Unemployment, stock markets, inflation and the debt ceiling all weigh on US politicians.
US politicians in economic theatre of battle
Politicians are scrambling for an accord on raising the US debt ceiling next week amid continued worries about unemployment, inflation and stock markets.
US stocks took a beating in April and last monthbecause of a weakening global outlook and economic problems at home. The Dow Jones Industrial Average, a closely watched measure of large US companies, fell by 7.1 per cent between the end of April and yesterday.
Unemployment has long topped the list of concerns, and the jobs report for last month did not provide much reason for optimism. The unemployment rate came in at 9.1 per cent, up slightly from April.
Politicians, meanwhile, are playing hardball over the country's need to raise its debt ceiling and borrow more money. The country is already tapping pension funds to meet its obligations, and Ben Bernanke, the chairman of the US Federal Reserve, has said not taking action would disrupt markets and hit the dollar.
Against that fractured backdrop, new US inflation data this week showed consumer prices leapt by 3.6 per cent in the year to the end of last month, the highest level since 2008. The rise "might soon become uncomfortable" as the Federal Reserve tries to contain consumer prices and reduce the unemployment rate, said Tim Fox, the chief economist at Emirates NBD in Dubai.
High oil prices are also hurting US consumers, further endangering a fragile economic recovery. Petrol prices are above US$4 a gallon in some parts of the country.
However, yields on two-year US treasuries fell to their lowest this year as investors became skittish about heightened risk in Europe.
"Whether we can overcome the debt crisis in Greece is a cause for concern that is spurring purchases of treasuries," Tomohisa Fujiki of BNP Paribas in Tokyo told Bloomberg News.