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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.

Labor Market Not As Rosy As it Appears?

On March 2, 2012, in Economy, by Tim

Well, next Friday’s labor report should be interesting as more signs emerge that the U.S. economy is not as healthy as it looks due to an unusually warm winter and odd seasonal adjustment factors resulting from the 2008-2009 recession. The latest evidence comes in this Gallup unemployment survey that shows the jobless rate going back up in February.

The differences between the adjusted/unadjusted and Gallup/BLS data are all rather complicated, but, one thing seems certain – the jobless rate as reported by the Labor Department is not going to go down again from its level of 8.3 percent in January. It could jump just a few tenths of a percentage point or to as high as 9 percent.

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ISM Manufacturing Index Declines

On March 1, 2012, in Economy, by Tim

The Institute for Supply Management reported that the ISM manufacturing index came in well below expectations last month, falling from 54.1 in January to 52.4 in February, as prices paid was one of only a few categories to post an increase.

The important new orders index fell from 57.6 in January to 54.9 last month, still indicating solid growth as readings above and below 50 indicate expansion and contraction, respectively. Production fell from 55.7 to 55.3, employment fell from 54.3 to 53.2, and prices paid rose a full six points, from 55.5 to 61.5.

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How Wrong, Indeed

On March 1, 2012, in Economy, by Tim

I don’t normally agree with Paul Krugman, the Nobel Laureate in economics and New York Times columnist, but the views on former Fed Chairman Alan Greenspan that he shared in this recent Playboy interview seem to be spot on:

PLAYBOY: Speaking of high-profile economic voices, you were pretty harsh about former Federal Reserve chairman Alan Greenspan and his role in the financial crisis. Should we be listening to him anymore?

KRUGMAN: No. I mean, how wrong do you have to be to get written out of the debate? He assured us that deregulation was making the system more stable. He was repeatedly wrong as the crisis unfolded. Look at Paul Volcker, whom I disagree with on some stuff but who is certainly an incredibly upstanding human being. When he left the Fed, he deliberately went silent to leave the field clear for Greenspan. Greenspan instead raced out to cash in personally on his role. He’s been so completely wrong at this point that the idea that some people still listen to him as a source of wisdom is awesome.

‘Ol Greenie is about due for another appearance on NBC (where his wife Andrea Mitchell works) or another Financial Times op-ed as some organizations still can’t seem to get enough of the guy who will surely not be treated kindly by history.

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Watch Ben Bernanke Live on CSPAN3

On February 29, 2012, in Banks, Economy, by Tim

Before the House Financial Services Committee, Federal Reserve Chairman Ben Bernanke will soon begin the central bank’s semi-annual Monetary Policy Report to Congress, otherwise known as the Humphrey Hawkins testimony, and you can watch it on CSPAN3.

I’ve got a pretty good hunch that, like his predecessor Alan Greenspan, history will not be kind to Ben Bernanke and elected officials may want to get out in front of that development by offering up some quips at today’s hearing – about all the money printing that central banks have been doing – so their thoughts can be recorded for posterity.

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Q4 GDP Revised Up to 3.0 Percent Rate

On February 29, 2012, in Economy, by Tim

The Commerce Department reported that higher levels of spending by consumers and businesses resulted in an upward revision to U.S. economic growth during the fourth quarter of 2011, the annualized rate of 2.8 percent that was reported a month ago revised up to 3.0 percent in the second of three estimates for the period.

Rising business inventories continued to be the most important factor in producing the best performance by the U.S. economy in a year-and-a-half as this volatile component accounted for a full 1.9 percentage points of the overall 3.0 percent growth rate. Personal spending accounted for 1.5 percentage points, due primarily to rising auto sales, while government spending subtracted 0.9 percentage points from the total.

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Consumers Shrug Off Surging Gas Prices

On February 28, 2012, in Economy, by Tim

The Conference Board’s consumer confidence index reversed January’s decline with a February surge to near the recovery high as an improving labor market seems to have trumped surging gasoline prices … for the time being. The index jumped from 61.5 last month to 70.8, just down from the recovery high of 72.0 one year ago.

Those saying jobs were “hard to get” fell from 43.3 percent to 38.7 percent, the lowest since late-2008, as Americans were more confident about their earning potential, 15.4 percent expecting their income to rise versus only 12.7 percent who were pessimistic.

In looking at the relationship between consumer confidence and gasoline prices above, it would appear that there has not yet been enough time for recently surging pump prices to have an impact on consumer outlooks as has happened reliably in the past.

The fact that the winter gas price surge has been so sudden and that miles driven at this time of the year are far less than in the spring and summer would suggest Americans still don’t fully appreciate how much $4 and $5 gas prices are going to hurt.

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