US economic recovery is complete. pt 2

[Daniel_Plainview]

Daniel_Plainview: what's your thinking about why we're seeing deflation? Especially in the face of the naked printing that was going on for QE1 and 2... does this pretty much guarantee a third round of printing?

Here are 10 reasons why we see deflation:

1. Economies can no longer grow without cheap oil; the world has hit a brick wall such that when oil prices reach $90 (West Texas) to $100/bbl (Brent), growth collapses. The only reason US GDP growth is positive is because of the ongoing massive govt life-support (fiscal and monetary stimulus), which adds at least 8% to GDP.

2. The collapsing housing & asset bubbles will take years to unwind ... if ever ...

3. The underlying economic fundamentals are very weak, and getting weaker. For example, structural unemployment is worsening, and the unavailability of cheap oil will exacerbate this. Unemployed people spend less on goods and services, which leads to a deflationary spiral.

4. Wages are stagnant or decreasing, and are now at levels of the 1990's.

5. Ballooning sovereign debts won't allow for further stimulus and/or bailouts.

6. Sovereign default risks will tighten credit even more.

7. Credit is tightening because banks won't lend when the asset-collateral values are suspect or impaired (there's so much fraud and non-transparency in the system now that actual asset values are largely unknown/unknowable).

8. The shadow banking system is the pinnacle of opacity, and when that begins to collapse ... look out ...

9. Persistent zero interest rates (ZIRP) have caused malinvestments and distortions in the capital / financial markets, such that we now have a negative real interest rates, which causes disincentives for savings / investment.

10. There's so much global uncertainty that consumers and investors are cautious and holding back. There's the pervasive background feeling that "the party's over."

Especially in the face of the naked printing that was going on for QE1 and 2... does this pretty much guarantee a third round of printing?

The problem is that naked printing exacerbates the problems when oil & commodity prices skyrocket. Heli-Ben is too much of an idiot to realize this, though ... so we will see QE3.

[OilFinder2]

Texas Manufacturing Activity Picks Up

September 26, 2011
Texas Manufacturing Activity Picks Up

Texas factory activity increased in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 1.1 to 5.9, suggesting growth picked up this month after stalling in August.

Most other measures of current manufacturing conditions also indicated growth in September. The new orders index edged down from 4.8 to 3.6 this month, suggesting order volumes continued to increase, but at a slightly decelerated pace. The shipments index rose from 6.7 to 9.4, reaching its highest level since March. The capacity utilization index remained in negative territory in September but rose from –2.8 to –1.3.

Perceptions of general business conditions worsened in September. The general business activity index remained negative for the fifth month in a row and fell from –11.4 to –14.4; ten percent of manufacturers perceived an increase in activity this month, while one quarter noted a decrease. The company outlook index fell from 7.2 in August to a near-zero reading in September. Still, the great majority of respondents said their outlooks were unchanged or improved from last month.

Labor market indicators reflected higher labor demand growth. The employment index came in at 13.4, up notably from 5.4 in August. One quarter of manufacturers reported hiring new workers, while 12 percent reported layoffs. The hours worked index moved back into positive territory in September, suggesting average workweeks lengthened.

[...]

Dallas Fed PDF

[Daniel_Plainview]

US Home Sales Collapse to 50-Year Low, in Clearest Sign Yet of Relentless, Ongoing Depression

WASHINGTON (AP) — The home-buying season was a bust.

March through August are typically the peak buying months. But this time, Americans bought fewer new homes in that stretch than in any other six-month period since record-keeping began a half-century ago. And sales of previously occupied homes didn't fare much better. They nearly matched 2009's total for the peak buying months. And that was the worst since 1997.

Combined, total sales this spring and summer were the weakest on records dating to 1963. The figures underscore how badly the housing market is faring and suggest that a recovery is years away.

Because the economy is barely growing and unemployment exceeds 9 percent, many people see a home purchase as too big a risk. Some worry about losing their jobs. Others can't afford the 20 percent down payment that most lenders now require.

Not even shrunken home prices and the lowest mortgage rates in six decades are convincing would-be buyers.

"The job engine has really sputtered out, and without jobs, Americans really can't purchase homes," said Celia Chen, a housing economist at Moody's Analytics.

Plunging stock prices and renewed recession fears have led many economists to push back expectations for a housing recovery.

Chen expects prices to bottom at the start of 2012. And she doesn't expect sales and prices to make a healthy recovery until 2015 at the earliest. In hard-hit areas such as California and Florida, it could take decades for prices to return to normal, she said.

Pierre Ellis, an analyst at Decision Economics, said that until wages increase and hiring picks up, sales will languish.

The "bad news is the evident absence of optimism that sales will pick up to any degree," Ellis said.

Roughly 168,000 new homes were sold from March through August ... In a healthy six-month buying season, about 400,000 new homes would sell.

... Nationally, prices are still falling. Prices for previously occupied homes have sunk more than 5 percent over the past year to a median of $168,300. New-home prices have fallen even further, by 7.7 percent, to $209,100. That suggests builders and Realtors are slashing prices to compete with low-priced foreclosures and short sales. Short sales occur when lenders allow homes to be sold for less than what's owed on the mortgage.

Combined, foreclosures and short sales are selling at an average 20 percent discount. And they're lowering neighboring home values. ...

[Daniel_Plainview]

Recession Engulfs Texas as Dallas Fed Index Plunges for 5th Consecutive Month and the Future Activity Index Collapses to its Lowest Level since April 2009

Perceptions of general business conditions worsened in September. The general business activity index remained negative for the fifth month in a row and fell from -11.4 to -14.4; ten percent of manufacturers perceived an increase in activity this month, while one quarter noted a decrease. The company outlook index fell from 7.2 in August to a near-zero reading in September. ... Expectations regarding future business conditions were generally less optimistic in September. The index of future general business activity edged down to -1.5, the first negative reading since April 2009. The index of future company outlook fell as well, staying positive but registering its lowest reading in more than a year. Most indexes of future manufacturing activity inched down in September, although all remained in solid positive territory.

[OilFinder2]

This, it should be noted, is the Dallas Fed's own words.

Texas Manufacturing Activity Picks Up

September 26, 2011
Texas Manufacturing Activity Picks Up

Texas factory activity increased in September, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, rose from 1.1 to 5.9, suggesting growth picked up this month after stalling in August.

Most other measures of current manufacturing conditions also indicated growth in September. The new orders index edged down from 4.8 to 3.6 this month, suggesting order volumes continued to increase, but at a slightly decelerated pace. The shipments index rose from 6.7 to 9.4, reaching its highest level since March. The capacity utilization index remained in negative territory in September but rose from –2.8 to –1.3.

Perceptions of general business conditions worsened in September. The general business activity index remained negative for the fifth month in a row and fell from –11.4 to –14.4; ten percent of manufacturers perceived an increase in activity this month, while one quarter noted a decrease. The company outlook index fell from 7.2 in August to a near-zero reading in September. Still, the great majority of respondents said their outlooks were unchanged or improved from last month.

Labor market indicators reflected higher labor demand growth. The employment index came in at 13.4, up notably from 5.4 in August. One quarter of manufacturers reported hiring new workers, while 12 percent reported layoffs. The hours worked index moved back into positive territory in September, suggesting average workweeks lengthened.

[...]

Dallas Fed PDF

[OilFinder2]

Chicago Fed: Midwest Manufacturing Gains 0.6% in August

The Chicago Fed Midwest Manufacturing Index (CFMMI) increased 0.6% in August, to a seasonally adjusted level of 85.0 (2007 = 100). Revised data show the index increased 0.3% in July. The Federal Reserve Board’s industrial production index for manufacturing (IPMFG) increased 0.4% in August. Regional output in August rose 7.6% from a year earlier, and national output increased 4.2%.

Production in three of the four regional sectors increased in August:
- Regional machinery sector production increased 1.4%;
- Regional auto sector production moved up 0.8%;
- Regional steel sector output rose 0.8%; and
- Regional resource sector output decreased 0.1%.

The Midwest’s machinery sector production increased 1.4% in August after decreasing 0.7% in July. The nation’s machinery production rose 0.7% in August. Regional machinery output in August was up 12.8% from its year-earlier level, and national machinery output was up 6.4%.

The region’s auto sector production moved up 0.8% in August after increasing 1.5% in July. National auto output rose 1.4% in August. The Midwest’s automotive output was up 10.3% in August relative to its year-ago level, and national automotive output was up 7.2%.

[...]

[OilFinder2]

The official numbers come out on Monday. But in the meantime ...

STRONG AUTO SALES CONTINUE TO DEFY RECESSION TALK

A consensus is building that September was a better month for auto sales than the industry expected. And it could be an indicator that the U.S. economy is not slipping back into a recession.

Auto information company TrueCar.com forecast that the annualized U.S. auto sales rate will hit 13.1 million this month. That’s up from about 12 million in August and the best since April.

"New vehicle sales are doing particularly well, even with worries of a recession and another wild month for the financial markets in September," said Jesse Toprak, a TrueCar analyst. "If the current trends hold, we expect 2011 total new light vehicle sales to be 12.75 million units -- up 10% from 2010."

Ford Motor Co. executives also are reporting that September should be the carmaker's best month since late winter and early spring, when sales were running at about the 13-million pace.

J.D. Power and Associates is forecasting September auto sales at a 12.9-million pace.

That 13-million mark is seen as an important economic indicator. Economists say a sales pace that brisk is unlikely in an economy that is shrinking.

Moreover, sales are strengthening without automakers resorting to huge discounts and sales incentives.

TrueCar estimates that the industry spent an average of $2,716 per vehicle on incentives this month, up almost 4% from August but down by nearly 1% from September of 2010.

[eXpat]

Roubini: U.S. in Throes of Economic Contraction

Most advanced economies are lapsing back into recession while the U.S. is already in the throes of an economic contraction, according to Nouriel Roubini, co- founder and chairman of Roubini Global Economics LLC.

“The way I see the global economy, I think we’re entering into a recession again in most advanced economies,” Roubini said in a panel discussion today at the Bloomberg Dealmakers Summit in New York. “I think we’re already into one in the U.S. based on the hard and soft data -- same with most of the euro zone, same with the United Kingdom.”

The Conference Board today said that confidence among U.S. consumers stagnated in September near a two-year low as the share of households saying it was difficult to find a job climbed to the highest level in almost three decades. European leaders over the weekend faced pressure at the annual meetings of the International Monetary Fund to solve a debt crisis already spilling over into other parts of the world.

“At this point, the issue is not whether there is going to be a recession or a double-dip but whether it’s going to be relatively mild or whether it’s going to be a severe recession and a global financial crisis,” Roubini said. “The answer to that question depends on what’s going to happen in the euro zone and whether they can get their act together.”

“We are running out of policy bullets,” said Roubini, a professor at New York University’s Stern School of Business. The debt crisis in Europe could have consequences that are “worse” than the collapse of Lehman Brothers Holdings Inc. in 2008.

http://www.bloomberg.com/news/2011-09-27/roubini-says-u-s-is-running-out-of-bullets-in-what-may-become-recession.html
But of course, Roubini doesn´t have the grasp of the economy that Oily has

[dsula]

But of course, Roubini doesn´t have the grasp of the economy that Oily has

That's true. You remember 2008? Mr doom was predicting the end of the world is imminent. Commerical real-estate collapse and such. So far OF2 is doing a far finer job.

[eXpat]

But of course, Roubini doesn´t have the grasp of the economy that Oily has

That's true. You remember 2008? Mr doom was predicting the end of the world is imminent. Commerical real-estate collapse and such. So far OF2 is doing a far finer job.

Yes, I actually do
USA was 3 hrs away from Economic, Political Collapse in September 2008
http://www.dailykos.com/story/2009/02/09/695504/-USA-was-3-hrs-away-from-Economic,-Political-Collapse-in-September-2008
Collapse in 2008 was postponed stuffing economy's throat with debt and market tricks. Is not going to hold forever...

[eXpat]

But of course, Roubini doesn´t have the grasp of the economy that Oily has

That's true. You remember 2008? Mr doom was predicting the end of the world is imminent. Commerical real-estate collapse and such. So far OF2 is doing a far finer job.

Oh the horror!!! Goldman Sachs´analysts are gloomy too!!
Goldman Sachs says that the economic collapse is coming

In a private 54 page report Goldman Sachs is telling its top clients to bet on a massive financial collapse.

The report, which was written by Goldman Strategist Alan Brazil and not meant for the eyes of the public, fell into the hands of the Wall Street Journal at the end of last week.
From the report that the select got on August 16th it is obvious that GS thinks that a huge economic crash is coming, but they do have some nice juicy ideas on how a profit can be turned from it.

This sort of thing has been written about in the past by bloggers, which has always been dismissed as pure conspiratorial fantasy. But this report was written by a top GS analyst.

The report says that throwing more money in the form of debt at the US economy will solve nothing. “Solving a debt problem with more debt has not solved the underlying problem. In the US, Treasury debt growth financed the US consumer but has not had enough of an impact on job growth. Can the US continue to depreciate the world’s base currency?” writes Brazil.
On top of that the European debt crisis is just going to get worse, says the report, and there is also a whole raft of European financial institutions that are about to go pop.
The Wall Street Journal says that Alan Brazil believes “as much as $1 trillion in capital may be needed to shore up European banks; that small businesses in the U.S., a past driver of job production, are still languishing; and that China’s growth may not be sustainable.”

Then Business Insider summarised Brazil’s advice on how to deal with any European economic collapse as follows:

Buy a six-month put option on the Euro versus the Swiss Franc, thus betting the Euro will drop against the Franc (the Franc being the currency that an official Goldman report recently referred to as the most overvalued in the world).
Buy a five-year credit default swap on an index of European corporate debt-the iTraxx 9. This is a bet that some of these companies will default, and your insurance policy, the CDS, will pay off.

http://www.economicvoice.com/goldman-sachs-says-that-the-economic-collapse-is-coming/50023394#axzz1ZBZ5Veer

http://seekingalpha.com/article/291405-even-goldman-sachs-now-expects-a-tremendous-financial-collapse

[eXpat]

Survey: 40 percent have cut back their spending

Almost half of us cut spending in the last 60 days, according to the September Financial Security Index of Bankrate.com.

"Forty percent of Americans say they have cut back on spending in the past 60 days due to the roller-coaster stock market or concerns about the economy. That is how recessions are born," said Greg McBride, CFA, Bankrate's senior financial analyst.

All income groups reported closing the wallet in the last 60 days.

ome 37 percent of those households with an income of $75,000 or more cut back while 43 percent of the lowest wage earners - those making under $30,000 a year - reduced spending.

The middle-aged were the most likely to limit their buying - almost half at 46 percent, while just a third of those under age 30 cut back.

http://www.newsobserver.com/2011/09/26/1519469/survey-40-percent-have-cut-back.html

[Daniel_Plainview]

Report: Consumers spent less, earned less in 2010

September 27, 2011, 1:05 pm EDT

WASHINGTON (AP) -- Consumers earned less and spent less for a second straight year in 2010. The government report released Tuesday offered a deeper look at how Americans have adjusted their spending after the worst recession since the Great Depression.

People spent less last year on food, cut back on entertainment and eating out at restaurants and gave less to charity. At the same time, they paid more for gas and health care -- trends that have continued this year.

Total spending by consumers fell 2 percent last year, according to the Labor Department's annual survey of consumer behavior. It's only the second decrease since the government began the survey in 1984. The first came in 2009.

Incomes declined 0.6 percent in 2010, after a 1.1 percent drop in 2009.

[Daniel_Plainview]

Home Builder Despair Remains At Highly Elevated Levels

Home builders have been depressed for years now, but the latest data served as a reminder of the long-standing stillness in housing.

Home builders have been in the dumps for what seems like my entire post-pubescence. The reason is obvious, I hope. Besides the disastrous shake-up of our housing finance industry, the remnants of the implosion remain. Excessive under-employment, a guarded lending environment, a flood of distressed properties and underwater homeowners have effectively drowned the real estate market for several years now.

The Housing Market Index’s sad state, though, has a second driver of doom. It’s the fact that the competitive landscape is made up of a great many small to mid-sized builders, most of which were overleveraged at the height of housing. Their sin of greed has since been replaced by despair as a result. So when the guys weigh in, perhaps from a barstool or a street curb, the effect is overwhelming on this index.

September’s reading showed a one point decline to a morbid mark of 14. Imagine that 50 separates positive sentiment from negative, and contemplate just how far down in the dumps builders are. Yet, there’s nothing new in this data. The index has hovered in the rancid range of 13 to 16 for six months now. The National Association of Home Builders (NAHB) Chairman Bob Nielsen, added that the recent economic and market upheaval has only served to drive the few hopeful homebuilders into the pessimistic pool. That fact was illustrated in the index which reflects builders’ views for the next six months, as it fell by 2 points to 17. The measure of current sales conditions dropped by a point to 14, while traffic of prospective buyers was seen lower, with that index down a point to 11. ...

.

Numbers above 50 show optimism; numbers below 50 show pessimism. Here we have a reading of 14, which is so deeply entrenched into pessimistic territory as to reflect pure, agonizing despair. A reading of 14 is quintessential pessimism. We're confronting a deeply depressed housing market.

[OilFinder2]

Uh, yeah, that's because everyone is still mopping up distressed existing homes. Duh.

Existing US Home Sales Jumped 7.7 Percent in August, Well Above Expectations (Story Developing)

[OilFinder2]

Some highlights from this very negative report (remember when manufacturing was a "bright spot" for the Cornies? Oops!)

Oops is right!! Indeed, manufacturing continues to be a bright spot. OOPS!!! Pity the poor doomers, whose hopes for a double-dip - now waiting for, oh, about a year-and-a-half - continue to be thwarted. Awwwww, poor doomers.



Demand for U.S. Capital Goods Climbs Most in Three Months in Recovery Sign

Orders for U.S. capital goods climbed in August by the most in three months, a sign business investment continues to support the recovery.

Bookings for goods like computers and communications gear, excluding military hardware and aircraft, climbed 1.1 percent, the most since May, a Commerce Department report showed today in Washington. Demand for all durable goods dropped 0.1 percent, less than forecast.

Manufacturers like General Electric Co. continue to benefit from sales to China, India and other emerging markets even as they face a slowdown in domestic spending. Gains in business investment in the U.S. indicate companies are looking beyond the plunge in stocks and concern over the European debt crisis and are seeking to expand.

“Companies are still willing to continue with their investment intentions despite the recent financial-market volatility,” said Neil Dutta, an economist at Bank of America Corp. in New York. “The risk was always that the recent volatility would prompt a pullback among businesses. At the moment there are no signs of that happening in any meaningful way.”

Economists at Barclays Capital Inc. and JPMorgan Chase & Co. were among those who raised their tracking estimate for third-quarter growth after the figures showed stronger investment and inventory building.

[...]

US Durable Goods Orders: Another Point for a Good Q3 GDP

Today's durable goods orders data lends credence to our projection of fairly robust Q3 US GDP after the dismal 0.8% expansion in H1. The durable goods report is the third important piece of data that should encourage economists to look for something close to what is regarded as trend growth in the US (2.5%-3.0%). The sharp rise in July personal consumption expenditures and the smaller real trade deficit were the other two piece.

Durable goods shipments excluding defense and aircraft, are a useful proxy for capital goods spending in (nominal) GDP calculations. These shipment roses 2.8% in August (the strongest since March), following a 0.4% rise in July. They have risen at an annualized pace of a little more than 16% over the past three months, up from 11.2% in Q2 and 3.9% in Q1.

Reports indicating that Corporate America balance sheets are flush has given rise in some quarters to arguments that they are hoarding cash. And yet business investment, not in plant, but equipment remains a bright spot in the economy. Capital goods orders rose 4.2%. Business investment in equipment and software appears to be running at around double the 7.8% pace seen in Q2. Consistent with this was yesterday's announcement by IBM and Intel to invest $4.4 bln over the next four years to create a new facility in New York for the next generation computer chip.

[...]

[Daniel_Plainview]

August Durable Goods Orders FALL, Contracting in 2 of past 3 Months

Orders for durable goods fell a seasonally adjusted 0.1% in August from July, the Commerce Department said Wednesday. The relatively small drop suggests economic uncertainty sparked caution among business executives, but not a full-scale spending freeze. ... Business investment has fallen in two of the past three months, underscoring a broader slowdown in the economy, said Peter Newland, an economist with Barclays Capital.

... Surveys show that consumers are similarly pessimistic, and economists say one key question for the economy is whether consumers are as willing as businesses to look past the current uncertainty and keep spending. ... Consumers are unlikely to open their wallets until the labor market improves. Unemployment has remained high at 9.1% and the economy added no new jobs on balance in August. ...

[Daniel_Plainview]

U.S. Consumer Confidence Stagnates at Two-Year Low

Sept. 27 (Bloomberg) -- Confidence among U.S. consumers stagnated in September near a two-year low as the share of households saying it was difficult to find a job climbed to the highest level in almost three decades.

The Conference Board’s sentiment index increased to 45.4 from a revised 45.2 reading in August that was the lowest since April 2009, when the economy was in a recession, figures from the New York-based private research group showed today. A report on home prices showed values dropped less than forecast in the year ended July.

The confidence reading signals hiring hasn’t improved after the world’s largest economy failed to create jobs in August and the unemployment rate held at 9.1 percent. Plunging stock prices and concern the crisis in Europe will undermine the global recovery may also be shaking Americans’ resolve, raising the risk that spending will cool during the holiday shopping season.

“Consumers remain very concerned about income, employment and the state of the economy,” said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston. “All of these factors point to even weaker labor market conditions as we get closer to the end of the year.”

[OilFinder2]

Here is the chart for all durable goods. The past 3 months have been -1.1%, +4.1% and -0.1%, with the July increase clearly overtaking the two smaller decreases. Only someone with blinders on - perhaps someone so politically obsessed he or she cannot see straight - could find a recession in these stats.


source

And here's the core "capital goods" chart - which reached a new all-time high last month. Only the most deluded would not be able to discern the obvious trend from this graphic - UP. And quite sharply, too.


source

NO I REFUSE TO BELIEVE THERE IS A RECOVERY MAKE IT ALL GO AWAY!!!!!!!!!

[OilFinder2]

August Durable Goods Orders FALL, Contracting in 2 of past 3 Months

Orders for durable goods fell a seasonally adjusted 0.1% in August from July, the Commerce Department said Wednesday. The relatively small drop suggests economic uncertainty sparked caution among business executives, but not a full-scale spending freeze. ...

Oh this is rich ... ... conveniently omitted from his own link we get the following inconvenient tidbits.

"Given market moves and how weak sentiment was in August, the fact that you had pretty solid activity is encouraging," said Peter Newland, an economist with Barclays Capital.

[...]

One cause for optimism in Wednesday's report was that orders for capital goods other than airplanes, which economists consider an indication of business confidence, rose 1.1% from July and 11.9% from a year ago. Unfilled orders, an indication of future activity, rose 0.9% from July, the sixteenth increase in the past 17 months.

Oops!!!