Tuesday, January 31, 2012

Offbeat Economic Indicators Show Strong Gains

1. Distilled spirits exports exceeded one billion dollars for the fifth consecutive year, reaching a projected record $1.34 billion in 2011 (based on 11-month totals).  Total spirits exports grew 16.5% over the preceding year

2.  U.S. pork and beef exports are setting new record highs

3. The American Staffing Association Staffing Index, a key weekly barometer of temporary and contract employment activity, is at the highest level for the third and fourth week of January for any year since 2008.

4. Cargo volume climbed 31% at the Port of Cleveland in 2011. 

5. Container traffic at the Port of Philadelphia increased by 6.7 percent in 2011 and auto shipments skyrocketed by 85 percent in the same period.

6. The Restaurant Performance Index rose to its highest level in nearly six years in December.

21 Comments:

At 1/31/2012 2:33 PM, Blogger Jon Murphy said...

If you'll forgive me, Dr. Perry, I'd like to present a dissenting opinion.

As much as I do enjoy seeing factories producing again (and these stats hint at it), could it also be that these primarily export-driven statistics show another aspect: falling domestic consumption? Companies are turning to foreign markets simply because of a lack of demand here?

I have an answer to this question (which I'll post at another time), but I'm wondering what others thoughts are

 
At 1/31/2012 2:34 PM, Blogger morganovich said...

meanwhile, consumer confidence dropped significantly (vs expectations of a rise) for january and the CBO essentially just admitted that u3 really ought to be 10% but is being understated by dropping the participation rate.

we had another trillion dollar deficit, and the CBO is forecasting below trend growth for 6 years which seems highly incongruous with the increases in tax revenues they forecast for the next 2 years leaving me to suspect that deficits will be larger than projected.

speaking of offbeat indicators, this is the best one i have seen in ages:

http://www.cnbc.com/id/46194541

it seems that laughter at fed meetings was highly correlated to the bubble in housing.

as this is like a sign of chummy, complacent groupthink, i can see how the relationship could be valid.

certainly, nothing i saw in the full fed minutes for 2006 that were recently released showed anything other than self congratulatory committee members asleep at the switch.

 
At 1/31/2012 2:44 PM, Blogger juandos said...

I have yet another dissenting point of view fueled by Zer0Hedge: Latest Congressional Budget Outlook For 2012-2022 Released, Says Real Unemployment Rate Is 10%

(here's a small portion)

Unemployment to remain above 8% in 2012 and 2013; will be around 7% by end of 2015; to drop to 5.25% by end of 2022.

This forecast is utterly idiotic and is completely unattainable unless the US workforce drops to all time lows and the US economy generates 300,000 jobs a month for 10 years...

Needless to say, CBO assumes the best of all worlds in this meaningless forecast...

But here is the kicker: "Had that portion of the decline in the labor force participation rate since 2007 that is attributable to neither the aging of the baby boomers nor the downturn in the business cycle (on the basis of the experience in previous downturns) not occurred, the unemployment rate in the fourth quarter of 2011 would have been about 1¼ percentage points higher than the actual rate of 8.7 percent" translation: CBO just admitted that the BLS numbers are bogus and real unemployment is 10%...

 
At 1/31/2012 2:53 PM, Blogger Jon Murphy said...

Although, I must admit the RPI number is very good news. It's a testament to disposable income.

 
At 1/31/2012 3:13 PM, Blogger juandos said...

"It's a testament to disposable income"...

Are you sure that RPI number in part isn't due to quantitative easing jon m?

 
At 1/31/2012 3:29 PM, Blogger sethstorm said...


Companies are turning to foreign markets simply because of a lack of demand here?

Something like that.


The American Staffing Association Staffing Index, a key weekly barometer of temporary and contract employment activity, is at the highest level for the third and fourth week of January for any year since 2008.

That's a bad thing, given how that industry is full of abuse. What they call "flexibility" is really disposability.

 
At 1/31/2012 3:35 PM, Blogger morganovich said...

regarding RPI_

in real terms, same store sales are shrinking. all the growth and then some last years was inflation and is projected to be the same in 2012. the forecast below is for 2-3% growth and 5%ish inflation, though perhaps not all passed along, but CPI component "food away from home" was up 2.9% in 2011, so if that remains the same, then even the high end of the forecast for 2012 is no real growth.

"U.S. restaurant same-store sales growth should average 2% to 3% in 2012, though restaurants will face pressure from continually rising food and beverage costs, Fitch Ratings said.

The rating firm said restaurant food and beverage costs should rise 5% or more for a second year in a row during 2012, though large chains are in a good position to fend of significant margin erosion, thanks to modest same-store sales growth, menu management and reliance on low-cost franchising.

Food inflation pressure will be driven by rising protein prices, as the Department of Agriculture most recently forecast beef and chicken prices in 2012 to rise by 9% and 5%, respectively, following sharp increases for many food items this year, Fitch said. "

http://online.wsj.com/article/BT-CO-20111209-709384.html

 
At 1/31/2012 3:36 PM, Blogger juandos said...

How 'offbeat' is this?

From Reuters: U.S. lawmakers press Obama on China auto parts

"We need to stand up to the bully on the block," U.S. Senator Debbie Stabenow, a Michigan Democrat, said, referring to Beijing. "The bully on the block continues to take our lunch money and we need to stop that," she said...

Oh yeah! Now that's pure genius...

(sethstorm where are you?)

 
At 1/31/2012 3:43 PM, Blogger morganovich said...

"could it also be that these primarily export-driven statistics show another aspect: falling domestic consumption?"

jon-

this would seem unlikely to be the case. US exports grew in 2011, no question, but in actual dollar terms US imports grew nearly 3 times as much.

now, we'd have to sort out which imports were "consumption" as opposed to imports of components or inputs and do likewise for exports and then trail such through the value chain, but given the magnitude of the differential, it seems nearly certain that imports would swamp exports around consumption which makes your thesis look questionable.

 
At 1/31/2012 3:46 PM, Blogger sethstorm said...

This comment has been removed by the author.

 
At 1/31/2012 3:47 PM, Blogger sethstorm said...

juandos:

It doesn't take union membership to want to see this nation's industries not be overrun by the Third World. Or allegiance.

 
At 1/31/2012 3:51 PM, Blogger morganovich said...

"It doesn't take union membership to want to see this nation's industries not be overrun by the Third World. Or allegiance."

no, but it takes a pretty dire misunderstanding of economics to think that increasing prices for US consumers is going to benefit them.

 
At 1/31/2012 4:31 PM, Blogger juandos said...

More of those 'offbeat' indicators...

The U.S. city average retail price for one pound of 100 percent ground beef was $2.36 in January 2009. As of December 2011, that price had risen to $2.92—a 23.7 percent increase and a new peak...

Yet there is this apparent problem as reported by Meat Trade News Daily on 21 Oct 2011: U.S. beef packing companies are suffering the largest losses in 2-1/2 years as tight supplies of cattle have them paying near record high prices for them, analysts and traders said on Thursday

The losses could cause beef companies like industry leaders Tyson Foods Inc (TSN.N) and JBS USA, a unit of Brazilian company JBS SA (JBSS3.SA), to cut back on the number of cattle they slaughter, which could eventually lead to higher retail beef prices, analysts said.

"The cattle market ended last quarter with a bang. It was certainly a victory for the producer, but not for the packer whose margins are at their narrowest levels of the year," said Elaine Johnson, an analyst with CattleHedging.com.

 
At 1/31/2012 4:41 PM, Blogger sethstorm said...

morganovich:

Only if there isn't an increase in quality.

The cheapness is making things worse off for people.

 
At 1/31/2012 7:04 PM, Blogger morganovich said...

seth-

so your argument is what, that making it more expensive to import a car increases quality?

how can that possibly make sense?

if us cars are higher quality (as determined by quality for price driving consumer decisions) then why do they need a tariff to compete?

it is that fact that they are NOT higher quality/price that makes people buy foreign cars.

so your solution is to make it harder to buy what they prefer and force them to buy what they do not prefer and by this you think you can make them better off? that the seth determined utility curve is better than their own and that you know better what they want than they do?

you're not making any sense here.

you keep repeating this preposterous claim that cheap goods harm people like somehow high quality versions of every single product in the whole freaking world are not available.

i've asked you a dozen times to name even one product that does not have high quality versions available.

you have never done so. unless you can, time to give up this repetitive nonsense as totally unsupportable.

hell, i'll bet i buy more high end american made stuff than you do. i'll bet your dvd/blu ray player was not made in the US. mine was. it's incredibly high quality. but i'll bet you were not willing to pay oppo prices for something you could get 80% cheaper.

i'll bet you have a foreign made TV too. my projector and screen were made in the US, but i'll bet you would not be willing to pay wolf cinema prices and instead bought a foreign made TV for 5% the price.

so how about we flip this around and i demand that all blu ray imports are taxed until hey cost $800 and all tv's until they are $20,000. you going to feel better off paying $25 grand for your home viewing and protecting us industry? you think others will?

hell, let's push it up to krell (also us made) prices and make it cost $50k. by your logic, we should be wildly better off.

somehow i doubt you are going to like the solution you are trying to force on auto buyers if it's forced on you in other spheres.

 
At 1/31/2012 7:04 PM, Blogger morganovich said...

seth-

so your argument is what, that making it more expensive to import a car increases quality?

how can that possibly make sense?

if us cars are higher quality (as determined by quality for price driving consumer decisions) then why do they need a tariff to compete?

it is that fact that they are NOT higher quality/price that makes people buy foreign cars.

so your solution is to make it harder to buy what they prefer and force them to buy what they do not prefer and by this you think you can make them better off? that the seth determined utility curve is better than their own and that you know better what they want than they do?

you're not making any sense here.

you keep repeating this preposterous claim that cheap goods harm people like somehow high quality versions of every single product in the whole freaking world are not available.

i've asked you a dozen times to name even one product that does not have high quality versions available.

you have never done so. unless you can, time to give up this repetitive nonsense as totally unsupportable.

hell, i'll bet i buy more high end american made stuff than you do. i'll bet your dvd/blu ray player was not made in the US. mine was. it's incredibly high quality. but i'll bet you were not willing to pay oppo prices for something you could get 80% cheaper.

i'll bet you have a foreign made TV too. my projector and screen were made in the US, but i'll bet you would not be willing to pay wolf cinema prices and instead bought a foreign made TV for 5% the price.

so how about we flip this around and i demand that all blu ray imports are taxed until hey cost $800 and all tv's until they are $20,000. you going to feel better off paying $25 grand for your home viewing and protecting us industry? you think others will?

hell, let's push it up to krell (also us made) prices and make it cost $50k. by your logic, we should be wildly better off.

somehow i doubt you are going to like the solution you are trying to force on auto buyers if it's forced on you in other spheres.

 
At 2/01/2012 8:28 AM, Blogger Jon Murphy said...

In regards to my original question (is the increase in exports due to a decrease in consumption), I think the answer is a resounding "no." Retail Sales and Wholesale Trade are at record levels. I think the increase in exports is simply this: we are producing more and the global economy is expanding. Surely good news.

 
At 2/01/2012 10:14 AM, Blogger morganovich said...

jon-

it's not quite that simple.

you are used to seeing growth figures in real terms.

import and export figures tend to be nominal.

both are showing double digit price increases which account for a significant amount of the gains.

that's not a sign of real growth, just inflation.

 
At 2/01/2012 10:21 AM, Blogger VangelV said...

In regards to my original question (is the increase in exports due to a decrease in consumption), I think the answer is a resounding "no." Retail Sales and Wholesale Trade are at record levels. I think the increase in exports is simply this: we are producing more and the global economy is expanding. Surely good news.

If the global economy is going through a sustainable expansion that is good news. But the problem as I see it is the massive liquidity that is behind a lot of the expansion. The Fed increased its balance sheet by around 20% last year. I don't know about you but I do not believe that the real economy expanded by 20%.

And if you look at Europe there are red flags everywhere. Sure, we can kick the can down the road by having some fake settlements with Greece and some of the other PIIGS but that will only work for so long. And if that means seeing bond holders take a 50% haircut there is a bigger problem.

If the losses are not deemed to be defaults the sovereign bond market will take a huge hit because purchasers could not hedge their positions with default insurance. That means that the sovereign bonds will be bought by central banks and that is a path to monetary destruction.

If the losses are determined to be defaults the large US banks that dominate the default insurance business will become insolvent. That will 'require' Fed intervention and another bout of massive liquidity that could cause the USD to collapse.

I am sorry but there are so many data points that just do not fit into a nice picture. While I can see how the current situation can turn into a boom in stocks, commodities, and even real estate I do not understand how such a scenario can be good for the purchasing power of savers or the bond market in general. Giving banks access to free money and letting them use that money to buy treasuries worked well in the 1990s when the spreads were wide but it is a lot harder today when you have a two year bond yielding 0.25%.

If we cherry pick certain data points and ignore others it is easy to paint any picture that we want to present to others. But reality does not care much about our narratives and demands resolution over the longer term. And from what I see today the longer term is not as nice looking for the US economy as it appears to be from the narrative that we are being presented with.

 
At 2/01/2012 2:43 PM, Blogger Jon Murphy said...

You are correct, VangelV. However, and I should have been more clear on this, I am only looking at the short term (2012-2013). I do think storm clouds are forming beyond 2013 and I would not be surprised to see a 2015/2016 recession.

 
At 2/01/2012 10:51 PM, Blogger VangelV said...

You are correct, VangelV. However, and I should have been more clear on this, I am only looking at the short term (2012-2013). I do think storm clouds are forming beyond 2013 and I would not be surprised to see a 2015/2016 recession.

But there is still a problem. We should see a nominal price explosion for equities this year. But after taxes you could still be looking at possible losses in real terms. And what happens if we see a strike against Iran? Or just as bad for the USD, if Iran stops enrichment but makes a deal to buy Russian uranium for its civilian reactors? The US could be stuck on the outside looking in as other countries work to secure resources that are needed by their domestic economies and make a move to shed their dependence on the USD as the primary reserve currency. The moves have to start at some point. And while I do not expect it, this spring/summer may be as good as any.

 

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