By EconMatters
In the previous post, we briefly mentioned that
“….there could be some hidden debt bombs as a recent Bloomberg finding suggests that China’s banks may be understating their exposure to runaway local borrowing by possibly billions of dollars that is raising fears of a government bailout.”
Here are more details. It appears that, based on a Bloomberg News survey, the construction boom by many local governments as part of China’s stimulus program that started in November 2008 have now become too big to complete and may require a bailout even bigger than the Euro debt crisis. Continue reading →
The National Association of Realtors (NAR) completely destroyed its December 2011 existing homes sales data and analysis with their January release today – and now they are saying their January 2012 data is better. At this point there is no doubt sales volumes are increasing – but the improvement originally conveyed in December makes the January “improvement” a step backwards.
Home sales prices too were screwed up in December – at the time it seemed strange prices were shown as increasing. This is what we had said in our December analysis: Continue reading →
The January 2012 Chicago Fed National Activity Index (CFNAI) release shows the 3 month moving average of +0.14 – indicating national economic activity was slightly above its historical trend. The index is approximately equal to the levels one year ago, and has broken out of the range channel it has languished in for the last 8 months.
The Chicago Fed National Activity Index (CFNAI) is Econintersect’s primary coincident indicator tool as it provides a summary quantitative value for all the economic data being released. The data is not spun or explained – it is what it is. However, this index may not be accurate in real time (see caveats below) – and it did miss the start of the 2007 recession. Continue reading →
by Macrotides
Monetary policy is a bit like watering a garden. Its nourishment is intended to foster growth and jobs, and when in full bloom, a rising standard of 
living for the majority of people in society. A functioning spigot (central bank) and nozzle at the end of the hose (banking system) are needed for monetary policy to water the economic garden. If either isn’t functioning properly, too much or too little water will flow from the financial system into the economy. Just as too much water can kill a healthy plant, too much money can cause inflation, erode the purchasing power of workers, and lower their standard of living. When too little money (credit) flows, economies contract, unemployment rises, and government tax revenue falls. Continue reading →
Posted in China, Economics, Eurozone, International Economic data, macroeconomics
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Tagged Brazil, China, Eurozone, Greece, India, inflation, interest rates, Italy, macrotides, Portugal, slowdown, Spain, unemployment
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Guest Author: Yves Smith, author of the best seller “Econned” and founder of the widely read blog Naked Capitalism, where this article first appeared with the title: Quelle Surprise! Taxpayers Will Be Paying for Part of Mortgage Settlement
The whole purpose of a settlement is that a party pays damages to rid themselves of liability, and the amount they pay (and “pay” can include the cost of reforming their conduct) is less than what they expect to suffer if they were sued and lost the case (otherwise, it would make more sense for them to fight).
But in the topsy-turvy world of cream for the banks, crumbs for the rest of us, we have, in the words of Scott Simon, head of the mortgage business at bond fund manager Pimco, in an interview with MoneyNews, lots of victims paying for banks’ misdeeds: Continue reading →
Greece continues to screw up the economic landscape.
The unanswerable question remains how Greece will default. Greece (as well as its weak sisters) cannot survive without an overhaul of the basic structure of the Eurozone. No talks are underway to reform the basic Eurozone structure – only continuing efforts to slash budgets which will intensify the death spiral. It amazes me at the market continuing to react to “good” Eurozone news. There is no good news – only bad news in various degrees. Continue reading →
by Steven Hansen and Doug Short
The Consumer Price Index (CPI-U) annual inflation rate fell to 2.9% in January 2012 from 3.0% in December. This was above the Econintersect expectation of 2.5%. Core inflation (CPI less food and energy) was rose slightly to 2.3% annual inflation [note that the Federal Reserve uses 2.0% core inflation as an inflation target].
There has been some hinting at the Fed that inflationary targets may be flexible at this time with so much economic slack, and the Fed statements continue to indicate they expect inflation to recede in the coming months. Continue reading →
Posted in Prices - PPI, CPI and More
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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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This is the second month of the “new” Leading Economic Index from The Conference Board, and after a month of review this index appears to be a significant tool useful for long-range outlook economic forecasts.
The Conference Board Leading Economic Index® (LEI) for the U.S. increased 0.4 percent in January to 94.9 (2004 = 100), following a 0.5 percent increase in December and a 0.3 percent increase in November.
This index is designed to forecast the economy six months in advance. Additional comments from the economists at The Conference Board add context to this positive outlook. Continue reading →
Combined imports and export container shipment growth was literally zero year-over-year at the Ports of LA and Long Beach in January 2012. This is a flat start for the new year.
Exports (which are an indicator of competitiveness and global economic growth) slightly contracted for the second time since August 2010.
Continue reading →
The Philly Fed Business Outlook Survey headlines for February 2012 show the index again improved slightly – and it remains in expansion territory. Survey components new orders and unfilled orders have improved – with both now in expansion territory.
Responses from manufacturing firms polled for this month’s Business Outlook Survey suggest that regional manufacturing activity continued to expand in February. The survey’s broad indicators for general activity, new orders, and shipments all increased from their readings in January. Firms reported near-steady employment levels but an increase in average work hours. More firms reported higher input prices this month, and a sizable share of firms reported price increases for their own manufactured goods. The survey’s broad indicators of future activity fell from levels in recent months but continue to reflect optimism about future manufacturing growth.
Continue reading →
The Producer Price Index (PPI) finished goods prices increased 
4.1% year-over-year in January 2012 (less than the 4.8% in December) – and increased 0.1% month-over-month. The PPI represents inflation pressure that could move into consumer prices – and the PPI continues to moderate.
PPI finished goods also is showing moderating pressures from intermediate goods and crude goods price inflation – in fact the differential in the producer price chain has almost disappeared. The market had been expecting a 0.3% month-over-month increase in finished goods prices (compared to the 0.1% increase).
Continue reading →
Posted in Prices - PPI, CPI and More
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Tagged consumer prices, CPI, energy, export prices, finished goods, food, gasoline, inflation, PPI, producer prices, Steven Hansen
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Residential building permits and construction completions in January 2012 show the industry rebound is continuing – and it is being fueled this month by both single family and apartments (structures with 5 or more units).
US Census Headlines:
- building permit up 0.7% month-over-month, up 19.0% year-over-year
- construction completions down 12.0% month-over-month, up 4.1% year-over-year
- the market expected 650K to 675K annualized housing permits versus the 676K reported
Econintersect Analysis:
- Building permits are up 20.4% month-over-month, up 27.2% year-over-year.
- construction completions are down 4.7% month-over-month, up 2.3% year-over-year.
Continue reading →
by Guest Author Scott Sambucci, Altos Research
“The latest home prices data shows that a stable 
market in January is leading to an up month in February. Rents and newly listed property prices all climbing weekly.”
Like Giants fans around the country still celebrating a big win, the housing markets seem to want to play the role of the triumphant underdog. Rolling into February 2012, the housing market has a set of reasonably bullish signals. But is it too early to celebrate? Continue reading →
The headlines say Industrial Production (IP) was unchanged in January 2012 and up 3.4% year-over-year. Econintersect analysis is down 0.4% month-over-month while up 2.8% year-over-year.
The market was expecting a month-over-month increase of 0.1% to 0.6% (vs the headline 0.0%).
IP headline data has three parts – manufacturing, mining and utilities. In the January 2012 report, manufacturing was up 4.5%, mining up 5.8% and utilities were down 7.5% (all percentages year-over-year). Note that utilities are 10.9% of the industrial production index.
The year-over-year rate of growth for IP has degraded since October 2011 (second derivative)- yet the manufacturing component of IP (which tracks the economy) has a slightly positive rate of growth since May 2010. The “sick” part of IP is utilities which is causing the overall index to misrepresent the true state of the economy.
Continue reading →
The Empire State Manufacturing Survey (manufacturing in New York State) in February 2012 continued on its third month of climb from negative territory. Manufacturing expansion is indicated by positive numbers to this index:
- The index rose six points to 19.5. This index is at the highest level since June 2010.
- Expectation was for a readings between 14.0 to 15.0
This index is now improving, and well above levels associated with past recessions. As a subjective statement, this index is showing manufacturing has entered “moderate” expansion territory.
Continue reading →
[This post has been revised - see note at bottom]
The Bureau of Labor Statistics (BLS) currently does not break down employment numbers by size of firm – and Econintersect has been relying on the data published by ADP in their monthly employment reports. However, the BLS is now thinking of providing this breakdown.
The Current Employment Statistics (CES) program is examining the feasibility of publishing monthly CES employment, hours, and earnings estimates by firm size. Currently, BLS publishes the first preliminary CES employment estimates for a given month at selected industry detail. Subsequent estimates for that month are published in more industry detail with the following month’s first estimates. Research suggests that the available sample may make it feasible to publish monthly size-class employment estimates by major industry sector together with the first preliminary estimates. Employment change by firm size would add a valuable dimension of detail to understanding current employment trends.
Continue reading →
Business sales continued to show moderate growth in December 2011 – but are strangely soft. Business sales combines manufacturing, wholesale and retail sales.
Business sales (inflation adjusted) now has the worst growth rate since February 2010 confirming this softness. Inventories look good with inventory-to-sales levels near historical lows for Decembers.
As inventories only rose slightly, Econintersect suspects business anticipated a weaker Christmas season – and cut back offerings accordingly. Interestingly, advance January 2012 retail sales also came in soft today. Continue reading →
January 2012 export prices rose 0.2% month-over-month while import prices rose 0.3%. The January rise in import prices is due to fuels / lubricants and foods, while the rise in export prices was driven by agriculture exports.
The data is continuing to indicate that the run up in prices seen since mid-2010 is over. Exports now up only 2.5% year-over-year and imports up 7.1%.
Continue reading →
Pundits are throwing out various reasons (including some apparent incorrect auto sales data) for reasons why January 2012 advance retail sales are improving at a weak rate. The expectations were for retail sales improvement 2 to 3 times higher than what was reported.
Econintersect analysis is that retail sales are not warning of an impending economic crash – but appear to be disappointing for those who want retail sales to lead a recovery.
No matter how the data is cut, retail sales are expanding faster than population growth – and roughly paralleling GDP. Looking at inflation adjusted data which gives a better feel of the quantity of things being purchased – shows the rate of growth has been roughly the same over the last 4 months.
Continue reading →
The January 2011 Ceridian-UCLA Pulse of Commerce Index™ (PCI) fell 1.7% year-over-year, and 2.2% below year-ago levels. Econintersect uses the PCI raw data to help forecast Main Street economy – and our analysis is that the index is up 2.6% month-over-month and down 0.1% year-over-year.
The data has been in a long term “less good” trend.
Continue reading →
