The NFIB Small Business Optimism Index fell 2.3 points in October to 91.6.
ICSC-Goldman Store Sales rose 1.2% for the week, and 2.3% for the year. Redbook, meanwhile, shows a retail sales drop from 3.8% to 3.3% on a year-ago basis.
The Chicago Fed National Activity Index was unchanged at 0.14 in September, with the 3-month moving average at -0.03.
First, let me say my heart goes out to the people of the Philippines. This was a horrific and very deadly event. And I can even understand their representative to the UN letting emotion carry the day when he said before the UN:
“What my country is going through as a result of this extreme climate event is madness.
“We can fix this. We can stop this madness. Right now, right here.
Well, emotion aside, no we can’t. As Bjorn Lomborg has said any number of times, the cost of doing what those who want to “stop this madness” want done would literally end life as we know it, ruin economies and yield, at best, marginal results. Or said another way, we can’t afford their desired programs and even if we could, they wouldn’t have much effect.
Then there is the reality of the day. Right now, for instance, carbon emissions in the US are at 1994 levels (and have dropped in most places around the globe due to the downturn in the global economy). Then there’s the inconvenient fact that warming around the globe has paused for ten years and some climate scientists say it may stay paused for another 2o years. And your guess is likely as good as theirs as to what the climate will do then. Oh, and arctic ice? Back with a vengeance. It is hard, in the middle of possible 30 year pause in warming, to claim a single event has been caused by … warming. But someone always will.
Finally, look on this side of the globe. Hurricanes and tornadoes are down – a lot:
Summer is almost over, and as of Tuesday morning, not a single hurricane had formed this year. Tornado activity in 2013 is also down around record low levels, while heat waves are fewer and milder than last year, according to the National Oceanic and Atmospheric Administration.
Meteorologists credit luck, shifts in the high-altitude jet stream, African winds and dust.
So it is possible that the “local” weather, in this case “local” is a rather relative term, in our tropics was cooler than the weather in the tropical region of the Philippines. Luck or the way the climate works? Is that something man has control over? Or, is it something that an increasing number of scientists seem to be concluding – that various “local” climatic events have more say over our weather than does CO2?
Since I don’t accept the science is settled on this issue, I think we have a lot to still learn about our climate and how it works and what effects it. To this point, I’m not convinced that a single trace gas that, until recently science said was a lagging indicator of warming, is not the culprit that spawns super storms like Haiyan.
If you thought Hugo Chavez was bad, his successor, Nicolás Maduro, is Chavez without the charisma. But Maduro learned all of Chavez’s tricks to stay in power, and one of them is to claim to be involved in a perpetual war against outside forces who are bent on destroying their socialist paradise. In this case the “high prices” in Daka stores (equivalent to our Best Buys) gained the ire of Maduro who sent the military in to seize the stores and require them to offer “fair prices” on their electronics:
Members of Venezuela’s National Guard, some of whom carried assault rifles, kept order at the stores as bargain hunters rushed to get inside.
Daka’s store managers, according to Maduro, have been arrested and are being held by the country’s security services. Neither Daka nor the government responded to requests for comment.
Of course, Daka is unlikely to continue to serve Venezuela if it can’t make a profit – something most socialists governments have never understood. But let’s look at the real reason this is happening:
“I have no love for this government,” said Gabriela Campo, 33, a businesswoman, hoping to take home a cut-price television and fridge. “They’re doing this for nothing but political reasons, in time for December’s elections.”
Maduro faces municipal elections on Dec. 8. His popularity has dropped significantly in recent months, with shortages of basic items such as chicken, milk and toilet paper as well as soaring inflation, at 54.3% over the past 12 months.
“This is more like government-sanctioned looting,” said 42-year-old Caracas-based engineer Carlos Rivero. “What stops them going into pharmacies, supermarkets and shopping malls?”
It is exactly like government-sanctioned looting. And the engineer’s point is telling – what industry in Venezuela can feel safe given the actions of this government? Why would any foreign entity ever invest or take the chance of establishing itself in Venezuela? Each election would put them on a target list for seizure depending on how poorly the head of the government viewed his popularity and how much he felt it necessary to boost his reputation.
The one entity whose job it is to protect you from force and fraud is engaged in both “legally”.
Why would anyone feel safe?
This week, Bruce, Michael and Dale discuss Obamacare and the end of antibiotics.
The direct link to the podcast can be found here.
As a reminder, if you are an iTunes user, don’t forget to subscribe to the QandO podcast, Observations, through iTunes. For those of you who don’t have iTunes, you can subscribe at Podcast Alley. And, of course, for you newsreader subscriber types, our podcast RSS Feed is here.
Non-farm payrolls increased by 204,000 in October, while the unemployment rate rose to 7.3%. Average hourly earnings rose 0.1%, while the average workweek declined to 34.4 hours. These headlines hide a lot. 720,000 people left the labor force, bringing the labor force participation rate down to 62.8%, the lowest since March, 1978. Meanwhile, an additional 17,000 people were counted as unemployed, while an additional 735,000 dropped out of the ranks of the employed. Overall, the total number of persons not in the labor force increased by 932,000. As a result, using the historical average labor force participation rate, the real unemployment rate rose from 11.45% to 11.98%, the highest in two years. Much of this oddness probably comes from skewing from the government shutdown.
Personal income rose 0.5% in September, while personal spending rose 0.2%. The PCE Price Index rose 0.1% both at the headline and core level. On a year-over-year basis, prices are up 0.9% overall, and 1.2% at the core level, i.e., ex-food and -gas.
The University of Michigan’s Consumer Sentiment Index fell 1.2 points to 72.0 in the early November reading.
Andrew Kohut thinks so:
Tucked away in recent polls—which have documented the extraordinary anger directed at the Republican Party during the shutdown crisis—are measures of clear disappointment with the Democratic Party. The disappointment is substantial, and it raises big questions about the 2014 midterms.
The Republican Party’s favorable ratings fell substantially in most every national survey that uses this yard stick, declining to 28% in the Gallup poll at one point. Yet when the GOP was matched up against the Democrats on key political measures, it did not look so bad.
A mid-October Pew Research national poll found that a plurality regard the Republicans as “better able to deal with the economy” than the Democrats (44%-37%). Independents favored the GOP on the economy by a whopping 46%-30% margin in that survey.
The Republicans took most of the blame for the shutdown, yet a growing number see the GOP as “better able to manage the government.” In December 2012, the Democratic Party held a 45%-36% advantage over the GOP as the party Americans viewed as better able to manage the government. By Oct. 15—in the midst of the shutdown and debt crisis—the Democratic lead on this measure disappeared: 42% said the Republican Party is better able to manage the federal government, compared with 39% who named the Democrats.
An early read of voter preferences for the House in 2014 by the Pew Research Center in mid-October had the Democrats with a six-point edge: 49% to 43% among registered voters. In historical terms, this is a relatively modest margin. Six points is the same lead the Democrats had in 2009, a lead that steadily eroded in 2010. The GOP picked up six Senate seats and 63 House seats in that year’s midterm.
The anger over the government shut-down is fading. But at the moment, ObamaCare is the gift that keeps on giving. And, of course, there’s the struggling economy. Neither the economy nor ObamaCare promise to fade into obscurity before the mid-term elections next year. One indicator of how deep the looming trouble is for Democrats can be found in the numbers associated with independent voters:
One clear troubling sign for the Democrats at this early stage is independent voters, who decide most elections. They are evenly divided, according to Pew’s mid-October survey: 43% say that “if the elections for Congress were being held today,” they would vote for the Republican candidate in their district, 43% say they would vote for the Democratic candidate.
The reason there’s hope for good results in 2014 for Republicans rests with the two issues nagging Democrats. Healthcare and the economy. Both are very personal issues, i.e. they are issues that effect all voters. They’re not some issue which voters simply have an opinion about. Both effect their lives, sometimes in dramatic fashion. And those are the very issues Republicans, if they’re smart, will focus on:
The economy and ObamaCare’s inauspicious debut are likely the most powerful drags on the president and in turn on his party. In a September Pew survey, 63% of Americans say the nation’s economic system is no more secure today than it was before the 2008 market crash.
A majority of Americans say their household incomes and jobs still have not recovered from the great recession. But pluralities think that government’s policies have helped large banks, corporations and the rich more than the middle-class, the poor or small businesses.
So maybe it isn’t as bleak for Republicans as some pundits would like to believe. That said, we’ve all watched the GOP manage to screw up all sorts of issues in the past. 2014 is going to take a focused effort to lay out those 2 issues for the pubic in clear fashion and with clear and appealing alternatives.
I’ll be interested to see if they can actually do that.
Chain stores reported October sales today. They were slightly positive, though the government shutdown seems to have had a negative effect.
3rd Quarter real GDP came is surprisingly high at an annual 2.8%, but inventory increases played an outsized role, contribution 0.83%. Personal consumption expenditure growth declined from 1.8% last quarter to 1.5% in the 3rd quarter. The GDP Price Index rose 1.9%
Initial jobless claims fell 9,000 last week, to 336,000. The 4-week moving average fell 12,000 to 348,250. Continuing claims rose 4,000 to 2.868 million.
The Bloomberg Consumer Comfort Index was essentially unchanged at -37.9 for the week.
The government’s expanding student loan portfolio is inflating consumer credit, which was up $13.7 billion in September.
The Fed’s balance sheet rose $8.2 billion last week, with total assets of $3.852 trillion. Reserve Bank credit increased $7.6 billion.
The Fed reports that M2 Money Supply fell by $-7.8 billion last week.
If you’re wondering why, please remember that whenever the Democrats or the White House get in trouble, step one of escaping that trouble is to use the bully pulpit to blame someone else. Oh, and there’s the fact that in the past, attacking the health insurance companies seemed to have worked:
The approach hasn’t sat well with some Democratic allies, who are publicly and privately urging the White House to ramp up its attacks on insurers, arguing that the the tactic shored up support as they struggled to push the bill through Congress. A group of Democratic strategists pressed senior administration officials during a conference call last week.
They’d like a repeat of 2009-10, when then-House Speaker Nancy Pelosi (D-Calif.) called insurers “the villains,” Obama blasted their willingness to “bend the truth or break it,” and Health and Human Services Secretary Kathleen Sebelius accused them of banking excessive profits.
“When Obamacare got into trouble, we juxtaposed our message against the insurance companies, which are very unpopular,” said Celinda Lake, a Democratic pollster who has advised her 2014 clients, including Alaska Sen. Mark Begich, to go after insurers. “We should be messaging against the insurance companies this time as well. This is not good faith. If there is a snowstorm, the insurance companies are blaming it on Obamacare.”
But there’s a problem. With the horrific rollout of ObamaCare, the White House needs the support of the industry they demonized for so long. They need the “villains”.
This time around, Obama needs the industry to make Obamacare work.
His restrained response over the past week shows just how much the dynamic between Obama and the insurance companies has shifted since the law passed — and how their fates have become intertwined. The health care law expands coverage to millions of Americans by sending them into the private insurance market armed with tax subsidies, forcing the president and his former nemeses into an uneasy partnership that’s only beginning to face strains.
“Their interests are aligned with our interests in terms of wanting to enroll targeted populations,” a senior White House official said Wednesday. “It is not that we will agree with everything now either, but I would say for some time now there has been a collaboration because of that mutual interest.”
The uneasy truce will likely exist until such a time as it is politically expedient for the White House to blame all of ACA’s ills on someone else — namely health insurance providers (trying to blame Republicans seems to have had little traction). But they can’t afford to do that at the moment. However, while a full frontal assault on the industry may not be in the offing, the White House is still inclined to snipe:
Senior White House adviser Valerie Jarrett angered insurers when she posted on Twitter that it was a “fact” that “nothing in Obamacare forces people out of their health plans.”
White House press secretary Jay Carney has been critical of insurance companies during his daily briefings, calling the individual market an under-regulated “Wild West.” But he’s tried to strike a balance, casting insurers as engaged in bad practices before the new health care law brought them into line.
Obama did the same during a health care speech Friday in Boston.
“Remember, before the Affordable Care Act, these bad apple insurers had free rein every single year to limit the care that you received or used minor pre-existing conditions to jack up your premiums or bill you into bankruptcy,” Obama said.
Ah, the life of a failed community organizer and his posse. Help create a monstrosity out of whole cloth and then, when it performs as poorly as critics said it would, find a “villain” and blame them. Except right now you need the villain. Meanwhile your party is raising the volume on its protests about the awful rollout and its effect on their chances for re-election next year.
What to do. What to do.
Thanks to an unfortunate set of circumstances, I’m in the market to buy a replacement car. I wrote about my short list of prospective cars at the other place. Please feel free to go there and offer comments and suggestions.
In other news, next week I begin a new part-time job. Assuming the students sign up for the course, I will start my first class as Adjunct Professor of Business for Park University. I will be teaching MGT352, “Principles of Management”, in the Fall 2 Alternative term at the Camp Pendleton Campus.