Is It About the Productivity -- Or is There Something More?

From the AP:The United States is out of step with the rest of the world's richest industrialized nations: Its economy is growing faster than theirs but creating far fewer jobs.The reason is U.S. workers have become so productive that it's harder for anyone without a job to get one.Companies are producing and profiting more than when the recession began,...

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The Housing Bust updated: Lo and behold, supply and demand works!

-by New Deal democratA few months ago I had the temerity to ask: Is it time to start looking for the end of the housing bust? That's because, in talking about the housing market, it is important to differentiate between housing sales and housing prices. Housing sales have been bouncing along the bottom for over two years. Housing prices, after being...

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The £300 EU Fee Per Head

The Office for National Statistics (ONS) claims that the British contribution to the EU increased from £5.3BN in 2009, to £9.2BN in 2010.Every British taxpayer now pays the EU £300 per head per annum. The EU budget will rise by 2.9% this year, despite the fact that member states are having to make massive cut backs in their own budgets.This dichotomy cannot contiue for much longer without there being a Europewide backlash against the ...

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State tax revenues for 4Q 2010 surprise to the upside

- by New Deal democratCalculated Risk tells us this morning that the Census Bureau reported quarterly state tax receipts for the 4th quarter of 2010 (fiscal 2Q 2011). As it turns out, they were a pleasant upside surprise compared with the preliminary Rockefeller Institute estimates.I previously showed that only the April to June quarter (during which annual corporate and individual tax returns are most filed) shows a significant seasonal departure from the other quarters. A reasonable seasonal adjustment for this quarter to reduce it by 22.5%....

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Are Transports Really Giving the Market A Good Signal?

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The Reason There is No Pent-Up Consumer Demand

The following chart was printed on the Economists' Free Exchange Blog:While consumers are spending, as shown in the chart above, there has been no sign of pent up demand. Real consumer spending on goods fell off its pre-2008 trend line during the recession and has since resumed its former pace with no indications that a surge in spending to make...

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Manufacturing -- Think Small

From the NY Times:Think manufacturing, and most likely your brain defaults to abandoned factories, outsourcing and economically devastated regions like the Rust Belt. So strong is our tendency to focus on American manufacturing as something that’s been lost that a chorus has risen up to decry the prevalence of “ruin porn” — those aestheticized versions of the decidedly un-pretty, with a particular focus on the once-triumphant automotive center of the universe, Detroit. But there are many parts of this country where manufacturing is very ...

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Real Incomes Fall

The Office for National Statistics (ONS) reports that "real" incomes fell by 0.8% in 2010, from £14,181 per person to £13,980.This is the first drop since 1981.The fall, according to "experts", is due to salaries being eroded by inflation (something that the man in the street could have told the "experts" months ago).The fall will add to the sense of gloom amongst consumers, and will inevitably hamper any possible growth in the economy.However, as with all statistics provided by the ONS, these figures should be taken with a pinch of salt. Statistics...

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Gold Still Hitting Resistance

From Bloomberg:“The more positive signs from the U.S. economy mean that the expectations of rate rises are starting to come back to people’s attention,” Darren Heathcote, head of trading at Investec Bank (Australia) Ltd. in Sydney, said today by phone. Higher rates “will inevitably take some of the shine off gold, decreasing its attractiveness to investors,”...

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Four Important Positive Changes in the U.S. Economy

There are three underlying trends occurring in the U.S. Economy that are flying below the radar.1.) The increased savings rate: for the last 10-15 years, the cry of "we don't save enough" has been been heard throughout the economic world. It was argued (and I believe correctly so) that the lack of savings was a sign the U.S. consumer was borrowing...

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New Congresspeople Now Members of the Washington Lobotomy Factory

From the Washingtonpost:A breakdown late last week in closed-door negotiations between congressional leaders and the White House on funding the federal government makes it increasingly possible that Congress will not agree on a long-term funding resolution or another temporary measure by an April 8 deadline, aides from both parties said.That means that the threat of a government shutdown — which had receded in recent weeks because of congressional approval of several stopgap funding measures — appears to be back on the table.Problems with the...

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The Eurozone Crisis - Spain Is Next

All eyes have been focused on Portugal, Ireland and Greece as the Eurozone slowly unravels. However, spare a thought for the next in line for financial chaos namely Spain.Banco Base (Spain's 3rd largest savings bank) has asked for Euro 1.45BN in state funds to meet "new local capital requirements".The Euro, as it currently stands, is destined to fail. At best there may be a two speed Euro (split along a North South axis). At worst, the Euro will cease to exi...

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Are Durable Goods Orders Showing an Upcoming Slowdown?

This chart is bothering me. Notice that a large number of data points in the last year are concentrated in the 192,000-196,000 area. There have been some strong moves above that area, but only three times. Now let's look at a longer time series.On the longer scale, notice that durable goods orders are still far below their peaks from the end of...

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The Week Ahead

Stocks: The rally over the last week or so has been very weak. Volume has been down and half of the upward moves occurred at the open with no intra-day follow through. The SPYs are still contained by a downward sloping trend line. However, the IWMs (which have led the market higher) have broken through their trend line but also have a declining MACD. While the underlying technical are still OK (for example, the MACD is about to give a buy signal on the SPY) the underlying economic situation (weakening durable goods orders, high gasoline prices,...

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EU Pressures Portugal

The EU is putting pressure on Portugal to come cap in hand to the EU for a bailout.Ewald Nowotny, a governing council member of the European Central Bank, is quoted in the Telegraph:"From a purely economic point of view one could probably recommend it. The domestic political situation in Portugal has clearly worsened ... the head of the government has stepped down." Why such advice?Philanthropy?No, this is purely self interest based on fear of the Eurozone unravelling as a result of economic chaos in Portugal. Were Portugal to accept a bailout,...

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Weekly Indicators: Accumulating signs of a slowdown Edition

- by New Deal democratIn the rear-view mirror department, 4th Quarter 2010 GDP was revised back up to 3.1%. Monthly data reported this week, however, was depressing. New home sales were recorded at an all-time low, although balanced against December's big uptick, the last three months are still better than the three months previous to them. More ominous, however, was the big decline in consumer confidence, and in particular expectations about the future. These are the worst in 2 years, and are a leading indicator. Durable goods also came in very...

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4Q GDP Up 3.1%

From the BEA:Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- increased at an annual rate of 3.1 percent in the fourth quarter of 2010, (that is, from the third quarter to the fourth quarter), according to the "third" estimate released by the Bureau of Economic Analysis. In the third quarter, real GDP increased 2.6 percent. The GDP estimate released today is based on more complete source data than were available for the "second" estimate issued last month. In the...

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Is It Time For Another Home Buyer Tax Credit?

Recent news from the housing market has been extremely concerning. Existing home sales appear to have stabilized somewhat, but at a low level and new home sales hit a record low. Credit conditions for new homes are also tightening, further hampering the process. There is an overhang of foreclosed properties depressing prices. And finally, homeowners equity is low, indicating that getting people out of homes they can't afford will be much harder. Simply put, there are myriad number of reasons to consider helping the housing market in some form...

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Crisis? What Crisis?

Unsurprisingly, given the resignation of the Prime Minister (Jose Socrates) and the ongoing budget turmoil, Portugal has had its credit rating downgraded by Standard & Poor's to BBB and by Fitch to A-.Despite the turmoil and the downgrade, the EU have delayed making a decision as to providing a "comprehensive package" to tackle the eurozone debt crisis.Instead the EU has adopted the ostrich policy of sticking its head in the sand. Jean-Claude Trichet, President of the European Central Bank, said that Portugal must implement the fiscal austerity...

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Declining Initial Jobless Claims suggest improving March jobs report

- by New Deal democratFor the past few months, I have been running a scatter graph of initial jobless claims (left) and monthly jobs gained/lost (bottom) since jobless claims hit their peak in March 2009. Blue is all private jobs, red includes government jobs as well (except I have excluded the March through August 2010 period which was distorted by...

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Texas Drought To Increase Wheat and Cattle Prices

From Bloomberg:The worst Texas drought in 44 years is damaging the state’s wheat crop and forcing ranchers to reduce cattle herds, as rising demand for U.S. food sends grain and meat prices higher. Texas, the biggest U.S. cattle producer and second-largest winter-wheat grower, got just 4.7 inches (12 centimeters) of rain on average in the five months through February, the least for the period since 1967, State Climatologist John Nielsen- Gammon said. More than half the wheat fields and pastures were rated in poor or very poor condition on March...

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Someone Finally Notices the Declining Labor Force

From MarketBeat:The Congressional Budget Office released a report today, projecting labor force participation through 2021. Labor force participation peaked in the late 1990s at around 67% as Baby Boomers reached peak working age and the entrance of women into the work force plateaued. It have been dropping since, with the decline exacerbated substantially by the recession as people dropped out of the labor force. The participation rate stood at 64.2% in February, down from 66% in December 2007 when the recession began. The CBO expects it to decline...

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The Wisdom of Socrates

Jose Socrates the Prime Minister of Portugal has "fallen on his sword", as a result of his austerity budget being voted down by all the opposition parties.Socrates had stated, prior to the vote, that if the budget was defeated he would resign.The result of this defeat is that the country probably has to stage a general election and, because it has no budget, will have to be propped up by the EU in order to prevent the financial collapse of Portugal and the unravelling of the Euro.Socrates is a canny man, and has probably saved his country from...

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