Apparently milk decline has New Zealand showing the worst fall in exports since 2009. Exports fell by 0.1% while exports grew by 3.4%.
Comments »Britain’s Economy Pops 1% vs Consensus of 0.6%
“Britain exited a double-dip recession in the third quarter with the strongest growth in five years as Olympic ticket sales and a surge in services helped boost the rebound.
Gross domestic product rose 1 percent from the three months through June, the fastest growth since 2007, the Office for National Statistics said in London today. That exceeded the highest estimate in a Bloomberg News survey for growth of 0.8 percent. The median forecast of 33 economists was 0.6 percent. The pound rose after the data were published.
The growth surge reflects a boost from the Olympics and a rebound from the second quarter, when GDP was affected by an extra public holiday.”
Comments »Something to Think About When Betting on the Future of a Consumer Economy
Had to spend some time at the vet today and randomly picked up TIME Magazine to find this interesting article that may have serious ramifications for the economy…
The article touches on a recent book discussing a new type of consumer culture. This could be a mega trend in the making…
Comments »Wholesale Cost Deflation Continues to Hit China
Price declines are expected to hit earnings in China as the worst deflation since 2009 hits China…
Comments »The Magnitude of the Mess We’re In
The next Treasury secretary will confront problems so daunting that even Alexander Hamilton would have trouble preserving the full faith and credit of the United States.
Sometimes a few facts tell important stories. The American economy now is full of facts that tell stories that you really don’t want, but need, to hear.
Where are we now?
Did you know that annual spending by the federal government now exceeds the 2007 level by about $1 trillion? With a slow economy, revenues are little changed. The result is an unprecedented string of federal budget deficits, $1.4 trillion in 2009, $1.3 trillion in 2010, $1.3 trillion in 2011, and another $1.2 trillion on the way this year. The four-year increase in borrowing amounts to $55,000 per U.S. household.
The amount of debt is one thing. The burden of interest payments is another. The Treasury now has a preponderance of its debt issued in very short-term durations, to take advantage of low short-term interest rates. It must frequently refinance this debt which, when added to the current deficit, means Treasury must raise $4 trillion this year alone. So the debt burden will explode when interest rates go up.
Read the rest here.
Comments »Morgan Stanley’s Joachim Fels Sees Green Shoots for the Global Economy, Chart Porn
“The other thing I will be watching is whether there will be more signs of green shoots in the economic data. You may remember that I pointed out the strong Korean export numbers as a first sign of hope two Sundays ago. In the meantime, exports in Germany, Taiwan and China, the whole range of monthly data in China and the US housing market and retail sales releases have surprised on the upside. So this week, all eyes will be on the German Ifo survey, US and UK 3Q GDP and the flash PMIs out of China and the euro area. Most of these should show an uptick, consistent with the green shoots theory. Yet overall, I doubt that global growth will escape from the twilight zone into daylight for quite some time to come.
Fels’ comments echo the latest from Goldman’s Jim O’Neill, whose weekend letter was devoted to the exact same thing: The growing green shoots around the world.
And O’Neill’s letter jibed with the latest measure from Goldman’s Global Leading Indicator (GLI), which is showing its first pickup in momentum all year.”
Comments »Remember All Those Great Consumer Charts? — Now Here’s The Dark Side Of The Economy
Yesterday we ran a bunch of happy economic charts.
Car
sales are booming. The unemployment rate is collapsing. Consumer sentiment is soaring.
But there’s a dark side: Corporate side data
Let’s just go to the charts!
Read the rest here.
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Wen Jiabao Says GDP Data Shows Stabilization in Chinese Economy
“China’s stocks rose, driving the benchmark index to a five-week high, after Premier Wen Jiabao said the economy has started to stabilize and industrial production and retail sales data beat estimates.”
Comments »This Is The Biggest Economic Story In The World
This is really the big story of the moment: The full-on comeback in everything related to consumers and households.
Let’s just break it down really fast.
Read the rest here.
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Air Cargo Spells Contraction for the Global Economy
I guess we can file this in the folder of randomly negative macro indicators: (via Nomura)
Comments »“Over the past nine years’ monthly data, there has been an 84% correlation between air cargo volume growth and global industrial production (IP) growth, with an air cargo lead of one to two months”
Capacity Utilization and the Economy
“One report that rarely receives enough attention is the Federal Reserve’s monthly report on capacity utilization. The industrial production numbers tend to be more volatile and can fluctuate, but the report on capacity utilization intends to show through time a picture of how employers are running their shops, factories and operations. While this ties in with today’s report, we are most concerned with the longer-term issues that this poses.
Today’s report showed a 0.4% production gain, versus a 0.2% gain expected. Capacity utilization also came in as expected at 78.3%. The problem is that this capacity reading is dismal, and it shows that the core economy is not running well even though this is nearly a peak report for the cycle.
The theory is simple enough. If capacity is running low, final demand is low and the need to massively hire workers is low. Of course there are exceptions, and nonfarm productivity can be taken into consideration as well. Still, if businesses are running at low capacity rates, then there is little reason to expect waves of hiring from the nonfarm sector.”
REINHART & ROGOFF: The US Is Delivering One Of The Best Post-Crisis Recoveries In History
Carmen Reinhart and Kenneth Rogoff, who wrote the book on the most recent financial crisis – “This Time is Different” – released a white paper Sunday reviewing the economy since the financial crisis.
And overall, they had positive things to say about the U.S.
“According to our (2009) metrics, the aftermath of the US financial crisis has been quite typical of post-war systemic financial crises around the globe,” they wrote. “If one really wants to focus just on United States systemic financial crises, then the recent recovery looks positively brisk.”
Read the rest and see the charts, here.
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Deutche Bank: Housing Recovery is Real and the U.S. Economy is Not Far Behind
“Despite some nagging doubts that have remained over the U.S. housing market, consensus is that housing has turned the corner and is recovering.
In his latest note titled The Housing Recovery Is For Real, Deutsche Bank’s Joseph LaVorgna writes that the “residential housing market is in the very early stages of a durable recovery.”
LaVorgna says this recovery in housing is important because housing is what led the U.S. economy into a recession, and is part of the reason the recovery has been so slow. Moreover, as “a leading indicator of underlying domestic demand,” any improvement in housing suggests that underlying domestic demand should improve as well. From LaVorgna:
“In the second chart below, we show the year-over-year growth rate in residential investment compared to the year-over-year growth rate in non-residential aggregated demand, which is defined as real GDP less inventories less residential investment. There is a four-quarter lead on the former relative to the latter.”
Comments »Christine Lagarde: Austerity Impedes Growth
“TOKYO — Countries should not sacrifice growth for the sake of austerity, the head of the International Monetary Fund told global financial leaders Friday, urging that the pace of government debt reduction be tempered by spending to help get the unemployed back to work.
Balancing those sometimes competing priorities is the central puzzle facing policymakers as the world economy slows further, even in dynamic Asia, IMF chief Christine Lagarde told finance leaders at the IMF and World Bank annual meeting in Tokyo.
Lagarde said she was “desperately optimistic” on prospects for a global recovery, while warning against backsliding on reforms needed to prevent future financial crises.
“The first priority, clearly, is to get beyond the crisis, and restore growth, especially to end the scourge of unemployment,” Lagarde said.”
Comments »Euro Zone Industrial Production Surprises to the Upside for a Second Month
“Euro-region industrial production unexpectedly increased for a second month in August, led by rising output in countries including Italy and France.
Output in the 17-member euro area rose 0.6 percent from July, when it also increased by that amount, the European Union’s statistics office in Luxembourg said today. Economists had projected a drop of 0.4 percent, the median of 36 estimates in a Bloomberg News survey showed. From a year ago, output slipped 2.9 percent after a 2.8 percent decline in July.”
Comments »Geithner: US Economy ‘Doing Better Than Anybody Had Reason to Expect’
“U.S. Treasury Secretary Timothy Geithner said Thursday that financial reforms and other actions in response to the global crisis are yielding results, helping the U.S. economy to grow at a pace better than there was reason to expect.
Speaking at a financial conference in Tokyo on Thursday, Geithner said the Obama administration would strive to resolve by the end of the year the impasse with the Congress that threatens to impose a so-called fiscal cliff of tax increases and deep spending cuts if the two sides do not reach agreement.
The U.S. has been relatively successful in managing to clean up the mess left by the 2008 financial crisis while not starving the economy of credit, Geithner said. Growth has dragged, though, due to the European crisis and severe drought across the U.S.”
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Bloomberg Puts Out a Nice Presentation on the U.S. Economy Going Forward
The Dollar’s Days as Reserve Currency are Numbered
As the International Monetary Fund and World Bank redouble their warnings on the prospects for global growth, central banks continue to flood the markets with liquidity. The US Federal Reserve began its third round of quantitative easing last month; the European Central Bank is offering unlimited purchases of bonds of troubled eurozone countries. The People’s Bank of China, responding to slowing growth, has cut interest rates repeatedly and trimmed reserve requirements.
It may seem a strange time to worry about a shortage of global liquidity. But precisely this risk looms and, if nothing is done, it will threaten 21st-century globalisation.
Read the rest here.
Comments »Consumers and Investors Share Negative Sentiment on the Economy
“More and more Americans feel the U.S. economy is mired in a recession, a new Rasmussen Reports survey finds.
The poll found that 62 percent of consumers believe the U.S. economy is currently in a recession, while 22 percent disagree.
Among investors, 61 percent say the economy is in a recession, while 24 percent say it’s not.”
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