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Dismal January Rolls On For Now Total Global Trade
Dismal January Rolls On For Now Total Global Trade
More bad news for the rest of the world, or at least the world’s economists, that has been anticipating the US economy as a means by which to expel negative economic forces. The idea of decoupling is not just something that suggests the US economy is moving contrary to all the rest, but also the sole source of hope for anything but a dramatic decline once again. Outside of the Establishment Survey and the unemployment rate, there has been nothing to suggest that any such divergence has existed. The most pertinent data, especially trade data, has been unambiguous in actually pegging the world’s declining fortunes to the lack of actual growth of the US economy.
While that was “good” enough to describe the rut that had befallen in 2012, most recent months, especially the dismal nature of January’s updates across a broad cross-section, increasingly suggest an end to even that nearly three-year furrow – but not in the direction that payrolls anticipate.
The latest trade data from the Census Bureau surpasses the ugliness we have come to expect of the elongated cycle. Both imports and exports fell year-over-year in January, as weakness, contraction even, is now universal in terms of US demand for foreign goods and foreign demand for US goods. Trade has ground to a startling halt.
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Whatever Became of Economists and the American economy
Whatever Became of Economists and the American economy
According to the official economic fairy tale, the US economy has been in recovery since June 2009.
This fairy tale supports America’s image as the safe haven, an image that keeps the dollar up, the stock market up, and interest rates down. It is an image that causes the massive numbers of unemployed Americans to blame themselves and not the mishandled economy.
This fairy tale survives despite the fact that there is no economic information whatsoever that supports it.
Real median household income has not grown for years and is below the levels of the early 1970s.
There has been no growth in real retail sales for six years.
How does an economy dependent on consumer demand grow when real consumer incomes and real retail sales do not grow?
Not from business investment. Why invest when there is no sales growth? Industrial production, properly deflated, remains well below the pre-recession level.
Not from construction. The real value of total construction put in place declined sharply from 2006 through 2011 and has bounced around the 2011 bottom for the past three years.
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Something Rotten Is Piling Up in this Economy
Something Rotten Is Piling Up in this Economy
Total US business inventories balloon to Lehman-Moment levels
“We do have more work to do in the US,” admitted John Bryant, CEO of Kellogg’s which makes Pringles, Pop Tarts, Kashi Cereal, and a million other things that consumers are increasingly reluctant or unable to buy. He was trying to explain the crummy quarterly results and the big-fat operating loss of $422 million, along with a lousy outlook that sent its stock careening down 4.5% during the rest of the day.
A peculiar side note: he also said that the “Russian business posted good results in the quarter and for the full year” – despite the ruble crash and whatever sanctions might have gotten in the way.
Then in the evening, ConAgra, with brands like Healthy Choice for consumers and something yummy they call “commercial food” for restaurants, cut its fiscal 2015 earnings guidance, citing a laundry list of problems, including the “strengthening dollar” and “a higher-than-planned mark-to-market loss from certain commodity index hedges.” But it blamed two operating issues “for the majority of the EPS cut: “a highly competitive bidding environment” and “execution shortfalls.”
After which confession time still wasn’t over: it would be “evaluating the need” for additional write-offs. What had gone well? Cost cutting – “strong SG&A efficiencies,” the statement called it. But the pandemic cost-cutting by corporate America represents wages and other companies’ sales.
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Post Crisis Scorecard – Global Debt Up $57 Trillion, 60% of American Jobs Created Are Low Level, Record Youth Living with Parents
Post Crisis Scorecard – Global Debt Up $57 Trillion, 60% of American Jobs Created Are Low Level, Record Youth Living with Parents
This morning, my Twitter stream was filled with some of the most outlandish bullish economic victory laps from pundits I’ve ever seen. The source was the monthly employment report, which showed a larger than expected increase in employment as well as higher wages. In addition, there was a huge upward revision to employment data in November. Interestingly enough, on the same day this report was released, several important articles came across my screen that make me as concerned as ever about the true state of the economy and where we are headed.
First, CNN Money just yesterday published an article titled: Obama Jobs: More Caregivers, Servers and Temps. Here are a few excerpts:
Got a job while Obama was president? Then there’s a good chance you are working in healthcare or food service or as a temp.
Those sectors were responsible more than 60% of the jobs created since Obama took office in January 2009.
Healthcare now employs 14.9 million Americans, up 11% over the past six years, according to a recent Pew Research Center report. More than one in 10 payroll jobs in the U.S. are in this industry.
Much of the job growth in healthcare has taken place in home health care services and outpatient care. That follows both the aging of America and the shift away from more costly hospital and nursing home care. These later two industries added only 3.7% and 1.2% more jobs, respectively, since 2009.
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The Shemitah: The Biblical Pattern Which Indicates That A Financial Collapse May Be Coming In 2015 – See more at: http://www.thedailysheeple.com/the-shemitah-the-biblical-pattern-which-indicates-that-a-financial-collapse-may-be-coming-in-2015_012015#sthash.0u6YG0le.dpuf
The Shemitah: The Biblical Pattern Which Indicates That A Financial Collapse May Be Coming In 2015
We are really starting to see the price of oil weigh very heavily on the economy and on the stock market. On Tuesday, the Dow was down 291 points, and the primary reason for the decline was disappointing corporate sales numbers. For example, heavy equipment manufacturer Caterpillar is blaming the “dramatic decline in the price of oil” for much lower than anticipated sales during the fourth quarter of 2014. Even though Caterpillar is not an “energy company”, the price of oil is critical to their success. And the same could be said about thousands of other companies. That is why I have repeatedly stated that anyone who believes that collapsing oil prices are good for the U.S. economy is crazy. The key to how much damage this oil collapse is going to do to our economy is not how low prices ultimately go. Rather, the key is how long they stay at these low levels. If the price of oil went back to $80 a barrel next week, the damage would be fairly minimal. But if the price of oil stays at this current level for the remainder of 2015, the damage will be absolutely catastrophic. Just think of the price of oil like a hot iron. If you touch it for just a fraction of a second, it won’t do too much damage. But if you press it against your skin for an hour, you will be severely damaged for the rest of your life at the very least.
So the damage that we are witnessing right now is just the very beginning unless the price of oil goes back up substantially.
When the price of oil first started crashing, most analysts focused on the impact that it would have on energy companies. And without a doubt, quite a few of them are likely to be wiped out if things don’t change soon.
But of even greater importance is the ripple effects that the price of oil will have throughout our entire economy. The oil price crash is not that many months old at this point, and yet big companies are already blaming it for causing significant problems. The following is how Caterpillar explained their disappointing sales numbers on Tuesday…
– See more at: http://www.thedailysheeple.com/the-shemitah-the-biblical-pattern-which-indicates-that-a-financial-collapse-may-be-coming-in-2015_012015#sthash.0u6YG0le.dpuf
Fed looks past a world in turmoil, confident in U.S. recovery
Fed looks past a world in turmoil, confident in U.S. recovery
(Reuters) – U.S. central bankers have looked beyond a global deflation threat, fear of energy-sector bond defaults, and a surge of oil patch layoffs to reach what appears to be a firm conclusion: the U.S. recovery is here to stay.
New trade data released on Wednesday and signs of ever-stronger consumer spending confirmed the United States remains the bright spot in a global economy plagued by uncertainty.
The trade deficit shrank in November to less than $40 billion, providing a boost to growth as Americans spent less on imported oil.
Meanwhile, the first corporate reports from the Christmas season showed at least some of that money trickling into stores as J.C. Penney Co Inc. (JCP.N) said same-store sales rose 3.7 percent in November and December, pushing the company’s stock up nearly 20 percent.
At its December policy-setting meeting, according to minutes released on Wednesday, the Federal Reserve took close stock of plunging world oil prices and turmoil in Europe and decided that those negative trends would not undo that underlying strength.
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oftwominds-Charles Hugh Smith: Here’s What’s Wrong with Corporate America–and the U.S. Economy
oftwominds-Charles Hugh Smith: Here’s What’s Wrong with Corporate America–and the U.S. Economy.
Will we ever tire of navigating the multiple layers of intermediaries between the customer and the provider, while corporate profits soar to unprecedented heights?
The second example is home appliances purchased at a Big Box retailer. Here’s the list of interactions between Corporate America and the customer:
This Is Why the Oil-Price Crash Will Maul the US Economy | Wolf Street
This Is Why the Oil-Price Crash Will Maul the US Economy | Wolf Street.
The plunge in the price of oil that began in July acts like a tax cut, it is said, and will boost spending by consumers and businesses, and thus goose the US economy. Among the voices propagating this view is the UBS macro strategy team. It found that each $10-per-barrel drop in the price of oil would goose US GDP by 0.1%. If the average price in 2015 stays where it is today – down nearly $50 per barrel since June – you can expect a boost to GDP of 0.5%, which would be big for the otherwise crummy US recovery.
I don’t know what these good folks have been smoking, but I want some of it too.
The idea is this: if consumers and businesses spend less on gasoline, heating oil, diesel, jet fuel, and other energy-related products, they would feel like they just got a tax cut and would spend this money thus saved on other things. And somehow this wouldincrease overall spending, and thus GDP.
Alas, the money spent on energy products is already included in GDP either under consumer spending or business spending. Any cut in prices will actually lower GDP by that amount. Now the hope is that consumers and businesses will spend all of this saved money on other things.
Fed rattled by elusive inflation, but loath to sound alarm yet | Reuters
Fed rattled by elusive inflation, but loath to sound alarm yet | Reuters.
(Reuters) – With the U.S. economy humming along at its fastest clip in more than a decade, the Federal Reserve should be confident about its ability to weather a global slowdown and start lifting interest rates around the middle of next year.
But then there is inflation.
Interviews with Fed officials and those familiar with its thinking show the mood inside is more somber than the central bank’s reassuring statements and evidence of robust economic health would suggest. The reason is the central bank’s failure to nudge price growth up to its 2 percent target and, more importantly, signs that investors and consumers are losing faith it can get there any time soon.
Despite undershooting the goal for three years, the Fed has long succeeded in convincing markets that the target was within reach. However, inflation expectations have begun slipping in recent weeks, threatening to amplify downward momentum from plunging energy prices and stuttering global growth.
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What Low Oil Prices Mean For The U.S. Economy
What Low Oil Prices Mean For The U.S. Economy.
For the last 4 years, the national average retail price of gasoline in the United States stayed within a range of $3.25-$4.00 a gallon. But that all changed this fall, with U.S. consumers now paying an average price of $2.82.
This usually is the time of year when gasoline prices tend to be at their lowest. But the current U.S. price of gasoline is exactly what we’d predict given the long-run relation between the price of gasoline and crude oil. There’s essentially no seasonal component in the price of crude. In other words, if crude stays at its current value (namely, Brent at $80), the lower price of gasoline is here to stay.
The current price of gasoline is 80 cents/gallon below what it has averaged over the last 3 years. Last year Americans consumed 135 billion gallons of gasoline. That means that if prices stay where they are, consumers will have an extra $108 billion each year to spend on other things. And if the historical pattern holds, spend it they will.
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Forget about Ebola – here’s why US banks (and your savings) are now EXTREMELY vulnerable
Forget about Ebola – here’s why US banks (and your savings) are now EXTREMELY vulnerable.
For a casual observer of the US economy (most “experts”), you could say that things look pretty good. Unemployment is at its lowest rate in six years. Earnings of S&P 500 companies are higher than ever, while their debt is lower than it’s been in the last 24 years.
Nonetheless, rather than getting excited for good economic times, the big commercial banks are all battening down the hatches. They’re preparing for bad times ahead.
I often stress the importance of being prepared, so in theory, that should be a great sign.
…click on the link above for the rest of the article…
