Wednesday, February 15, 2012

Empire State Manufacturing Expands in February


"The February Empire State Manufacturing Survey indicates that manufacturing activity in New York State expanded for a third consecutive month. The general business conditions index rose six points to 19.5, its highest level in more than a year (see brown line in graph). The index was last negative in October, then rose to a level of around zero in November; subsequently, the readings have become increasingly positive, suggesting that the expansion in business activity for New York manufacturers has gained momentum in recent months.

Indexes for the six-month outlook, while somewhat lower than last month, conveyed a widespread expectation that conditions would improve in the months ahead. The future general business conditions index fell four points to 50.4 (blue line), with 58 percent of respondents expecting conditions to improve over the next six months and 7 percent expecting conditions to worsen."

11 Comments:

At 2/15/2012 10:10 AM, Blogger VangelV said...

Why do you only look for points that support your narrative while you ignore the rest of the evidence? After all, if we are to accept the fact that declining Chinese electricity and oil demand means weakness in the Chinese economy why is it that we don't look to see if the same thing is happening in the US?

Yes, manufacturing can expand and may have expanded. But how much of that is just an inventory rebuild?

Let me provide you with some concerning data points. In no particular order:

1. Gasoline use in the US has declined from 9.2 MMbd in 2007 to 8.5 MMbd in 2011Q4. This comes out to around a 13% decline.

2. Electrical consumption is well below the 2008 level. But it also peaked in 2010Q3 and begun a decline in 2011Q3.

3. Unadjusted January Retail Sales Post Biggest Sequential Plunge In History

Sorry Mark but from where I sit the reported 'recovery' is an illusion driven by technical and statistical reasons. It certainly does not look very sustainable from here.

 
At 2/15/2012 10:52 AM, Blogger morganovich said...

http://ca.news.yahoo.com/flights-u-airlines-hit-10-low-222052224.html

here's another interesting datapoint:

flights by us airlines were at a 10 year low in 2011.

"The overall number of flights by U.S. airlines have steadily declined since 2008 when the recession dampened travel demand. Most recently, stubbornly high fuel prices have prompted airlines to further cut capacity to reduce costs and maintain higher fares"

low activity, high prices, just like down chemical and the retail sales numbers that are up pretty much in line with CPI.

this all seems more consistent with a stagflation narrative than one of real recovery.

 
At 2/15/2012 11:14 AM, Blogger Buddy R Pacifico said...

"Despite Naysayers, The Recovery is Real" states Brian Wesbury, Chief Economist at First Trust.

Mr. Wesbury explains:

"Real GDP has grown for 10 consecutive quarters, while the Fed’s measure of manufacturing output is up 15%. The ISM index is at 54.1 and S&P 500 earnings are up 67% since mid-2009."

Further...

"It’s important to recognize that these data are mostly from sources not controlled by the executive branch of the federal government."

 
At 2/15/2012 11:28 AM, Blogger VangelV said...

Mr. Wesbury explains:

"Real GDP has grown for 10 consecutive quarters, while the Fed’s measure of manufacturing output is up 15%. The ISM index is at 54.1 and S&P 500 earnings are up 67% since mid-2009."


Brian Westbury is your source of support? You sure you don't want to reconsider that idea?

"Mr. Greenspan's Cappuccino," Wall Street Journal (May 31, 2005): "These nattering nabobs expect a housing collapse to take down the U.S. economy. But excessive pessimism is unwarranted: Fears of a housing bubble are overblown."

Well, the 'nattering nabobs' turned out to be a lot more accurate than Mr. Wesbury.

 
At 2/15/2012 12:08 PM, Blogger Buddy R Pacifico said...

But excessive pessimism is unwarranted: Fears of a housing bubble are overblown."

Well, the 'nattering nabobs' turned out to be a lot more accurate than Mr. Wesbury."


Mr. Wesbury goes on later in the article to state:

"Many believe that the Fed waited too long to hike rates in response to "irrational exuberance" in the equity market, so by raising the possibility of "local bubbles" in housing it would seem rational for the market to expect the Fed to address this issue more quickly."

"Adjusting for demographics, it is virtually impossible to believe a nationwide housing bubble exists. Nonetheless, if the Fed does stop hiking rates at current levels, a bubble could easily form."

 
At 2/15/2012 12:17 PM, Blogger morganovich said...

"Real GDP has grown for 10 consecutive quarters, while the Fed’s measure of manufacturing output is up 15%. The ISM index is at 54.1 and S&P 500 earnings are up 67% since mid-2009.""

as reported, this may be true, but all the growth in the last 2 q's has been from dropping the gdp deflator away from cpi. use CPI instead and it's been flat for 6 months.

q4 used a delfator of 0.8%, 75% lower than the BLS's CPI for q4.

that's a stunning divergence.

those are cooked numbers even if you believe the BLS.

unemployment is going the same way.

there has been no recession in us history with such slow employment recovery.

the 1958 recession was just as deep in terms of gdp.

full pre recession employment was reached in 9 months from the trough.

we are at 36 and have not even made up 1/2 the drop. (using u3) and are far worse than that looking at jobs created vs lost.

if this recovery is "real" where are the jobs? sure, employment is a lagging indicator, but not this lagging.

at some point, you have to start asking about the data's reliability.

when your scale reads that you are at your weight from college, but you can't fit into your pants, you check the scale.

 
At 2/15/2012 12:37 PM, Blogger morganovich said...

buddy-

btw, vangel is correct about westbury.

he's a perma bull.

i'd be looking more toward folks like roubini who have been right as opposed to a broken clock like westbury..

 
At 2/15/2012 7:08 PM, Blogger juandos said...

"Real GDP has grown for 10 consecutive quarters,..."...

Hey buddy do you know if Wesbury was taking into account all those revised GDP numbers?

 
At 2/16/2012 4:10 AM, Blogger wtflynninsurancem said...

Great Blog!! That was amazing. Your thought processing is wonderful. The way you tell the thing is awesome. You are really a master.

Insurance Agency Framingham MA

 
At 2/16/2012 10:32 AM, Blogger morganovich said...

""Real GDP has grown for 10 consecutive quarters,..."..."

perhaps, but real per capita GDP has been down for 10 YEARS.

http://www.census.gov/hhes/www/income/data/historical/people/

download the spreadsheet "all races" right at the top.

you'll see that 2010 dollar per capita income in the US peaked in 2000 and has not gone anywhere since (2010 dollars column is the one adjusted for CPI)

2010 was 26487.

2000 was 28293.

a 6% drop.

i don't have the 2011 figure yet, but we can eyeball it.

real GDP was reported as 1.7% growth.

however, constant dollar GDP is going to read much lower as it uses CPI instead of the BEA's deflator and the 2 diverged significantly in q3-4.

that's going to cut constant dollar GDP by at least 1%.

so, you get 0.7% growth and about 1% population growth (309-312), which leads to a contraction in chained dollar per capita gdp from 2010.

these are just rough ups and it may vary a bit, but it makes me a bit skeptical that things really got any better in 2011.

GDP tends to go up just based on population growth, but net it out, and we've gone nowhere for 12 years.

 
At 2/16/2012 11:51 AM, Blogger morganovich said...

oops, actually, that's not quite true.

2006 was slightly higher than 2000.

but then it dropped heavily and 2010 and 2011 are both below the level of 1998.

of course, 2006 got a big GDP boost from wars that 2000 lacked and had more deficit spending.

 

Post a Comment

Links to this post:

Create a Link

<< Home