Monday, June 6, 2011

economic reports, week ending jun 4th

if we didnt know this was supposed to be a "recovery", the uniformly dismal economic reports that we've been seeing recently could have easily had us fooled...first, goldman sachs cut their forecast for 2nd quarter growth a 2nd time, to 3%, largely due to supply disruptions from japan; then the chicago purchasing managers index crashed to 56.6 from 67.6, the largest drop since the lehman crash and 2nd largest in history, prompting further downgrades in growth forecasts; also, the consumer confidence reading fell "unexpectedly" from 66 to 60.8, when economists had been expecting a rise to 67; then the case shiller index fell to a new recession low, and the ISM manufacturing index came in at 53.5 in may, down badly from 60.4 in april, & the worst since 2009...finally, we had a pair of dismal unemployment reports for May...

let me start with the popular case-shiller home price index, which has finally confirmed what other home price indexes have been indicating all along, that being that home prices have officially "double dipped", that is to say that all the appreciation of the previous year has been lost, and the average home price in the 20 metro areas that comprise 70% of the US market has now hit a post bubble low...for the three months ending march, the case-shiller composite 20 was down .2% from february's number, and off 31.6% from the home price peak...the national index is down 5.1% YoY...of course, the bubble cities are worse, with las vegas off 58.3%, compared with dallas, off only 7.7%; other cities are in the links on my blog...the CoreLogic index, which is the one the Fed uses, was also out this week, and it showed a .7% increase from march to april; however, that index is not seasonally adjusted...another home price index, the FHFA, was released last week; its based on data provided by fannie & freddie, & it showed a 2.5% decline in prices from the 4th qtr 2010 to the 1st quarter this year, which was the greatest decline in that index since the 4th quarter of 2008...

    the one post on case-shiller that i found interesting this week was on Mish's blog, where a reader supplied him with 4 charts and 2 tables showing home prices adjusted for inflation; in real terms, average prices in some cities are actually now lower that when the case shiller index began in 1987; ive included a copy of that table above, which should enlarge if you click on it…but even those charts & tables still dont compare apples to apples, because the mix of homes is constantly changing...the current figures case-shiller figures include new home resales which did not yet exist in prior years, which gives the index a continuous bias to the those more expensive houses...no one has yet come up with an index which covers the continuing denigration of home values as the older homes deteriorate and some are even eventually bulldozed; & those homes which have been torn down since '87 are not included in any index...

Percent Job Losses During Recessions the other headline report that was out this week was the BLS unemployment stats for may; total nonfarm payroll as reported by the establishment survey increased by 54,000 as a result of 83,000 new private jobs, less the loss of 29,000 local government jobs, of which 18,000 were laid off school teachers...over & above that, added march jobs were revised from 221,000 down to 194,000, and april was revised from 244,000 to 232,000, so the net jobs gain in this report was actually 15,000...remember, we need around 125,000 jobs a month just to keep pace with the growth of the labor force...according to estimates by morgan stanley, about half of the new jobs added in May came as a result of the McDonalds hiring event in April, which occurred after the april survey was taken....a total of 13.9 million americans count as being unemployed, but as a result of more rejoining the workforce the percentage of unemployed ticked up to 9.1%, which the white house opined was "uncomfortably high"…another 8.5 million are working part time for economic reasons ...the 4 million who who have given up dont count in these official govt figures, and according to new research from the Chicago Fed, the expiration of unemployment benefits also “contributed modestly” to the drop in unemployment seen between october 2009, when it peaked at 10.1%, and the beginning of this year...6.2 million of those counted were unemployed for more than 26 weeks, and the average length of unemployment for those who count was 39.7 weeks, which was a new record high...the employment-population ratio remained unchanged at 58.4%...the household survey, from which the headline percentages are calculated, showed quite a disparity from the establishment survey; it showed a gain of 373,000 jobs for the private sector, while government jobs decreased 417,000...with manufacturing weakened by parts shortages, most of the job growth was in the service sector, led by health care & unpaid internships...average wage growth for those working was 6 cents, and thats grown at a rate of 1.8% over the past year...an article in Investors Business Daily showed private sector wage gains over the the ten years starting 2001 were at 4%, far short of any 10 post war year period, which except for the period ending 1983 had always exceeded 25%, & pay growth was even worse than during the great depression, when wages grew 5%...the chart i've included compares job losses in this recession to the other post war recessions; click & you can see this recovery is not like the others...

the number of americans on food stamps also increased in the latest report, hitting a new record; in march, 44.199 million people were receiving an average monthly ration worth $133.24 towards their food purchases; as a result of the recent budget deal, $900 million will be cut from federal nutrition programs, removing about 500,000 women, children and seniors from the programs, which is about the amount of money the bush-obama tax cuts gives to millionaires over an 8 day period...several states are also reducing the number of weeks the unemployed can draw unemployment rations...

 

 

 

the above is my weekly commentary that accompanied my sunday morning links mailing, which in turn was selected from my weekly blog post on the global glass onion…if you’d be interested in getting my weekly emailing of selected links that accompanies these commentaries, most coming from the aforementioned GGO posts, contact me...

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