Category: US Economy
The analysis published under this category are as follows.
Monday, May 07, 2007
US Economy and China's Currency -- What Gives? / Economics / US Economy
By: Gerard_Jackson
"Currency manipulation places American workers, farmers and businesses at a competitive disadvantage and this Congress will work with the administration to hold trading partners accountable to the rules of trade," said House Trade Subcommittee Chairman Sander Levin (D - MI). (And some readers still wonder why I have such intellectual contempt for most politicians, especially the likes of Levin). The basic problem for the US economy is not an undervalued Chinese currency but monetary policy.Read full article... Read full article...
Saturday, May 05, 2007
US Economy, Stuck in the Middle with You / Economics / US Economy
By: John_Mauldin
Clowns to the left of me, Jokers to the right, here I am Stuck in the middle with you! - Stealers Wheel, 1974
The recent data on the economy is stronger than was expected. Does this mean that the slowdown we have seen for the past few quarters is behind us? Other data suggests the economy is weakening (witness the very slow 1.3% GDP growth last quarter). This week we look at the seeming disconnect in the data, briefly examine where the real stock market booms are happening, and re-visit the housing markets. It's a lot for what will be a quick letter (and lots of charts), as I am trying to leave town, so let's jump right in.
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Friday, May 04, 2007
“Growth” is in the Eye of the Beholder - US GDP falls 10% in Euro Terms / Economics / US Economy
By: Peter_Schiff
It may come as a shock to many of you, but I too believe that we are experiencing a "Goldilocks" economy. However, unlike most on Wall Street I do not define this as economic growth that is neither too hot nor too cold. I believe the analogy is apt simply because
U.S. economic growth is a fairy tale! When such gains are measured against the gains in the price of just about anything people buy, or in just about any foreign currency, it's a whole different story. For example; measured in euros, U.S. GDP has declined from 11.5 trillion in January of 2000 to 10 trillion today. From a European perspective, the U.S. economy has been in a seven-year recession, with GDP declining by close to 2% per annum.
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Friday, May 04, 2007
The "Something for Nothing Army", on the March! / Economics / US Economy
By: Ty_Andros
Today's Tedbits is about broad social trends and what you can bank on in formulating your investment strategies. It is not gloom and doom, it is reality! See it for what it is and thrive. The world is changing, change provides opportunity: Globalization is the future unfolding before our eyes.
Understand it, don't be afraid of it, none of us can prevent the future coming at us at one day at a time. Next week will be doing an in-depth analysis of the Energy markets, don't miss it!!
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Saturday, April 21, 2007
LEI and KRWI Signal Imminent Recession, Is it Different This Time? / Economics / US Economy
By: Paul_L_Kasriel
The bulls on the economy had better hope it's different this time because both the index of Leading Economic Indicators (LEI) and the Kasriel Recession Warning Indicator (KRWI) are sending out recession warning signals now that March data are available. As I discussed in earlier commentaries (see The Econtrarian " Recession Imminent? Both the LEI and the KRWI are Flashing Warning " and The Econtrarian " When The Facts Change, I Change My Model - What Do You Do? "), year-over-year contractions in the quarterly average level of the LEI usually presage recessions, as shown in Chart 1.Read full article... Read full article...
Friday, April 13, 2007
Yes the FOMC is Predominently Concerned about Inflation, BUT... / Economics / US Economy
By: Paul_L_Kasriel
The Federal Open Market Committee (FOMC) has a baseline forecast that real Gross Domestic Product (GDP) will grow this year somewhat below the economy's potential growth rate, which the FOMC perceives to be about 2-3/4%, and core consumer inflation will gradually move lower toward the 2% upper bound of the FOMC's “comfort zone.” That's the baseline forecast. But since the end of January, the FOMC has grown more concerned about inflation overshooting and real economic growth undershooting their respective forecasts.
In a sense, the Fed is caught on the horns of a dual mandate – to promote full employment along with price stability. We believe that this dual-mandate dilemma will be resolved early in the second half of this year. That is, we expect the FOMC to become predominantly more concerned with full employment and less concerned about price stability.
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Tuesday, April 10, 2007
Leading Economic Indicator attacked for signaling sluggish GDP growth / Economics / US Economy
By: Paul_L_Kasriel
When The Facts Change, I Change My Model - What Do You Do?
On March 22, I published a commentary entitled" US Recession Imminent? Both the Leading Economic Indicators and the KRWI are Flashing Warning Signs ". The LEI refers to the index of Leading Economic Indicators published by the Conference Board. The KRWI (Kasriel Recession Warning Indicator) is something I happened on in my independent research.
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Saturday, April 07, 2007
The US Economy financed by debt and excessive speculation - Cliff-Risk Nation / Economics / US Economy
By: Michael_J_Panzner
In the credit derivatives market, certain instruments are exposed to what is known as "cliff risk." This ominous sounding phrase describes a situation where the last in a series of adverse developments obliterates the value of what was only recently viewed as a triple-A-rated security. Up until that point, however, rating agencies, investors, and bankers assume that circumstances will eventually right themselves and that the principal will be paid in full, in spite of whatever bad news might have come along beforehand.
This latter way of thinking is not confined to the nether world of complex securities with tongue-twisting names like CDOs-squared. In many respects, it describes a point-of-view that permeates many aspects of modern financial life. Increasingly, Americans have taken it for granted that good times beget more of the same and they have acted accordingly. If bad news comes along, the damage is absorbed. Unlike with some toxic derivatives, however, many believe that if circumstances do manage to take a turn for the worse, something can always be done about it.
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Wednesday, April 04, 2007
Bubbles, Derivatives and Global Financial Shocks - Itchy Trigger Fingers / Stock-Markets / US Economy
By: Dr_William_R_Swagell
In his new book “FINANCIAL ARMAGEDDON” ( www.financialarmageddon.com ) Michael Panzner paints a chilling picture of how he sees the current global asset and credit bubbles climaxing. Need I say it… not at all well!
Panzner, is “a 25-year veteran of the global stock, bond, and currency markets…(who) has worked in New York and London for HSBC, Soros Funds, ABN Amro, Dresdner Bank. and JPMorgan Chase”.
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Tuesday, April 03, 2007
Financial Markets - Time to Pay Attention, China Trade War, Housing, Iran and more / Economics / US Economy
By: Dr_Martenson
There's so much happening in the markets both financially and geopolitically, that I hardly know where to begin.
Probably the most shocking news of the week was not the tension in the Middle East around Iran. No, as disturbing as is the possibility of another shooting war in immediate proximity to 25% of the world's daily oil shipments, the reality of a trade war with China announced on Friday (March 30 th , 2007) was even more disturbing:
The Bush administration, facing heavy pressure to deal with soaring trade deficits, will impose economic sanctions against China as a way of protecting American paper producers from unfair Chinese government subsidies, a Commerce Department official said Friday.
The action will reverse 20 years of U.S.trade policy by treating China, which is classified as a nonmarket economy, in the same way that other U.S. trading partners are treated in disputes involving government subsidies.
The decision was to be announced by Commerce Secretary Carlos Gutierrez. Department official said Friday.
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Wednesday, March 28, 2007
Bernanke's JEC Testimony - Fed Still Worried Most About Inflation, However ... / Economics / US Economy
By: Paul_L_Kasriel
Am I missing something? Has not the FOMC marginally moved toward - not all the way to - an agnostic position with regard to its next likely directional change in the federal funds rate? That's what I took away from Fed Chairman Bernanke's JEC testimony and Q & A today. Yes, the FOMC still sees higher inflation as the "predominant policy concern ...[h]owever, the uncertainties around the outlook have increased somewhat in recent weeks."
One of those uncertainties has to do with business capital spending. To wit, "the magnitude of the slowdown [in business equipment and software expenditures] has been somewhat greater than would be expected given the normal evolution of the business cycle."
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Wednesday, March 28, 2007
Learning Curves - Yield Curve turns Positive, Recession ? / Economics / US Economy
By: Brady_Willett
Yesterday CBS's Mark Hulbert attacked bearish 'advisors' that neglected to announce that the U.S. yield curve was no longer inverted. Apparently Mr. Hulbert believes that those who pointed out that recession usually follows a curve inversion should have immediately ratcheted down their recession odds because the curve told them to do so.
"I'd be a very poor man if my wealth were dependent on getting a dollar for every one of those advisers who, since late last week, has even acknowledged that the yield curve has become positive again - much less conceded that, by the logic of their previous argument, a recession has become less likely.
It just goes to show how difficult it is to be truly objective in this business."
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Thursday, March 22, 2007
US Recession Imminent? Both the Leading Economic Indicators and the KRWI are Flashing Warning Signs / Economics / US Economy
By: Paul_L_Kasriel
Today the Conference Board reported that its index of Leading Economic Indicators (LEI) for February declined by 0.5% on the heel's of January's downwardly revised 0.3% drop. The January-February LEI average is down 0.49% from its Q1:2006 average. If the January and February levels of the LEI are not changed after revisions, then in order for the first quarter's LEI average to equal that of Q1:2006, the March LEI would have to increase 1.7%.
The last time the month-to-month increase in the LEI even approached this magnitude was back in March 2004, when it increased 1.4%. So, as of right now, the odds favor the first quarterly average year-over-year contraction in the LEI of this current economic expansion.
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Tuesday, March 20, 2007
US Recession Watch Perhaps, But Not Yet Warning / Economics / US Economy
By: Paul_L_Kasriel
Every recession commencing with the one in 1970 has been preceded by the combination of a negative spread between the Treasury 10-year yield and the federal funds rate and a year-over-year contraction in the CPI-adjusted monetary base (bank reserves plus currency). When both of these variables are calculated on a quarterly average basis, there have been no false recession alarms. To date, every recession has been preceded by at least two quarters of this combination. This is shown in Chart 1 in which the vertically-shaded areas represent recessionary periods.Read full article... Read full article...
Wednesday, March 14, 2007
What's Down With Nominal US Retail Sales Growth? / Economics / US Economy
By: Paul_L_Kasriel
Asha will do her usual excellent job of synthesizing the February retail sales report and highlighting the important implications of it. But I wanted to call your attention to an interesting trend change in retail sales.Read full article... Read full article...
Wednesday, March 14, 2007
US Housing recession increasing risks of US Economic recession as growth continues to slow / Economics / US Economy
By: Paul_L_Kasriel
Three quarters of below potential growth and counting.
As everyone knows, the housing recession is the biggest drag on the pace of economic activity right now. But is the housing recession at its bottom? And more importantly, are there negative multiplier effects emanating from the housing recession? With regard to whether the housing recession has hit bottom; it is doubtful. In an average housing downturn, real residential investment expenditures decline by about 25% peak to trough.
Chart 1
