One month down, five more to go.
U.S. Economy: Growth Rate Falls Short of Forecasts (Update3)
July 31 (Bloomberg) -- The U.S. economy shrank at the end of 2007 and grew less than forecast in this year's second quarter, signaling that the country is in worse shape than investors had anticipated.
``We're in a recession,'' Allen Sinai, chief economist at Decision Economics Inc. in New York, said in a Bloomberg Television interview. ``It's going to widen, it's going to deepen.''
Any word on the when the 2nd half of year recovery will recover? It is like we've sent a rescue team out to save the stranded mountain climbers and now the rescue team itself needs saving. Surely we can send out a few more helicopters to drop some freshly printed cash on them. If we do it enough times, they can burn it to keep themselves warm until the storm passes.
``Exports are making the difference between a near recession, or mild recession, and a deep recession,'' Nariman Behravesh, chief economist at Global Insight Inc., a Lexington, Massachusetts, forecasting firm, said in an interview with Bloomberg Television. ``We don't really see a recovery until some time in the spring or summer'' of 2009 for the economy, he said.
It is almost like the growth in exports is somehow related to the growth in the decline of our dollar (see "weekly view" chart). Yeah, almost exactly like that. Therefore, one would imagine that in order to keep the growth rate up in exports we'll also need to keep the growth rate up in our own currency destruction. We'll know we're doing a good job on this front if oil continues to cost significantly more than the year before. Even with the recent pullback in oil prices, lookin' good so far! Oil averaged just $64.20 a barrel last year.
Initial claims for unemployment insurance jumped by 44,000 to 448,000, the Labor Department said today. The department tomorrow may say payrolls declined by 75,000 in July, bringing total job losses so far this year to over 500,000.
Perhaps an increase in government jobs can help offset those losses.
California cuts 20,000 jobs over budget stalemate
SAN FRANCISCO (AFP) — California Governor Arnold Schwarzenegger on Thursday axed 20,000 temporary state employees and slashed the pay of 200,000 more workers in the latest twist to a budget stand-off.
Then again, maybe not. It would seem 220,000 government workers suddenly feel the urge to spend less. This no doubt marks the bottom in California's real estate market.
Warning: Keep this dose of sarcasm and all related sarcasm out of reach of children. The use of this sarcasm by more than one person may spread infection and/or hysteria.
Dude, the second half recovery is already underway. The FHA has our back and the Fed has Fannie & Freddie's. Merrill just got like 9 billion dollars. And today Cramer repeatedly and unequivocally wrote the stock market bottom was now "in".
ReplyDeleteWhat could go wrong... employment? Puh-leeze, only poor people work.
Stag,
ReplyDeletehttp://www.reuters.com/article/ousiv/idUSN3161434220080731
Per the above link, rising import prices are not included in the GDP deflator. This is good news on the GDP front. Great news actually. As our dollar continues to weaken, import prices can continue to rise without dragging down GDP. Maybe we can even avoid a recession. As long as GDP is strong, who really cares if our dollars buy less than they used to.
Not quite a win-win, but decidedly postive nontheless. Less is more, more or less. The prosperity continues.
Also, I really don't know where you got the idea that sarcasm is contagious. You need to chill out. All is well as our strong GDP proves. Maybe you should try a Su Doku.
AllanF,
ReplyDeleteDude, the second half recovery is already underway.
Welcome to the "under" economy.
Undervalued stocks remain undersold. Understated banks remain undercapitalized and underfinanced. The underpriviliged underfunded underinsured are underpaid while the undertaxed rich are underwritten. Underpowered investors continue to understandably soil their underwear as they ignore the economy's most underwhelming underlying fundamentals. But most importantly and as seen at GM, the inflationary undertaker risks underpinning and undermining our underground economy are still underestimated and underappreciated.
That being said, fortunately some of us are believers in the "over" word. For example, we may have overdone our sarcasm. ;)
MAB,
Real gross domestic product is adjusted for inflation. But the rate of inflation used to perform this complicated calculation excludes import prices like the cost of imported oil. This has soared, pushing up gasoline prices and taking a big bite out of U.S. household budgets.
Is it any wonder the have's can't figure out why the have not's are struggling? Further, thank goodness none of my investments are tied to the GDP! I was not aware that the GDP was calculated this way as it has always been a relatively meaningless statistic to me and I never bothered to look. After reading this article I'm left with the following opinion.
Investments tied to inflation (TIPS): good.
Investments tied to the GDP (stock market): good luck!
Funny how just adding a bit of "luck" to an otherwise "good" thing changes its meaning so much.
MAB,
ReplyDeleteAll is well as our strong GDP proves. Maybe you should try a Su Doku.
Su Doku? I barely knew her!
Sup-er economy? I'll take the soup please!
It would be helpful to have a drum roll during the punch line and be playing to a mostly drunk audience I would imagine. It might also help to be a bit more original I suppose.
Spitzer? I barely knew her!
http://notsomuchnews.blogspot.com/2008/03/whorospitz.html
Leonard Fallson is a columnist for the NSM News. As he puts it, he doesn't need to hide his "I" from the audience like his dorkbutt editor Anand Ramakrishnan does. He tells it like it is, and he tells it like it is in an angry and mostly sarcastic way.
...
What happened to you, Spitzer? You used to be cool. Kudos, however, in getting your wife to stand next to you at the press conference. That must have been a great family dinner afterwards.
Eliot: "So...how's the meatloaf, honey?"
Silda: "Good...tastes kinda like whore. Oops, how did that come up in the conversation?"
I can't believe I posted this. Shame on me. My "good taste" boundary can often be more than a bit flexible though (much like inflation targeting by the Fed), especially when I can't seem to stop laughing.
StagMark,
ReplyDeleteLong time, etc - I have the ultimate GDP riddle posted on my blog - take a gander and share your thoughts!
energyecon,
ReplyDeleteI don't know nearly enough about how the GDP is calculated to even offer any insights on that. I am apparently too lazy to educate myself on the details of the GDP as well.
Rather than take any personal responsibility for it though, I'm going to blame the Playstation 3 and chocolate chip cookies.
Rockband sucked me in and now it is Civilization's turn. That's TWICE the games and using a crude back of envelope calculation one might expect a doubling of a certain personal anti-productivity miracle. Just imagine what a third game would do to my productivity. As a side note, I better start maintaining the front yard again or I will regret it!
Then there are the cookies. My girlfriend made some today. The first one increased my productivity measurably as I definitely gained energy and my spirits lifted. I did what most would do once that was noticed. I ate a second one. Unfortunately, it didn't seem to do much at all. It very much surprised the extrapolator in me. You'd think eating two cookies would be twice as good. I ate a third one anyway though and suddenly feel ready for a nap. It doesn't seem logical. Something is horribly wrong with the math.
That being said, I'm confident that by the time we get our third tax rebate checks in the mail (based on the popularity of the first one as the economy began to slow), our country will be poised for massive productivity gains (unlike a third game and/or a third cookie).
Ooooh Civ on the PS3 - sounds SWEET - since I am no longer single etc I must live vicariously through your most excellent video adventures...though I have to cop to experiencing silicon lust for 'Lair' [sigh]
ReplyDeleteenergyecon,
ReplyDeleteI must live vicariously through your...
Don't do it!
I sent my Rockband guitar back since the overdrive mechanism didn't work any longer. The replacement showed up in the mail yesterday.
Why is this important? Well, it explains my very blood shot eyes and the pain and stiffness in my left pinky today. I think I may have played way TOO long last night. The concept of time was lost on me until the sun came out.
I would imagine it is similar to what a drug addict might experience after going cold turkey for two weeks and then having a few pounds of a mysterious substance land in his back yard (presumably dropped from a drug smuggler's plane).
Or perhaps it is similar to what a consumer might experience if tax rebate checks suddenly appeared. Who knows!
No no it's all good - this living vicariously thing is like...OPM!
ReplyDeleteenergyecon,
ReplyDeleteOPM!
This company is dead. I didn't kill it. Don't blame me. It was dead when I got here. It's too late for prayers. For even if the prayers were answered, and a miracle occurred, and the yen did this and the dollar did that and the infrastructure did the other thing, we would still be dead. You know why? Fiber optics. New technologies. Obsolescence. We're dead, all right. We're just not broke. And do you know the surest way to go broke? Keep getting an increasing share of a shrinking market. Down the tubes, slow but sure. - Lawrence Garfield, Other People's Money, 1991
One more thought on that.
ReplyDeleteGM Stands Behind CEO Wagoner
http://online.wsj.com/article/SB121796187824614187.html?mod=yahoo_hs&ru=yahoo
General Motors Corp.'s board of directors remains behind Chief Executive Rick Wagoner following the company's surprise $15.5 billion loss in the second quarter, the company said Tuesday.
...
"The board is totally behind Rick, realizing nobody could deal with this situation any better than he," one person close to the board said. "It's a case of an excellent plan, [and] delivering on all promises."
Stag,
ReplyDeletehttp://www.bls.gov/news.release/ximpim.nr0.htm
The above import and export price statistics are just plain scary. Prices are out of control.
The trend is your friend, Doh!
MAB,
ReplyDeleteImport prices increased 1.7 percent in July after rising between 2.8 and 3.1 percent in each of the
previous four months. Prices for overall imports jumped 21.6 percent for the year ended in July, the largest
12-month increase for the index since first publication in September 1982.
Oil sure has dropped though. Heck, might even be $100 a barrel again someday. I've pretty much given up on $11 oil like we had in 1998 though.
Lower Oil Prices Slow in Reaching Pump
http://www.washingtonpost.com/wp-dyn/content/article/2007/01/05/AR2007010501756_pf.html
So far, the benefits of falling crude oil prices haven't trickled down to consumers.
Oh wait. That article was from January of 2007. Oops. My bad.
Crude prices plunged almost 9 percent on Wednesday and Thursday, before stabilizing on Friday. They finished the week at $56.31 a barrel on the New York Mercantile Exchange, down 7.8 percent since the start of the year.
$56.31? Lookin' good though.
Even if prices stayed around this level, Leggate said, "that's not a low number."
Looks pretty low to me, at least by comparison. D'oh!