PeakTrader.com

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PeakTrader said...

U.S. inflation and employment are slowing, the E.U. and China are contracting or slowing, the U.S. is facing the "fiscal cliff," and Obamacare is adding to the uncertainty.

The U.S. housing market is recovering slowly from its deep depression, while the U.S. stock market is holding up from negative investor sentiment.

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Jon says: "I offered $1,000 to anyone who believed that we were/will soon be in a recession in 2012."

You'll make more money betting on a recession. However, don't listen to the overblown inflationists, who believe the economy has been contracting for years or decades.

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http://www.blogger.com/comment.g?blogID=28997633&postID=1400753526572281739

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Manufacturing shrinks, first time in nearly three years
Jul 2, 2012

"...fell to 49.7 from 53.5 the month before, missing expectations of 52.0.

A reading below 47 would be consistent with another recession.

The report is consistent with an economy that is growing at an annualized rate of a little below 1 percent after 1.9 percent growth in the first quarter."

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http://www.blogger.com/comment.g?blogID=28997633&postID=1350835396172321972

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PeakTrader said...

"...thanks to the shale gas revolution, only five years to go from 6,000 back down to 5,000 million metric tons."

We can also thank the deep depression. Chart:

http://stateofworkingamerica.org/charts/output-gap-real-gdp-compared-to-potential-gdp-2000-11/

And further thanks to a slowing economy from 1.9% real growth in the first quarter to 1% and perhaps a recession soon.

Of course, the E.U.-17 is doing its share too:

Eurozone unemployment rises to 11.1 percent in May, highest rate since euro was established
July 2, 2012

Eurostat, the EU’s statistics office, said unemployment rose to 11.1 percent in May.

Six countries in the eurozone, including Spain and Italy, are in recession.

“...indicate ongoing labour market weakness, with further deterioration highly likely in the second half of the year.”

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http://www.blogger.com/comment.g?blogID=28997633&postID=4267446388546829719

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PeakTrader said...

Yet, we've had a weak recovery from a severe recession. It's less than an L-shaped recovery when compared to potential real growth of 3% per year. Real growth has slowed to 1.7% in 2011, and likely slowed even further in the first half of 2012.

US Big Three automakers score solid sales
Jul 3 2012

The Big Three US car manufacturers have reported strong domestic sales for June, capping a solid first half of the year even as US economic growth overall remained weak.

"High auto sales volumes in June can be attributed to pent-up demand, some targeted incentive programs, low interest rates and falling gas prices," said Michelle Krebs of industry specialists Edmunds.com.

"There was great pressure from automakers to close June strong, especially after the unexpectedly weak Memorial Day holiday weekend in May," added Edmunds's Jessica Caldwell.

"It is the end of a quarter so undoubtedly they wanted to finish big. Two weak months in a quarter would make for unfavorable reporting."

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June retail sales gain may be smallest in 3 years
July 3, 2012

With both consumer confidence and sentiment declining in June, shoppers’ caution has translated to their wallets.

U.S. retailers will release their final results on Thursday.

“June results are likely to further confirm slowing growth that surfaced in April,” said BMO Capital Markets analyst Wayne Hood. “There’s a growing list of management teams sounding more guarded as compared with previous months.”

A survey by the International Council of Shopping Centers and Goldman Sachs showed customer traffic slowed, with the highest percentage of consumers saying they didn’t shop at all during the past week since late May.

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http://www.blogger.com/comment.g?blogID=28997633&postID=3515203510771601654

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PeakTrader said...

"Thursday Economic Reports: Lookin' Good"

Have we even begun a recovery yet?

It looks like a recoverless recovery in a rolling depression.

Will there be another recession before an actual recovery?

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Jon, a recovery to me is getting back on track.

We haven't even moved towards the track yet.

Output Gap (through Q4 2011):

http://stateofworkingamerica.org/charts/output-gap-real-gdp-compared-to-potential-gdp-2000-11/

In 2012, the economy slowed and may be slowing from a slow rate.

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Employment: Another Weak Report (more graphs):

http://www.calculatedriskblog.com/2012/07/employment-another-weak-report-more.html

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http://www.blogger.com/comment.g?blogID=28997633&postID=2230509691032081122

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PeakTrader said...

"...imagine an economy that produces 100 apples. If 10 of those apples are given to people with food stamps, then people who otherwise would have had those 10 apples are now worse off. The stimulus of 10 apples through food stamps is exactly offset by the destimulus of 10 apples for those people from whom the 10 apples were taken."

Imagine an economy where demand for apples falls from 100 to 90. So, supply of apples falls to 90 and jobs are lost.

It can become a vicious cycle. Demand falls, supply falls, jobs are lost. So, demand falls further, supply falls further, more jobs are lost, etc., and we declare a "Great Depression."

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It seems, some people feel there's nothing that can be done about periods of feast and famine.

They know as much about economics as people did in the Dark Ages.

They make Larry look like Paul Samuelson.

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Morganovich, just because you make things up doesn't prove anything.

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Bart says: "He has been busted so many times..."

Of course, you can't prove it, like everything else you tried to prove.

Everytime you stood-up for your simple and biased positions, the bottom of your pants tore off.

You should've learn by now your 19th century economics aren't even that good.

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http://www.blogger.com/comment.g?blogID=28997633&postID=2537321811981110581

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PeakTrader said...

It looks like a 2012-13 recession:

The American Enterprise Institute
July 27, 2012

"Research from the Federal Reserve finds that that since 1947, when year-over-year real GDP growth falls below 2%, recession follows within a year 70% of the time.

Real GDP expanded at a mere 1.5% annual rate last quarter, and final sales creeped forward at only a 1.2% pace. That pace of growth is fairly pathetic.

Inventories were accumulated at a $66 billion annual rate, which is a rapid pace and implies that production will remain muted as firms work down excessive stockpiles.

Real consumer spending increased at a 1.5% rate, the second slowest quarter since 2009.

a) at least the U.S. economy is growing and b) at least the U.S. economy is doing better than the EU economy. But that’s a case of lowering expectations. America should and can do better."

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This has been a weak and expensive "recovery:"

Revisions to the 2009-2011 estimates - BEA July 27, 2012

"The percent change from the preceding year in real GDP was revised up from a decrease of 3.5 percent to a decrease of 3.1 percent for 2009, was revised down from an increase of 3.0 percent to an increase of 2.4 percent for 2010, and was revised up from an increase of 1.7 percent to an increase of 1.8 percent for 2011."

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The garbage indicator supports Marmico's new orders indicator:

CHART OF THE DAY: The US Garbage Indicator Is Sending An Ominous Sign For The Economy
Jul. 26, 2012

"Among the 21 categories of items shipped by rail, none have a tighter correlation to GDP than waste...an 82 percent correlation to US economic growth.

The more you produce, the more you throw out. Waste carloads are way down."

http://www.businessinsider.com/chart-of-the-day-the-us-garbage-indicator-economy-2012-7

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http://www.zerohedge.com/sites/default/files/images/user3303/imageroot/2012/07-2/20120802_exportcollapse.png

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If a recession began in June, then we had a weak and expensive expansion that lasted only 36 months.

Per capita real GDP remains below the 2007 peak and it's even lower compared to the long-run trend.

Obama added $5 trillion in federal debt, which doesn't include Bush's TARP, which would make the debt even higher.

[i.e. federal debt is lower than it otherwise would've been, over the past few years, because of the roughly $400 billion in cash inflows from TARP.]:

The Bailout Scorecard
Last update: Aug. 1, 2012

"$700 billion TARP bill and the separate bailout of Fannie Mae and Freddie Mac.

Altogether, accounting for both bailouts, $602 billion has gone out the door—invested, loaned, or paid out—while $309 billion has been returned.

The Treasury has been earning a return on most of the money invested or loaned. So far, it has earned $82 billion.

When those revenues are taken into account, $211 billion is the net still outstanding as of Aug. 1, 2012."

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marmico said...

When you consider it on a per capita basis (low population growth), it seems to be comparably better than "sluggish" relative to prior recovery/expansions.

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PeakTrader said...

Marmico, if population growth was constant, per capita real GDP would be even lower.

This depression is worse than the Great Depression, because government spent so much for so little growth.

http://www.advisorperspectives.com/dshort/charts/indicators/GDP-per-capita-overview.html?Real-GDP-per-capita-since-1960-log.gif

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marmico said...

"Marmico, if population growth was constant, per capita real GDP would be even lower."

Think about it. You have it backwards. Basically, productivity growth + population growth (POP) = GDP growth.

The lower the POP, the lower the GDP growth, productivity held constant. POP has been in a secular decline for 60 years.

Actually, government spending, in nominal terms, is flat since 2009, and down, probably, 5% in Real terms

So if you adjusted for POP and NIPA government spending, this would be a Reaganesque or Clintonian expansion.

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PeakTrader said...

Marmico, I've been talking about per capita real GDP, not real GDP. Only adding more babies, for example, won't raise per capita real GDP.

The Great Depression Statistics

"The widespread poverty of the Great Depression caused dramatic changes to family life as young couples, worried about their finances, put off having children. The US fertility rate (the number of children born to women aged 15-44) declined by nearly 20% from 1928 to 1935."

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US birthrate plummets to lowest in 25 years as poor economy puts would-be parents off having children
26 July 2012

"The average number of births per woman has fallen 12 per cent from a peak of 2.12 in 2007, when the economy began to falter.

'And like any recession, it doesn't hit all people equally, and it hit some people much harder than others.'

He added that the effect of the economy on births has been quicker and more enduring than any slump since the Great Depression."

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Federal spending is $1 trillion a year more and tax revenue is roughly unchanged, compared to 2007, because the additional spending failed to generate enough growth to raise tax revenue.

So, there's roughly a $1 trillion budget deficit this year.

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Wikipedia

U.S. Federal Budget - 2007

Total Spending: $2.73 trillion
Total Revenue: $2.57 trillion
Deficit: $161 billion

U.S. Federal Budget - 2012 (projected)

Total Spending $3.73 trillion
Total Revenue $2.63 trillion
Deficit: $1.101 trillion

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