Here Comes The Double Dip Pt. 2

[Lore]

Market volumes have been low as the feel good rally is being led by traders and not investors. The bear wedge is in place.

[OilFinder2]

Still awaiting that delfationary depression!


Consumer Prices in U.S. Rose in February as Gasoline Jumped

The cost of living in the U.S. rose in February by the most in 10 months, reflecting a jump in gasoline that failed to spread to other goods and services.

The consumer-price index climbed 0.4 percent, matching the median forecast of economists surveyed by Bloomberg News, after increasing 0.2 percent the prior month, the Labor Department reported today in Washington. The so-called core measure, which excludes more volatile food and energy costs, climbed 0.1 percent, less than projected.

The biggest jump in gasoline in more than a year accounted for about 80 percent of the increase in prices last month, leaving households with less money to spend on other goods and services. Federal Reserve policy makers say the advance in fuel costs will be temporary, and most see little risk inflation will flare out of control as unemployment exceeds 8 percent.

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[OilFinder2]

This was reported as no change, but January was revised upward from no change to +0.4%, so it's an increase since last month's report anyway.

I think the decrease in mining is due largely to decreases in coal and natural gas.



Industrial Production in U.S. Was Little Changed in February

Industrial production in the U.S. was little changed in February, reflecting slower manufacturing and a decline in mining.

The output at factories, mines and utilities compared with a median projection for a 0.4 percent gain in a Bloomberg News survey of economists. January production was revised to a 0.4 percent increase, previously reported as no change, figures from the Federal Reserve showed today in Washington. Factory production, which makes up about 75 percent of total output, rose at the slowest pace in three months.

Higher energy costs and less European demand for U.S. exports may be prompting some manufacturers to limit production. At the same time, growth in the industry at the forefront of the expansion will probably be sustained on the heels of stronger retail sales and corporate investment in new equipment.

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[Daniel_Plainview]

CBO: Exploding debt under Obama policies

The Congressional Budget Office said Friday that President Barack Obama’s tax and spending policies will yield $6.4 trillion in deficits over the next decade, more than double the shortfall in CBO’s own fiscal baseline — even after taking credit for reduced war costs.

House Republicans, slated to unveil their own plan next week, are sure to seize on the numbers, but more than two-thirds of the $3.5 trillion disparity can be explained by what is still a rich diet of tax breaks continued under the Obama plan.

Indeed, in the case of discretionary appropriations, CBO scores the president as coming in about $4 billion under the $1.047 trillion target set by the Budget Control Act last summer. And within these confines, the biggest discrepancy is that his budget is $2 billion over the caps for security programs at the expense of domestic priorities.

That said, the picture is grim, and even if Obama were to get his way on all fronts, the federal debt held by the public would nearly double again from $10.1 trillion at the end of 2011 to $18.8 trillion at the end of 2022.

For the current fiscal year ending Sept. 30, CBO is now projecting a shortfall of $1.3 trillion. In fiscal 2013, the deficit will still hover near the $1 trillion mark — about $977 billion. And while it will fall to 2.5 percent of GDP by 2017, it then begins to grow again to 3 percent of GDP by 2022.

In order to sustain the illusion of real growth and prosperity, the US govt has relied upon 3 basic principles: (1) increase the national debt exponentially / parabolically; (2) fundamentally alter the presentation of employment data by ignoring that 90% of new jobs are part-time/temp, and by ignoring that unprecedented numbers of discouraged workers are vacating the workforce; and (3) blow as many bubbles as possible using ZIRP, QE, "operation twist," etc.

Even using the highly optimistic CBO data, and even ignoring the effects of peak oil ... the outlook is far beyond dire and approaching terminal/lethal.

[AgentR11]

I used to look at graphs like that and be alarmed, but I'm thinking now that they are very misleading. A bump of x in 1920 is the same sized x in 2012, but $x in 1920 would buy substantially more gold, silver, labor, corn, wheat, etc, that $x in 2012. Basic nature of inflation. If you plotted that curve above relative to something sane, say like a 5yr running average of gold; it would be much, much flatter.

If you want to plot it, time against an inflating fiat currency, try year vs ln($outlay). Should still show solid growth in government, as there are more warm bodies, and more physical assets in production and in need of services, and more stuff that government does.

Finally, its suggested that there is something lethal about the above chart. Far from it. Its perfectly fine; though the deficit part should probably be restrained some at this point. If we need inflation to keep luxury central running, then don't expect anything else, and never assume a limit exists. There is nothing evil about a cup of coffee being priced at $150 at McDonalds. They're just numbers. Japanese have been paying 100+ Yen for coffee (we won't discuss the crime of cold coffee in cans from vending machines, but I digress...) for ages now, they seem no worse off for the experience.

[dolanbaker]

The monerty units are really meaningless, the important thing is really how many hours do you need to work to pay for that burger or whatever.

If it takes longer to pay than a few weeks ago then things are getting worse and vice versa.
We have been living in a period when the time needed to pay for almost all basic necessities has been reducing consistently for the last century or so, it's only now that trend has stopped and appears to have gone into reverse for many sections of the population.

[Daniel_Plainview]

Oil climbs on Iran tensions, dollar slip

(Reuters) - Oil prices rose more than 2 percent on Friday on support from the continuing tensions over Iran's disputed nuclear program and the potential for supply disruptions in the region along with the weaker dollar.

Crude futures posted marginal weekly losses, but rose for the day after slumping the previous session on news the United States and Britain were preparing a release from strategic oil reserves later this year.

The dollar weakened after a report on U.S. consumer prices, which investors viewed as reducing the likelihood of the Federal Reserve tightening monetary policy anytime soon. <USD/>

U.S. consumer prices rose the most in 10 months in February as the cost of gasoline spiked, but there was little sign that underlying inflation pressures were building up.

"The reasoning is that the Fed will not be as likely to pull back on stimulus or raise interest rates, so the dollar weakened and that pushed up oil, along with the uncertainty about Iran and the SPR," said Phil Flynn, analyst at PFGBest Research in Chicago.

U.S. gasoline and heating oil also rose sharply, tagging along as Brent crude moved higher and boosted by news that Enterprise Products Partners (EPD.N) shut a U.S. Gulf Coast-to-Midwest refined products pipeline because of a valve leak.

Brent May crude rose $3.21 to settle at $125.81 a barrel, surging above its 20-day and 10-day moving averages and reaching $126.10 ahead of the close. For the week, Brent fell a mere 17 cents.

U.S. April crude rose $1.95 to settle at $107.06 a barrel, reaching $107.25 and also pushing above its 10-day and 20-day moving averages. For the week, U.S. crude dipped 34 cents.

Brent's premium to U.S. crude, now comparing May contracts, ended at $18.23 a barrel based on settlements.

[Daniel_Plainview]

Finally, its suggested that there is something lethal about the above chart. Far from it. Its perfectly fine; though the deficit part should probably be restrained some at this point.

I assume you're joking (... hopefully ...)

[OilFinder2]

In Sit-Down Restaurants, an Economic Indicator

Have you been eating more at restaurants with waiters rather than fast-food joints?

If so, you are not alone, and that in fact is an indication that the American economy is improving.

Over the 12 months through January, sales at what the government calls full-service restaurants were 8.7 percent higher than in the previous 12 months. That was the fastest pace of growth since the late 1990s, when the economy was booming. Moreover, as is seen in the accompanying charts, that rate was much greater than the rate of growth in sales at limited-service restaurants.

Since those numbers became available 20 years ago, that difference has been a reliable indicator of how the economy is going. In tough times, people may still eat out, but they cut back.

Full-service restaurants may or may not be expensive. Le Bernardin in Manhattan qualifies, but so does Red Lobster. The range at limited-service places is not nearly as wide.

Americans now spend about $220 billion a year at full-service restaurants, and $211 billion at the limited-service places. (They also spend $21 billion at what the government calls “drinking places,” also known as bars. Bar sales are now rising slower than at either type of restaurant, although history does not indicate that has any particular significance for the economy.)

To my knowledge, no previous article has pointed to the relative sales-growth figures at different types of restaurants as an economic indicator. The lack of attention from economists may be partly because of the fact that the government releases the restaurant figures on a delayed basis and does not offer seasonal adjustments for the sectors. The Census Bureau reported the January numbers this week as it reported overall retail sales for February, and most attention was focused on the fact that overall sales improved in February and that figures for the previous two months were revised upward.

As can be seen from the charts, over time the relative sales trends of the different types of restaurants have generally coincided with changes in the gross domestic product numbers. But recently, that relationship seems to have broken down, with the economy growing much more slowly than the restaurant numbers would indicate.

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