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“Tomorrow we get the last revision to Q4 GDP.

First the number came in at 2.8%.

Then upon first revision it was revised to 3.0%.

According to Bloomberg, the consensus is still it will stay at 3.0% upon tomorrow’s revision.

But maybe it will be way more.

Nomura has a new note out titled: US: Why Q4 GDP growth could be much higher than previously estimated

First they note that the December data from last year has been mostly revised higher, which augurs well for a good upward revision to this all-encompassing number.

Moreover, the incorporation of the Quarterly Services Survey (QSS), an important input for estimating household service consumption, might add a few more tenths to real GDP growth in Q4 2011. The annualized q-o-q growth rate of real personal service consumption was reported to be 0.74% in the second estimate of GDP, following 1.93% in Q3 and 1.86% in Q4. Considering other service-related data for Q4, such as the nonmanufacturing ISM survey and nonfarm payrolls in private service industries, the 0.74% increase seems to have underestimated service consumption. Although our expectation for the third estimate of Q4 GDP of 3.5% is already well above the market consensus of 3.0%, we think that there are some upside risks to our forecast.”

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“The data so far from China in 2012 has been a major disappointment for the global economy.

One thought we had was that the typical January-February Lunar New Year slowdown was exaggerated thanks to it being the Year Of The Dragon, and that because of that the rebound would come harder/sooner than people expected.

But so far that theory isn’t being born out.

Barclays analyst Gayle Berry recently visited China, and met with various industrial firms, and came back with some grim news: Things are weak, and it’s not just a matter of the Lunar New Year.

Here is our summary of Berry’s key points:

• Demand for copper in China remains weak, and the outlook for the rest of the year doesn’t look so great.
• Some manufacturers cranked up production in January/February in anticipation of a rebound in Q2, but “demand has been softer than they expected.”
• Appliance demand is weak thanks to slow construction and poor real estate sales.
• Copper inventories are rising.

Bottom line:

Overall, we believe Chinese demand in the short term is likely to disappoint before beginning on a recovery trajectory later in Q2. Subsequently, we think that imports will weaken until bonded stocks are run down to more normal levels, possibly in Q3 12. With the market already expecting a drop in Chinese imports, we doubt this alone would have a significant negative impact on LME prices. That’s more likely to be determined by the market’s evaluation of how long imports will weaken for and whether it’s the result of short-term dislocation or longer lasting core weakness. The LME backwardation meanwhile is likely to continue unless Chinese exports are big enough to begin offsetting the draws in LME inventories, in our view.

So there you go.”

Old habits die never seem to die….

“Amir Mohammed has been sleeping outside the Libyan Embassy in Cairo awaiting a visa for a week, his bed a layer of cardboard on the sidewalk. He has given up on finding a job in Egyptand is looking for a way out.

“I’m trying to just eke out an existence in my own country, but I can’t,” the 30-year-old hairdresser said. “There’s no work. Why did we have a revolution? We wanted better living standards, social justice and freedom. Instead, we’re suffering.”

The world’s highest youth jobless rate left the Middle Eastvulnerable to the uprisings that ousted Egypt’s Hosni Mubarakand three other leaders in the past year. It has got worse since then. About 1 million Egyptians lost their jobs in 2011 as the economy shrank for the first time in decades. Unemployment in Tunisia, where the revolts began, climbed above 18 percent, the central bank said in January. It was 13 percent in 2010, International Monetary Fund data show.

Finding work for people like Mohammed will be the biggest challenge for newly elected governments, highlighting the rift between soaring expectations unleashed by the revolts and the reality of economies struggling to escape recession. Failure risks another wave of unrest in a region that holds more than half the world’s oil.

‘High Hopes’

“The advent of democracy brought with it high, high hopes,” said Raza Agha, London-based senior economist at the Royal Bank of Scotland Group Plc. “Expectations are that new governments will bring prosperity, but when you look at the fundamentals, this does not appear to be the case.”

Full article

WASHINGTON (CNNMoney) — Stronger job growth has brought “good news” recently, but overall, it remains “out of sync” with the modest growth of the U.S. economy, Federal Reserve Chairman Ben Bernanke said Monday.

“The improvement in the labor market over the past year — especially the decline in the unemployment rate — has been faster than might have been expected, given that the economy during that time appears to have grown at a relatively modest pace,” Bernanke told the National Association for Business Economics on Monday.

Government numbers show the U.S. economy has added more than 200,000 jobs each month since January, and the unemployment rate has fallen to 8.3% from 9% in just five months. Meanwhile, the U.S. economy has been growing relatively slowly, most recently at a mere 3% annual pace.

Bernanke called those figures a ‘puzzle.’ For the unemployment rate to fall that significantly, the economy should have been growing much more quickly.

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“Linda Hall of Spokane, Wash. has worked hard all her life but hasn’t earned any respect from the labor market. Laid off for the first time at age 62, Hall has no health insurance, not enough savings for retirement and almost no chance of getting hired again.

“A year ago I was absolutely certain that I had job security,” Hall said. “Change is a part of life. But, truthfully, until a few weeks before [getting laid off], I just didn’t see it coming and couldn’t imagine such a thing happening.”

Like many older workers, Hall is confronting America’s new economic reality.

“If you worked hard, chances are you’d have a job for life, with a decent paycheck and good benefits and the occasional promotion,” President Barack Obama lamented in his 2011 State of the Union Address. “That world has changed.”

Baby Boomers like Hall are more likely than previous generations to keep working, or at least looking for work, as they get older. Since hitting a low of 29 percent in the 1990s, the labor force participation rate for older workers (those who are 55 and up) has risen to 40 percent today. The increase is partly due to employers offering stingier retirement plans than they once did….”

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“And for a contrarian take on the US economy, check out this slide from Morgan Stanley, which basically argues that aside from autos, it’s actually hard to be impressed with any aspect of the US economy right now.

That’s a rather different spin than what you get from many other analysts and pundits, who blithely talk about the “improving” US economy, without then further backing that up.

See our comment below…

Morgan Stanley

While all of the above is fair, we think it’s a little narrow. Initial claims continue to improve. Retail sales (despite high gas prices) continue to be strong. Most housing metrics are clearly better than they were the year before. The bright spots aren’t entirely constrained to auto sales, as the chart above implies.”

Singapore’s industrial production grew less than economists estimated in February as a slump in electronics output persisted.

Manufacturing rose 12.1 percent from a year earlier after a revised 9.6 percent decline in January, the Economic Development Board said today. The median of 13 economists surveyedby Bloomberg News was for a 16.2 percent gain.

Asia’s manufacturing rebound from the first two months of the year, when the output numbers were distorted by the Lunar New Year holidays shutting factories, may be limited by Europe’s sovereign-debt crisis and China’s slowing economic growth. The region’s currencies have declined in March even as six months of the strongest U.S. job growth since 2006 bolstered the outlook for demand.

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College students and their families have struggled to pay for the rising cost of tuition, a cost that has been driven in part by swelling administrative expenses.

Over a 20-year period, the growth in administrative personnel at institutions of higher education has outpaced the growth in both faculty and student enrollment.

Critics refer to this as administrative bloat and contend it shows that universities and colleges are inefficient institutions.

Defenders say colleges are adding administrative staff to meet student needs.

An IBD analysis of data from the National Center for Education Statistics shows that from 1989-2009 the number of administrative personnel at four- and two-year institutions grew 84%, from about 543,000 to over 1 million.

By contrast, the number of faculty increased 75%, from 824,000 to 1.4 million, while student enrollment grew 51%, from 13.5 million to 20.4 million.

The disparity was worse at public universities and colleges, where personnel in administration rose 71%, faculty 58% and student enrollment 40%. Private schools also saw administration and faculty growing faster than student enrollment, although faculties slightly outpaced administration increases.

Administrative personnel are employees who are not engaged in instruction and research. The jobs range from university president and provost to accountants, social workers, computer analysts and music directors.

One reason administration at public institutions has grown faster may be that bureaucracies tend to expand their staff and programs over time, regardless of need.

“The increase has a lot to do with all the money these institutions pull in from third parties, like state funds and student financial aid,” said Daniel Bennett, a research fellow at the conservative Center for College Affordability & Productivity. “They’re using it to grow their staff rather than on students.”

Since students are insulated from the full cost of tuition, administrators feel less pressure to spend more on faculty to teach students.

Bennett has also written that an onerous regulatory environment that higher education faces may be partially to blame.

“In order to comply with the government’s requirements, colleges need to employ a staff that is responsible for providing the multiple state and federal agencies with compliance reports and data,” he wrote.

Acknowledging that some of the increase may be due to administrators wanting “to re-create themselves,” Dan King, executive director at the American Association of University Administrators, claims it’s also due to changing needs.

“Students are coming in less prepared, needing more remedial assistance,” he said. “If they need help from a writing lab or math lab, that’s usually done by administrators. That’s something that universities didn’t have to provide as much even 10 years ago.”

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Matthew Philips
10/27/2011 | 9:37 am

The numbers are in on how much it costs to go to college this year, and (surprise) they’re up again, thanks largely to decreases in state funding and increasing enrollments. The biggest price hikes came in the public sector: An 8.7 percent increase for in-state tuition at public two-year schools, and an 8.3 percent jump in the price of four-year public institutions, for in-state students.

Read the rest here.

Justin Fox

Jean-Claude Trichet, now a few months into retirement, has no regrets about his eight-year tenure as president of the European Central Bank. At least, that’s what he said at Harvard’s Kennedy School Thursday night when a student asked him point blank. “I don’t regret anything,” was the response.

But listening to the full talk (when there’s video, it will be available here), it was clear that Trichet did regret something about the last few years. He regrets that economists didn’t give him better advice.

What Trichet said was that state-of-the-art macroeconomic theory was almost entirely useless in dealing with the crisis that began in 2007. Yeah, he tried to be polite about it: “This doesn’t mean we have to abandon DSGE,” he said, referring to the dynamic-stochastic general equilibrium models — in which an economy of rational, far-seeing actors struggles with the occasional friction or shock, but generally gets along okay — that dominated the work of economists at central banks. Buuut “atomistic rational agents [the figures that populate DSGE models] don’t capture behavior during a crisis.” Another quote: “Rational expectations theory has brought macroeconomics a long way … but there is a clear case to reexamine the assumptions.” And neither of these approaches leaves room for the possibility that financial market fluctuations could be the source of problems for the real economy.

Trichet finally reached for the last refuge of the frustrated economic policymaker: John Maynard Keynes. He quoted (at length) a famous story from Keynes’ General Theory. It describes a beauty contest in a newspaper where the goal is to pick the face that the most readers will vote for.

It is not a case of choosing those which, to the best of one’s judgment, are really the prettiest, nor even those which average opinion genuinely thinks the prettiest. We have reached the third degree where we devote our intelligences to anticipating what average opinion expects the average opinion to be. And there are some, I believe, who practise the fourth, fifth and higher degrees.

“It captures what’s happening when a systemic crisis is unfolding,” Trichet said. At the height of the 2008 crisis, he went on, “it was clear that an immensely large number of [market] participants were thinking that if there was not a game change, the system would collapse.”

Now, none of this is exactly news. Lots of people have said similar things over the past couple of years. But it was very interesting hearing them from someone who until recently was one of the most powerful economic policymakers on the planet — and one who has been criticized mainly (at least among English-speakers; the Germans have their own unique view) for being too conservative, and too unwilling to jettison faulty models of how the world works. Not that he has any regrets or anything.

Trichet’s analysis nicely parallels the chapter on postwar macroeconomics in a fascinating new book I’ve been reading, The Assumptions Economists Make, by Jonathan Schlefer. Schlefer is a former alt-weekly columnist and editor of MIT’s Technology Review who quit journalism to get a Ph.D in political science, and is now a research associate at Harvard Business School. His book is a tough critique of economics, but a deeply informed and sympathetic one. And his basic attitude is pretty much the same as Milton Friedman’s in the famous essay “The Methodology of Positive Economics.” It’s okay if an economic theory is unrealistic and oversimplified. All that matters is whether it delivers useful predictions.

By that standard, here are Schlefer’s judgments on the succession of theories that have dominated academic macroeconomics since the 1970s:

Read the rest here.

Twitter: @alphaconsumer

On the surface, the retail world seems stacked against women: We pay more for many items, from shampoo to razors to dry-cleaning services. But a look into the reasons for this alleged price discrimination reveals legitimate market forces—not sexism—to be at work.

In a provocative article on Marie Claire’s website, “Why Women Pay More,” writer Lea Goldman quite rightly points out that women pay more to dry clean shirts than men do. She also calls out more expensive women’s shampoos and razors and different insurance rates for women. “We lose out in nearly every transaction we make,” Goldman asserts.

Aside from that being a gross overstatement (the vast majority of the transactions we make are gender neutral—when you bought your morning coffee, did the barista make note of your gender?), many of Goldman’s examples can be explained through simple economics, not sexism.

Men’s and women’s shirts, for example, are not created equal. Men’s shirts, because of their flat lines, are far easier to clean, and dry cleaners can use standardized machines to iron them. Women’s shirts are, naturally, curvier, and require a more labor-intensive dry cleaning process. It would hardly be fair to require a dry cleaner to charge the same amount for such different services. (Even the feminist blog Jezebel acknowledged this fact when the story first made the news in 2009.) Goldman calls this price difference “blatant discrimination,” but the facts suggest it is only the market at work.

Goldman’s reporting also reveals the complex system of tariffs the United States has developed over the years. Men’s sneakers are taxed at 8.5 percent; women’s at 10 percent. But the price difference isn’t always biased against women. Men’s gloves are taxed at 14 percent and women’s are taxed at 12.6 percent. Complicated and bureaucratic, yes. Sexist? Only if the tax difference always gave men a better deal for no legitimate reason, which it doesn’t.

Goldman also points out a fact of life that many couples have surely noticed: Women’s self-care products tend to be pricier than men’s. Shampoo, deodorant, and razors marketed to women tend to carry higher price tags than those sold to men. Perhaps women prefer fancier products, or maybe we’re simply willing to pay more for our hygiene routines, but the market clearly supports pricier products for women. But is it really sexist when women also have the choice to simply skip the expensive options and purchase off-brand razors, soap, and shampoo instead? Anyone who’s recently visited a pharmacy knows that women do not suffer from lack of choice in the self-care aisles.

The article also calls attention to the higher rates women pay for health insurance, an area of legitimate concern, as the national birth control debate recently made clear. This topic is too important to be lumped in with complaints about expensive conditioners and $7 dry cleaning charges, which are, after all, luxury expenses anyway. The area of insurance is a complicated one, and women don’t always get the short end of the stick: Auto insurance companies often give young women better deals than young men, and for good reason—they’re safer drivers. Does Goldman also think that’s sexist?

Marie Claire encourages readers to contact their members of Congress to ask them to outlaw this so-called “gender-pricing.” Before you do that, consider the unintended consequences of such laws. If dry cleaners could no longer charge more to clean a shirt that required more labor, how many of those small businesses would go out of business? If women’s shampoo couldn’t cost more than men’s shampoo, which popular yet pricey products would be forced off the market? (Goodbye, Kerastase.)

There’s plenty of discrimination and abuse against women in the world to get angry about and to fight. Paying more for expensive dry cleaning and shampoo is not one of them.

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A slump in every category….

“Asian stocks rose after Japan posted an unexpected trade surplus and as a survey that showedChina’s manufacturing may contract this month stoked speculation the government may introduce more measures to bolster growth.

First Tractor Co., a Chinese maker of farm equipment, jumped 7.6 percent in Hong Kong after the mainland’s central bank cut reserve requirements to more branches of Agricultural Bank of China Ltd. Samsung Electronics Co. (005930), Asia’s No.1 consumer-electronics maker that counts China as its biggest market, gained 1.3 percent in Seoul. Honda Motor Co., Japan’s second-largest carmaker, added 1.7 percent in Tokyo.

“I don’t see a hard landing happening in China this year because of the policy offsets that can be put in place,” saidAndrew Pease, Sydney-based chief investment strategist for the Asia-Pacific region at Russell Investment Group, which manages about $150 billion. “China’s housing sector remains a key concern. The anecdotes coming out of the housing market suggest the weakness is quite pronounced.”

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“Euro-area services and manufacturing output contracted more than economists forecast in March on declining domestic demand, adding to signs that the region’s economy is sliding into recession.

A euro-area composite index based on a survey of purchasing managers in both industries dropped to 48.7 from 49.3 in February, London-based Markit Economics said in an initial estimate today. Economists forecast a gain to 49.6, according to the median of 21 estimates in a Bloomberg News survey. A reading below 50 indicates contraction….”

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“Oil and gas production in the United States and North America is going to skyrocket in the next 8 years due to strides in natural resource extraction, write Citi analysts in a report published yesterday. In fact, they went so far as to call North America “the new Middle East,” at least in terms of oil production.

This—as well as a trend towards declining U.S. energy consumption—will completely transform both the domestic economy and the threats the U.S. will face in the future,

Indeed, Citi economists expect total liquids production to as much as double for the continent in the next decade, and predict that the U.S. could overtake both Russia and Saudi Arabia in oil production by 2020:

That’s because there is incredible potential to extract and refine energy products on domestic soil:

Citi Investment Research and Analysis

This energy boom would have a transformative effect on the domestic economy. Here are just a few of the most astonishing consequences in a “good-case” scenario:

• Citi analysts expect real GDP to increase by 2.0 to 3.3 percent—$370 to $624 billion—as a consequence of new production, a decline in energy consumption, and the economic activity generated along with this.
• 3.6 million new jobs could be created by 2020 as a consequence of increased energy production. Of those new jobs, some 600,000 would probably be devoted to oil and gas extraction while 1.1 million would be generated to meet demand in related industrial and manufacturing sectors. National unemployment could subsequently decline by up to 1.1 percent.
• The current account deficit could shrink by 80 to 90 percent due to energy exports at an already low level of production. Citi analysts predict that the current account balance could move from -3.0 percent of GDP to -0.6 percent of GDP by 2020.
• The value of the dollar could jump by 1.6 to 5.4 percent, primarily based on changes in the current account balance.
• What’s more, risks to the U.S.—in particular, geopolitical risks—would dramatically decrease. A domestic or continental energy boom would diminish the importance of conflict within and tensions involving the Middle East, as the U.S. would become significantly more energy independent.
• Finally, Citi analysts note that this could lead to a considerable decline in oil prices.

While they qualify that this growth depends the realization of their “good-case” assumptions, Citi economists emphasize that the energy sector provides an almost inconceivable opportunity for economic growth:

It is difficult to square these rosy visions with the current reality of a nation still struggling to shake off the aftermath of the 2008 Great Recession, with millions still unemployed, economic recovery still uncertain, worries over ballooning fiscal debts, a hollowing out and loss of manufacturing competitiveness, tremendous angst and hand-wringing over volatile oil prices and dependence on oil imports, deep social divisions, and political paralysis. But if our analysis is accurate, then in only eight short years, this situation may be turned upside-down and economists, policymakers and the nation as a whole may confront new “problems” around managing a vast hydrocarbon windfall and preventing “Dutch Disease.”

The coming generation of Americans and its leaders may be privileged to witness a remarkable resurgence of the American economy and industry, led by its energy sector, but spreading to the rest of the manufacturing sector and beyond, a potential minor Industrial Revolution.”

Read more: http://www.businessinsider.com/a-spike-in-us-oil-production-is-about-to-make-it-the-new-middle-east-2012-3#ixzz1plEXoCQf

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“BRUSSELS (AP) — The European Union is seeking powers to block foreign companies from winninglucrative government contracts unless their home countries open their own public-sector deals toEuropean firms.

The proposals unveiled Wednesday appear to be targeted mostly at China, whose companies have obtained public projects in Europe.

The EU says China’s massive government contracts remain mostly reserved for local companies — a claim that Beijing rejects.

But the EU also hopes to gain concessions from the U.S. and Japan, which it says are more restrictive to foreign bidders than the 27-country bloc.

The EU’s Trade Commissioner Karel De Gucht, said “This proposal will increase the leverage of the European Union in international negotiations.”

If organic growth does not materialize then subsidizing growth with debt may be tough sledding going forward…   

We should have put conditions upon the banks who got taxpayer bailout funds to have to lend to help mend the economy….

Graphs derived from a LinkedIn and Council of Economic Advisors (CEA) project paint a picture of American industry some may see as very troubling. When one views the industries that are expanding, versus those contracting, the sense is that we are seeing shrinkage in areas traditionally aligned with wealth creation in America, while expansion in industries one might characterize as spending, particularly on the part of government.

How has our economy evolved in the past five years? Which industries are shrinking or growing through these challenging economic times? These are some of the questions that the Council of Economic Advisors (CEA) delves into each February in the “Economic Report of the President” (ERP). This year, the CEA worked with us to glean further insights into industry trends both during the recent recession and after its end in June 2009 [1].

With the data and methodology [2] in hand, we calculated the growth rates in industry size between 2007 and 2011. Here’s what we found:

One wonders how much the huge growth in “renew-ables” is inefficient from a pure business perspective, as efforts in that sector are often subsidized by government spending. And it only seems to get worse from there.

The fastest-growing industries include renewables (+49.2%), internet (+24.6%), online publishing (+24.3%), and e-learning (+15.9%). Fastest-shrinking industries were newspapers (-28.4%), retail (-15.5%), building materials (-14.2%), and automotive (-12.8%).

While the chart at top of the previously linked page raises question, the one below it may prove to be even more startling. The growth in health care can’t be all that comforting, part of it likely due to an aging Baby Boomer population. Meanwhile, pharmaceuticals, automotive, construction, real estate, retail and others have tanked, while public policy, the Internet, consulting and even think tanks are growing. The chart below certainly may give you something to think about.

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