Here Comes The Double Dip Pt. 2

[dorlomin]

IMF slashes global growth forecasts

• Eurozone GDP expected to fall 0.5% during 2012
• UK set to grow 0.6% – sharp fall from earlier 1.6% estimate
• World growth downgraded from 4.1% to 3.3%

http://www.guardian.co.uk/business/2012/jan/24/imf-slashes-global-growth-forecasts?commentpage=last#end-of-comments

[OilFinder2]

Mid-Atlantic Manufacturing Expands Briskly

Manufacturing activity in the central Atlantic region expanded at a brisk pace in January, the Federal Reserve Bank of Richmond reported Tuesday, as the bank's gauge of economic conditions showed a sector continuing an expansion that began at the end of last year.

The bank's manufacturing general-business index advanced to 17 in January, compared to December's reading of 3. Prior to the end of last year, the Richmond Fed data had illustrated a moribund manufacturing sector.

Numbers above zero indicate expanding activity, while any figure below that connotes contraction.

The Index's subcomponents moved from strength to strength, with most key categories showing marked improvement from December.

The Richmond Fed's shipment index showed the most impressive performance January, soaring by 14 points from December to 17. The employees index jumped eight points, to 4, from a negative reading in the previous month. Meanwhile, the new orders index doubled to 14 from its December showing.

[...]

[AgentR11]

Yep.. those "wonderful" unemployment numbers sure are making an awe inspiring difference.
not.

[Daniel_Plainview]

IMF slashes global growth forecasts

• Eurozone GDP expected to fall 0.5% during 2012
• UK set to grow 0.6% – sharp fall from earlier 1.6% estimate
• World growth downgraded from 4.1% to 3.3%

http://www.guardian.co.uk/business/2012/jan/24/imf-slashes-global-growth-forecasts?commentpage=last#end-of-comments

First, Eurozone GDP will collapse 5% without vigorous fiscal stimulus:



However, as the Eurozone crisis deepens, and sovereign debts escalate, the Eurozone will not be able to afford fiscal stimulus.

----- Successive plans to restore confidence in the euro area have failed. Proposals currently on the table also seem likely to fail. The market cost of borrowing is at unsustainable levels for many banks and a significant number of governments that share the euro.

----- Two major problems loom over the euro area. First, the introduction of sovereign credit risk has made nations and subsequently banks effectively insolvent unless they receive large-scale bailouts. Second, the ensuing credit crunch has exacerbated difficulties in the real economy, causing Europe’s periphery to plunge into recession. This has increased the financing needs of troubled nations well into the future.

----- With governments reaching their presumed debt limits, some commentators are calling on the European Central Bank (ECB) to bear the costs of additional bailouts. The ECB is now treading a dangerous path. It feels compelled to provide adequate “liquidity” to avert systemic financial collapse, yet must presumably limit its activities in order to prevent a loss of confidence in the euro—i.e., a change in market and political sentiment that could lead to a rapid breakup of the euro area.

----- Five measures are needed to enable the euro area to survive: (1) an immediate program to deal with excessive sovereign debt, (2) far more aggressive plans to reduce budget deficits and make peripheral nations “hypercompetitive” in the near future, (3) supportive monetary policy from the ECB, (4) the introduction of mechanisms that credibly achieve long-term fiscal sustainability, and (5) institutional change that reduces the scope for excessive leverage and consequent instability in the financial sector.

----- Europe’s leaders have mainly focused on a potential longterm fiscal agreement, and the ECB under Mario Draghi is setting a more relaxed credit policy; however, the other elements are essentially ignored.

----- This crisis is unique due to its size and the need to coordinate 17 disparate nations. We give four examples of economic, social, and political events that could lead to more sovereign defaults and serious danger of systemic collapse. Each trigger has some risk of occurring in the next weeks, months, or years, and these risks will not disappear quickly.

Finally, if the Eurozone falls into a severe recession, the US will follow:

The bigger question remains what happens to the US, once i) Europe does not react aggressively to the threat of the biggest recession since 2008, and ii) its GDP does contract by 4% or more.

[OilFinder2]

U.S. Economic Confidence Best Since May

U.S. economic confidence is at -25 in the week ending Jan. 22, improved from -29 the prior week and the best since the week ending May 22, 2011.

The Gallup Economic Confidence Index is an average of two components: Americans' ratings of current economic conditions and their outlook for the economy. Economic confidence is now not much different than the -23 for the same week a year ago and the -28 of the same week in 2010. Americans have grown steadily more positive about current economic conditions in the past three weeks. They are also now more positive about the future direction of the economy than they were three weeks ago, though these views have shown a less consistent pattern.

[...]

Bottom Line

U.S. economic confidence continues to improve, consistent with recent modest improvement in unemployment, positive news on jobless claims, and the general perception that the overall U.S. economy is getting slightly better. This seems like good news for the nation's businesses as well as for President Barack Obama's re-election chances as he presents his State of the Union message to the nation on Tuesday.

[...]

[OilFinder2]

Truck Tonnage Soars at Strongest Rate Since 1998

For-hire truck tonnage rose 5.9 percent in 2011, the biggest year-over-year freight gain for trucking since 1998, the American Trucking Associations said Tuesday.

The year ended with a surge in freight, with truck tonnage rising 6.8 percent from November and 10.5 percent from December 2010, according to the ATA. The increase in the seasonally adjusted For-Hire Truck Tonnage Index underscores the growing strength of U.S. manufacturing and domestic freight in late 2011.

“While I’m not surprised that tonnage increased in December, I am surprised at the magnitude of the gain,” said ATA Chief Economist Bob Costello.

The truck tonnage index was almost flat in November, rising only 0.3 percent from October. Year-over-year, truck tonnage increased 6.1 percent in November.

[...]

[vision-master]

oily.............

[OilFinder2]

Here's a nice couple graphs showing that decoupling thingy in action. Both data sets through November.

EU

^^^ =

US

^^^ =

[OilFinder2]

Finally, if the Eurozone falls into a severe recession, the US will follow:

Or, perhaps, strength in the US will keep Europe from falling into a severe recession (though clearly most of it is already headed into at least a mild one). There's no law saying the US must follow Europe. Perhaps Europe will follow the US, or at least be held up by it.

[dolanbaker]

Depends on where Japan is going as well.

http://www.bbc.co.uk/news/business-16712816

Japan has announced its first annual trade deficit in more than 30 years, a setback for a country known for its exports including cars and electronics.

The deficit came in at 2.49 trillion yen ($32bn; £20bn) for 2011, the finance ministry said.

Japan's imports rose 12% and its exports fell 2.7%, compared to the previous year.

The decline in exports was attributed to the impact from the earthquake and tsunami on 11 March.

....


Energy demands

On the import side of the trade balance Japan has had to increase the amount of incoming energy supplies, as the Fukushima nuclear disaster saw many atomic power stations being taken offline.

As a result, crude oil imports surged 21.3% by value, liquefied natural gas imports rose 37.5% and petrochemical imports were up 39.5% compared to 2010, government figures showed.

Nuclear power previously accounted for about 30% of electricity generation in Japan.

[ralfy]

sorry to burst your bubble ralfie

Vessel Glut Makes BDI Irrelevant as Economic Indicator

http://seekingalpha.com/article/247261- ... -indicator

Helpful points by Tom Demian and Matt Miller in the comments section.

[ralfy]

I forgot to add concerns over Chinese steel output and European imports.

[OilFinder2]

Yet another mega Boeing order. And Europe gets a big chunk of this too.



Norwegian carrier orders 122 Boeing jets, 100 from Airbus

Budget carrier Norwegian Air Shuttle ASA on Wednesday said it has ordered 222 new aircraft from Boeing and Airbus in separate deals with a combined worth of $127 billion in list prices.

The total order, which includes 122 Boeing 737 aircraft and 100 Airbus A320 planes for delivery starting in 2016, is the largest ever aircraft purchase in Europe, Norwegian Air Shuttle said.

[..]

Norwegian Air Shuttle, one of Europe's fastest growing airlines, sees the acquisition of new, fuel-efficient aircraft as key to its strategy to offer low-cost fares. It has expanded rapidly in Europe, and Kjos told The Associated Press last month that it's planning to launch long-haul operations, with flights to New York and Bangkok scheduled to start in early 2013.

The deal with Boeing includes orders for 100 Boeing 737 MAX8s and 22 Boeing Next-Generation 737-800s, in addition to purchase rights for an additional 100 737 MAX8 aircraft. Boeing said Norwegian is the first European carrier to complete an order for its 737 MAX aircraft.

"The total order is valued at $11.4 billion at list prices and represents the largest-ever Boeing order from a European airline," the American company said.

[...]

[dolanbaker]

I have to laugh at all this "aircraft sales" talk being a sign of recovery, it's simply fleet renewal, replacing older less fuel efficient aeroplanes with the latest & most fuel efficient ones that will pay for themselves fairly quickly in fuel savings.

Airlines that don't renew are going bust as their operating costs are too high.
Once this current fleet renewal is complete, sales will nosedive!

[Daniel_Plainview]

U.S. jobless claims increase 21,000 to 377,000

WASHINGTON (MarketWatch) - Jobless claims climbed by 21,000 to a seasonally adjusted 377,000 in the week ended Jan. 21, the U.S. Labor Department said Thursday. Economists surveyed by MarketWatch estimated claims would climb to 373,000. Claims from two weeks ago were revised up by 4,000 to 356,000. The average of four-week claims fell slightly, down 2,500 to 377,500. The monthly average smoothes out seasonal quirks and is viewed as a more accurate gauge of labor-market trends. Continuing claims increased by 88,000 to a seasonally adjusted 3.55 million in the week ended Jan. 14. Continuing claims are reported with a one-week lag. About 7.64 million people received some kind of state or federal benefit in the week ended Jan. 7, down 188,612 from the prior week. Total claims are reported with a two-week lag.

[TheAntiDoomer]

Thanks DP, 4 week moving average continues to fall!!

AND

Durable Goods Orders Surge

Orders to U.S. factories for long-lasting manufactured goods increased in December after business stepped up spending on machinery and other capital goods.

The Commerce Department says orders for durable goods rose 3 percent last month. The second straight monthly gain offered more evidence that the economy has begun the new year with some momentum.

Perhaps the best evidence of that was a 2.9 percent increase in so-called core capital goods, such as computers and machinery. That pushed total orders for this category to a record $68.9 billion.

Economists pay most attention to so-called core capital goods because they are often viewed as a good way of gauging business investment plans.

[TheAntiDoomer]

[OilFinder2]

You know things are going pretty well when initial claims rise by 12K and still print well below 400K.

More info on that excellent durable goods report.



DURABLE GOODS ORDERS SURGE 3%, NOVEMBER REVISED UPWARD

Stronger orders for airplanes and machinery translated into a better-than-expected 3.0% increase in durable-goods orders in December, the Commerce Department estimated Thursday.

It was the third straight increase for durable-goods orders. The level of new orders for big-ticket items rose 10% in 2011.

Economists surveyed by MarketWatch had been forecasting a 2.4% rise, banking on strength in civilian aircraft as Boeing Co. BA +0.17% reported stronger orders last month.

[...]

The government’s data showed orders for nondefense capital equipment goods excluding aircraft, often called “core orders,” rebounded 2.9% last month, a reversal from decreases of 1.2% in November and 0.9% in October.

Such core capital goods orders are considered the best gauge of capital spending by businesses. Core capital goods orders were up 10.0% in 2011.

Shipments of core capital goods — a figure that feeds directly into calculations of gross domestic product — rose 2.9% in December.

[...]

Details

Most sectors reported better bookings in December compared with November. Of note, orders soared 18.9% for civilian aircraft, rose 6.0% for machinery and jumped 5.1% for primary metals.

Declining orders for December were seen in fabricated metals, defense aircraft and electrical equipment.

Excluding a 5.5% increase for transportation equipment, durable orders rose 2.1% in December. This marked the fourth straight such gain.

Excluding defense, orders rose 3.5% in December, easing back from a 4.6% jump seen in November.

Meanwhile, shipments of durable goods 2.1% in December and were up 7.8% in 2011.

[vision-master]

You know things are going pretty well when initial claims rise by 12K and still print well below 400K.

More info on that excellent durable goods report.



DURABLE GOODS ORDERS SURGE 3%, NOVEMBER REVISED UPWARD

Stronger orders for airplanes and machinery translated into a better-than-expected 3.0% increase in durable-goods orders in December, the Commerce Department estimated Thursday.

It was the third straight increase for durable-goods orders. The level of new orders for big-ticket items rose 10% in 2011.

Economists surveyed by MarketWatch had been forecasting a 2.4% rise, banking on strength in civilian aircraft as Boeing Co. BA +0.17% reported stronger orders last month.

[...]

The government’s data showed orders for nondefense capital equipment goods excluding aircraft, often called “core orders,” rebounded 2.9% last month, a reversal from decreases of 1.2% in November and 0.9% in October.

Such core capital goods orders are considered the best gauge of capital spending by businesses. Core capital goods orders were up 10.0% in 2011.

Shipments of core capital goods — a figure that feeds directly into calculations of gross domestic product — rose 2.9% in December.

[...]

Details

Most sectors reported better bookings in December compared with November. Of note, orders soared 18.9% for civilian aircraft, rose 6.0% for machinery and jumped 5.1% for primary metals.

Declining orders for December were seen in fabricated metals, defense aircraft and electrical equipment.

Excluding a 5.5% increase for transportation equipment, durable orders rose 2.1% in December. This marked the fourth straight such gain.

Excluding defense, orders rose 3.5% in December, easing back from a 4.6% jump seen in November.

Meanwhile, shipments of durable goods 2.1% in December and were up 7.8% in 2011.

[Daniel_Plainview]

US new-home sales fell in December to make 2011 worst sales year since records began in 1963

WASHINGTON — Fewer people bought new homes in December, making 2011 the worst sales year on record.

The Commerce Department said Thursday new-home sales fell last month to a seasonally adjusted annual pace of 307,000. The pace is less than half the 700,000 that economists say must be sold in a healthy economy. About 302,000 homes were sold last year. That’s less than the 323,000 sold in 2010, making 2011 the worst year on records dating back to 1963.



The median sales prices for new homes dropped in December to $210,300. Builders continued to slash price to stay competitive.

...Economists caution that housing is a long way from fully recovering. Builders have stopped working on many projects because it’s been hard for them to get financing or to compete with cheaper resale homes. For many Americans, buying a home remains too big a risk more than four years after the housing bubble burst.

Though new-home sales represent less than 10 percent of the housing market, they have an outsize impact on the economy. Each home built creates an average of three jobs for a year and generates about $90,000 in tax revenue, according to the National Association of Home Builders.

A key reason for the dismal 2011 sales is that builders must compete with foreclosures and short sales — when lenders accept less for a house than what is owed on the mortgage.