Thursday Positive Economic News Roundup
There's so much positive economic news coming out today that I'll summarize six of the reports below instead of writing a separate post for each one:
1. Gallup's survey-based measure of the U.S. unemployment rate dropped sharply to 8.3% in mid-October, from 9.2% at the end of August and from 10% a year ago (see chart above). The decrease suggests that the BLS could report an October jobless rate below 9.0%.
2. To meet burgeoning worldwide market demand for Boeing's single-aisle jets, the 737 production rate has recently increased from 31.5 airplanes per month to 35 per month, and will increase in the future to 38 airplanes a month in the spring of 2013, and to 42 airplanes a month by the summer of 2014.
3. Demand for commercial vehicles strengthened in September. Class 8 net orders rose to 23,600 units, a gain of 55% year-over-year and 12% month over month, while orders for 5-7 classes rose 8% month over month. “Years of deferred purchases are buoying up demand,” said an industry analyst.
MP: The case for the U.S. economy to enter another recession this year continues to weaken.
20 Comments:
i'm not sure i'd go that far.
consumer and small business confidence remains at rock bottom levels only generally seen in deep recessions.
the misery index is very high.
inflation is up (again).
household income and disposable income continue to drop, hardly the usual behavior 2 years+ into a recovery.
u-6 is trending up and is now at 16.2%. that gallup number will likely wind up being statistical noise. initial claims remain stubbornly above 400k.
lending is punk.
seems like a pretty strong case for a bad economy to me.
When I look at those indicators, I'm reminded that consumer and small business confidence were very high in 2006/2007, just before we fell off the cliff.
MP: The case for the U.S. economy to enter another recession this year continues to weaken.
Sadly, commodity prices are suggesting the opposite. Copper is sharply down and while Brent is still over $100 it is nowhere near levels that suggest a recovery. Everything that I see suggests a liquidity driven attempt to get Obama through the next election but little substance behind the hype of a recovery.
We seem to be in a Rolling Depression, where there are several months of improving economic data and then several months of deteriorating economic data, etc..
However, living standards have been declining throughout the Obama Depression, even with the multi-trillion dollar government spending spree.
Figures...four comments so far and two of them bring Obama into this. Some people just refuse to see a light at the end of the tunnel as long as that guy's in the White House I guess.
good read I came across yesterday...
http://www.theglobeandmail.com/report-on-business/commentary/neil-reynolds/the-sad-demise-of-the-one-income-family/article2205193/
The New York Fed treasury model update today showed a "surge" in the chances of a recession through September 2012 from 2% to a little more than 3%.
what a killjoy for the bears!
maybe people would feel better if they said
EMPLOYMENT RATE REACHES 91.7%!!
sounds like an A minus grade
not too shabby
Truth or consequences, do you blame Bush for this recovery, the weakest in U.S. history (or at least since the Great Depression)?
If FDR spent this kind of money, we would've had an economic boom in the '30s.
Truth or consequences, do you blame Bush for this recovery, the weakest in U.S. history (or at least since the Great Depression)?
Yes. Had Bush allowed the market to clear the contraction would have been a lot deeper but would have been over very quickly. Obama made things worse.
If FDR spent this kind of money, we would've had an economic boom in the '30s.
FDR did spend a great deal of money just as Hoover did and there was no boom. Compare that to Harding, who cut taxes and spending during a sharper contraction. Nobody remembers that contraction because once prices collapsed and liquidation took place the market was off and running.
Slowly, the recovery is taking place.
http://www.ktvz.com/news/29544671/detail.html
Daimler announces a second shift in building trucks, hiring 425 in Portland, Oregon at a plant once slated for closure.
VangelV, to clear dead brush around a house, you don't need to burn the house down too.
Or kill the patient to cure the cancer, bomb an entire city to destroy an enemy base, etc.
There can be a quick and massive creative-destruction process in a mild recession, or without a recession, e.g. 2000-02.
Also, the federal government is spending over $1 trillion a year more than 2007. Yet, employment, for example, is in less than an L-shaped recovery (when population growth is included).
The federal government is adding to a huge debt through large deficit spending. I agree, both taxes and spending need to be cut, to spur the recovery.
VangelV, to clear dead brush around a house, you don't need to burn the house down too.
Or kill the patient to cure the cancer, bomb an entire city to destroy an enemy base, etc.
No you don't. And that is not my argument. All I pointed out is that keeping inefficient companies that cannot compete alive hurts the economy because it removes resources from their more effective competitors.
There can be a quick and massive creative-destruction process in a mild recession, or without a recession, e.g. 2000-02.
What the hell are you talking about? Greenspan injected huge amounts of liquidity and the government did its part through the GSEs to prevent a recession in 2000 after the IT bubble burst. All that liquidity accomplished was to kick the can down the road a bit as a housing bubble was allowed to form. We would have been far better off if the Fed and Treasury allowed the markets to work without distortions and to have a sound economy instead of bubbles in internet stocks and housing stocks.
Also, the federal government is spending over $1 trillion a year more than 2007. Yet, employment, for example, is in less than an L-shaped recovery (when population growth is included).
Of course the government is spending more. That is what Keynesians do every time there is a crisis. The government spends more and the Fed opens up the spigots until the country is drowning in debt.
The federal government is adding to a huge debt through large deficit spending. I agree, both taxes and spending need to be cut, to spur the recovery.
Yes but spending should have been cut. But the process should have begun under Bush, who claimed to be a fiscally responsible conservative. Instead he increased the size of government faster than Clinton. Obama is even worse.
VangelV, if lending standards began to tighten in 2004, which Bush wanted, the financial crisis and severe recession likely would've been averted.
Also, expansionary fiscal policy is needed in a recession. However, tax cuts are generally more effective than increases in government spending.
Moreover, you can't blame Bush for the weak recovery, because he had nothing to do with it.
Furthermore, it seems you doubt there was a quick and massive creative-destruction process in the early 2000s.
Perhaps, you didn't notice after the tech boom, many tech firms went out of business, many surviving tech firms actually earned profits, and even old economy stocks earned higher profits.
The result was a record 20 consecutive quarters of double-digit earnings growth in the 2000s. U.S. firms became most efficient in producing more output with fewer inputs. It was the most efficient economy the world ever saw.
VangelV, if lending standards began to tighten in 2004, which Bush wanted, the financial crisis and severe recession likely would've been averted.
Perhaps. But by 2004 a lot of damage was already done. Like Clinton before him Bush was pushing HUD and the GSEs to expand home ownership by lowering standards. And when Ron Paul wanted legislation that would end the government's implicit guarantee on GSE borrowing the Republicans and Bush abandoned him.
Also, expansionary fiscal policy is needed in a recession.
No, it isn't. Spending more money to offset too much spending before the crisis does not work. You are stuck in a Keynesian fallacy that is not supported by real world evidence. Take a look at the huge spending by Hoover/FDR and compare it to the budget cuts by Harding. Which approach led to a depression and which one to a recovery?
However, tax cuts are generally more effective than increases in government spending.
You need a reduction in government spending. Government is the problem, not the solution.
Moreover, you can't blame Bush for the weak recovery, because he had nothing to do with it.
Correct. Bush made things worse by bailing out the reckless lenders and by spending far too much once the crisis began.
Furthermore, it seems you doubt there was a quick and massive creative-destruction process in the early 2000s.
Not at all. The worthless dot_com companies that were more worried about eyeballs than profits were wiped out. The Y2K industry collapsed. The problem was the Fed's reaction to the much needed destruction of those companies. Instead of allowing a recession to wipe away the malinvestments the Fed and Treasury blew a new and bigger bubble in housing.
Perhaps, you didn't notice after the tech boom, many tech firms went out of business, many surviving tech firms actually earned profits, and even old economy stocks earned higher profits.
I noticed. But as I wrote above, the loose money policies had a lot to do with profits that would not have been earned in a sound economy. And the same loose money policies created a new bubble.
The result was a record 20 consecutive quarters of double-digit earnings growth in the 2000s.
If you keep printing money it will go somewhere and profits will be earned. But as the crash showed, the business models that created the profits were lousy and once the music stopped created massive losses that were far larger than the illusory profits.
Profits made by lousy accounting and imaginary mark to model gains are not real. (Just as shale gas profits made by overestimating EURs and depreciation are not real.)
U.S. firms became most efficient in producing more output with fewer inputs. It was the most efficient economy the world ever saw.
It was a SCAM. Most of the profits were not real. They came from the financial sector as it mispriced the products that it was buying.
VangelV, you completely ignore the real economy.
The U.S. created 17.6 million jobs between 1993-98, and created only 3.7 million jobs between 2001-06. However, U.S. real GDP growth was only slightly higher from 1993-98 than from 2001-06. So, the U.S. became much more productive in the 2000s, i.e. using fewer inputs to produce more output.
Profit is a function of efficiency, not the money supply. U.S. firms, in almost every industry, had a profit boom in the 2000s, and freed-up labor and capital flowed into emerging industries.
Also, Bush had to bail-out lenders, because too many borrowers weren't creditworthy.
Moreover, the Fed has been increasingly successful smoothing-out business cycles, since the Great Depression, which has lead to greater prosperity.
However, in 2007, we had restrictive monetary policy, with contractionary fiscal policy, which caused the recession.
VangelV, you completely ignore the real economy.
Not at all. I simply have trouble accepting much of the crap that comes from the BLS because it hides what the real economy is doing. As I have written before, if we used the same methodology today as we used to pre-Boskin we would have seen similar levels of growth and inflation in the 1990s and 2000s as the 1970s.
The U.S. created 17.6 million jobs between 1993-98, and created only 3.7 million jobs between 2001-06. However, U.S. real GDP growth was only slightly higher from 1993-98 than from 2001-06. So, the U.S. became much more productive in the 2000s, i.e. using fewer inputs to produce more output.
It didn't. Much of the 'GDP' that was reported came from mark-to-model financial engineering that had nothing to do with reality.
Profit is a function of efficiency, not the money supply. U.S. firms, in almost every industry, had a profit boom in the 2000s, and freed-up labor and capital flowed into emerging industries.
In the 2000s much of the 'profit' that was reported was not real. After the contraction most of that profit was written off because it did not exist.
Also, Bush had to bail-out lenders, because too many borrowers weren't creditworthy.
He did not have to bail them out. He should have let them fail. It was cheaper to protect the depositors than to bail out the reckless lenders.
Moreover, the Fed has been increasingly successful smoothing-out business cycles, since the Great Depression, which has lead to greater prosperity.
The Fed has been a failure. It created the Great Depression by goosing the money supply in the latter half of the 1920s in an attempt to protect the Bank of England. It has devalued the US dollar to the point that it now has around 2% of the purchasing power that it did before the Fed was formed. It has been creating purchasing power out of thin air and used it to finance an ever growing government to the point where the public sector consumes more than 40% of what the real economy produces. An enemy of the United States could not do any more damage to its economy than the Fed has managed to do.
However, in 2007, we had restrictive monetary policy, with contractionary fiscal policy, which caused the recession.
There was no restrictive monetary policy. The Fed was creating liquidity as fast as it could.
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