Economy's better, but headwinds ahead.12:00 AM, Mar 8, 2014 • By IRWIN M. STELZER
Five years ago this Sunday share prices hit a 13-year low: the S&P index of 500 shares fell to 676.53. Today it stands at 1,878.04, an increase of about 170 percent. Five years ago Sunday the unemployment rate stood at 8.7 percent, and was to reach 10 percent in a few months. Today, the unemployment rate stands at 6.7 percent. Five years ago this month builders received permits to build 513,000 homes; this month they likely will receive close to twice as many. Five years ago auto sales fell to a 27-year low of 10.4 million vehicles. This year sales will top that by some 50 percent.
Yet three out of every four Americans believe the nation is still in recession. With reason. Yesterday’s jobs report showed that the number of long-term unemployed rose last month to 3.8 million, below its peak but still high by historic standards. If millions had not dropped out of the work force in the past five years, the unemployment rate would be above 10 percent, higher than at the depths of the recession. And household incomes remain stuck at about their five-year-ago level when adjusted for inflation. Which accounts for the view of so many Americans that the recession has not ended. And that somehow things are out of control—fewer than one person in four believes the president is doing a good job, and only one American in ten is satisfied with Congress’s performance.
This is the shape of things when the president dropped his budget on congressional desks this week. Its call for an increase in taxes and in spending beyond the sums agreed to only a few months ago in the bipartisan spending bill worked out by Republican representative Paul Ryan and Democratic senator Patty Murray will go unheeded. So a government-led spending spurt and looser fiscal policy cannot be counted on to play a major role in offsetting the likely continued reduction in asset purchases by the Federal Reserve Board, the so-called tapering. Indeed, since Obama will not get his spending wish list, and since the deficit is declining relative to the size of the economy, fiscal policy might be a headwind to growth this year.
There are others:
· Economy watchers say that the year-end inventory build-up presages slower production, at least in the first half of this year.
· Activity in the service sector fell in January.
· Market watchers worry that after a five-year bull run, historical patterns suggest that the bulls are about to leave the arena, and the bears to emerge from hibernation.
· Those who follow the auto industry fear that February’s relatively weak performance is due primarily to a suspension of consumers’ demand for new vehicles rather than to the weather.
· Housing analysts worry that the shift from a sellers’ to a buyers’ market early in the year reflects an enduring slowdown in the housing market.
· Retailers worry that warmer weather will fail to reverse a recent sales slowdown.
Much is being made of the forecasting difficulty created by the storms that blanketed a good part of the country. The word “weather” appeared 119 times in the Fed’s survey of business conditions, published last week. That survey revealed that production in several regions was slowed by electricity outages and supply-chain disruptions. “It will only be in coming months, when the impact of the weather works its way out of the data, that a true picture of the underlying health of the economy is revealed,” comments Markit’s Chris Williamson.
8:50 AM, Mar 7, 2014 • By GEOFFREY NORMAN
Non-farm payrolls surprised to the upside in February with 175,000 jobs added. The number was “unexpectedly” high with forecasts running in the 150,000 range and some going much lower.
8:39 AM, Mar 6, 2014 • By GEOFFREY NORMAN
The Labor Department report on first time unemployment claims came in slightly below expectations: 323,000 against an expected 336,000 and the best figure in three months.
2:21 PM, Mar 4, 2014 • By GEOFFREY NORMAN
The administration has produced a budget that includes various predictions not least of which concerns GDP growth. The White House, as Jeffry Bartash of Marketwatch reports, is looking for sunny days ahead and:
12:17 PM, Mar 4, 2014 • By JERYL BIER
Here's a rather harsh assessment of the last four years under the Obama administration's economic policies:
11:00 AM, Feb 20, 2014 • By JERYL BIER
A recently released Department of Agriculture (USDA) report on the "Food Assistance Landscape" for the fiscal year 2013 shows that for the second year in a row, participation in the federal government's SNAP (food stamps)
10:40 AM, Feb 19, 2014 • By GEOFFREY NORMAN
What we have been told is a “recovery” has a way of throwing off false trails. We were told to expect a robust performance, this year, from the housing sector yet, yesterday, for example, we learn that home-builder confidence has not merely fallen, but cratered. As Reuters reports:
9:09 AM, Feb 13, 2014 • By GEOFFREY NORMAN
Braving the weather, the BLS has released the weekly first-time claims numbers. They were off, a bit, on the high side. The “expected” figure: 330,000.
Actual and, of course, “unexpected” number: 339,000. Close enough for government work, anyway.
Blame the weather.
And the recovery keeps rolling along.
12:00 AM, Feb 8, 2014 • By IRWIN M. STELZER
When economic forecasts prove wrong, it is customary to blame the weather. So cold that consumers stayed home, or so hot that consumers, well, stayed home. So cold that outdoor construction was unexpectedly low, unless of course unusually high temperatures made such work impossible lest heat stroke afflict the workers. In short, weather is the straw at which sinking forecasters often grasp.
1:03 PM, Feb 7, 2014 • By GEOFFREY NORMAN
The monthly employment numbers are out and even the New York Times is dismayed. The economy added 113,000 jobs in January, which was (all together now) unexpectedly short of the 180,000 economists were predicting. This news:
12:00 AM, Feb 1, 2014 • By IRWIN M. STELZER
President Obama surely deserves to relax this weekend and enjoy the Super Bowl after an arduous week in which he prepared and delivered his fifth State of the Union message, one the White House admits set forth a rather limited agenda, and then took to the hustings for stops in four states on the campaign trail that has become his natural home. The president might have been spared the chore had Woodrow Wilson, in 1913, not overturned Thomas Jefferson’s 1801 decision to deliver only a written message, a move explicitly designed to avoid mimicking the pomp of Britain’s King’s Speech. Thanks to the Wilson and the forward march of communications technology we now are treated to the spectacle of congressmen vying for seats on the aisle so that they might touch the flesh of the president as he enters the chamber.
3:11 PM, Jan 17, 2014 • By GEOFFREY NORMAN
In a speech to the U.S. Chamber of Commerce, Canada's foreign minister, John Baird put things plainly: