The Economist is running a great multi-page story on this topic in this weeks edition. You can read it online here. It's a really good explanation of the problems and possible solutio...
Monday, February 28, 2011
Agricultural Prices/Situation Round-Up
Over the last week, there have been several very important news stories regarding the agricultural price situation.Here's a brief recap of the events that got us here:A drought and fire in Russia last summer, coupled with export restrictions imposed by the government there, helped bring about soaring wheat prices. Meanwhile, bad harvests in the U.S., Europe, Australia and Argentina have contributed to soaring agricultural commodity prices on international markets.And, despite an increase in production, we are seeing larger increases in demand:Growers...
Bright Future For Ex Farepak Director?
William Rollason has joined Bright Futures (a holding company focussed on providing specialist contract catering services within the corporate business, local authority and independent schools sectors) as a non-executive director.However, his tenure as NED may be short lived, Rollason was chief executive of European Home Retail, the parent company of Farepak (the Christmas hamper business that went bust in 2006) and moves are afoot in the High Court by the Insolvency Service to disqualify the 9 directors of Farepak and its parent from holding a...
Sunday, February 27, 2011
The Importance of Labor Unions
With all of the talk surrounding Wisconsin and the governor's desire to end collective bargaining, the issue of unions has again come to the forefront of debate. While I don't talk about it much, I am a big fan of unions and think they are an important part of the economy. However, the primary reason why I support unions is based in law, not economic policy.The U.S. has a long legal tradition that stretches back to England in the middle ages. We can trace our legal roots in property, trusts, wills and criminal law to this era. Just as importantly,...
Saturday, February 26, 2011
Weekly Indicators: dueling inflection points edition
- by New Deal democratThis week was thin on monthly data: housing sales are still awful, but no more awful than they've been for the last two years. Housing prices are still falling (a mixed blessing, I really should write more on that), regional manufacturing reports were very good, but durable goods ex-Boeing stunk. This last one is of a piece with the weak industrial production report from the last week, and will have an impact on the LEI. Finally, 4th quarter GDP was revised downward, due in part to the effect of the "50 little Hoovers."...
Friday, February 25, 2011
Weekend Weimar and Beagle
Wow -- it has been a long time since I've put any of these up, hasn't it? That being said, here are the k...
Weekly Indicators: tote dat barge, lift dat bale ...
- by New Deal democratI am up to my eyeballs in work today. Weekly indicators will be posted in full tomorrow.In the meantime, maybe the proprietor of this here blog's doggies have done something endearing this we...
The German Miracle
In my piece yesterday a commenter noted that German manufacturing seemed to defy my central thesis. As if on cue, Time Magazine has an article on the "German Miracle." Here are the highlights:First, we have to give credit to the German government for a slate of reforms and programs that have really helped job creation. Germany (much like Spain) had a chronic unemployment problem, a result of a labor market that was too highly regulated and offered too much protection for workers. German policymakers began to change the system back in 2003 with...
Inflection point number 2: Gas prices
- by New Deal democratAs I noted last week, two indicators - initial jobless claims and the price of Oil - were nearing inflection points. Yesterday the 4 week average of jobless claims came within a whisker of crossing the 400,000 threshold consistent with a self sustaining recovery that adds more jobs than it needs to accomodate population growth.This...
Oil and the Recovery
A commenter asked me if I thought the current price spike in oil changed my outlook.First, I believe the evidence is clear: the U.S. economy is in the middle of a recovery. We've had six straight quarters of GDP growth, a solid manufacturing sector and a recovering service sector. Other countries are growing, which is giving strong support to U.S. exports. PCEs are now higher on an inflation adjusted basis than pre-recession levels. The two laggards are employment (which is typical as it is a lagging indicator) and housing (which will be a...
LSE Suspends Trading
Share trading in London has been suspended all morning as a result of ongoing technical problems with the London Stock Exchange's prices data (initially, and incorrectly, described by the LSE as a "glitch").The LSE had to close its Italian stock exchange operation close earlier in this week, because of technology problems.LSE went live on Monday with a new technology platform called Millennium (a Sri Lankan design).It would seem that more work needs to be done on the system, and that the LSE needs to explain as to why it went live without evidently...
Yesterday's Market
I've just switched to a new computer and I'm still transferring programs etc.. Quote tracker takes a bit of time to "reprogram" on the new computer. These will be back on Mond...
Thursday, February 24, 2011
Thoughts on International Trade
There has been a great round robin discussion on international trade in the economic blogsphere over the last week or so. I believe it started with this article from William Polley and was followed up on by Mark Thoma and Kash over at Angry Bear. I wanted to throw my two cents into the discussion as it were, especially as it relates to manufacturing jobs and the overall benefits of international trade.Let me first make what I believe are two very important points regarding this discussion.There seems to be a desire to return to the "glory...
Inflection point number 1: Initial Jobless Claims
- by New Deal democratLast week I wrote that initial jobless claims was one of two series that appeared to be at inflection points. By that I meant that a small move in either one could result in the economy "turning a corner" - but in opposite directions.This morning's report that Initial jobless claims were only 391,000 brings the 4 week moving average down to the lowest point since before the September 2008 meltdown: 402,000. A number of ~410,000 or less next week will bring this average under 400,000.The inflection point is that such a number...
Wednesday, February 23, 2011
Oil Prices and Recessions
With oil spiking, it seems appropriate to look to an expert on the effect of oil shocks on the economy. In the blogsphere - and the real world -- there is no better expert than Professor James Hamilton at Econbrowser. Here is a link to a piece that shows the very strong relationship between oil shocks and economic recessions. The link also contains another link to a paper written by Professor Hamilton on the subject. For those of you who can't wait, here is the conclusion:I've just completed a new research paper that surveys the history of...
CPI Up .4%
From the BLS:The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in January on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.6 percent before seasonal adjustment.Increases in indexes for energy commodities and for food accounted for...
Libya, the Middle East and the Stock Market
The events of the Middle East -- first and foremost -- are reminding me of the democratic changing of the guard that occurred in Eastern Europe. Watching the events from afar is fascinating and scary.More importantly, these types of events can cause fundamental disruptions to the stock market as they cause a realignment of trading strategies. Here...
The Miguided Hawks of The MPC
The Telegraph reports that according to the latest MPC minutes, released today, the Bank of England chief economist Spencer Dale has joined Martin Weale and Andrew Sentance in calling for an interest rate rise.The "hawks" deem inflation to be a significant threat to the economy.They are wrong:1 The impact of the austerity budget has yet to be felt, once that kicks in there will be a significant deflationary pressure on the economy.2 The economy is teetering on the edge of another recession, any upward increase in interest rates will push the economy...
Tuesday, February 22, 2011
Consumer Confidence at Three Year High
From Bloomberg:Big upward revisions to an already accelerating consumer confidence report point to a pivot higher for the consumer sector. The Conference Board's index rose to 70.4 in February for the best reading in three years. January was revised more than four points higher to 64.8.The assessment of the jobs market definitely improved. On the current assessment, a reading that offers an indication on the monthly employment report, fewer consumers in February said jobs are hard to get, at 45.7 percent vs January's 47.0 percent. On the...
The Sheer Stupidity of U.S. Political Dialog
The standard crap from the political right:1.) All regulation is bad2.) Any data which might force us to change our current method of doing business or behavior is a liberal conspiracy3.) There is a giant press conspiracy to paint conservatives in a negative light which warrants my near paranoid methodology of interpreting press stories.4.) "Socialism"5.) Arm everybody with as many guns as possible -- and make sure the guns are as large as possibleThe standard crap from the political left:1.) Money is evil and those whose incomes are above $75,000/$100,000...
PPI Increases .8%
Last week all the BLS issued both the PPI and CPI. Let's start out by looking at PPIFrom the BLS:The Producer Price Index for finished goods rose 0.8 percent in January, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This advance followed increases of 0.9 percent in December and 0.7 percent in November and marks the seventh...
Brown's Legacy
I have written many times on this site about the failure or Gordon Brown's tripartite regulatory system (imposed on the City in 1997).It is interesting to see that others have also now realised that this system was a failure, and played a large part in the recent banking crisis in the UK.The Telegraph reports that US treasury secretary Timothy Geithner said:"Remember your colleagues in the UK ran a strategy for a long time called light touch approach to financial regulation that was designed consciously to pull financial activity from New York...
Monday, February 21, 2011
Self Fulfilling Prophecy
It would seem that, if this report in the Telegraph is accurate, we are in danger of talking ourselves into another recession:"Concerns about the economic outlook, job losses and consumer spending saw 34 per cent of households seeing a worsening of their finances, the lowest level since March 200...
Friday, February 18, 2011
Weekly Indicators: Oil and Jobless Claims at inflection points Edition
- by New Deal democratLast week I said that I was currently watching our high frequency indicators especially to contrast the forces of continued strengthening (initial jobless claims) vs. Oil's choke hold on the economy. The data this week shows the contrast of both of those indicators at inflection points. As I wrote this morning, Oil's rise past $90 during January already seems to be having an impact on consumer spending. Its level near that point since last spring is also showing up in slowing industrial production. More than a a whiff...
Gas Prices are beginning to choke off the Recovery
- by New Deal democratYesterday Bonddad asked whether gas prices will choke off the recovery. My view of the industrial production and retail sales reports this week is less sanguine than his. In fact I believe that $90+ Oil is already beginning to choke off the recovery.Let's begin with retail sales. As you may recall, real retail sales is one...
Breast Beating
It appears the controversy du jour centers around first lady Michelle Obama's decision to "promote breast-feeding, particularly among black women, as part of her campaign to reduce childhood obesity." In conjunction with this initiative, "The Internal Revenue Service...announced that breast pumps, which can cost several hundred dollars, would be eligible...
Manufacturing Still in Good Shape
This week, we've had three important reports on manufacturing -- industrial production, the New York Fed's Empire State Manufacturing Survey and the Philly Fed's Manufacturing Survey. Let's examine the details of each.From the Fed:Industrial production decreased 0.1 percent in January 2011 after having risen 1.2 percent in December. In the manufacturing...
