For the past few months, the stock market has been behaving like a reveler who’s had just a little too much to drink, and the bond market has been behaving like the guy who wants to take away the stock market’s car keys.
We should probably listen to the bond market.
Read the rest here.
Comments »“China’s industrial output growth is likely to slow this quarter as the world economy cools and Europe’s debt crisis worsens, the Ministry of Industry and Information Technology said.
“The global economy is slowing down, Europe’s sovereign debt crisis is deepening and the downside risks to the world economy are rising with international demand still slack and global commodities and financial markets continuing to be volatile,” the ministry said in a statement before a briefing in Beijing today.”
Comments »– by New Deal democrat
Just about the only drawback in Friday’s employment report is that at the rate employment has been growing since it bottomed 2 years ago, it will take possibly a decade to make up all of the jobs lost plus population growth since 2007. Even job growth of 250,000 a month would be downright tepid for the 1980s or latter part of the 1990s. To substantially accelerate real, population adjusted job growth, we need monthly improvement of 300,000+ or even 400,000+ jobs.
And there are signs that we may be on the verge of achieving at least the lower part of that range in the very near future.
First of all, let’s look at updated graphs showing the relationship of the rate of initial jobless claims with the unemployment rate. Here’s the long term graph:
Read the rest here.
Comments »by CalculatedRisk on 2/06/2012 12:13:00 PM
There have been some recent articles arguing the “housing bottom is nowhere in sight”. That isn’t my view.
First there are two bottoms for housing. The first is for new home sales, housing starts and residential investment. The second bottom is for prices. Sometimes these bottoms can happen years apart.
For the economy and jobs, the bottom for housing starts and new home sales is more important than the bottom for prices. However individual homeowners and potential home buyers are naturally more interested in prices. So when we discuss a “bottom” for housing, we need to be clear on what we mean.
For new home sales and housing starts, it appears the bottom is in, and I expect an increase in both starts and sales in 2012.
To see the graphs and read the rest, go here.
Comments »Comments »Global Credit Research – 06 Feb 2012 Hong Kong, February 06, 2012 — Moody’s Investors Service says that while it expects a benign credit environment for Asia Pacific banks in 2012, there are still potential hazards that could develop into material adverse shocks for particular systems.
“These are not our central scenario, but what we consider as “tail risks”, or low-probability, but potentially high-impact events that warrant close monitoring over the coming 12 months,” says Stephen Long, a Moody’s Managing Director for the Financial Institutions Group in Asia Pacific.
The report lists and discusses five downside risk scenarios that Moody’s views as increasingly disturbing.
These include: (1) contagion risk from Europe’s sovereign crisis; (2) the possibility of a hard landing for the Chinese economy; (3) the bursting of real estate bubbles in Asia; (4) a downturn in commodity prices; and (5) a downturn in the Australian property market.
Regarding contagion risk, Moody’s believes that the banking systems in Australia, New Zealand, Korea and Vietnam are the most vulnerable to financial and economic shocks from a euro area crisis.
While another downside scenario is the risk of a China hard-landing, a somewhat comforting conclusion from Moody’s stress test is that the profitability, loss reserves, and capital positions of Chinese banks still provide a strong cushion.
The report also says that a substantial downturn in real estate prices in Asia would only have a limited impact on the region’s banking systems in general.
In addition, Moody’s expects the credit impact of a commodity price downturn to vary across the region, with potential distress concentrated in net commodity exporters, but also a risk among midstream processors.
Finally, a downturn in the Australian property market is another single-economy tail risk identified in the analysis. However, Moody’s notes that Australian banks are protected against the direct impact of falling house prices by their low loan-to-value ratios, and the use of mortgage insurance.
The report is titled “Asia Pacific Banks: Five Risk Scenarios for 2012.” It can be accessed on www.moodys.com.
“CEO Charles Schwab says the Federal Reserve’s prolonged, “emergency” near-zero interest policy is hurting, not helping the economy.
“The Fed policy has resulted in a huge infusion of capital into the system, creating a massive rise in liquidity but negligible movement of that money,” Schwab writes in The Wall Street Journal. “It is sitting there, in banks all across America, unused.”
“The multiplier effect that normally comes with a boost in liquidity remains at rock bottom. Sufficient capital is in the system to spur growth — it simply isn’t being put to work fast enough,” wrote Schwab, the founder and chairman of the Charles Schwab Corp.”
Comments »Who they are, where they are, and how they got left behind.
Understanding this chart: I’m tracking the growth in unemployment by DURATION with the shortest-term unemployed in orange at the bottom, and the long-term unemployed in blue at the top. I’ve indexed all numbers to begin at 100 in January 2007. Takeaway 1: People unemployed for 15-26 weeks (red) have doubled. Takeaway 2: People unemployed for 27 weeks and over have quadrupled.
See that graph? Click it. Print it. Tape it to your wall, and maybe give it some lamination. This is what the tragedy of long-term unemployment looks like, with the blue line tracking the quadrupling of those unemployed six months or longer.
The U.S. economy got some much-needed good news this afternoon when the January jobs report showed the unemployment rate falling to its lowest level since the second month of Obama’s presidency. Every single indicator — from hourly pay to unemployment among non-college graduates — got better.
But here’s the really bad news: There are still 5.5 million people out of work for six months or longer. That’s enough to fill the state of Minnesota. And even this stat probably understates the crisis. Another 6 million people who should be in the labor force have stopped looking for work entirely. It’s safe to assume many of them dropped out of the market for jobs because they were unemployed for so long. Taken together, it’s an 11 million-person crisis. Big enough to fill Ohio.
Who are the long-term unemployed? They’re mostly the very-long-term unemployed. Of the 5.5 million people out of work for more than 27 weeks, 4 million have been out of work for more than 52 weeks, according to this fantastic report from the Pew Charitable Trusts. Here are four things we know about the very-long-term unemployed:
Read the rest here.
Comments »
Via Rortybomb
“Here’s an interesting response to the pretty good job numbers from Friday. Tyler Cowen at marginalrevolution: “The ‘big loser’ here?: Old Keynesianism. You really can get a recovery when the real shocks are moderately positive. You will note, as we have been told many many times by many many sources, fiscal and monetary policy have not been extremely pro-active in recent times; in fact the stimulus has been trickling to a close. The big winners, apart from the American public?: real business cycle theory.”
Read the rest here.
Comments »Despite a continued cloudy view of the U.S. economy, some top economics bloggers are beginning to see a ray of hope on the horizon. According to a new Ewing Marion Kauffman Foundation survey, 14 percent of respondents now believe the economy is “strong and growing” or “strong with uncertain growth,” an improvement over last quarter.
For the Kauffman Economic Outlook: A Quarterly Survey of Top Economics Bloggers of 2012, the Kauffman Foundation sent invitations to more than 200 leading economics bloggers as identified in the Palgrave’s econolog.net December 2010 rankings about their views of the economy, entrepreneurship, and innovation.
Looking ahead, only 33 percent now anticipate U.S. poverty to increase in the next three years, a significant positive change from previous surveys. Respondents also believe that employment and global output will rise faster than anything else and, surprisingly, some expect a higher marginal tax rate.
When asked to identify policy options to stimulate the economy, top economics bloggers overwhelmingly supported approval of the Keystone XL pipeline, with 77 percent in agreement (25 percent strongly agreeing), and 75 percent favor opening up more domestic areas to oil and gas exploration and drilling. Other preferred policy recommendations included giving states flexibility to set their own minimum wage (67 percent agreeing) and the revenue-neutral adoption of a value added tax (58 percent agreeing). Opinion remained split on raising the top marginal income tax.
Other research highlights include:
Read the rest here.
Comments »Submitted by Tyler Durden
A month ago, we joked when we said that for Obama to get the unemployment rate to negative by election time, all he has to do is to crush the labor force participation rate to about 55%. Looks like the good folks at the BLS heard us: it appears that the people not in the labor force exploded by an unprecedented record 1.2 million. No, that’s not a typo: 1.2 million people dropped out of the labor force in one month! So as the labor force increased from 153.9 million to 154.4 million, the non institutional population increased by 242.3 million meaning, those not in the labor force surged from 86.7 million to 87.9 million. Which means that the civilian labor force tumbled to a fresh 30 year low of 63.7% as the BLS is seriously planning on eliminating nearly half of the available labor pool from the unemployment calculation. As for the quality of jobs, as withholding taxes roll over Year over year, it can only mean that the US is replacing high paying FIRE jobs with low paying construction and manufacturing. So much for the improvement.
Chart below shows it all – that jump is not a fat finger!
Read the rest here.
Comments »Catching up: The January ISM Non-manufacturing index was at 56.8%, up sharply from 53.0% in December. The employment index increased in January to 57.4%, up from 49.8% in December. Note: Above 50 indicates expansion, below 50 contraction.
From the Institute for Supply Management: December 2011 Non-Manufacturing ISM Report On Business®
Read the rest here.
Comments »
