Consumer Confidence Up

US consumer confidence is up in June and is at a nine-month high. The optimism is due to the surge in the stock market and some signs of economic stability are coming to rise. The Reuters/University of Michigan consumer survey rose to 69 from 68.7 in May. This was the fourth consecutive monthly increase. There are still pertinent issues facing the US economy, but job losses are starting to decrease from the past few months figures and housing prices have flattened in some regions.

This consumer survey is a good sign, because it shows that consumers are starting to believe in the US economy once again and are beginning to have confidence. Joshua Shapiro, chief US economist at MFR says "households are reverting to a more sustainable spending path vis-a-vis income that allows scope for paying down debt and adding to savings." This shows that Americans are becoming more wary of their spending habits, while this is good for the longer term stability of the economy and people's futures, it will not help the immediate status of the economy. The one thing that will help the economy is spending, and the current trend is towards savings.

Oil on the Rise

Oil prices hit an eight month high today reaching over $73 a barrel. This raise was in part due to the forecast for the increased global demand. Oil prices have risen 60% this year but still remain far from the $150 range it almost hit last year. The International Energy Agency (IEA) has warned that rallying prices had been driven by optimism of a global financial recovery and not on supply and demand fundamentals.

The price of oil will teeter for the following months, but no one can argue that oil prices have a direct correlation with the global economy. When times are bad, oil prices fall; when times are good, oil prices increase. This is simple supply and demand; oil prices will increase whenever the global economy recovers from this slump. Demand for oil is dependent on production; currently industries such as manufacturing and construction are facing difficult times and do not need as much oil to run their factories and meet production requirements.

Another argument that is often voiced when the topic of oil price is brought to attention is whether or not oil prices will increase because it is a rare and valuable resources and the world will one day run out, or if the world has the ability to produce alternative energy fast enough so it is no longer dependent on oil. We live in a society where problems are fixed only when they arise and because of this, high oil prices will be hard to prevent. When oil prices are high enough that United States and other key economies are sick of paying high oil prices, then only will we adapt and start accepting other fuel alternatives.

Chrysler Alive?

After a short stint in Bankruptcy, Chrysler has found a viable business partner in the Italian car manufacturer Fiat. Fiat is well known for its compact, fuel efficient cars and hopes to bring their success to Chrysler. Even with the new investment, Fiat only owns 20% of Chrysler, while the majority stake (55%) belongs to a health care trust owned by the United Autoworkers Union.

The fusion of Fiat and Chrysler seems to be rather strange because neither have a strong presence in the current US economy. Fiat is a heavy weight in Europe, but little is known of their success and capabilities in the US; Chrysler on the other hand has been a key player in the US auto industry. The problem Chrysler has faced in the past few years has been a lack of true identity. While Fiat is a viable company, it will take a drastic change of focus and concentration in Chrysler's business plan to be succesfull in this increasingly competitive market.