US Economy Could Recover Much Sooner Than Expected pt 3

[the48thronin]

neat chart.

2001 diesel fuel MY COST .97
2007 deisel fuel MY COST 2.65

plastics... petroleum...HMMM dollar value vs volume....

I love misleading charts myself..... desperation moves....


common sense... I cannot afford much but a guy making $100 a month can afford less....

[jbrovont]

The guy making $100 a month just got a $0.40 cent raise, so it's all good now. *Plus* he left $0.20 in his ash tray instead of spending it, so he can use it in an emergency later.

neat chart.
<snip>
common sense... I cannot afford much but a guy making $100 a month can afford less....

[Heineken]

Such data are meaningless, esp. considering the sources. I wonder which "economists" Bloomberg chose to "survey"? Hacks.

A classic case of, "Don't like the message, so blame the messenger."

The data is from the Dept of Commerce, not Bloomberg, in case you weren't aware.

And of course a U.S. government mouthpiece is to be believed!

[Heineken]

Meanwhile, back in the real world . . .

http://finance.yahoo.com/tech-ticker/do ... 10021.html

[Heineken]

On the contrary, there is plenty the Chinese can purchase from the US. Here is a chart showing US exports to China through 2007:



No doubt it went down during the recession, but also no doubt it's picked up this year.

The US makes plenty of plastic parts. If a rise in Chinese prices due to a revaluation of the yuan led to the impracticality of the US importing whatever plastic parts from China we do import from them, they can always build whatever facilities they need to in the US.

In fact, as of last year, "Plastics and Articles Thereof" were the 5th largest US export to China (Table 2).

Why don't you post a chart showing the change in Chinese exports to the US? The trade imbalance is massive. We can't possibly compete with Chinese labor without accepting a drastic drop in our living standards---much lower wages, fewer benefits.

More expensive Chinese imports will be a double whammy on the consumer and the economy, because it will cause not only inflation but higher interest rates, which is the last thing the US can afford.

[eXpat]

Time to close this silly thread for good.
John Hussman: It's Official, The Data Says Another Recession Is Coming

Fund manager John Hussman (via PragCap), who's been bearish for awhile, says it's now clear that a double-dip is coming.

Based on evidence that has always and only been observed during or immediately prior to U.S. recessions, the U.S. economy appears headed into a second leg of an unusually challenging downturn.

A few weeks ago, I noted that our recession warning composite was on the brink of a signal that has always and only occurred during or immediately prior to U.S. recessions, the last signal being the warning I reported in the November 12, 2007 weekly comment Expecting A Recession. While the set of criteria I noted then would still require a decline in the ISM Purchasing Managers Index to 54 or less to complete a recession warning, what prompts my immediate concern is that the growth rate of the ECRI Weekly Leading Index has now declined to -6.9%. The WLI growth rate has historically demonstrated a strong correlation with the ISM Purchasing Managers Index, with the correlation being highest at a lead time of 13 weeks.
Taking the growth rate of the WLI as a single indicator, the only instance when a level of -6.9% was not associated with an actual recession was a single observation in 1988. But as I've long noted, recession evidence is best taken as a syndrome of multiple conditions, including the behavior of the yield curve, credit spreads, stock prices, and employment growth. Given that the WLI growth rate leads the PMI by about 13 weeks, I substituted the WLI growth rate for the PMI criterion in condition 4 of our recession warning composite. As you can see, the results are nearly identical, and not surprisingly, are slightly more timely than using the PMI. The blue line indicates recession warning signals from the composite of indicators, while the red blocks indicate official U.S. recessions as identified by the National Bureau of Economic Research.

http://www.businessinsider.com/john-hussman-its-official-the-data-says-another-recession-is-coming-2010-6

[Heineken]

Consumer-confidence index down sharply. Stocks down around 240 points this afternoon.

Growth is sagging in CHINA.

Additional major hits are coming, including the likely default of Spain and Greece, despite bailouts and austerity measures.

Yup, the "recovery" is happening MUCH sooner than expected, OilFinder!

[OilFinder2]

Why don't you post a chart showing the change in Chinese exports to the US? The trade imbalance is massive.

pstarr said:

There is little the Chinese need to purchase from us. They do not need our pharmacueticals, F-22's, Ipods etc. They make their own. But we desperately need their extruded plastic parts and have not means of manufacturing this stuff ourselves. We can not labor cheaply enough, nor are we willing to pollute our country for the subassemblies we depend on.

So I replied by showing him a chart that the Chinese purchase tens of billions of dollars of goods from us every year, and that that amount has been growing, and that the items include plastic parts. In other words, there are plenty of things the Chinese already purchase from us, so it is not unreasonable to believe they could purchase even more given sufficient incentive. Of course we have a large trade deficit with them, but that was beside the point.

We can't possibly compete with Chinese labor without accepting a drastic drop in our living standards---much lower wages, fewer benefits.

That depends on how much the exchange rate changes, and how much more Chinese incomes grow (they've already been rising). There are already companies leaving China because it's becoming too expensive.

More expensive Chinese imports will be a double whammy on the consumer and the economy, because it will cause not only inflation but higher interest rates, which is the last thing the US can afford.

Not necessarily, because if the yuan goes up (along with Chinese wages), thus making it more expensive to produce in China, we might import less from China, thus reducing the impact of the higher price of Chinese goods.

[pstarr]

From the NYT:

Op-Ed Columnist
The Third Depression
By PAUL KRUGMAN
Published: June 27, 2010

As far as rhetoric is concerned, the revival of the old-time religion is most evident in Europe, where officials seem to be getting their talking points from the collected speeches of Herbert Hoover, up to and including the claim that raising taxes and cutting spending will actually expand the economy, by improving business confidence.

Of course, Krugman proposes more deficit spending etc. to stimulate the economy, assuming future growth will ameliorate the current debt. He is another Infinite-Earth Believer who doesn't understand our energy/ecology/debt/growth conundrum.

[Heineken]

OilFinder, tinker with the words and the numbers all you want; the plain fact is you are betting on a very sick horse---and perhaps, a horse that deserves to be sick, because it insists on eating sugar and not even paying for it.

[Heineken]

From the NYT:

Op-Ed Columnist
The Third Depression
By PAUL KRUGMAN
Published: June 27, 2010

As far as rhetoric is concerned, the revival of the old-time religion is most evident in Europe, where officials seem to be getting their talking points from the collected speeches of Herbert Hoover, up to and including the claim that raising taxes and cutting spending will actually expand the economy, by improving business confidence.

Of course, Krugman proposes more deficit spending etc. to stimulate the economy, assuming future growth will ameliorate the current debt. He is another Infinite-Earth Believer who doesn't understand our energy/ecology/debt/growth conundrum.

Exactly. The fantasy must be kept alive at all costs! Otherwise we might have to wake up to REALITY.

Plus, let's not forget the coming economic impact of the Gulf disaster, which could well become the Atlantic disaster. Those awful numbers have barely begun to register yet. Imagine, a major economic zone of the U.S. basically WIPED OUT.

[eXpat]

US auto sales drop from May to June, another sign of weak economy

DETROIT (AP) - Most automakers have seen their U.S. sales drop from May to June, a sign that this year's slow recovery in the industry may be stalling.

Consumers are delaying big-ticket purchases because they're worried about their jobs in an environment of high unemployment. Analysts predict overall sales for the industry will drop 10 percent or more from May.

Sales of General Motors Co., Ford Motor Co. and Chrysler Group cars and trucks fell between 12 and 13 percent from May. Subaru's sales were also down, but Hyundai Motor Corp. bucked the trend with a slight gain.

Hyundai Motor Corp. reported a 4 percent increase from May and a 35 percent jump from June of last year, helped by sales of its midsize Sonata sedan.

http://www.todayonline.com/BreakingNews/EDC100702-0000020/US-auto-sales-drop-from-May-to-June,-another-sign-of-weak-economy

[OilFinder2]

^
Umm . . . auto sales normally decline from May to June.

[OilFinder2]

It's funny reading all the talk about a double-dip and the stock market panicking, and meanwhile I'm reading stuff like this:

LINK

Wednesday, June 30, 2010
Ga. ports booming -- will economy follow?
By Dan Chapman
The Atlanta Journal-Constitution

China’s factories run ‘round-the-clock. Ships laden with containers low-ride the Pacific. Georgia’s ports report record traffic.

Trucks and trains leave the ports filled to the brim. Warehouses and distribution centers add workers. Retailers re-stock inventories -- and hope shoppers will reach for their wallets.

It’s looking like Christmas in July; retailers are getting an early start filling warehouses for the holidays. Georgia’s ports, truckers and rail lines hustle to keep them supplied.

“We just had our sixth consecutive month of double-digit growth and we are on pace for the 2010 calendar year to be a record for us,” said Curtis Foltz, executive director of the Georgia Ports Authority. “I don’t want to claim the recession is over throughout the U.S. But it’s pretty remarkable that we’ve fully recovered the loss of volume at our ports.”

Container traffic at Georgia ports is up 25 percent through the first five months of the year, versus the same period last year, with more than 631,000 of the steel boxes passing through Savannah. May was the sixth busiest month ever.

[...]

And this:
Trucking Recovery in Full Swing on Gains in Freight Volumes

The trucking industry is finally experiencing a period of growth, as an economic recovery has led to solid freight volumes, tightening capacity and signs of a driver shortage waiting in the wings, said Bob Costello, chief economist of the American Trucking Associations, in the Trucking Economic Review.

"It looks like motor carriers are finally enjoying some better days, after more than two years of extremely tough times," he said.

In the review, the ATA said it has raised its economic forecast for the rest of this year. While gross domestic product grew at a 2.7 percent annualized rate in the first quarter of 2010, the ATA expects GDP growth to top 4 percent this quarter. For the entire year, GDP is expected to grow 3.4 percent, compared to the 2.4 percent drop in 2009.

[...]

This is precisely the kind of thing people were telling me a year ago, "How can there be a recovery if [trucking volumes are collapsing] [port activity is collapsing]?" Back then I was trying to explain that some things are just lagging indicators, and/or that some things just are recovering at different rates than others.

Well, these things are no longer declining, they're growing at a hefty rate now! So do we get an admission from these same people that maybe, just maybe, we're actually in a recovery now?

Nooooo , of course not.

[the48thronin]

no recovery yet... counting loads twice doesn't mean more loads!

[Heineken]

There are plenty of things the Chinese already purchase from us, so it is not unreasonable to believe they could purchase even more given sufficient incentive. Of course we have a large trade deficit with them, but that was beside the point.

It's not beside the point. It is a huge point. Also, China's economy is slowing, so the Chinese will turn even more to domestic sources of good and services.

There are already companies leaving China because it's becoming too expensive.

Well, if companies are leaving China because it's becoming too expensive there, they certainly aren't going to move here! Ghana, maybe.

The US has pretty much abrogated its industrial base. It's gone. We just make specialty products now in certain niches. And, oh yeah, some cars (and only one major US car manufacturer is remotely solvent).

The US economy is housing. Housing is the US economy. And housing is hopelessly mired in a quagmire.

[OilFinder2]

It's not beside the point. It is a huge point.

Yes, it was 100% beside the point. Pstarr said the Chinese do not need to buy anything from the US. I replied by showing him that the Chinese have been increasingly buying more stuff from us since 2002 or so. End of story. Everything else was irrelevant. Read the context of the exchange.

Also, China's economy is slowing, so the Chinese will turn even more to domestic sources of good and services.

This is not necessarily true, but that's getting too off-topic.

There are already companies leaving China because it's becoming too expensive.

Well, if companies are leaving China because it's becoming too expensive there, they certainly aren't going to move here! Ghana, maybe.

I have little doubt many companies will find still-cheaper places to make their stuff, but *some* of them will also return production to the US. I can even give you a few recent examples of this, if you like.

The US has pretty much abrogated its industrial base. It's gone. We just make specialty products now in certain niches. And, oh yeah, some cars (and only one major US car manufacturer is remotely solvent).

Contrary to popular belief, the US is the world's largest manufacturer. Yes, I can prove that too, if you like.

The US economy is housing. Housing is the US economy. And housing is hopelessly mired in a quagmire.

I could also say that cars are the US economy. Or . . . banking. Or maybe food - after all that's the most important economic good of all, no? Or . . since our previous recession was caused by the dot-com bust, one could also say that technology is the US economy. If one sector going bust causes a recession, one could say it was the most important part of the economy, no?

Point being, there is no one thing which "is" the US economy. There are many things.

[Heineken]

Gosh OIlfinder, to read your posts you'd think you could walk into a Home Depot or a WalMart and find loads of "Made in USA" tags. Good luck. I'm sure you'll find a few if you look high and low enough.

Of course you can find "examples" of companies that have moved production back to the US, but these are special cases, merely anecdotal. The trend has been obvious for a long time, and it's a big reason why we're in this pickle. Housing became our big industry (and cars, yes), and these are big-ticket items that must be bought on credit. The ordinary, daily-purchase stuff is made in China. The tortoise once again beats the hare.

Drive across the country and you'll see what we're made of. Apart from industrial farms, it's suburbia. Housing and endless miles of cheesy stores. Manufacturing remains in pockets, but it's sick and getting sicker.

[timmac]

Yes I can agree with OilFinder2 that there is still a large economy here but what he is leaving out of his Delusion is that we are up to our eyeballs in DEBT, States are going broke, Fed is going broke, S.S. is going broke, many companies that are here is still battling huge debt, GOM oil leak is going to finish off what is left here.

To think we are going to recover is living with one's head in the sand...

[Cloud9]

Looks like the Baltic Dry Index is headed south again. This from Zero Hedge
http://www.zerohedge.com/article/baltic ... -year-lows