US Economy Could Recover Much Sooner Than Expected pt 3

[eXpat]

New York owes $200 billion in retiree health care costs - but there's no money

(NaturalNews) New York State, along with its cities and counties, have promised $200 billion worth of retirement health care benefits to their employees, and no one knows where that money is going to come from, according to a study conducted by the Empire Center for New York State Policy.

Unless the governments in question figure out a way to raise that money, they will soon be forced to decide between paying the promised health care bills and paying other expenses, such as the $264 billion in bonds that they also owe. With rising health care costs, a faltering economy, and steady public opposition to higher taxes and bailouts, the problem is only likely to worsen in the coming years.
...
The report's authors warn that although their study focused on New York, the problems are not unique to that state.

Credit analysts are currently predicting that if forced to choose between defaulting on health care payments and defaulting on bond payments, governments will choose to pay down their bonds. This will inevitably lead to lawsuits as retirees attempt to claim the benefits that they were promised as city, county or state employees.

http://www.naturalnews.com/030950_New_York_health_care_costs.html
Clearly we are entering a new age of plenty!

[OilFinder2]

And yet, tax receipts in NY state are up 7% for the first 9 months of the year (click on link for interactive map).

LINK

States make gains in taxes
Updated 6d 13h ago
By Dennis Cauchon, USA TODAY

Tax collections are surpassing projections, the clearest sign yet that state and local government finances are on the mend as the economy improves.

Sharp rises in tax collections since July, especially in the last three months, have boosted tax revenues to levels not seen since 2008, a review of tax reports shows. Including federal aid, state and local government revenue is running at a record high.

States have added workers each of the last three months and now employ more people than when the downturn started, although local governments continue to trim.

[...]

In the short term, though, the outlook is brightening. Nearly every state is reporting tax collections above what it expected and higher than a year ago:

•Georgia. State tax collections are up 7.4% in the first five months of the fiscal year, through November. The state had budgeted for a 4% increase.

•California. Tax collections are up 8.6% — $2.5 billion in the five months ended Nov. 30. State Controller John Chiang says the state shouldn't face a cash crisis for the rest of the budget year.

•Ohio. The hard-hit state reported tax revenue up 7%. "November was another month of strong tax performance," said the state's budget report.

Other solid gains: New York, Illinois, Florida, Michigan, Rhode Island, West Virginia and Hawaii.

[...]

[Cloud9]

How is it that taxes are going up while wages are going down and unemployment is going up? Answer, creative taxation. Result, those that can will move out of the city.

[Cog]

Not surprisingly OF2 left out part of the story from his link. A little intellectual dishonesty at work again.

The $200 billion in federal stimulus aid received since February 2009 offset declines in tax revenue, making Washington the No. 1 source of money.

[OilFinder2]

Not surprisingly OF2 left out part of the story from his link. A little intellectual dishonesty at work again.

The $200 billion in federal stimulus aid received since February 2009 offset declines in tax revenue, making Washington the No. 1 source of money.

I knew someone would bring that up.

Nope, sorry, read it closely:

Sharp rises in tax collections since July, especially in the last three months, have boosted tax revenues to levels not seen since 2008, a review of tax reports shows. Including federal aid, state and local government revenue is running at a record high.

Notice it says tax collections and tax revenue are up. Federal aid is not a tax collection - it's just federal aid. The 2009 date referred to in your sentence refers to last year (and maybe earlier this year) when state and local tax revenue were still declining and the shortfall was being made up by federal aid.

Take, for example, data from the state of Georgia
- Income tax receipts are up 7.7%
- Sales (and "use") taxes are up 7.5%
- Some categories are down (notably property taxes revenue) but overall tax revenues are up 9.9%
Notice on the chart it does not even list federal aid. All of these increases are tax revenue.

[PrestonSturges]

Speaking of dishonesty, what about the "Texas Miracle?"

TX is $25 B in the red, yet it keeps being hyped as an example of the wonders of Republican governance.

[Ludi]

Speaking of dishonesty, what about the "Texas Miracle?"

TX is $25 B in the red, yet it keeps being hyped as an example of the wonders of Republican governance.

You'd be amazed at how "normal" things seem here - sort of. On the edges of the city, they keep scraping away, building new retail space while existing recently built retail space sits empty. Somehow folks must be getting funds for construction.

[PrestonSturges]

Speaking of dishonesty, what about the "Texas Miracle?"

TX is $25 B in the red, yet it keeps being hyped as an example of the wonders of Republican governance.

You'd be amazed at how "normal" things seem here - sort of. On the edges of the city, they keep scraping away, building new retail space while existing recently built retail space sits empty. Somehow folks must be getting funds for construction.

Sounds like the bubble is still perking along.

[eXpat]

Economists foretell of U.S. decline, China's ascension

To hear a number of prominent economists tell it, it doesn't look good for the U.S. economy, not this year, not in 10 years.
Leading thinkers in the dismal science speaking at an annual convention offered varying visions of U.S. economic decline, in the short, medium and long term. This year, the recovery may bog down as government stimulus measures dry up.
In the long run, the United States must face up to inevitably being overtaken by China as the world's largest economy. And it may have missed a chance to rein in its largest financial institutions, many of whom remain too big to fail and are getting bigger.
...
Jorgenson sees Asian emerging markets as the most dynamic in the world, eclipsing other emerging market contenders such as Brazil and Russia with steady growth over the next decade.
"The rise of developing Asia is going to accompany slower world economic growth," he said.
The United States will need to come to terms with the fact that its prevalence in the world is fated to come to an end, Jorgenson said. This will be difficult for many Americans to swallow and the United States should brace for social unrest amid blame over who was responsible for squandering global primacy, he said.
MIT's Simon Johnson put it more bluntly, saying the damage from the financial crisis and its aftermath have dealt U.S. prominence a permanent blow.
"The age of American predominance is over," he told a panel. "The (Chinese) Yuan will be the world's reserve currency within two decades."
Johnson said he believes the United States has failed to learn its lesson from the financial crisis and continues to implicitly back its largest financial institutions.
"I'm concerned about the excessive power of the largest global banks," he said. "Who are the government-sponsored enterprises now? It's the six biggest bank holding companies."

http://www.reuters.com/article/idUSTRE7082BL20110109?pageNumber=2

[Daniel_Plainview]

OUCH: Philly Fed Revises December Business Conditions Down To 20.8 From 24.3

01/13/2011 10:12 -0500

Unfortunately, the Ministry of Disinformation and Data Revision will not be able to blame the latest major economic data point revision on dyslexia. After as we previously noted, the Chicago PMI was revised lower from 68.6 to 66.8 just three short days ago, today that other standout number, the Philly Fed, which had originally printed at the better than expected level of 24.3, has just been revised much lower to 20.8. Since this number means the Philly Fed actually declined from the November print of 22.5, one can see why even the Chinese are seeing their jaws drop at the ceaseless "adjustment" of what has now become an unrepentantly upwardly economic data stream.

[OilFinder2]

^
1. In those Fed surveys, 20.8 is still a very good number.
2. A decline from 22.5 to 20.8 is little more than typical month-to-month noise.

But then, we know how credible Zerocredibility . . . erm, Zerohedge . . . is.

In other news . . .

LINK

Total U.S. Trade Reaches Two-Year High In Nov.; Get Ready For “Blowout Real GDP Growth” For Q4
By Mark Perry on January 13, 2011

According to today’s BEA report, total U.S. trade with the rest of the world (sales of U.S. products to consumers and firms in other countries PLUS purchases of foreign production by American consumers and businesses) reached $357.6 billion in November, the highest level in more than two years. Total trade in November was the highest level of total U.S. trade since October 2008, and is more than $100 billion and 45.4% above the April 2009 cyclical low of $246 billion (see chart above). This also makes the fourth consecutive month of total international trade above the $350 billion level in December 2007, when the recession started.

Further, the combined international trade volume for U.S. buyers and sellers has increased in 14 out of the last 18 months (following ten consecutive declines), providing further evidence that the economy started on a recovery path last summer and continues to make solid gains almost every month. Both the sales of U.S. goods and services produced by American firms and sold to the rest of the world, and the purchases of foreign-produced goods and services by American consumers and firms, have been on an upward trend as the U.S. and global economies recover.

First Trust economists Brian Wesbury and Bob Stein are now predicting that net exports alone in the fourth quarter will add more than three percentage points to real GDP growth, resulting in a “blowout real GDP report of 5% to 6%” for QIV 2010.

^
Notice the V-shape.

[eXpat]

Initial Claims for Unemployment Insurance Rise: Is There Trouble Ahead?

When the unemployment claims came out last week, I stated that:

There is good news in claims this week, they have fallen below the important 400,000 threshold that divides job creation from job loss (this is a very rough estimate of the critical value)

However, upon further reflection I added an update:

Update: I should add the cautionary note that seasonal adjustment procedures can be misleading near holidays, so the good news in the report comes with lots of uncertainty.

The worry these numbers were perhaps distorted by seasonal adjustment procedures gets some support from this week’s initial claims numbers. As the Labor Department reports, initial claims have climbed back above the critical 400,000 threshold dividing job gains from job losses (see here for a discussion of the 400,000 figure).

In the week ending Jan. 8, the advance figure for seasonally adjusted initial claims was 445,000, an increase of 35,000 from the previous week’s revised figure of 410,000. The 4-week moving average was 416,500, an increase of 5,500 from the previous week’s revised average of 411,000.

http://moneywatch.bnet.com/economic-news/blog/maximum-utility/initital-claims-for-unemployment-rise-is-there-trouble-ahead/1085/

[eXpat]

Census Has It Wrong - Trade Deficit Increased in November

Econintersect disagrees with the assessment of the U.S. Census/BEA that the trade balance deficit shrunk in November 2011. The likely reason is the methodology used to seasonally adjust the data. First the headlines from the November 2010 release of the U.S. International Trade in Goods and Services:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total November exports of $159.6 billion and imports of $198.0 billion resulted in a goods and services deficit of $38.3 billion, down from $38.4 billion in October, revised. November exports were $1.2 billion more than October exports of $158.4 billion. November imports were $1.1 billion more than October imports of $196.8 billion.

In November, the goods deficit increased $0.1 billion from October to $51.2 billion, and the services surplus increased $0.2 billion to $12.9 billion. Exports of goods increased $1.3 billion to $113.5 billion, and imports of goods increased $1.4 billion to $164.7 billion. Exports of services decreased $0.1 billion to $46.2 billion, and imports of services decreased $0.3 billion to $33.3 billion.

The goods and services deficit increased $3.0 billion from November 2009 to November 2010. Exports were up $20.7 billion, or 14.9 percent, and imports were up $23.7 billion, or 13.6 percent.
Econintersect evaluates the data based on unadjusted data. The November trade data confirms the combined effect of retail sales being up (analysis here), wholesale sales at all time peak (analysis here), and industrial production (analysis here) being flat. Since goods were not being manufactured – the goods gap should be imports.
...

Full article:
http://seekingalpha.com/article/246474-census-has-it-wrong-trade-deficit-increased-in-november?source=feed

[OilFinder2]

^
You might want to read my comment in that article.

[OilFinder2]

And BTW eXpat, that article not only contains a lot of non-doomer-y stuff, its final conclusion isn't going to make a hill of beans of difference to Q4 GDP.

The November trade data confirms the combined effect of retail sales being up (analysis here), wholesale sales at all time peak (analysis here), and industrial production (analysis here) being flat.

[...]

Exports were very strong – even after the October 2010 historical high exports (analysis here). This was the second highest level of exports in 2010. What is beyond debate is the amount of exports far exceeding the preceeding Novembers back to when this data series began in 1992.

Etc.

And then the conclusion:

Last month [Oct], the trade balance definitely shrunk. In November, there is no question the trade balance grew – and likely in the range of 0.5% – despite the historically high November exports.

Now, the headline # from the Census Bureau:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that total November exports of $159.6 billion and imports of $198.0 billion resulted in a goods and services deficit of $38.3 billion, down from $38.4 billion in October, revised.

That's a difference of $100 million or 0.26% - basically it remained flat. This analysis says it really rose 0.5% - again, basically remaining flat.

Even if true, it wouldn't make a hill of beans of difference to Q4 GDP.

[eXpat]

Over 1 million Americans seen losing homes in 2011
After a record 1 million home foreclosures in 2010, this year is likely to be even worse

NEW YORK (AP) -- The bleakest year in the foreclosure crisis has only just begun.

Lenders are poised to take back more homes this year than any other since the U.S. housing meltdown began in 2006. About 5 million borrowers are at least two months behind on their mortgages and industry experts say more people will miss payments because of job losses and also loans that exceed the value of the homes they are living in.

"2011 is going to be the peak," said Rick Sharga, a senior vice president at foreclosure tracker RealtyTrac Inc. The firm predicts 1.2 million homes will be repossessed this year.

The blistering pace of foreclosures this year will top 2010, when a record 1 million homes were lost, RealtyTrac said Thursday.

One in every 45 U.S. households received a foreclosure filing last year, a record 2.9 million of them. That's up 1.67 percent from 2009.

On Thursday, Freddie Mac reported that fixed mortgage rates dipped this week for the second straight time, extending a sliver of hope for some home owners. .
The average rate on the 30-year mortgage dropped to 4.71 percent from 4.77 percent the previous week. The rate on the 15-year loan, a popular refinance choice, slipped to 4.08 percent from 4.13 percent.

http://finance.yahoo.com/news/Over-1-million-Americans-seen-apf-1937862554.html?x=0&sec=topStories&pos=9&asset=&ccode=

[Daniel_Plainview]

One in every 45 U.S. households received a foreclosure filing last year, a record 2.9 million of them. That's up 1.67 percent from 2009.

1 in 45 homes received a foreclosure filing in 2010? That can't be right. If that is correct ... HOLY CRAP, BATMAN!! And RealtyTrac is projecting three million foreclosures in 2011, with 1.2 million repossessions.

Here are the top 5 states for foreclosure filings in 2010:

Nevada (one in 11 homes received a foreclosure filing in 2010)
Arizona (one in 17 homes received a foreclosure filing in 2010)
Florida (one in 18 homes received a foreclosure filing in 2010)
California (one in 25 homes received a foreclosure filing in 2010)
Utah (one in 29 homes received a foreclosure filing in 2010)

The only way the US can afford more bank bailouts is by printing à la Zimbabwe! It's a good thing Helicopter Ben has those printing presses geared for overdrive ...

It's amazing how we can have a "recovery" when housing and employment are the worst since the Great Depression ...

[dolanbaker]

http://www.ritholtz.com/blog/2011/01/wi ... te-market/

Just about as bad as it can get!



Plus dozens of charts, showing the expected drop!

[OilFinder2]

Industrial production rises by most in 5 months

WASHINGTON (AP) — Industrial production rose in December by the largest amount in five months, providing the economy with solid momentum heading into the new year.

Activity at the nation's factories, mines and utilities increased 0.8 percent last month, the Federal Reserve said Friday. Industrial production was up in every month but one in 2010.

Overall industrial activity has risen 11 percent since hitting its recession low in June 2009. But it is still 6 percent below its peak reached in September 2007.

Factory production, the biggest slice of industrial output, rose 0.4 percent, the sixth straight monthly increase. Makers of computers and electronic products, clothing and leather, chemicals and other products were among the industries seeing gains. But auto production dipped.

"Manufacturing looks like it is doing its job and moving the economy ahead," said John Silvia, chief economist at Wells Fargo.

[...]

Retail sales rise for sixth month in December

WASHINGTON (AP) — Retail sales rose for a sixth consecutive month in December, with big gains in sales of autos and furniture. The increases lifted sales for the year by the largest amount in more than a decade.

Sales rose 0.6 percent last month to $381 billion, the Commerce Department said Friday. The gain boosted retail sales 13.5 percent above the recession low hit in December 2008.

The string of increases pushed sales for all of 2010 up 6.7 percent, the largest annual increase since 1999.

Separately, the Labor Department said consumer prices rose 0.5 percent in December, the largest increase in 18 months and a reflection of rising gas prices.

But outside of energy costs, there was little sign of widespread inflation. Core inflation, which strips out volatile energy and food, was up just 0.1 percent in December.

[...]

[eXpat]

What a Recovery!

Here's one way of looking at today's data:

"US Retail Sales Record Strongest Growth Since 1999" (Financial Times)

US retail sales surged last year at the strongest pace since 1999, as consumers shook off their fears of recession and started spending again amid tepid inflation.

Commerce department figures on Friday showed that total sales in 2010 were up 6.8 per cent from 2009, marking the sharpest such increase in more than a decade.

And here's another --

And another --

What can I say but..."What a recovery!"

http://www.financialarmageddon.com/2011/01/what-a-recovery.html