Showing posts with label gdp. Show all posts
Showing posts with label gdp. Show all posts
7:55 AM
The road to the economy's recovery has been a long and winding one. For sure.
What we have to look at is the job picture. Frankly the overall job growth situation has been dismal. It could be worse, so we have that going for us. The addition of more jobs would be beneficial to several sectors of the U.S. economy including housing.
The remainder of 2014 has the pulse of the consumer in the mix. While I'm on that subject, August retail sales were reported earlier today as increasing by 0.6 percent after an upwardly revised 0.3 percent. July was previously reported to have been flat.
The core sales correspond mostly with the GDP, which increased 0.4 percent in August.
Reuters was a source for this entry.
What we have to look at is the job picture. Frankly the overall job growth situation has been dismal. It could be worse, so we have that going for us. The addition of more jobs would be beneficial to several sectors of the U.S. economy including housing.
The remainder of 2014 has the pulse of the consumer in the mix. While I'm on that subject, August retail sales were reported earlier today as increasing by 0.6 percent after an upwardly revised 0.3 percent. July was previously reported to have been flat.
The core sales correspond mostly with the GDP, which increased 0.4 percent in August.
Reuters was a source for this entry.
3:37 PM
The recession ended 5 years ago. Did you notice? GDP figures can be volatile, as we were reminded by several economists. In a zerohedge.com story by Tyler Durden, the economic pulse isn't good. There is always a silver lining in side every dark cloud.... right?
Some have noted weaker than expected Q1 2014 GDP will bring a stronger Q2 number. Keep that in the brainpan because that will be the silver lining.... if it happens. Tyler brings forth the notion of ignoring the hard data and relying on the Fed's balance sheet.
One central point is stagnating median incomes. There has been info pointing to this for about 5 years. Housing has been struggling in some areas of the country and are still feeling the effects of the recession. Smart Girl Politics asks, "What happened to the recovery?"
The positive spin on the economy continues as they point out in their article. One "spin" of note is that the U.S. economy contracted for the first time since 2011. This contraction shows how much fragility the economy has.
Some have noted weaker than expected Q1 2014 GDP will bring a stronger Q2 number. Keep that in the brainpan because that will be the silver lining.... if it happens. Tyler brings forth the notion of ignoring the hard data and relying on the Fed's balance sheet.
One central point is stagnating median incomes. There has been info pointing to this for about 5 years. Housing has been struggling in some areas of the country and are still feeling the effects of the recession. Smart Girl Politics asks, "What happened to the recovery?"
The positive spin on the economy continues as they point out in their article. One "spin" of note is that the U.S. economy contracted for the first time since 2011. This contraction shows how much fragility the economy has.
11:46 PM
In his 1841 work Extraordinary Popular Delusions and the Madness of
Crowds, Charles Mackay (1814-89) identified a common thread of
individual and collective idiocy running through such follies of the
past. These included alchemy, witchhunts, and crusades.
A clear implication of Mackay’s work was that all of these follies had been consigned to the past by intelligence, experience and enlightenment. But one folly remains alive and well. Financial bubbles. The past thirty years has given us the growth and bursting of the greatest financial bubble in history. This bubble confirmed the idiocy identified by Mackay. This 'money for nothing' lunacy has mired much of the world in debt from which there is no escape.
Perhaps the most truly remarkable feature of this "super-cycle" was that it endured for so long in defiance of all logic or common sense. Individuals in their millions believed that property prices could only ever increase, such that either borrowing against equity (by taking on invariably-expensive credit) or spending it (through equity release) was a safe, rational and even normal way to behave. Former Federal Reserve boss Alan Greenspan has been ridiculed for believing that banks would always act in the best interests of their shareholders, and that the market would sort everything out in a benign way. But regulators more generally bent over backwards to ignore the most obvious warning signs, such as escalating property price-to-incomes ratios, soaring levels of debt-to-GDP, and such obviously-abusive practices as sub-prime mortgages. Debt escalation was making it self-evident that the apparent expansion in the economy was neither more nor less than the simple spending of borrowed money.
No other major economy got it quite as wrong as Britain under Gordon Brown, but much the same was happening across the Western world, most notably in those countries which followed the disastrous Anglo-American philosophy of “light-touch” financial regulation.
Where the Western countries were concerned, was that they reduced their production without making corresponding reductions in their consumption. Corporations’ outsourcing of production to emerging economies boosted their earnings (and, consequently, the incomes of the minority at the very top) whilst hollowing out their domestic economies through the export of skilled jobs.
At constant (2011) values, consumption by Americans increased by $6,500bn between 1981 and 2011, whilst consumption on their behalf by the government rose by a further $1,700bn, but the combined output of the manufacturing, construction, agricultural and extractive industries grew by barely $600bn. At less than $200bn in 2011, net exports of services did almost nothing to bridge the chasm between consumption and production. Between 1981 and 2011, and again expressed at constant values, American indebtedness soared from $11 trillion to almost $54 trillion. Fundamentally, what had happened here was that skilled, well-paid jobs had been exported, consumption had increased, and ever-greater quantities of debt had been used to fill the gap. This was, by any definition, unsustainable.
At the same time, there is no real evidence that the economy is recovering from what is already a more prolonged slump than the Great Depression of the 1930s. We are now more than four years on from the banking crisis and, under anything approaching normal conditions, there should have been a return to economic expansion by now. Governments have tried almost everything, from prolonged near-zero interest rates and stimulus expenditures to the creation of money on a gigantic scale. These tools have worked in the past, and the fact that, this time, they manifestly are not working should tell us that something profoundly different is going on.
Beyond visibility and culpability, the two big questions which need to be addressed are ‘how bad can it get?’ and ‘is there anything that we can do about it?’ Of these, the first question hardly needs an answer, since the implications seem self-evident. In terms of solutions, the first imperative is surely a cultural change away from instant gratification, a change which, if it is not adopted willingly, will be enforced upon society anyway by the reversal of economic growth.
A clear implication of Mackay’s work was that all of these follies had been consigned to the past by intelligence, experience and enlightenment. But one folly remains alive and well. Financial bubbles. The past thirty years has given us the growth and bursting of the greatest financial bubble in history. This bubble confirmed the idiocy identified by Mackay. This 'money for nothing' lunacy has mired much of the world in debt from which there is no escape.
Perhaps the most truly remarkable feature of this "super-cycle" was that it endured for so long in defiance of all logic or common sense. Individuals in their millions believed that property prices could only ever increase, such that either borrowing against equity (by taking on invariably-expensive credit) or spending it (through equity release) was a safe, rational and even normal way to behave. Former Federal Reserve boss Alan Greenspan has been ridiculed for believing that banks would always act in the best interests of their shareholders, and that the market would sort everything out in a benign way. But regulators more generally bent over backwards to ignore the most obvious warning signs, such as escalating property price-to-incomes ratios, soaring levels of debt-to-GDP, and such obviously-abusive practices as sub-prime mortgages. Debt escalation was making it self-evident that the apparent expansion in the economy was neither more nor less than the simple spending of borrowed money.
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No other major economy got it quite as wrong as Britain under Gordon Brown, but much the same was happening across the Western world, most notably in those countries which followed the disastrous Anglo-American philosophy of “light-touch” financial regulation.
Where the Western countries were concerned, was that they reduced their production without making corresponding reductions in their consumption. Corporations’ outsourcing of production to emerging economies boosted their earnings (and, consequently, the incomes of the minority at the very top) whilst hollowing out their domestic economies through the export of skilled jobs.
At constant (2011) values, consumption by Americans increased by $6,500bn between 1981 and 2011, whilst consumption on their behalf by the government rose by a further $1,700bn, but the combined output of the manufacturing, construction, agricultural and extractive industries grew by barely $600bn. At less than $200bn in 2011, net exports of services did almost nothing to bridge the chasm between consumption and production. Between 1981 and 2011, and again expressed at constant values, American indebtedness soared from $11 trillion to almost $54 trillion. Fundamentally, what had happened here was that skilled, well-paid jobs had been exported, consumption had increased, and ever-greater quantities of debt had been used to fill the gap. This was, by any definition, unsustainable.
At the same time, there is no real evidence that the economy is recovering from what is already a more prolonged slump than the Great Depression of the 1930s. We are now more than four years on from the banking crisis and, under anything approaching normal conditions, there should have been a return to economic expansion by now. Governments have tried almost everything, from prolonged near-zero interest rates and stimulus expenditures to the creation of money on a gigantic scale. These tools have worked in the past, and the fact that, this time, they manifestly are not working should tell us that something profoundly different is going on.
Beyond visibility and culpability, the two big questions which need to be addressed are ‘how bad can it get?’ and ‘is there anything that we can do about it?’ Of these, the first question hardly needs an answer, since the implications seem self-evident. In terms of solutions, the first imperative is surely a cultural change away from instant gratification, a change which, if it is not adopted willingly, will be enforced upon society anyway by the reversal of economic growth.
6:56 AM
The global economy had a pretty good October. Resilience was reflected. This despite a government shutdown in the United States. Even retail reports in the U.S. were good for October.
The November "so far" looks shaky. Manufacturing missed expectations. This signals a deceleration in growth. Any improvement was largely confined to Germany. The PMI there notched up the best growth, according to Markit economist Chris Williamson.
Growth outside France and Germany slowed to near stagnation. GDP could fall in the fourth quarter.
The November "so far" looks shaky. Manufacturing missed expectations. This signals a deceleration in growth. Any improvement was largely confined to Germany. The PMI there notched up the best growth, according to Markit economist Chris Williamson.
Growth outside France and Germany slowed to near stagnation. GDP could fall in the fourth quarter.
4:48 PM
Maybe Wall Street should pay attention to Main Street. The consumer confidence index this week dropped to its widest margin month-to-month since August 2011. Eric Jones of TD Securities said on Friday, February 1, "That was the best negative print on GDP I have ever seen", attributing weakness in the -0.1% 4th quarter to slower defense spending. Main Street sees a double-dip recession as a real possibility. The Fed in confident that the asset purchase program will be successful.
The Conference Board's index decreased to 58.6 as released this week and actually saw December's number revised down to 66.7, the worst reading by American consumers since November 2011.
Americans who make less than $500,000 per year will see an increase of 1% to 1.4% in their annual effective tax rate as a result of the payroll tax increase. Americans are expected to pay $205 billion more in 2013 than in 2012.
Consumer spending increased 2.2% in the fourth quarter. Manufacturing got a boost as business invested in capital goods like computers and trucks. Total business investment surged 12.5%.
The Conference Board's index decreased to 58.6 as released this week and actually saw December's number revised down to 66.7, the worst reading by American consumers since November 2011.
Americans who make less than $500,000 per year will see an increase of 1% to 1.4% in their annual effective tax rate as a result of the payroll tax increase. Americans are expected to pay $205 billion more in 2013 than in 2012.
Consumer spending increased 2.2% in the fourth quarter. Manufacturing got a boost as business invested in capital goods like computers and trucks. Total business investment surged 12.5%.
9:38 PM
What should we expect with the economy this year? Well, we'll have growth at about 2% with a healing housing market, reinforced consumer spending and a slowly improving job market.
What's this mean to investors? The stage should be set for good investor results with a continuation of modest growth. Despite modest economic expansion in 2012, earnings for companies in the S&P 500 grew by almost 5%. Companies in 2013 will continue to concentrate on profits rather than expansion.
Despite greater volatility, earnings and stock prices have steadily grown over time. Since 1954 earnings increased at an average annual rate of 6.3%. Stocks were up 6.9% per year for a total average return of 10.5% annually with dividends reinvested.
There are three items to watch. The GDP, S&P 500 Index, and S&P 500 Earnings. The stock market is not back at its October 2007 levels. Look at current earnings.
Expect a 10% correction in the stock market. There will be no relief from low interest rates.
The IMF projects global growth to be 3.6% in 2013.
One sector to look at is healthcare stocks. Key points to consider are a 30 million increase in number of insured. People the age of 65 is increasing. Healthcare spending is increasing. A new innovation is personalized medicine. The healthcare sector has outperformed the S&P over the last 5 years.
What's this mean to investors? The stage should be set for good investor results with a continuation of modest growth. Despite modest economic expansion in 2012, earnings for companies in the S&P 500 grew by almost 5%. Companies in 2013 will continue to concentrate on profits rather than expansion.
Despite greater volatility, earnings and stock prices have steadily grown over time. Since 1954 earnings increased at an average annual rate of 6.3%. Stocks were up 6.9% per year for a total average return of 10.5% annually with dividends reinvested.
There are three items to watch. The GDP, S&P 500 Index, and S&P 500 Earnings. The stock market is not back at its October 2007 levels. Look at current earnings.
Expect a 10% correction in the stock market. There will be no relief from low interest rates.
The IMF projects global growth to be 3.6% in 2013.
One sector to look at is healthcare stocks. Key points to consider are a 30 million increase in number of insured. People the age of 65 is increasing. Healthcare spending is increasing. A new innovation is personalized medicine. The healthcare sector has outperformed the S&P over the last 5 years.
9:16 AM
Nervousness. That's the best way to describe the mood of the markets. That mood has not entirely filtered across the national spectrum regarding the economy. Close though. Retail spending is low. Which in a way is good. That tells me that households are indeed watching their spending. But, with an economy geared towards spending, that doesn't sit well with the big banks and hedge funds. Wall Street, as a whole, has been watching for the bright and shining light to bring the American economy out of darkness. Alas, that light has not been shown.
Housing is still down. There has been a rise in home construction to be sure. But realize just how much new building needs to happen to create more jobs. We need about 400,000 to 600,000 jobs a month, for I don't know how many months, to get unemployment down to 10 year ago levels.
The DJIA is hovering at the 13,000 level. To be sure there are those who say a new bull market is within reach. But realize that more and more money is being taken out of the stock market practically daily. Is there the push to bring in a new bull?
Everything going wrong with the U.S. economy has to do with our massive debt levels. The current national debt grossly exceeds 15 trillion dollars. But don't miss seeing the bigger picture. Along with that the U.S. government is also sitting on 84 trillion dollars in unfunded liabilities in Social Security, Medicaid, and other entitlement programs. Nearly 100 trillion dollars total!
To put it in perspective, if you spent 1 dollar every second, every single day, every single year..... it would take 31,000 years to spend just 1 trillion dollars. Now multiply that by 100.
Divided by every citizen of the United States, this equates to to more than 318,000 owed by every citizen in the U.S. During the Obama administration more debt has been racked up than the administrations of George Washington through George H.W. Bush (Bush 41) combined. This is the component that could unhinge our global economy. One analyst on CNBC talked about Europe, but asked what about the United States. Seems we are not looking in our own backyard.
Fox News reported in August 2011, American debt had already surpassed its entire 2010 GDP of 14.53 trillion dollars.
The U.S. government borrows four out of every ten dollars it spends. Our Social Security taxes (what you and I pay through income taxes) have 40 percent going to pay the INTEREST on the debt.
Without borrowing money to fill its quarter of the GDP and cover the national debt, 10 percent of our economy could vanish. It's looking more and more likely to prevent this is to raise the debt ceiling. That obviously will bring a fight in Congress.
The Treasury Borrowing Advisory Committee is in fear of a massive sell-off of Treasury bonds by foreign investors. This could place another 75 billion dollars on taxpayers. This also would increase mortgage lending rates. Treasury Secretary Geithner reported that the debt ceiling debate will come AFTER November's election day. His timing is off!
The mudslinging has already begun. Speaker John Boehner has said no to a rise in the debt ceiling. We very well can't operate without a rise. Not raising the debt ceiling could put the entire market in peril. Prices for core goods will rise, another collapse of the housing market could happen, and a destruction of wealth is sure to overtake us.
As much as I wish to keep more debt from happening, a rise in the debt ceiling has to happen. After that, than what?
QE3, that's what.
I wrote earlier that Geithner's timing was off. When will it be? I say at the end of September. There most likely will be monumental events that will happen to the U.S. economy to put the debt ceiling debate into gear. Look at the Treasury auction results. If you see those auctions starting to falter, that's the trigger. Bernanke will make the case for more easing by the Fed. These events will just "kick the can" down the road some more and we'll deal with it in the new year, no matter who the president is.
Housing is still down. There has been a rise in home construction to be sure. But realize just how much new building needs to happen to create more jobs. We need about 400,000 to 600,000 jobs a month, for I don't know how many months, to get unemployment down to 10 year ago levels.
The DJIA is hovering at the 13,000 level. To be sure there are those who say a new bull market is within reach. But realize that more and more money is being taken out of the stock market practically daily. Is there the push to bring in a new bull?
Everything going wrong with the U.S. economy has to do with our massive debt levels. The current national debt grossly exceeds 15 trillion dollars. But don't miss seeing the bigger picture. Along with that the U.S. government is also sitting on 84 trillion dollars in unfunded liabilities in Social Security, Medicaid, and other entitlement programs. Nearly 100 trillion dollars total!
To put it in perspective, if you spent 1 dollar every second, every single day, every single year..... it would take 31,000 years to spend just 1 trillion dollars. Now multiply that by 100.
Divided by every citizen of the United States, this equates to to more than 318,000 owed by every citizen in the U.S. During the Obama administration more debt has been racked up than the administrations of George Washington through George H.W. Bush (Bush 41) combined. This is the component that could unhinge our global economy. One analyst on CNBC talked about Europe, but asked what about the United States. Seems we are not looking in our own backyard.
Fox News reported in August 2011, American debt had already surpassed its entire 2010 GDP of 14.53 trillion dollars.
The U.S. government borrows four out of every ten dollars it spends. Our Social Security taxes (what you and I pay through income taxes) have 40 percent going to pay the INTEREST on the debt.
Without borrowing money to fill its quarter of the GDP and cover the national debt, 10 percent of our economy could vanish. It's looking more and more likely to prevent this is to raise the debt ceiling. That obviously will bring a fight in Congress.
The Treasury Borrowing Advisory Committee is in fear of a massive sell-off of Treasury bonds by foreign investors. This could place another 75 billion dollars on taxpayers. This also would increase mortgage lending rates. Treasury Secretary Geithner reported that the debt ceiling debate will come AFTER November's election day. His timing is off!
The mudslinging has already begun. Speaker John Boehner has said no to a rise in the debt ceiling. We very well can't operate without a rise. Not raising the debt ceiling could put the entire market in peril. Prices for core goods will rise, another collapse of the housing market could happen, and a destruction of wealth is sure to overtake us.
As much as I wish to keep more debt from happening, a rise in the debt ceiling has to happen. After that, than what?
QE3, that's what.
I wrote earlier that Geithner's timing was off. When will it be? I say at the end of September. There most likely will be monumental events that will happen to the U.S. economy to put the debt ceiling debate into gear. Look at the Treasury auction results. If you see those auctions starting to falter, that's the trigger. Bernanke will make the case for more easing by the Fed. These events will just "kick the can" down the road some more and we'll deal with it in the new year, no matter who the president is.
8:52 AM
Right now could be the calm before the storm as far as the debt goes in the United States. The U.S. is in the spot of a good thing however with U.S. assets in demand over the European situation. The U.S. can print its own money.
Debt at the federal level is just about at 100 percent of GDP. The crisis level is 110 to 120 percent of GDP, but the U.S. is running debtsat 8 percent of GDP per year. This puts a crisis mode situation in the mix in about 2 to 3 years.
In that time the bond market could go south, pushing interest rates higher. The dollar value will go down too. Anti-dollar instruments may be a good idea as far as investments go.
Get you free copy of the Great Super Cycle - READ MORE.
Debt at the federal level is just about at 100 percent of GDP. The crisis level is 110 to 120 percent of GDP, but the U.S. is running debtsat 8 percent of GDP per year. This puts a crisis mode situation in the mix in about 2 to 3 years.
In that time the bond market could go south, pushing interest rates higher. The dollar value will go down too. Anti-dollar instruments may be a good idea as far as investments go.
Get you free copy of the Great Super Cycle - READ MORE.