop in oil prices inspired by anticipation of decreased Japanese demand. At the same time, some speculate that the probable increase in Japan’s spending has the potential to propel their already strong currency, the yen, higher as Japanese money invested abroad is applied to rebuilding. How long and to what extent such factors will influence the world economy remains to be seen.
The earthquake also took a heavy toll on the nation’s industries, forcing Toyota, Honda and Nissan to halt operations at most of their domestic plants. These shutdowns come at a time of strong recovery in global consumption (U.S. auto sales clocked their strongest pace in 18 months in February ). Also suspending operations are Panasonic, Sony, and Toshiba. A bigger impact will likely come in the weeks ahead as the disruptions make their way through the global supply chain.
In today’s world, we exist as part of a connected, global community. And although it is fitting to discuss how international situations can have an impact domestically, we should also remember that such analysis cannot diminish Japan’s catastrophic losses. While the weeks and months ahead will gradually reveal the extent of the disaster, it will also give us a chance to demonstrate our humanity and generosity.
SPECIAL NOTE: While we do not want to discourage you from donating toward relief efforts in Japan, we urge you to exercise caution. Whenever a natural disaster strikes, there are always unscrupulous individuals who will attempt to take advantage of the generosity of those who wish to give. Many reputable sources warn donors to be cautious when making contributions to relief agencies and charities. Please visit the Better Business Bureau’s Wise Giving Alliance for more information about how to donate safely. See www.bbb.org/charity.
ECONOMIC CALENDAR: Tuesday – Empire State Mfg Survey, Import and Export Prices, Treasury International Capital, Housing Market Index, FOMC Meeting Announcement Wednesday – Housing Starts, Producer Price Index, EIA Petroleum Status Report
Thursday – Consumer Price Index, BOE Announcement, International Trade, Jobless Claims, Industrial Production, Leading Indicators, Philadelphia Fed Survey
HEADLINES:
Professional-football players disbanded their union and filed a lawsuit against the NFL and team owners on Friday. The collapse of the talks makes it likely that NFL owners will bar their players from turning up to work and withholding their paychecks. The players filed suit for the right to be allowed to work.
U.S. consumer sentiment fell to its lowest level since October 2010 as gasoline prices rose. The preliminary March reading on the overall index on consumer sentiment came in at 68.2, down from 77.5 in February. The numbers were in contrast to the retail sales report earlier Friday, which showed sales posted their largest gain in four months in February.
House Republicans are preparing another stopgap-spending bill that would cut $6 billion from current levels and keep the government running for three more weeks. The stopgap-spending bill would buy lawmakers more time after existing funding authority expires on March 18 to agree on final spending levels for the 2011 fiscal year, which ends September 30. The Senate would have to approve it as well before it could be sent to President Obama to sign into law.
Forbes 2011 Billionaires List breaks two records: total number of listees (1,210) and combined wealth ($4.5 trillion). Mexico's Carlos Slim Helu, added $20.5 billion to his fortune, and is now worth $74 billion. Bill Gates (#2) and Warren Buffett (#3) both added a more modest $3 billion to their piles and are now worth $56 billion and $50 billion, respectively.
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