Friday, April 09, 2010

Global Economic Boom

"Throughout much of the world, businesses are reporting a continuing surge in new orders, providing an indication that economies are growing (see chart above, click to enlarge). In most countries, orders received by manufacturing businesses turned up sooner than orders to service businesses. But even service providers are now reporting increases in new business."

~Floyd Norris in today's NY Times


At 4/09/2010 4:36 PM, Blogger PeakTrader said...

U.S. durable goods, seasonally adjusted annual rate for December 2007 (when the recession began) was $224.1 billion.

In February 2010 (reported March 24th) U.S. total orders rose to a seasonally adjusted $178.1 billion, including:

"The increase was led by the second huge jump in demand for commercial aircraft, an increase of 32.7% which followed a 134.9% rise in this volatile category in January."

Given volatile components in durable goods, U.S. new auto sales may be a better proxy to measure U.S. manufacturing (and U.S. consumption) in the "global economic boom:"

2006 16.6 million
2007 16.2 million
2008 13.2 million
2009 10.4 million

2010 The seasonally adjusted annual rate for March 2010 was 11.7 million.

Ignoring population growth, if the U.S. reaches 13.2 million auto sales in 2010 and 16.2 million in 2011, then that would be a V-recovery.

At 4/09/2010 4:44 PM, Blogger PeakTrader said...

Of course, "housing starts" is still in a deep depression:

2006 Jan 2.273 million
2007 Jan 1.409 million
2008 Jan 1.083 million
2009 Jan 0.488 million
2010 Jan 0.611 million

2010 Feb 0.575 million

At 4/09/2010 4:59 PM, Blogger PeakTrader said...

From article:

"Spending on durable goods that influences several years are taken most often in a climate of trust and expected growth. Otherwise, economic actors would not hesitate to postpone or even cancel their purchase decisions."

To be meaningful, two areas used in the "Durable Goods Orders" must be removed: Armaments and transport. Indeed, these two sectors are extremely volatile."

At 4/09/2010 5:25 PM, Blogger PeakTrader said...

Moreover, U.S. imports are way down:

Current account deficit rises to $115.6B in 4Q
Mar 18, 2010

For the year (2009), the deficit in the current account plunged by 40.5 percent to $419.9 billion. Last year's deficit represented 2.9 percent of the total U.S. economy.

America's current account deficit soared to an all-time high of $803.5 billion in 2006, which represented 6 percent of total GDP.

Gregory Daco, an economist at IHS Global Insight, said he was looking for the current account deficit to rise to $554 billion this year (2010), which would represent 3.7 percent of GDP.

"The recession may have temporarily watered down global imbalances but old habits die hard," Daco said. "As the world economies recover, the U.S. current account deficit will climb and surpluses in countries with export-led growth such as Germany and China will resurface."

At 4/09/2010 8:41 PM, Blogger PeakTrader said...

Durable goods is seasonally adjusted monthly data. Here's annual data for 1997:

"In 1997, U.S. consumers spent $659.4 billion on durable goods (8.2 percent of GDP). Producers spent $615.2 billion on durable equipment in 1997 (7.6 percent of GDP)."

"In addition, durable goods contributed to the GDP in the categories of exports and government purchases. Overall, the production of durable goods accounted for $1.316 trillion (16.3 percent of GDP) in 1997."

At 4/09/2010 10:07 PM, Anonymous gettingrational said...

Interesting that the Japanese Service sector is still negative compared to other majors.

BTW, whatever happened to the poster known as Peak Trader?

At 4/10/2010 10:27 AM, Anonymous morganovich said...

peak is spot on.

these % change charts are very commonly misinterpreted.

a 10% increase after a 30% decline is NOT a V shape.

77% of the decrease still remains.

that's a weak recovery, not a strong one.


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