Category: Economy

Not A Surprise

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It turns out that 76% of the American public believe that we are still in a recession.

Considering that unemployment, even by the rather low U-3 number is around 10%, this is not surprising.

The reality is that we are still in a hole, and 2% annual won’t get us out of this hole for at least a decade.

Of course, the very serious people in Washington, DC think that the deficit is over, so now they are going to slam on the brakes to get the deficit down.

There have been persistent problems with lead levels in Washington, DC’s water supply.

While correlation does not prove causation, it does make one wonder.

Economics Update

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Unemployment Population Ratio: Still Not Back

The lede here has to be the non-farm payroll (NFP) numbers for April, which were very, very, good.

There was in increase in payrolls of 290,000 , which was the largest increase since March of 2006, and manufacturing added 44,000 jobs, the largest increase in 12 years.

Additionally, as Paul Krugman observes, “My favorite indicator from the household survey isn’t the unemployment rate, it’s the employment-population ratio — and that’s up, from 58.6 to 58.8.”

It’s been rising since December.

Unfortunately, unemployment worsened, though part of this was discouraged workers returning to work:

But. Keep an eye on those unemployment rates. The headline figure is back up at 9.9%, the highest it’s been this year. The U-6 underemployment rate is a gruesome 17.1%. And U-4, which is total unemployed plus discouraged workers, has hit a new high of 10.6%.”

Even at nearly 300,000 new jobs a month, it will take years for these people to find work again.

Additionally, we have the short-term good/long-term bad news that consumers are using credit once again. Consumer borrowing rose by $2 billion in March.

In energy and currency, it appears that Greece, and the recent UK elections have created uncertainty, which has driven oil prices lower, and the dollar was mixed, up slightly versus the Pound, and down slightly versus the Euro.

Economics Update

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It’s jobless Thursday, and initial unemployment claims fell slightly, 7K to 444K, with a 4 week moving average dropping 4,750 to 458,500, and continuing claims fell 59,000 to 4.594 million, though filings for extended claims rose.

Still, we are not seeing numbers that show a recovery in the job market, and the fact that April retail sales disappointed won’t help.

In Yuro land, the European Central Bank held its benchmark steady at 1%, whihc had the effect of pushing the dollar up, which in turn drove oil down.

Basically, Greece trumps the oil disaster.

Economics Update

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The ADP private job report for April is out today, and it reports that 32,000, but since the private non-farm workforce needs to grow somewhere in the neighborhood of 130,000 a month, this means that unemployment is still increasing.

Additionally, the Institute for Supply Management’s Non-Manufacturing Index was 55.5, for the 4th straight month with any number above 50 indicating expansion, though the employment component of the index fell.

All in all though, better numbers are getting better.

In real estate, mortgage applications rose, with the refinance index falling, and the purchase index rising, so this is likely an artifact of the tax credit.

And its the same story as yesterday with regard to Greece and oil and currency, with people fleeing to safety driving the dollar up, and the rising dollar pushing oil down.

Economics Update (a Day Late)

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It was jobless Thursday, and the news is generally good, with applications for initial unemployment claims falling again, falling by 11k to a seasonally adjusted 448K, though the 4 week moving average rose slightly, and the continuing claims fell slightly to 4.65 million.

Additionally, the The Federal Reserve Bank of Chicago’s national activity index rose in March, foreclosures fell in the 1st quarter, though things like foreclosure moratoriums and mandatory arbitration may have contributed to this, and Japanese consumer spending and wages rose in March, though prices continue to fall.

Also, 30 year mortgage rates fell slightly this week, which moderates concerns about increasing interest rates.

Additionally, US treasurys rose, and yields fell slightly in the latest 7-year auction, implying that rates remain stable.

Energy and currency are largely being driven by Greece.

People are less concerned about a Greek default, which has reduced demand for the dollar as safe haven, driving the dollar lower, and the lower dollar has drive oil prices higher.

Economics Update

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Well, the Federal Reserves Open Market Committee (FOMC) has spoken, and it has kept its benchmark rate at effectively 0, and repeated its statement that the rates will remain low for an extended period.

Not an unexpected development. After all, the economy still sucks.

In real estate, mortgage applications fell overall, but home purchase applications rose. This is probably the interplay of rising rates versus the expiration of the home purchase tax credit.

In the real world, the American Trucking Aassociation’s Trucking Tonnage Index rose in March, indicating that there is something positive going on.

In the world of sovereign debt, the US Treasury 5-year bonds’ yeild rose to 2.54%, though compared to the yield on 2-year Greek bonds, which are now over 20% (!), it’s pretty cheap money.

Also note that in the continuing euro zone meltdown, Spain’s debt rating was cut S&P.

In energy and currency, oil rose on the news that the FOMC’s posture is unchanged, and the dollar rose on continued Euro zone problems.

A Personal Anecdotal Economic Data Point

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On Monday, I sent out an update of my resume including my brief stint as a tech writer (also here).

Basically, it needs to be included, because I want to plug the hole in my employment history, so something with “2010” in it is useful, but I don’t want to get a bunch calls from recruiters who do not look past the key word search calling me with technical writer positions,* so I listed my title is listed as, “Developer/Writer.”

It is true and accurate. “Developer” was my official title, and writer was what I did, but by avoiding the dreaded term “technical writer”, I won’t trigger a keyword search.

In any case, on to the data point:

I got a very strong response to my resume mailing,† perhaps 50% more responses by phone or email that happened with my last resume drop in October 2009.

So, I do have a sense of things picking up.

BTW, if you want to look at my resume, you can see it, as well as an 8 page complete CV that covers everything back to college, here.

*At least not ones from out of town. I’m not willing to travel to be a tech writer, but I’m willing to commute daily to be one.
†I use a shell account at Panix.com, who I highly recommend, and I have a whole series of Unix scripts that allow me to send a few hundred emails, or do a mail merge into an email, with attached files, with each recipient getting an individualized “To:” header. (I.e. no BCC:) If you are interested, drop me a line, and I will send them to you.‡
‡And there is no need to tell me that it’s ugly C shell script. I already know this.

Economics Update

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More good news, with the Conference Board’s consumer confidence index rising in April, and home prices falling in February.

I bet you are wondering how home prices falling in February is a good thing. Well, it’s simple, it fell month to month, but rose on a year over year basis, for the first time since December, 2006.

It may mean that things are bottoming out.

Certainly, it’s better than the alternative.

Still, the financial crisis looks to remain with us for some time, with Greece and Portugal’s sovereign debt downgraded by Standard & Poors, with some of Greece’s debt now rated as junk bonds.

Unsurprisingly, this has led to a flight to safety and concerns about the recovery, which has driven the dollar higher and oil lower.

Economics Update

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Well, we have absolutely boffo numbers on the new home sales front, with sales climbing 27% from February to March, though as Barry Ritholtz notes, “In February 2010, new Home Sales reached a record low. Bouncing off of those depressed levels is not a big deal.”

I call a dead cat bounce, with a 3 cushion shot because of the February snowpocalypse, though it is still good news, as is the durable goods order number, which were down overall, but up when aircraft sales are factored out.

As to currency and energy, the reduced fears over Greece following their request for external aid pushed the dollar down, and the housing numbers drove oil higher.

Economics Update

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It’s jobless Thursday, and initial unemployment claims fell by 24,000 to 456,000, not as good as forecast, and the 4-week moving average rose slightly, while continuing claims fell by 40,000 to 4.65 million, though, as always, the last number does not count those (like me) collecting extended unemployment benefits.

In inflation land, we had the producer price index rise by 0.7% in March, giving an annual rate of inflation of over 8½%, though the year over year increase is 6%, and for the core rate, which strips out food and energy, the increase was only 0.1% for the month and 0.9% year over year.

Of concern is the fact that food prices rose by 2.4% in March, a 26 year high.

In real estate, the Architecture Billings Index fell, indicating future contraction in the construction of commercial real estate, while mortgage applications rose, largely on lower rates.

In home sales, we saw a 6.8% spike last month. This was almost certainly driven by the home buyer tax credit that is due to expire on April 20, so we’ll see what the April, and May numbers look like.

In energy and currency, oil rose slightly on good earnings reports, and the Euro took a hit on new Greek deficit numbers.

Economics Update

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Not a bunch of news, but is news is good news, with the Conference Board’s index of leading economic indicators rising sharply.

Additionally, defaults and foreclosures fell in California, though one wonders whether this is a real improvement, or if it’s just that we’ve basically run out of non-delinquent/foreclosed houses.

L’affaire Goldman seems to the primary mover in oil, with strong Goldman earnings driving oil prices higher, while the juxtaposition of the Goldman numbers and the uncertainty about Greece left the dollar mixed.

[on edit]
The Canadian Ddollar has broken the 1:1 ratio with the US dollar, hitting $1.0012 U.S today.

Economics Update

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Beyond L’affaire Goldman, it’s a slow news day

We have the Reuters/University of Michigan consumer confidence survey falling, and applications for building permits up sharply in March.

The oil and currency numbers are really about the Goldman Sachs enforcement action by the SEC, which raised concerns about the economy, and this uncertainty has pushed oil down, and the dollar up, on a concern about demand and demands for safe havens respectively.

Economics Update

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Well, so much for a recovery in employment, initial unemployment claims rose by 24,000 to 484,000, with the 4-week moving average rising by 7,5000 to 457,750, and continuing claims rose by 73,000 to 4.64 million.

Additionally, real estate is looking grim, with foreclosures rising by 7% in the 1st quarter of2010over the 4th quarter of 2009, and by 16% year over year, which implies over 1 million foreclosures over the next year.

On the brighter side of real estate, mortgage rates fell for the first time in 5 weeks, and builder confidence rose, though the latter is largely driven by the insane home buyer tax credits.

In consumer credit, credit card delinquencies fell in March, though Capital One is doing worse. (What’s in your wallet?)

In more general metrics, the Philadelphia Federal Reserve Bank’s Business Activity Index beat expectations, rising to 20.2, beating forecasts of 20, and factory production grew by 0.9%.

Meanwhile in currency and energy, concerns about Greece drove the dollar up, and oil down.

I’ll Take “Unsustainable” for $500, Alex

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China’s Economy?

China is reporting that its economy grew by 11.9% year over year.

This raises two issues:

  • How reliable are these numbers? The PRC tends to encourage lower level bureaucrats to over-report growth, and these numbers tend to filter up the chain.
  • If these numbers are anywhere near reality, what is driving it, and will it be like Wile E. Coyote discovering that he is standing in thin air when something more sustainable hits?

Chinese real estate is clearly with a bubble, with some areas experiencing appreciation in excess of 50% (!) over the past year.

One of the things driving this is the fact that the Yuan is under-valued: It makes foreign assets more expensive, which drives up demand for local investments, like real estate.

If their currency appreciates, and it does appear to be in the cards in the not-too-distant future, we could see money flowing to non-Chinese assets, and their bubble burst.

This could be yet another shoe to drop (there are many out there) in the current downturn, even though we currently appear to have found a bottom.

Economics Update

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Well, we have mostly good news today, with the Summary of Commentary on Current Economic Conditions, aka “The Beige Book”, showed the economy picking up steam in March.

Additionally, the retail sales report for March rose more than expected, and diesel fuel consumption rose indicating increased transportation activities, and the US trade deficit rose, which also indicates an increase in demand.

On the down side, the National Federation of Independent Business’ index of small business optimism fell in March, and since this is where most jobs are created, it does not bode well for jobs in the near term.

In real estate, mortgage applications fell for the 6th straight week, which is not surprising, as mortgage rates have been trending higher and the FHA has started to charge more for mortgage insurance to replenish its depleted reserves.

Finally, inflation seems to remain well under control with the March CPI rising by only 0.1%

Economics Update

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Business orders returning

Well, it’s kind of a slow news day, as the big news was the Euro loans to Greece, but we do have another sign of a recovery, which is that business orders are on an upswing worldwide.

All in all, I think that we are truly in recovery, unless another shoe drops in high end finance, but I’m kind of expecting another shoe to drop there, causing another panic and another bailout.

The National Bureau of Economic Research (NBER) continues to take a conservative approach, saying that, “The determination of the trough date on the basis of current data would be premature.”

This is not surprising. The folks at the NBER typically take more than a year after the trough bottom to announce that they have determined a trough date.

In energy, gasoline is up nearly 4¢/gallon this over the last three weeks, to $2.85/gallon, and it’s not unreasonable to assume that it will break $3/gallon by the start of the summer driving season.

As to oil, it fell today, as and so did the dollar, largely in reaction to the Greek bailout.

Economics Update

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Well, today is jobless Thursday, and the the new unemployment numbers disappointed big time, with initial claims rising to 460,000, as opposed to falling slightly to 435,000, with the 4-week moving average rising 2,250 to 450,250.

On the bright side, continuing claims fell by 131K to 4.55 M, though one wonders how much of that was because of Tom Coburn’s petulant filibuster against extended unemployment benefits, which likely has depressed the number, which (full disclosure) has effected me directly. (Will no one rid me of ……… Oh, never mind.)

Meanwhile in consumer spending, February consumer borrowing fell at a -5.6% annual rate, wiping out, and then some, the growth in consumer borrowing in January that had economists crowing, though the Institute for Supply Management’s service sector index grew faster than it has since July 2004 in March.

On the brighter side, delinquencies in consumer loans fell in the 4th quarter of 2009.

In the world of national finance and central banks, we have a few developments with the 3-year, 10 year, and 30 year treasury notes falling and their yields rising, which implies that investors expect interest rates to increase, at least a bit.

Meanwhile, in central bank land, the Bank of England has left its benchmark interest rate and its quantitative easing unchanged, and the Bank of Korea also left rates unchanged.

In real estate, it’s been a pretty busy few days with the 30 year fixed rate mortgage hitting an 8 month high, which, unsurprisingly has depressed mortgage applications.

In residential real estate, foreclosures are still rising, and distressed home sales hit a new high of 29% in January, though delinquencies on sub-prime mortgages fell for the first time since 2006.

I’m thinking that the sub-prime delinquency rate fell because we have finally run out of people who have those mortgages who haven’t yet been forced out of their homes.

In commercial real estate, mall vacancies have hit an at least 10 year high, there are no records prior to this, and office vacancies hit 17.4%, the highest since 1994.

Meanwhile, in energy and currency, the bad job numbers drove crude prices down, and new concerns about Greece have driven the dollar higher.