Recently, Vanguard has begun urging people to contribute 12% to 15%, including the employer contribution, because of the stock market's weak returns and uncertainty about the future of Social Security and Medicare.
Their reluctance to invest may have more to do with regulatory, financial and fiscal uncertainty than weak consumer demand (see article).
The group blamed the weak UK economy, uncertainty over the global economic outlook and a delay in fulfilling an order for 1, 000 taxis from Azerbaijan.
Regardless of impressive strength from Cisco on strong earnings and Facebook despite a lock-up expiration, weak economic data, uncertainty over the fiscal cliff, and the escalation of a military conflict between Israel and Palestine have conspired to keep the pressure on equities.
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Yet the two concerns remained cautious about future sales trends, citing weak economic growth and consumer uncertainty.
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Unfortunately, top competitors PPR SA, the Gucci parent, and LVMH Moet Hennessy Louis Vuitton all recently reported lackluster China sales, and European shoppers remain squeezed by weak wages and deep economic uncertainty.
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Too many factors could keep demand for Treasurys high, such as long-term uncertainty over Europe and a weak U.S. economy.
Earlier in the day the Organization for Economic Cooperation and Development said the global recession is nearing a bottom, but warned that the recovery will be weak unless governments do more to remove uncertainty from bank balance sheets.
Its structure becomes weak and unable to absorb any increases in uncertainty, inefficiency, and especially, shocks.
"Weak economic data in a number of regions increased uncertainty regarding the direction of the global economy, " said Tom Linebarger, chairman and chief executive officer.
However, a report out of the UK showing that money supply is barely moving and a weak bond auction in Italy has put traders back into uncertainty mode.
Econometric analysis indicates that the effects of political uncertainty may be overstated, and that the weak economic situation is one of the causes, and not the consequence, of political gridlock, according to Goldman.
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It added, though, that the recovery will be weak if governments don't take further action to remove uncertainty from bank balance sheets.
This reflects a protracted period of weak external demand with consequent strongly negative effects on exports and increasing uncertainty about high-growth emerging countries.
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The export slowdown has been due to weak demand from traditional markets such as the U.S. and Europe, which have been mired by economic uncertainty.
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