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REMINDER: All investment, economics, and finance related material now appears at the new IaconoResearch.com. For the time being at least, this has become a personal blog covering a variety of mostly unrelated topics.

Consumer Prices Flat, Jobless Claims Plunge

On January 19, 2012, in Economy, by Tim

The Labor Department reported that overall consumer prices were unchanged in December for the second month in a row as falling energy costs offset price increases elsewhere and, for the entire year of 2011, inflation came in at 3.0 percent.

Gasoline prices that fell 2.0 percent from November to December combined with household energy costs that were down 0.4 percent to push the energy index 1.3 percent lower, however, energy prices remain up 6.6 percent from a year ago with many analysts now predicting a sharp increase in pump prices this spring.

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About Those Eight Million “Lost” Jobs…

On January 18, 2012, in Economy, Housing, by Tim

Time and again you hear pundits say that what the U.S. experienced in the last decade was a terrible boom/bust cycle for the housing and credit markets. But then, almost in the same breath, they oftentimes say the nation must do whatever it can to get those eight million jobs back that were “lost” when the housing bubble burst.

But, does that make any sense?

Were those jobs really “lost” or should a good many of them have never existed in the first place?

Anyone with a rudimentary understanding of economics would conclude that, since many of the jobs created early in the decade were related to housing – construction workers, mortgage brokers, etc. – that they won’t be coming back anytime soon, at least not as long as the housing bubble remains “popped” (which is a pretty good bet over the next few years).

Of course, since the early-2000s housing boom was, effectively, the cure for the stock market boom that went bust at the turn of the century, one could argue that what the government and central bank need to do is create a new and different asset bubble.

But, so far, Fed Chief Ben Bernanke and crew seem to be shooting blanks.

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U.K. Inflation at 4.2%, Mervyn Writes a Letter

On January 17, 2012, in Economy, Europe, by Tim

Prices are falling all around the world, or so it seems, and that’s a good thing for Bank of England Governor Mervyn King because every time the U.K. inflation comes in too hot – more than a percentage point above the official two percent target – he’s supposed to write a letter of apology to Chancellor George Osborne.

Based on this Telegraph story today, where it was learned that the annual inflation rate fell from 4.8 percent to 4.2 percent, another Dear George letter has likely already been delivered, but Mervyn might be able to take a break sometime this spring as some big tax hikes fall out of the year-over-year consumer price comparisons.

Like a lot of the things we do on this side of the pond, it’s all pretty silly.

I’m not sure if they still do this, but, back in 2007, the Telegraph used to publish the letter from the Bank of England along with the response from the Chancellor of the Exchequer as noted in this item at the old blog. Apparently, with all that’s happened in the aftermath of the financial crisis, no one cares as much about a little inflation.

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Federal Government About to Downsize?

On January 16, 2012, in Economy, by Tim

Though down slightly in 2011, federal government payrolls have been growing steadily in recent years, adding about a million new jobs since the financial crisis began in 2008, but, that looks as though its about to change according to this survey from Gallup.

In the public sector, state and local governments have born the brunt of the bad U.S. economy, due in large part to their lack of a printing press and the ability to keep piling on debt in amounts never witnessed before on planet earth. With a much larger workforce – a combined 19 million versus less than 3 million for the federal government – state government payrolls have declined by more that 125,000 since 2008 and local governments have seen net reductions of more than a half million.

But, still, it seems the federal government has some catching up to do.

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Retail Sales Up 0.1%, Down 0.2% Ex-Autos

On January 12, 2012, in Economy, by Tim

The Commerce Department reported(.pdf) that retail sales in the U.S. came in well below expectations last month, rising 0.1 percent in December following an upwardly revised increase of 0.4 percent in November. Excluding automobiles, sales fell 0.2 percent after a gain of 0.3 percent the month prior.

Apparently, American consumers bought nearly all of their iPads, iPhones, and big screen TVs in November as electronics & appliance stores saw sales plunge 3.9 percent in December, the largest decline amongst six of the 13 categories where sales were lower. Gasoline station sales fell 1.6 percent due to a plunging price at the pump and sales at general merchandise stores fell 0.8 percent.

Motor vehicle sales rose 1.7 percent last month and home improvement stores saw a 1.6 percent increase to lead the advancing categories as food and clothing sales both rose 0.7 percent. On a year-over-year basis, overall sales were up 6.5 percent and, for all of 2011, sales rose 7.7 percent, both fairly impressive increases given the slow economic recovery.

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Confidence in the U.S. Economy Surges

On January 11, 2012, in Economy, by Tim

A new Gallup poll shows that, after steady improvement since the summer debt-ceiling debacle lows, confidence in the U.S. economy has steadily improved and now sits at its highest level since last May, just as gas prices near $4 a gallon were starting to bite.

An improving labor market and lower pump prices are no doubt major factors behind the recent rise that led to a surge in holiday sales as Americans renewed their decades long love affair with credit card debt (temporarily at least) as noted in this item yesterday.

While this is consistent with other measures of consumer confidence, it’s worth noting that, at -27, the latest Gallup poll readings are well below what might be considered “normal” as is the case for other gauges of  consumers’ mood that remain at “recession levels”.

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