Category: US Economy
The analysis published under this category are as follows.
Tuesday, August 14, 2007
It's Not the Housing Market That Threatens the US Economy / Economics / US Economy
By: Gerard_Jackson
The reported collapse of the mortgage market has clearly spooked markets and the great majority of analysts. We are even told that this financial ‘disaster' is rippling through Europe and Asia, forcing their central banks to pump up the money supply. But belief that the bursting of a housing boom could send the US economy into recession is, in my opinion, a complete fallacy.
Friday, August 10, 2007
You Know Things Are Bad When The WSJ Trots Out Malpass and Wesbury In The Same Week / Economics / US Economy
By: Paul_L_Kasriel
This headline is from an email I received today from a well-known financial journalist noted for her proclivity for identifying "naked emperors." I will address Malpass' errors in another commentary. But in this short note I want to talk to Wesbury's op-ed piece in today's WSJ, "Fair but Unbalanced".
Before countering some of Wesbury's almost perennial happy-talk, let me acknowledge a bit of truth in his essay. The financial media, especially the broadcast financial media, do like to "spice it up," akin to professional wrestling, by having bulls and bears duke it out. After all, as Wesbury indicates, it's all about ratings and ad dollars. Sound bites sell, not analysis. But that's the extent of our agreement.
Read full article... Read full article...
Wednesday, August 08, 2007
US Economic Growth in Domestic Private Final Demand : Its Falling - Can It Get Up? / Economics / US Economy
By: Paul_L_Kasriel
If the housing recession is not spreading to other parts of the economy, how do you account for the fact that growth in real domestic private final demand is slowing? Real domestic private final demand includes the following line items from the gross domestic product (GDP) accounts: personal consumption expenditures, nonresidential fixed investment expenditures and residential investment expenditures. Real domestic private final demand represented about 87% of real GDP in the past five years. Chart 1 shows the growth in real domestic private final demand in recent years – on both a quarter-to-quarter annualized basis and year-over-year basis.
Read full article... Read full article...
Tuesday, August 07, 2007
Some Advice For Ben Bernanke on the State of the US Economy / Economics / US Economy
By: Tim_Iacono
Here are a few words of advice for current Fed chairman Ben Bernanke who will prognosticate on the state of the U.S. economy in the FOMC policy statement today.
First, start assigning blame - get political man! The next few months are probably going to be pretty rough and next year might be even worse, so start pointing your finger at the guy who is responsible for all of this.
Read full article... Read full article...
Tuesday, August 07, 2007
Monetarism and the US economy / Economics / US Economy
By: Gerard_Jackson
Tom Nugent's article on the US economy and monetary policy inadvertently revealed the severe shortcomings of monetary debate in the US. ( Monetarism: Dead at Last? , National Review Online , 23 July 2007). Nugent refers to Wayne Angell, a former member of the Federal Reserve Board, who appeared on the Larry Kudlow show on CNBC , who said that the Fed was targeting the federal funds rate. What was really interesting was his comment that monetary growth merely responded to changes in the demand for money.
Read full article... Read full article...
Tuesday, July 31, 2007
No Worry about US Consumer Spending So Long As Jobs/Income Are Growing? / Economics / US Economy
By: Paul_L_Kasriel
That's the rallying cry of the economic bulls. Aside from the fact that jobs and personal income are coincident indicators, not leading indicators, and that labor compensation as a percent of consumer spending tends to rise just before the onset of recessions (see Payroll Growth = Consumer Spending Growth?), will jobs and income growth alone be enough to sustain real consumption growth going forward? That is, with mortgage equity withdrawals drying up and corporate buybacks and private equity buyouts slowing down, suppose that consumer spending relative to disposable income reverts to its mean. What rate of growth in real consumer spending could we look forward to in 2007?
Read full article... Read full article...
Wednesday, July 25, 2007
Wealth Effect or Borrowing / Asset Sales Effect? / Economics / US Economy
By: Paul_L_Kasriel
In the question-and-answer session following his semiannual monetary policy report to Congress last week, Fed Chairman Ben Bernanke pooh-poohed the notion that mortgage equity withdrawal (MEW) had played much of a role in funding household spending in recent years. Rather, Chairman Bernanke, like most academics, cited the "wealth effect" as responsible for stimulating household spending.Read full article... Read full article...
Wednesday, July 25, 2007
Q2 US Real GDP Growth Forecast: Chicago Fed at 2.7%; Consensus at 3.2% / Economics / US Economy
By: Paul_L_Kasriel
Of course, the Chicago Fed does not release to the public its GDP forecasts. But it does publish an index called the National Activity Index (NAI), which is, in effect, a darned good coincident indicator of real GDP growth. The NAI is a weighted average of 85 existing monthly indicators of economic activity drawn from five broad categories:Read full article... Read full article...
Saturday, July 14, 2007
Philly Fed President Plosser: Consumer Spending, Exports Are Cause for Optimism / Economics / US Economy
By: Paul_L_Kasriel
Really?
Light motor vehicle sales down for six consecutive months (see Chart 1) is cause for consumer spending optimism? Bed Bath & Beyond, Best Buy, Circuit City, Sears Holdings, Home Depot and West Marine recently issuing profit warnings are a cause for consumer spending optimism?
Saturday, July 14, 2007
Inflation, Birth / Death Ratio and Asking the Chinese to Buy Our Mortgages / Stock-Markets / US Economy
By: John_Mauldin
In this issue:
The Birth/Death Ratio
Retail Sales Up? Let's Hear it for Inflation!
King Dollar and the Guillotine
Asking the Chinese to Buy Our Mortgages?
A Half a Trillion and Counting
Albacore, Maine, Denmark and Europe
Is the economy slowing down or is it getting ready to go on a new tear? Judging by the run-up in the Dow, the answer is a major turnaround for the economy in the last half of the year, from the close-to-recession numbers of the first quarter. So, what has happened to my forecast of a slowdown or minor recession?
Read full article... Read full article...
Tuesday, July 10, 2007
US Bureau of Labor Statistics "Phantom" Workers Now Account for 56% of Payroll Increase / Economics / US Economy
By: Paul_L_Kasriel
Each month the Bureau of Labor Statistics attempts to estimate how many jobs were created (or eliminated) by smaller businesses not yet included in its survey of employers. This estimate is referred to as the "birth/death" adjustment. In the 12 months ended June, total-not-seasonally-adjusted nonfarm payrolls increased by 1.982 million. During the same interval, the birth/death adjustment contributed 1.111 million jobs to the total. That is, in the 12 months ended June, the birth/death adjustment accounted for 56.0% of the 12-month increase in total nonfarm payrolls.Read full article... Read full article...
Friday, July 06, 2007
The Tentacles of the Housing Recession Are Beginning to Strangle the US Consumer / Economics / US Economy
By: Paul_L_Kasriel
Light motor vehicle sales in the U.S. dropped 3.4% month-to-month in June to a seasonally adjusted rate of 15.6 million units. Excluding the Katrina-depressed sales of September 2005, the June 2007 sales rate was the slowest since September 2002. Light motor vehicle sales have declined sequentially for six consecutive months (see Chart 1). On a quarterly average basis, new light motor vehicle sales contracted at an annual rate of 12.7% in Q2 vs. a 6.2% increase in Q1.Read full article... Read full article...
Thursday, June 28, 2007
Chicago Fed Index Suggests Continued Below Trend US Growth in Q2 / Economics / US Economy
By: Paul_L_Kasriel
The Chicago Fed publishes a national economic activity index each month that only the Chicago Fed's economic research department and I pay attention to. This index is not a leading one, but is a coincident one.
The Chicago Fed National Activity Index (CFNAI) is a weighted average of 85 existing monthly indicators of economic activity drawn from five broad categories: 1) output and income 2) employment, unemployment and hours 3) personal consumption, housing starts and sales 4) manufacturing and trade sales and 5) inventories and orders.
Read full article... Read full article...
Tuesday, June 19, 2007
Time to Change America by Challenging Economic Fundamentals / Economics / US Economy
By: Richard_C_Cook
Though headlines are dominated by the war in Iraq, everyone realizes there is something wrong with the US economy. But few have focused on the connection between the two.
It is clear that the post-World War II era of worldwide dollar hegemony is beginning to slip. The ideas of a "New American Century" put forth by Washington-based neocons actually may represent a last-gasp attempt to use military force to hold onto a system whereby the US has supported its domestic economy through trade domination of most of the rest of the world.
Read full article... Read full article...
Tuesday, June 19, 2007
An Emergency Program of Monetary Reform for the United States - Part 2 or 2 / Economics / US Economy
By: Richard_C_Cook
THE NATIONAL DIVIDEND SOLUTION
The way out of the monetary dilemma, said Douglas, was not to opt for Marxism or socialism, because economic democracy cannot be achieved by another collectivist “-ism” to replace finance capitalism. Also, Marxism, like finance capitalism, assumes an economy of scarcity. It simply says that workers have a greater right to the limited supply of manufactured products than do business owners.
Read full article... Read full article...
Monday, June 18, 2007
An Emergency Program of Monetary Reform for the United States - Part 1 of 2 / Economics / US Economy
By: Richard_C_Cook
The mass media show attractive images of the comfortable lifestyles of the upper income earners who benefit from the cash-rich global economy. Which luxury car to drive, which championship golf course to frequent, which hedge funds to invest in, which stock brokers to consult—good questions if you've got the money! But behind this attractive scenery, debt, bankruptcy, and poverty are a tsunami that is overwhelming much of the world's population, including growing numbers in the U.S.
Following close on the heels of these calamities is a worldwide breakdown in law and order. Drug dealing, money laundering, gangsterism, white collar crime, political corruption, weapons trafficking, human slavery, terrorism, and endemic warfare are the dark side of a global financial system where everything has a price, the rich seem above the law, and individual security is almost impossible to attain.
Read full article... Read full article...
Monday, June 18, 2007
US Economy - Smoke and Mirrors / Economics / US Economy
By: Paul_J_Nolte
It is nice to be able to take a bit of a vacation, come back and see that everything is just as you left it. Including the SP500. OK, so there was a bit of volatility while on the trip, with markets rising and falling by 70+ points in all but three trading days for the month of June. Everything from China to inflation to interest rates has been blamed or credited with the daily changes in the markets, however it just may be that investors are struggling with still high valuations and a likely slowing to the economy.Read full article... Read full article...
Saturday, June 16, 2007
It's Official: The Crash of the U.S. Economy has begun / Economics / US Economy
By: Richard_C_Cook
It's official. Mark your calendars. The crash of the U.S. economy has begun. It was announced the morning of Wednesday, June 13, 2007, by economic writers Steven Pearlstein and Robert Samuelson in the pages of the Washington Post, one of the foremost house organs of the U.S. monetary elite.Pearlstein's column was titled, “The Takeover Boom, About to Go Bust” and concerned the extraordinary amount of debt vs. operating profits of companies currently subject to leveraged buyouts.
Read full article... Read full article...
Saturday, June 09, 2007
Narrowing in April US Trade Gap Suggests Weak Domestic Demand / Economics / US Economy
By: Paul_L_Kasriel
In nominal terms, the U.S. April trade deficit narrowed significantly to $58.5 billion from March's downwardly revised gap of $62.4 billion. In price-adjusted terms, the trade deficit in goods also narrowed sharply in April to $54.9 billion from March's $59.6 billion. So, this more-than-expected narrowing in the trade deficit ought to cause forecasters to bump up their secondquarter GDP forecasts, right? Wrong. Most of the narrowing in the deficit was the result of weaker imports, not stronger exports. In price adjusted terms, imports of goods fell 3.6% month-to- month, while exports fell 0.4%.Read full article... Read full article...
Thursday, June 07, 2007
White House Buys into “Immaculate” Recovery Theme / Economics / US Economy
By: Paul_L_Kasriel
Today the White House updated its economic forecast from that made last November. Back then, the Bush administration was expecting real GDP growth of 2.9% in 2007 on a Q4/Q4 basis. Now it is forecasting 2007 real GDP growth of 2.3%. Given the 0.6% annualized growth in Q1, this forecast implicitly assumes average growth of 2.87% in the remaining three quarters of 2007. For 2008, the White House is forecasting even stronger growth from the assumed 2.87% over the remainder of 2007 - 3.1% for 2008. As far as I can tell by looking at the White House's annual average forecast for the 3-month T-bill rate in 2007, 4.8, it assumes no Fed interest rate cuts this year.Read full article... Read full article...