Free Markets, Free People

Economy

Economic Statistics for 10 Mar 16

Information revenue in the 4th Quarter of 2015 rose 1.8%, compared to the revised 0.7% in the 3rd Quarter.

The US Treasury reported a budget deficit of $-192.6 billion in February. The deficit is up 8.7% overall in 2016 compared to February 2015.

Initial weekly jobless claims fell 18,000 to 259,000. The 4-week average fell 2,500 to 267,500. Continuing claims fell 32,000 to 2.225 million.

The Bloomberg Consumer Comfort Index rose 0.2 points to 43.8 in the latest week.

The Fed’s balance sheet rose $2.6 billion last week, with total assets of $4.481 trillion. Reserve bank credit fell $-0.9 billion.

The Fed reports that M2 money supply rose by $14.0 billion in the latest week.


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Let’s make the US like Germany … er, Mississippi?

The “social democracy” or “democratic socialism” model that many of the left want so badly is showing it isn’t all it’s cracked up to be.  For instance:

Since Sweden is held up as a sort of promised land by American socialists, let’s compare it first. We find that, if it were to join the US as a state, Sweden would be poorer than all but 12 states, with a median income of $27,167.
Median residents in states like Colorado ($35,830), Massachusetts ($37,626), Virginia ($39,291), Washington ($36,343), and Utah ($36,036) have considerably higher incomes than Sweden.
With the exception of Luxembourg ($38,502), Norway ($35,528), and Switzerland ($35,083), all countries shown would fail to rank as high-income states were they to become part of the United States. In fact, most would fare worse than Mississippi, the poorest state.
Oh, my!  Say it ain’t so, Bernie!
Germany, Europe’s economic powerhouse, has a median income ($25,528) level below all but 9 US states. Finland ranks with Germany in this regard ($25,730), and France’s median income ($24,233) is lower than both Germany and Finland. Denmark fares better and has a median income ($27,304) below all but  13 US states.
And Mississippi? Well, when adjusted for purchasing power, we find a funny thing (heh … I couldn’t help myself):
Now that we’ve accounted for the low cost of living in Mississippi, we find that Mississippi ($26,517) is no longer the state with the lowest median income in real terms. New York ($26,152) is now the state with the lowest median income due to its very high cost of living.
More importantly, when the European countries are adjusted for purchasing power, they fare even worse:
Once purchasing power among the US states is taken into account, we find that Sweden’s median income ($27,167) is higher than only six states: Arkansas ($26,804), Louisiana ($25,643), Mississippi ($26,517), New Mexico ($26,762), New York ($26,152) and North Carolina ($26,819).
We find something similar when we look at Germany, but in Germany’s case, every single US state shows a higher median income than Germany. Germany’s median income is $25,528. Things look even worse for the United Kingdom which has a median income of $21,033, compared to $26,517 in Mississippi.
So? So, myth busted.  If you want everyone to be the equal of  … well, now, New York … just listen to the siren song of social democracy. High taxes, marginal benefits and low purchasing power.  When you can’t even point to them being better than Mississippi in terms of median income, maybe it would be better not to hold up European social democracies as something to “strive” to be like.
~McQ

Economic Statistics for 4 Mar 16

A -2.1% decline in exports outpaced a -1.3% drop in imports to increase January’s trade deficit to $-45.7 billion.

242,000 net new jobs were created in February, as the unemployment rate held steady at 4.9%. The labor participation rate rose to 62.9%. On the negative side, however, average hourly earnings fell -0.1%, as did the average work week, down -0.2 hours to 34.4 hours. The U-6 unemployment rate, the broadest measure of underemployment, fell -0.2% to 9.7%.


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Economic Statistics for 3 Mar 16

Chain stores that still report monthly sales growth are mostly reporting stronger rates of year-on-year sales in February than January.

Non-farm productivity for the 4th quarter of 2015 was revised upwards to -2.2%, and labor cost increased were revised down to 3.3%.

Factory orders rose a strong 1.6% in January thanks to wide strength in durable goods. Core capital goods orders rose 3.4%.

Markit’s PMI Services index for February fell to a contractionary 49.7 from 53.2. The ISM Non-Manufacturing index held steady, down only -0.1 point to 53.4.

The Challenger Job-Cut Report came in at 62,599 layoffs announced in February.

The Gallup Good Jobs rate in the U.S. was 44.6% in February, down just -0.1% from the previous month.

Initial weekly jobless claims rose 6,000 to 278,000. The 4-week average fell 1,750 to 270,250. Continuing claims  rose 3,000 to 2.257 million.

The Bloomberg Consumer Comfort Index fell -0.6 points to 43.6 in the latest week.

The Fed’s balance sheet fell $-11.3 billion last week, with total assets of $4.479 trillion. Reserve bank credit fell $-8.5 billion.

The Fed reports that M2 money supply rose by $34.2 billion in the latest week.


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Economic Statistics for 2 Mar 15

The Fed’s Beige Book characterizes the economy as relatively flat, with most districts reporting modest to moderate growth.

February’s ADP Employment Report indicates that 214,000 new private sector jobs were created during the month.

The Gallup US Job creation Index was unchanged at 29 in February.

The MBA reports that mortgage applications fell -4.8% last week, with purchases down -1.0% and refis down -7.0%.


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Summing up the state of America

Zero Hedge sums up both the “Super Tuesday” results and the broader political and policy situation in the US very well:

Negative interest rates. The war on cash. More quantitative easing. Monetary policy described as a “helicopter drop”. An avowed socialist running for President – and competing well. Another candidate under investigation by the FBI for mishandling classified information. A debate that featured a candidate begging for someone to attack him so he could get some air time. One candidate accusing another of stealing from the party and calling another a liar. The closed captioning for most of the debate reading “unintelligible yelling”. An accomplished, serious-minded governor getting drowned out by three buffoons competing to see who can get the biggest guffaws from a crowd that makes the audience at a professional wrestling match look reserved and intellectual.

It’s getting weird and the market is having a tough time figuring out what to take seriously, what to ignore, what to laugh nervously about and what to just laugh at. Are we really about to put up our very own American version of Silvio Berlusconi as the Presidential candidate of a formerly serious political party? Is the other party really having a competitive race with one candidate running on an overtly socialist agenda that is barely distinguishable from his opponent’s? Who doesn’t claim to be a socialist? Are central banks actually considering pushing interest rates more negative after getting basically no positive response from the initial push below the previously sacrosanct zero bound? Has the Federal Reserve actually told banks to prepare for negative interest rates here in the US right after raising rates for the first time in years? Are serious economists actually have a debate about whether it is a good idea to just print up cash and pass it out? Is that really monetary policy? Are governments really talking about banning actual currency, the very money created by that government? Money that depends, oh by the way, solely on people’s trust that the government will stand behind the money they are about to outlaw? Has everyone lost their freaking minds?

My sentiments to a tee.  This is probably the most awful domestic political climate I’ve seen in my lifetime.  I’ve can’t remember having such a horrible “choice” before.  And for me, there really isn’t a choice given who is likely to win on either side.

Yes, there’s anger out there on both sides toward the political establishment.  They took a great country and have run it into the ditch.  Got it and agree with the anger.  But what this is boiling down to is the white version of Obama and a crook that makes Nixon look like an altar boy in comparison.  The voting public obviously wants some sort of political change but it also seems to be demanding change that will make a bad situation worse.

The pregnant question is “how did we get here?”  The Republican party obviously got here by a fairly conventional route – promise them anything to get elected and then, basically, ignore them.  The “them” being the GOP faithful.  So how did Trump become the answer, unless you’re a low information voter who is content to let a more unstable version of the current resident of the White House call the shots? How can anyone spend anytime researching the guy and come away with a positive feeling about what he’d do if he were in the Oval Office?  I’m sorry, but this bombastic political chameleon, who has duped and used people his whole life, will be as large if not a larger disaster than Obama has been.

And as for the crook on the other side, if anyone wants to firmly establish corruption at the highest levels of the country just to say we have a “woman president”, then you deserve to be horsewhipped.  Machine politics will survive and become even more pervasive and controlling.  Is this what everyone wants?   The Democrats are sliding hard left.  Sanders is popular because he too has a vast support group that is willfully (or not) ignorant and wants “free” stuff.

For goodness sake this is about what is best for the country, not some ideological check mark.  Certainly a woman should be our chief executive at some time.  But Clinton?  As a whole, those who voted for Obama willfully ignored the glaring and obvious reasons not to elect him to make sure the race check mark was made.  And what did it give us?  The worst president in my lifetime.  Now, it seems, the voting public is going to double down and make him the second worst president in my lifetime regardless of who wins in November.

 

“The main problem in any democracy is that crowd-pleasers are generally brainless swine who can go out on a stage & whup their supporters into an orgiastic frenzy—then go back to the office & sell every one of the poor bastards down the tube for a nickel apiece.” – Hunter S. Thompson, Fear and Loathing on the Campaign Trail ’72

That’s where we’re headed.  Those that want to see it “all burn down” may be in the middle of seeing just that.

~McQ