Auto Market in Recession, Dollar Weakens Again
According to the head of the Nissan Motor Company, the United States auto industry is in recession, even if the entire economy is not.  
Chief Executive Officer of Nissan, Carlos Ghosn expressed that there is definitely a recession in the auto market. The rising costs of auto building materials are increasing risks in the auto industry. The 2007 car and light truck sales were the worst in ten years, and are not expected to get too much better during 2008.
CEO Ghosn does not expect the U.S. auto recession to last for an extended time, however. Prices for raw materials need to lower. Ghosn explained that European markets cannot be ignored, and they need to be utilized, especially Russia.
In other economic news, the dollar weakened against the euro again. Thoughts on the dollar’s strengthening against the euro being short-lived were exactly on target. Recession fears in the United States escalated, while European service sectors showed growth. The European Central Bank may not cut rates, after all. The euro is now at $1.4861, which is the highest it has been for three weeks. The dollar also fell against the yen.
A modest rate cut is still expected of the FOMC in the coming March meeting. The business index in The Federal Reserve district of Philadelphia plunged to negative 24 this month. Chances of a larger rate cut are fairly slim, considering the weakness of the dollar and the current inflation rate, which is higher than the Fed is comfortable with.
Oil prices remain upwards of $98 per barrel, despite the inventory increase of domestic crude oil, keeping fuel and energy costs high. This is down from over $100 per barrel earlier, but still too high to keep core inflation down.
Meanwhile, the Federal Reserve is continuing the Term Auction Facilities, with the next on scheduled for Monday, February 25, 2008. The budget remains at $30 billion and awards are still 28-day loans for bidding banks.
As usual there is mixed economic news, and the stocks have not yet recovered completely. There is little left to do but wait and see how monetary policy takes effect for the year.
