The Recovery Thread

[oldfart]

Posted: Fri Nov 06, 2009 3:10 pm Post subject:

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Well the October BLS numbers are out and it's time for an update. They contain no sign of a turnaround in employment. Non-farm employment dropped 190,000 (estimates were 175,000) and the unemployment rate rose to 10.2% (estimates had been 9.9%). Unemployment reached 15.7 million, more than double the level in Dec 07. Labor force participation rates ramained at 65.1% and the ratio of workers to working age population declined again to 58.5% The official underemployment rate rose steeply from 17.0% to 17.5%.

My favorite benchmark, the diffusion index of employment changes, continued to weaken, the 271 non-farm index falling from an adjusted 16.1 in September to 14.9 in October (the 83 industry index fell astonishingly from 4.9 to 3.6). This means that for every sector that added jobs there are six that lost jobs (1 to 15 in manufacturing!).

Job loss is not as bad as it was earlier in the year, but a continuation of losses at that level would have been catastrophic. There is no truly positive news here, things are only getting worse more slowly. This is a depression on the installment plan.

If I were optimistic, I would predict GDP growth in the fourth quarter, technically ending the "recession" but continued net job losses at least until the middle of next year. My prediction of unemployment topping at 10.5% now appears on the low side and I would put the top at 10.5--11.0%. Employment reaching 2007 levels will not occur until 2013 and adjusting for population growth, we will not see an employment to population ratio in the range we are accustomed to until perhaps 2015 or even later.

Jamie

 

[NYcarbineer]

Unemployment is a LAGGING INDICATOR.

(Say what? Look it up...)

 

[garyd]

I don't thnk he'd have to Carbs. You've got a recovery built on false positives. YOur 3.5% growth is compounded of paying people to buy homes and cars and at least some of those people are now out of work setting us up for another round of foreclsures and repos in the coming months.

 

[oldfart]

Unemployment is a LAGGING INDICATOR.

(Say what? Look it up...)

As are corporate expenditures, labor cost per unit, loans outstanding, bank interest rates and book value of trade inventories. And the point is......?

 

[garyd]

His point would be that he thinks he knows something when the reality is that he knows nothing much beyond how to read.

Keep in mind another real bad sign is that a lot of commodities are climbing in terms of dollars while remaining stationary in comparison to each other. This would tend to indicate that someone somewhere is playing peculiar games with the inflation numbers.

 

[Toro]

Home prices rise for the fourth month in a row.

Home Prices in 20 U.S. Cities Rise for Fourth Month (Update3) - Bloomberg.com

Existing home sales were up 10% from last month and 23% from last year.

Econoday Report: Existing Home Sales November 23, 2009

Corporate profits were up 25% compared to last quarter.

Econoday Report: Corporate Profits November 24, 2009

 

[Neubarth]

Toro, that home price rise shit is just that, shit. It is a lie, just like most of the other OBAMA administration lies. Home prices continue to go down. We are in a severe Depression and everything is collapsing regardless of the Obama lies .

Corporate profits are collapsing, not rising. That is anther lie. Look at the actual balance sheets. Your links are to a total nonsense double talk site. Witness the following, "Profits are after tax but without inventory valuation and capital consumption adjustments. Corporate profits are still down 7.2 percent on a year-on-year basis."

 

[Toro]

Neubarth

You are not looking at the world objectively. You are data mining and engaging in confirmation bias. We can disagree about the state of the economy, but when you start accusing an independent and highly-respected institution of lying, you are being way too emotional. The Case-Shiller home index is showing that home prices are rising. They have nothing to do with the government. Maybe it will start falling again, I don't know, but it has been rising for several months now. You cannot be credible if you are constantly accusing everything that contradicts your thesis as being part of a conspiracy.

Corporate profits are not collapsing. Corporate profits are down 7% from a year ago but are rising sequentially. That is not a lie. That is coming from the companies themselves. Balance sheets are being repaired. Look through the financial statements yourself and you will see this is generally the case.

 

[Zander]

I don't thnk he'd have to Carbs. You've got a recovery built on false positives. YOur 3.5% growth is compounded of paying people to buy homes and cars and at least some of those people are now out of work setting us up for another round of foreclsures and repos in the coming months.

And that number was revised to 2.8% today. There are 3 inputs to consider: Consumer Spending, Investment by Business, Government spending. The entire "growth" (sic) was from Government spending.

 

[Toro]

I don't thnk he'd have to Carbs. You've got a recovery built on false positives. YOur 3.5% growth is compounded of paying people to buy homes and cars and at least some of those people are now out of work setting us up for another round of foreclsures and repos in the coming months.

And that number was revised to 2.8% today. There are 3 inputs to consider: Consumer Spending, Investment by Business, Government spending. The entire "growth" (sic) was from Government spending.

Consumption, exports and imports, and government spending were all up.

Real personal consumption expenditures increased 2.9 percent in the third quarter, in contrast to a decrease of 0.9 percent in the second. ...

Real exports of goods and services increased 17.0 percent in the third quarter, in contrast to a decrease of 4.1 percent in the second. Real imports of goods and services increased 20.8 percent, in contrast to a decrease of 14.7 percent.

Real federal government consumption expenditures and gross investment increased 8.3 percent in the third quarter, compared with an increase of 11.4 percent in the second. National defense increased 8.9 percent, compared with an increase of 14.0 percent. Nondefense increased 6.9 percent, compared with an increase of 6.1 percent. Real state and local government consumption expenditures and gross investment decreased 0.1 percent, in contrast to an increase of 3.9 percent. ...

Federal government spending is about 20% of the economy. Federal government spending was ~1.7% of the 2.8% of GDP growth.

Profits were up.

Profits from current production (corporate profits with inventory valuation and capital consumption adjustments) increased $130.0 billion in the third quarter, compared with an increase of $43.8 billion in the second quarter.

News Release: Gross Domestic Product

The recovery is weak and choppy, and we may fall back into recession in 2010 or 2011. But right now, the economy is growing.

 

[Neubarth]

....But right now, the economy is growing.

Bullshit! The economy is tanking. When you have an economy that is over 70 percent Service Sector and 550,000 people a week are losing their jobs, the economy is crashing.

Add to that the collapse in construction, Durable goods orders, retail sales, new home sales and so on, and we are well into this Depression. When companies post false earnings by selling their inventory and thus exhausting their supply in the warehouse without ordering replacements, they can create the illusion of profitability, but that is not real, as they eventually will have to order material for their warehouses. Claiming profits as if everything is normal is a lie even if it is technically correct.

I am amazed at how you believe all the bullshit that is coming out since Obama became president. Use a little discernment, Toro and stop being duped by all the nonsense. In a Service Sector economy, rapidly rising unemployment is a leading indicator. It means that there will be more and more people not spending as much in the service sector. Amazing how that works.

 

[Neubarth]

Neubarth

You are not looking at the world objectively. You are data mining and engaging in confirmation bias. We can disagree about the state of the economy, but when you start accusing an independent and highly-respected institution of lying, you are being way too emotional. The Case-Shiller home index is showing that home prices are rising. They have nothing to do with the government. Maybe it will start falling again, I don't know, but it has been rising for several months now. You cannot be credible if you are constantly accusing everything that contradicts your thesis as being part of a conspiracy.

Corporate profits are not collapsing. Corporate profits are down 7% from a year ago but are rising sequentially. That is not a lie. That is coming from the companies themselves. Balance sheets are being repaired. Look through the financial statements yourself and you will see this is generally the case.

Toro what you are saying is totally nutz. In all of my travels around this country, only in the northeast is there any indication of housing price rises. I do not see it in the South. I do not see it in the Midwest. I do not see it in the West and I most certainly do not see it on the West Coast. I am in communication with people all around the country, and they tell it like it really is. Case Shiller does not know what they are talking about. Do they have the numbers on the millions of homes that have been sold in auction sales, or are they disregarding that factor? When the data is so totally wrong as to be laughable, you have got to know that it was bought with money and not confirmed with analysis.

Just like the Unemployment Insurance claims. If you look at the weekly data and then see the so called seasonal adjustments that go UP one week and down the next and up the next week and down the next, you can clearly see that there is no seasonal adjustment. It is just chicanery for amusement sake to see how stupid the sheeple are. AND they are really stupid because nobody questions the insanity of the "adjusted" numbers. Either there are twenty seasons in a year and they are about two weeks in duration, or they are just playing games. Look at the data to see how damn stupid they are.

 

[Neubarth]

Unemployment is a LAGGING INDICATOR.

(Say what? Look it up...)

In an INDUSTRIAL SOCIETY, unemployment would be a lagging indicator. In a Service Sector Economy such as our is, rapidly increasing Unemployment is a Strong Leading indicator.

Even though we lead the world in manufacturing, over 70 percent of the economy is service sector. It is collapsing, and no amount of lies and misrepresentation about the economy and unemployment can change the fact that our economy is collapsing.

When I see positive data, I will be the first to ballyhoo it. So far, there is nothing that would qualify as positive date. All I see is fish flopping on the dock out of the water. Some of them flop pretty high, but they are all dying slowly out of the water, and boy do they stink.

For those of you who keep looking towards the Thirty Percent of the Economy that is not Service Sector, I have this to say, "You are not looking at the world objectively. You are data mining and engaging in confirmation bias."

 

[Toro]

Toro what you are saying is totally nutz. In all of my travels around this country, only in the northeast is there any indication of housing price rises. I do not see it in the South. I do not see it in the Midwest. I do not see it in the West and I most certainly do not see it on the West Coast. I am in communication with people all around the country, and they tell it like it really is. Case Shiller does not know what they are talking about. Do they have the numbers on the millions of homes that have been sold in auction sales, or are they disregarding that factor? When the data is so totally wrong as to be laughable, you have got to know that it was bought with money and not confirmed with analysis.

Yesterday, I closed on a piece of property in one of the hardest hit areas of the country. I had to get a wire, so I went to my bank. I asked my banker how has business been. She said that for the lower end of the housing market, things are flying. Properties that are being listed are being sold in a week or two. These aren't investors or flippers. These are people buying homes to live, often first time buyers.

There are bidding wars on the low end.

real-estate brokers say multiple offers on certain homes have recently become more common in parts of California and Arizona and the Washington, D.C., and Minneapolis-St. Paul metropolitan areas.

Bidding Wars Are Emerging on Foreclosures - WSJ.com

But residents are allowing themselves the first twinges of optimism amid the gloom. The 2,600 existing homes in this development 60 miles east of San Francisco are selling at nearly three times last year's pace. One builder has sold about 30% more homes in 2009 than a year ago. And homeowners here are seeing the welcome return of another phenomenon: the bidding war.

When Catrina Koleva and her husband found their dream home listed here for $299,900 in February, they figured they would try to win the five-bedroom spread. Instead, they faced 12 other bidders and gave up. The winning bid was 30% over asking price, said Tabari Palmer, a representative of the listing agent. "I think people are seeing there are some pretty good values here," Ms. Koleva said.

Home Buyers Stir Hope in California - WSJ.com

Family friends are brokers in the Inland Empire. Their business is bustling.

Dismissing auctions totally misses the point. Volume ALWAYS increases at the bottom as sellers finally puke out their inventory. This HAS to happen.

And it is not just Case-Shiller that is confirming the rise in home prices and increased volume. Other indices such as OFHEO and Bloomberg are seeing the same thing. Dismissing Robert Schiller is laughable, given that he was one of the few economists to warn about both the tech and housing bubbles.

 

[Toro]

Initial jobless claims are at the lowest level in more than a year at 466,000. Continuing claims fell 190,000 to 5.4 million.

Bloomberg.com: Economic Calendar

 

[Neubarth]

Volume ALWAYS increases at the bottom as sellers finally puke out their inventory. This HAS to happen.

And it is not just Case-Shiller that is confirming the rise in home prices and increased volume. Other indices such as OFHEO and Bloomberg are seeing the same thing. Dismissing Robert Schiller is laughable, given that he was one of the few economists to warn about both the tech and housing bubbles.

All I am hearing from you is hype of the market. Didn't we just go over the numbers a couple of days ago that clearly showed that there is no rush to purchase? The actual numbers say that most investors are waiting for an actual bottom to the market. We have got another twenty percent and four years to go.

 

[Toro]

All I am hearing from you is hype of the market.

That's your problem. All you are hearing is what you want to hear. I have said numerous times that the recovery is likely to be choppy and weak, and that the risk of falling back into recession in 2010 and 2011 is high. If that's your definition of hype, well, I can't help you there.

I've been investing in markets for a long time, and there are always people at the bottom saying that the market/economy is going to get worse. Always. They don't see it, and they don't adjust their thesis when the market moves against them. They just get more shrill.

California housing has risen for eight straight months and some homes are seeing multiple bids.

“There are a lot of minefields -- a lot of uncertainty going forward -- but we were looking at eight consecutive months of increases in the statewide median, and we are seeing multiple offers” on many homes for sale, she said. “It’s going to be a slow recovery.”

California Housing Market Turns Corner, Realtors Say (Update2) - Bloomberg.com

 

[Zander]

All I am hearing from you is hype of the market.

That's your problem. All you are hearing is what you want to hear. I have said numerous times that the recovery is likely to be choppy and weak, and that the risk of falling back into recession in 2010 and 2011 is high. If that's your definition of hype, well, I can't help you there.

I've been investing in markets for a long time, and there are always people at the bottom saying that the market/economy is going to get worse. Always. They don't see it, and they don't adjust their thesis when the market moves against them. They just get more shrill.

California housing has risen for eight straight months and some homes are seeing multiple bids.

“There are a lot of minefields -- a lot of uncertainty going forward -- but we were looking at eight consecutive months of increases in the statewide median, and we are seeing multiple offers” on many homes for sale, she said. “It’s going to be a slow recovery.”

California Housing Market Turns Corner, Realtors Say (Update2) - Bloomberg.com

after a 65% rise in the stock market in 6 months we are now at the bottom??? lol.... ok.

 

[Neubarth]

All I am hearing from you is hype of the market.

That's your problem. All you are hearing is what you want to hear. I have said numerous times that the recovery is likely to be choppy and weak, and that the risk of falling back into recession in 2010 and 2011 is high. If that's your definition of hype, well, I can't help you there.

I've been investing in markets for a long time, and there are always people at the bottom saying that the market/economy is going to get worse. Always. They don't see it, and they don't adjust their thesis when the market moves against them. They just get more shrill.

California housing has risen for eight straight months and some homes are seeing multiple bids.

“There are a lot of minefields -- a lot of uncertainty going forward -- but we were looking at eight consecutive months of increases in the statewide median, and we are seeing multiple offers” on many homes for sale, she said. “It’s going to be a slow recovery.”

California Housing Market Turns Corner, Realtors Say (Update2) - Bloomberg.com

after a 65% rise in the stock market in 6 months we are now at the bottom??? lol.... ok.

Toro, you always spout the company line (the absurd lies of the Obama administration about the economic recovery) even though you throw out an occasional caveat about how the recovery can turn to the south. Since it has never turned to the north, it is not likely to be a W recovery. All I have seen is an L shape to the recovery. There is no viable economic recovery, only fish flopping out of water with one and even two percent improvements that are most often wiped out in the following month. That is the L shape. Now from the tip of the L we might see a recovery, but I expect to see a gradual but steady decline. Were Obama to have instituted a program to put people to work from the ranks of the unemployed, that gradual decline might have been averted. Alas, no effort from this administration has been made and the people have been left to suffer. I will remind you for the hundreth time on this forum, the seventy percent service sector economy is what is dragging us down. It most certainly is not industrial layoffs.

 

[Toro]

after a 65% rise in the stock market in 6 months we are now at the bottom??? lol.... ok.

The bottom of the economic decline, and the bottom of the housing market.

Stocks are a leading indicator. The fact that equities are up 65% is an indication that the financial crisis is over and that the economy has bottomed.