by John Mauldin, Thoughts from the Frontline
The evils of this deluge of paper money are not to be removed until our citizens are generally and radically instructed in their cause and consequences, and silence by their authority the interested clamors and sophistry of speculating, shaving, and banking institutions. Till then we must be content to return, quo ad hoc, to the savage state, to recur to barter in the exchange of our property, for want of a stable, common measure of value, that now in use being less fixed than the beads and wampum of the Indian, and to deliver up our citizens, their property and their labor, passive victims to the swindling tricks of bankers and mountebankers. ≈ Thomas Jefferson, in a letter to John Adams, 21 March 1819 Continue reading →
Posted in Economics, Government, Japan, Trade Data, macroeconomics, money, money and banking, stock markets
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Tagged consumer confidence, Economy, exports, GDP, industrial production, inflation, Japan, John Mauldin, recovery, trade balance
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The Ideology to End Ideologies – A Response to Corey Robin on Nietzsche, Hayek, Mises, and Marginalism
by Philip Pilkington
This article was first published by Naked Capitalism (May 13, 2013)
Editor’s Note: Econintersect considers this a fundamentally important discussion of the philosophical underpinnings of 20th and 21st century economic thinking. It is contentious, to the point of being “in your face”, and is a far more complex subject than many would try to address in an essay of this length. However, the author has succeeded illustriously in his effort. The reader is encouraged to take the time to read this carefully and critically. We think it is well worth the effort.
The political philosopher Corey Robin recently published an interesting essay on what he thinks to be the connection between the late German philosopher Friedrich Nietzsche and the economic theory of marginalism which Robin associates with the Austrian school (but which, of course, is also a mainstay of mainstream neoclassical economics). I should start by saying that I respect Robin’s work a great deal; I respect it to the extent that I did an interview with him for this very site when his last book appeared. However, his latest piece is grossly misguided and reflective of the fact that, when it comes to theoretical economics, academic critics on the left simply do not know their enemy at all. Continue reading →
Written by Steven Hansen
There have been several posts over the past few weeks discussing college / university education. Goldman Sachs economist Jan Hatzius stated:
[T]he faster job growth among college graduates is entirely due to faster growth in the size of the college-educated population; the employment/population ratio among college graduates has in fact fallen sharply,
Continue reading →
Posted in Employment, Weekly Economic Summary, aa syndication
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Tagged college, dropout, Economy, employment, GDP, high school, recovery, Steven Hansen, unemployment, university, weekly review
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by Lee Adler, Wall Street Examiner
The media exhibited much consternation today as economists’ consensus guess on first time unemployment claims turned out to be way too optimistic this week. That raised two questions in my mind. Was the number really that bad, and even if it was, does it matter?
The Labor Department reported that the seasonally adjusted (SA) representation of first time claims for unemployment rose by 32,000 to 360,000 from a revised 328,000 (was 323,000) in the advance report for the week ended May 11, 2013. The consensus estimate of economists of 330,000 for the SA headline number was too optimistic after 3 weeks of guesses that were too pessimistic. Call it “evening things up.” They were wrong one way 3 times in a row, so they overcompensated the other way this week. It’s a ridiculous game, but everybody plays anyway. Forecasters are virtually always wrong, not just because economic forecasting is quackery, but also because the seasonally adjusted number, being made-up, is impossible to consistently guess (see endnote). Continue reading →
by Doug Short, Advisor Perspectives/dshort.com
The University of Michigan Consumer Sentiment preliminary number for May came in at 83.7, a major advance over the April final reading of 76.4. This is the highest level since July of 2007, prior to the Great Recession. The Briefing.com consensus was for 78.5.
See the chart below for a long-term perspective on this widely watched index. I’ve highlighted recessions and included real GDP to help evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.
Continue reading →
Written by Steven Hansen
The Conference Board Leading Economic Index (LEI) for the U.S. improved 0.6% in April to 95.0 (2004 = 100). Overall, the index value has been slowly trending up, and one month is not a trend.
This index is designed to forecast the economy six months in advance. The market expected a 0.3% improvement in the LEI (versus the +0.6% reported).
Both the LEI and ECRI’s WLI are forecasting improving growth for the next six months.
Continue reading →
Tanju Yorulmazer, Federal Reserve Bank of New York
One of the most interesting phenomena marking the recent financial crisis was the disruptions in the interbank market, where banks borrow and lend reserves to each other. This post draws upon my paper with Douglas Gale, “Liquidity Hoarding,” to discuss this practice by banks during times of increased uncertainty about future liquidity needs and its consequences for the efficient transfer of liquidity in the interbank market.
Continue reading →
Written by Steven Hansen
The Philly Fed Business Outlook Survey fell into negative (contraction) – after two months in positive territory. This survey has been negative for 9 of the last 13 months. Key element new orders slipped further into contraction territory.
This is a very noisy index which readers should be reminded is sentiment based. The Philly Fed historically is one of the most negative of all the Fed manufacturing surveys.
The market was expecting the index value of 2.0 to 2.5 (actual was -5.2). Positive numbers indicate market expansion, negative numbers indicate contraction.
Continue reading →
Posted in Manufacturing, Retail & Business Sales, aa syndication
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Tagged backlog, business, conditions, manufacturing, new orders, orders, Philly Fed, philly_man, Steven Hansen
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Written by Steven Hansen
Residential building permits and construction completions in April 2013 continues to show the industry growth.
- Our analysis paints a slightly different picture than the headline data.
- Apartment building permits comparing April 2012 to April 2013 are stronger this month.
- The rate of annual growth for building permits in the last 12 months for this sector has been mostly in a channel between 25% and 40%. This month is above this channel.
- Please note that the media concentrates on housing starts as a single metric for this data series – while Econintersect focuses on the general growth trends of the sector (permits versus completions) which are the best indicator of trends which show the health of this sector. Housing starts would give an indication of construction contribution to GDP.
Continue reading →
by Doug Short and Steven Hansen
The April 2013 Consumer Price Index (CPI-U) year-over-year inflation rate fell from 1.5% to 1.1% . Core inflation (CPI less food and energy) fell slightly also from 1.9% to 1.7%.
The dynamics were large decreases from the gasoline index (which is not part of core inflation), and some inflationary pressures from electricity and natural gas.
The Producer Price Index (released yesterday) showed finished goods fell to a 0.6% year-over-year inflation rate.
Continue reading →
Posted in Prices - PPI, CPI and More, aa syndication
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Tagged Advisor Perspectives, consumer prices, CPI, Doug Short, dshort.com, energy, export prices, finished goods, food, gasoline, inflation, PPI, producer prices, Steven Hansen
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Written by Steven Hansen
For the second month in a row, both import and export container counts are contracting year-over-year – comparing same months in 2012 and 2013.
- Economically intuitive imports however are “less bad” (but are still growing year-to-date);
- exports are also “less bad” in April but continues to contract year-to-date.
Continue reading →
Housing Smoke and Mirrors (Part 6)
“It was the best of times, it was the worst of times.”
Written by Adam Whitehead, KeySignals.com
Click to enlarge
We thought it would be amusing to start this discussion with the latest “Smoke and Mirrors” from RealtyTrac. They clearly have an interesting perspective and “scale” in relation to measuring the housing recovery. If a picture can be worth a thousand words, hyperbole has just reached a new level. No prizes for guessing what the consensus view on the housing market is. Continue reading →
by Reda Cherif and Fuad Hasanov, Voxeu.org
This article was originally published by Voxeu.org (May 3, 2013)
Europe’s austerity-first approach has triggered research-based efforts to evaluate the effectiveness of debt-reduction strategies. This column, based on a US empirical study, suggests that an ‘austerity shock’ in a weak economy may be self-defeating. Public-debt reduction historically occurs gradually amid improved growth. If policymakers, firms and households respond as in the past, we should expect lower deficits amid higher growth and, eventually, decreasing debt ratios.
In many advanced countries, in the wake of the 2008 global financial crisis, deficits skyrocketed and public debt ballooned (see Figure 1). In fact, fiscal stimulus accounted for only a small fraction of the increase in debt, whereas collapsing revenues and higher unemployment and social benefits contributed the largest share (IMF 2011). Continue reading →
Posted in Economics, International Economic data, macroeconomics
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Tagged austerity, consumer confidence, Economy, Federal Reserve, Fuad Hasanov, GDP, inflation, recession, recovery, Reda Cherif
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Written by Steven Hansen
The headlines say Industrial Production (IP) declined 0.5% in April 2013 and up 1.9% year-over-year. Econintersect‘s analysis using the unadjusted data is that IP was also showed a decline of 0.5% month-over-month but the year-over-year was up 2.5% year-over-year.
- The year-over-year rate of growth is trending up using a three month rolling average, but is down using any rolling average between 6 to 12 months.
- Industrial production is being affected by large movements in utilities, but the data was soft in most categories.
- The market was expecting a month-over-month decrease of 0.2% to 0.5% (vs the headline growth decline of 0.5%).
- The manufacturing sub-index (which is more representative of economic activity) was down 0.4% month-over-month – and up 1.3% year-over-year – seasonally adjusted.
Continue reading →
Written by Steven Hansen
The Empire State Manufacturing Survey (manufacturing in New York State) in May 2013 shows manufacturing is contracting after expanding for the previous three months in a row.
- This noisy index has moved from 17.1 (May), 2.3 (June), 7.4 (July), -5.9 (August), -10.4 (September), -6.2 (October), -5.2 (November), -8.1 (December), -7.8 (January 2013). 10.0 (February) , 9.2 (March), 3.1 (April) – and now -1.4.
- Expectation was for a reading of 1.0 to 3.5 versus the -1.4 reported
- New orders sub-index also shows this sector is marginally contracting, while unfilled orders continues to say this sector is slightly contracting.
As this index is very noisy, it is hard to understand what these massive moves up or down mean – however this regional manufacturing survey is normally one of the most pessimistic.
Continue reading →
Written by Steven Hansen
The Producer Price Index year-over-year inflation is disappearing..
The BLS reported that the Producer Price Index (PPI) finished goods prices year-over-year inflation rate fell from 1.1% in March to 0.6% in April 2013 – with the month-over-month growth down 0.7%. The PPI represents inflation pressure (or lack thereof) that migrates into consumer price.
The market had been expecting a contraction of 0.5% month-over-month in finished goods prices compared to the 0.7% contraction.
Continue reading →
by Doug Short, Advisor Perspectives/dshort.com
Note from dshort: I’ve updated this commentary to include the latest labor force data in May’s release of the April employment report.
Every Thursday I post an update on weekly unemployment claims shortly after the BLS report is made available. My focus is the four-week moving average of this rather volatile indicator. The financial press takes a fairly simplistic view of the latest weekly number, and the market often reacts, for a few minutes or a few hours, to the initial estimate, which is always revised the following week.
One of my featured charts in the update shows the four-week moving average from the inception of this series in January 1967. Continue reading →
Written by Steven Hansen
In April 2013, year-over-year price deflation continues in import prices for 11 of the last 12 months . Export price price are also deflating this month:
- with imports down 0.5% month-over-month, down 2.6% year-over-year
- and exports down 0.7% month-over-month, down 0.9% year-over-year.
The dominate factors in the month-over-month changes were falling oil import prices and falling food export prices – however export prices fall was broad based.
Continue reading →
Posted in Prices - PPI, CPI and More, aa syndication
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Tagged agriculture, BLS, commodities, export, food, import, OIL, prices, Steven Hansen
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by Lee Adler, Wall Street Examiner
Retail sales grew modestly and on trend in April. There was no evidence of either a slowing economy or one that is overheating and about to cause conventional inflation measures to move higher. At the same time, as usual, economists got the outlook wrong, underestimating the growth rate.
According to the Commerce Department’s Advance Retail Sales Report, retail sales rose by 0.1% in April (month to month) and were up 3.7% annually, which was an acceleration from the annual rate of +2.8% in March. These are seasonally adjusted estimates which will be revised several times before they are finalized. Neither figure is adjusted for inflation. The median forecast of economists in mainstream media surveys was for sales to be down -0.3% to -0.6% month to month. The economists’ consensus was too low (what else is new?), with the problem being partly with the seasonal adjustment, and partly just the fact that economic forecasting is quackery. These big forecasting misses happen almost every month lately. Continue reading →
Posted in Economics, Retail & Business Sales, macroeconomics
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Tagged consumer confidence, CPI, Economy, Federal Reserve, gasoline, GDP, Lee Adler, retail sales, trade balance
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