Free Markets, Free People

Dale Franks

Dale Franks’ QandO posts

Economic Statistics for 2 Jan 13

The following US economic statistics were announced today:

In weekly retail sales, Redbook reports a below-plan 2.9% increase from the previous year. ICSC-Goldman reports a relatively strong weekly sales increase of 0.6%, and a 2.7% increase on a year-over-year basis.

Construction spending in November fell -0.3%, though it was still 7.7% higher on a year-over-year basis.

The Markit Economics’ final December PMI Manufacturing Index is 54.0, up 1.2 points from November’s 52.8.

The ISM Manufacturing Index is a relatively weak 50.7 for December, but is still up more than a point from November’s 49.5.

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Dale Franks
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Economic Statistics for 27 Dec 12

The following US economic statistics were announced today:

The Conference Board’s consumer confidence index plunged 6.4 points this month to 65.1, as fiscal cliff worries begin besetting consumers.

The Bloomberg Consumer Comfort Index fell slightly from -31.9 to -32.1.

Initial claims for unemployment fell 12,000 last week, to 350,000. The 4-week moving average fell 11,250 to 356,750, Continuing claims fell 25,000 to a new recovery low of 3.219 million.

New home sales for November rose 4.4% to an annual rate of 377,000. The annual rate has risen slowly all year, from 340,000 in January.

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Dale Franks
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Economic Statistics for 26 Dec 12

The following US economic statistics were announced today:

In weekly retail sales, Redbook reports a relatively weak 2.9% increase from the previous year. ICSC-Goldman reports a weekly sales increase of 0.7%, and a 3.2% increase on a year-over-year basis.

The S&P Case-Shiller Home Price Index rose a seasonally-adjusted 0.7% in October, which is 4.3% higher on a year-over-year basis.

The Richmond Fed Manufacturing Index declined from 9 last month, to 5 in December.

State Street’s investor confidence index rose 0.4 points to 80.9 in December. The report says confidence is "weak".

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Dale Franks
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A government we can’t afford

In the Telegraph today, Janet Daley tries to explain the same thing I’ve been trying to explain here for, well, years.

Any political leader prepared to deceive the electorate into believing that government spending, and the vast system of services that it provides, can go on as before – or that they will be able to resume as soon as this momentary emergency is over – was propelled into office virtually by acclamation.

So universal has this rule turned out to be that parties and leaders who know better – whose economic literacy is beyond question – are now afraid even to hint at the fact which must eventually be faced. The promises that governments are making to their electorates are not just misleading: they are unforgivably dishonest. It will not be possible to go on as we are, or to return to the expectations that we once had. The immediate emergency created by the crash of 2008 was not some temporary blip in the infinitely expanding growth of the beneficent state. It was, in fact, almost irrelevant to the larger truth which it happened, by coincidence, to bring into view. Government on the scale established in most modern western countries is simply unaffordable. In Britain, the disagreement between Labour and the Conservatives over how to reduce the deficit (cut spending or increase borrowing?) is ridiculously insignificant and out of touch with the actual proportions of the problem.

Just as our debate here on what constitutes a "balanced approach" to cutting the deficit. The truly silly part of that debate is the demand that "the rich" pay more in taxes, as if that money would somehow close the gap in financing the welfare state. In France, the government wants a 75% tax rate, but…

Barack Obama knows that a tax rise of those proportions in the US would be politically suicidal, so he proposes a much more modest increase – an income tax rate of around 40 per cent on the highest earners sounds very modest indeed to British ears. But that is precisely the problem. If a tax rise is modest enough to be politically acceptable to much of the electorate, it will not produce anything like enough to finance the universal American entitlement programmes, social security and Medicare, into a future with an ageing population. There is no way that “taxing the rich” – that irresistibly glib Left-wing solution to everything – can make present and projected levels of government spending affordable.

Right now, mandatory entitlement spending alone is 62% of the Federal budget, and it will rise continuously under present law. At the same time, federal revenues don’t even cover the cost of those entitlements, plus interest payment on the national debt.

Think about that. We could eliminate the entire Federal Government except for entitlement spending and interest on the national debt, and we would still have to borrow money to pay for it.

The president’s proposal for increasing taxes on "the rich" would bring in an extra $40 billion dollars next year. So, instead of borrowing $1.1 Trillion next year, we’ll only have to borrow $1.06 Trillion. Somehow, we are told, this will be massively helpful.

Meanwhile, if interest rates return to their historic average levels the cost of debt service alone will rise from $250 billion per year to $750 billion per year.

But, really, anyone who isn’t as dumb as a bag of hammers already knows that the amount of government we have is unaffordable, simply by noting that we’ve increased the national debt from $1 trillion to $16.3 trillion since 1980. It took us 190 years to accumulate $1 trillion in debt. And 32 years to multiply it more than 15 times.

We have three choices. We can cut all Federal spending by half. We can have massive tax increases on the middle class. We can do nothing and eventually default/hyperinflate our monetary and financial system away.

Based on the politics of 2012, I assume it will be the latter.

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Dale Franks
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Economic Statistics for 21 Dec 12

The following US economic statistics were announced today:

The Reuter’s/University of Michigan’s consumer sentiment index is down nearly 10 points in December to 72.9  from last month’s 82.7.

The Chicago Fed National Activity Index turned positive, coming in at 0.10 vice a revised -0.64 in October.

Personal income in October was up 0.6%, following a flat October. Consumer spending rose 0.4%, compared to a -0.2% drop in October. For inflation, the PCE price index fell -0.2% while the core rate was unchanged. On a year-over-year basis, income is up 4.1% while spending is up 3.5%; the PCE is up 1.4% at the headline level and 1.5% at the core.

Durable goods orders in November rose 0.7%, while ex-transportation orders were up 1.6%. This is the second consecutive monthly increase.

The Kansas City Fed manufacturing index fell to -6 in November from -4 in October.

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Dale Franks
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Economic Statistics for 20 Dec 12

The following US economic statistics were announced today:

The index of leading indicators fell -0.2% in November, as expected, due mainly to temporary, Sandy-related weakness in employment.

The Bloomberg Consumer Comfort Index rose to an eight month high of -31.9 from -34.5.

Initial claims for unemployment rose 17,000 last week, to 361,000. The 4-week moving average fell 14,000 to 367,750. Continuing claims rose 12,000 to 3.225 million.

Corporate profits in the third quarter rose 17.9% to $1.742 trillion annualized.

Existing home sales rose 5.9% to a much better than expected 5.04 million annual rate.

Philadelphia Fed Survey took a big jump back into positive territory, rising to 8.1 from last month’s -10.7.

The FHFA House Price Index rose 0.5% in October, which is up 5.6% on a year-over-year basis.

3rd quarter GDP was revised up to an annualized 3.1% in the final estimate, a big change from the initial 2.0% estimate. A big change. The GDP price index, an inflation measure, rose 2.7%.

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Dale Franks
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Economic Statistics for 19 Dec 12

The following US economic statistics were announced today:

November housing starts came in at a slightly les than expected 0.861 million pace, but building permits rose 3.6 percent to an annual pace of 0.899 million.

The MBA reports that higher interest rates made mortgage applications plunge -12.3% last week, with purchases down -5.0% and refinancings down -14.0%. An increase in mortgage rates caused the drop in activity.

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Dale Franks
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Economic Statistics for 18 Dec 12

The following US economic statistics were announced today:

In weekly retail sales, Redbook reports a 2.4% increase from the previous year. ICSC-Goldman reports a strong weekly sales increase of 4.3%, and a 3.5% increase on a year-over-year basis.

The Housing Market Index tose to 47, as homebuilders report the best conditions in more than five years.

The US current account deficit fell by $11 billion in the 3rd quarter, to -$107.5 billion. 

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Dale Franks
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Observations: The QandO Podcast for 16 Dec 12

This week, Bruce, Michael, and Dale discuss the Newtown shootings.

The direct link to the podcast can be found here.

Observations

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