The Recovery Thread

[Ame®icano]

At first, there was a stimulus that suppose to create (and save) jobs. Minor $787 billions turned to be over a trillion. Then there was a blame on private sector, because they just "not hiring". But why public sector is not hiring, in fact, they are firing people too?

Back in August, Obama signed another stimulus, $26B for saving government jobs. One would thing that when you got money to save jobs, you would save jobs... but that's not exactly what's happening.

TPS teacher who watched Obama sign bill is laid off

TPS hasn't spent a dollar of the $7.6 million in teacher rehire money it received from the Aug. 10 bill, opting instead to save it for next school year to rehire or retain a myriad school employees - probably not teachers.

 

[Trajan]

It is likely that the bottom in the economy was either in the second or third quarter. This thread is for evidence that the economy is recovering.

I believe that the economy is going to rebound, albeit it is going to be choppy, and there is a high probability of a double dip.

Having said that, there is evidence that the economy will soon start growing if it is not already.

First piece of evidence presented: Yesterday on their conference call, the CEO of Google said that the worst of the recession is behind us and that the businesses they serve - which is a wide swath of the economy - appear to be picking up.

Second piece of evidence: Many semiconductor companies in their quarterly earnings releases have said they are seeing an increase in shipments, and that end demand for computers and electronics appears to be rising.

well, a bottom? I am not sure how exactly to define a bottom. Each time I think we are there, we get another gdp readjustment that tells us differently. We have been sliding form last years q4 5.7....Q3 is, according to the tip sheets etc. I read goldman, zero hedge etc. is going to be flat if not ugly. A pulse is around 1.7-2.5%.....deadlined is anything under that.

growth is usually in the 3.0 range.

Q4 always sees a pick up, people will buy more around the holiday season, thats the cycle. Google may be seeing more marketing and ad revenue because we are coming into season.

Gallup is a pretty good indicator, they see unemployment at 10.% right about now.


Until jobs start growing, I don't see a floor. We need 125-150K a month to accommodate new pop. growth and new entries into the workforce. We are just sliding along. The new normal has been reached for the last 2 quarters. How long will the new normal last? beats me.

The housing market is a rank mess. Like it or not the admins handling of it has not yielded anywhere near a bottom or unwound anything.

5 million homes are being held by banks, out of the market right now until they see an uptick, then go they will go ahead with these foreclosures and homes they already have and put them out there, when that glut hits, the market tank the market again. The effect is and will be huge.

I just don't see it, we can cherry pick glimpses we see, but the biggeys- capital investment, jobs, a steady, month to month 250k to 300k as gdp starts to climb above 3.5%....we are floating , we'll dip a bit and rise a bit the waves as they buffet the economy in a minimal range....but thats about it.

 

[Toro]

Initial jobless claims came in at 434k, the second lowest of the year. Continuing claims of 4356k were the lowest since 2008.

 

[asterism]

Initial jobless claims came in at 434k, the second lowest of the year. Continuing claims of 4356k were the lowest since 2008.

Getting worse at a slower pace isn't "recovery."

 

[Toro]

It's not getting worse. Getting worse is rising claims.

 

[Toro]

FTR the lowest initial claims number for the year was on July 10, which was affected by an unexpected shift in automobile assemblies. Excluding that week, this week was the lowest claims number since August 2008.

 

[Ravi]

Initial jobless claims came in at 434k, the second lowest of the year. Continuing claims of 4356k were the lowest since 2008.

Getting worse at a slower pace isn't "recovery."

If the economy improves it means the terrorists have won.

 

[asterism]

It's not getting worse. Getting worse is rising claims.

No, continuing new jobless claims is getting worse. Getting worse for fewer now than before, but still getting worse.

It's not a recovery until things start getting better.

 

[william the wie]

It's not getting worse. Getting worse is rising claims.

No, continuing new jobless claims is getting worse. Getting worse for fewer now than before, but still getting worse.

It's not a recovery until things start getting better.

AU.com is reporting more declining real estate prices so the Far East housing bubble may be about to bust. The tsunmai and volcanic eruption problem in Indonesia while relatively small so far (less than 1,000 dead so far) could grow if eruptions and earthquakes keep on keeping on. The EU keeps finding ever bigger problems within the PIIGS so no overseas help is in sight.

 

[Toro]

It's not getting worse. Getting worse is rising claims.

No, continuing new jobless claims is getting worse. Getting worse for fewer now than before, but still getting worse.

It's not a recovery until things start getting better.

No, that is wrong. Continuing claims was the lowest since 2008.

Claims data offer rare good news on the labor market as initial claims fell steeply to 434,000 in an October 23 week that isn't skewed by special factors. The level is the lowest since July as is the four-week average of 453,250. Given that July's data were distorted by adjustment problems tied to auto retooling, the latest batch of data is perhaps the best so far of the recovery.

Continuing claims for the October 16 week fell 122,000 to a two-year low of 4.356 million.

Econoday Report: Jobless Claims*October*28,*2010

Here is the press release from the Department of Labor

http://www.dol.gov/opa/media/press/eta/ui/current.htm

 

[william the wie]

Toro, UEI claims data cover neither temp workers nor independent contractor data. With new hires tending to be temps or contractors we have little or no idea what is going on in unemployment at the moment.

 

[Toro]

Chicago PMI came in at 60 today, well ahead of expectations and signaling expansion.

GDP rose 2%, but the headline number was weaker than it seems. Much of GDP was a build-up in inventories, and net imports rose.

There is nothing wrong with net imports rising. However, exports aren't rising much, even though the dollar has been weak. That calls into question the Fed's QE2 program. What's the point of destroying the dollar if exports don't rise much?

 

[The Rabbi]

What's the point of destroying it even if exports do rise? I hope we've gotten past mercantilism here.

 

[pinqy]

Toro, UEI claims data cover neither temp workers nor independent contractor data. With new hires tending to be temps or contractors we have little or no idea what is going on in unemployment at the moment.

True, but temp help are covered in the Establishment survey, and unemployment from temp jobs ending is covered in the Household survey, so we'll see those effects next week.

Independent contractors are covered in the household survey and may or may not be in the establishment survey, depending on the pay structure.

 

[Toro]

One forecaster who foresaw the collapse of the housing market - as most economists failed miserably - is now seeing a growing economy, albeit not fast enough.

As a reader of economic tea leaves over the last five turbulent years, Mr. Shepherdson has a darn good record. For instance, unlike the throng of economists who failed to see the housing crisis coming, Mr. [Ian] Shepherdson warned his clients in fall 2005 that real estate would crash and a recession would ensue.

He was early, of course, and now acknowledges that he was not nearly emphatic enough in his warnings. But he was fundamentally right back then and has been consistently on target since. So, I am happy to report that he sees the beginnings of a turn in the economy that could translate to a rise in gross domestic product growth and an improving employment picture in the second half of 2011.

The basis for his view is a shift, albeit nascent, in commercial and industrial bank lending. The trend is real, he said, and as it gains steam, small businesses should receive more credit, for which they have been starved. And because these companies employ half of the nation’s work force, this credit expansion will translate into real employment gains.

“The depression in small businesses explains pretty much everything in the weakness of this cycle,” Mr. Shepherdson said. “I reckon in the last cycle they accounted for two-thirds of all new job creation. Not only are they big, they are better job-creation engines than big companies, which are more inclined to do their new hiring offshore.”

HERE are the data that have caught his eye. At this time last year, the total stock of commercial and industrial bank credit was $1.32 trillion; it was contracting at a blistering pace — about $7 billion a week. Indeed, between the peak of such lending in October 2008 and the trough in June of this year, total commercial and industrial bank credit fell by one-quarter.

Now, this contraction has stopped. The data have recently turned positive and should continue climbing, albeit slowly. “Getting to zero is not bullish at the moment,” Mr. Shepherdson said. “I would want to see commercial and industrial credit growing reasonably strongly to an outright positive four, five or six billion dollars a week. The story is really that the credit contraction seems to be coming to an end.”

One problem for economists and investors, he said, is that our current economic cycle does not have the typical recession-recovery characteristics or timeline. Those who thought it would be similar to recent recessions were trying to fit a square peg into a round hole; there was nothing normal or routine about the events we have just lived through.

http://www.nytimes.com/2010/11/07/business/07gret.html?_r=1

I can't stress that last part enough.

 

[loosecannon]

money quote:

And because these companies employ half of the nation’s work force, this credit expansion will translate into real employment gains.

“The depression in small businesses explains pretty much everything in the weakness of this cycle,” Mr. Shepherdson said. “I reckon in the last cycle they accounted for two-thirds of all new job creation. Not only are they big, they are better job-creation engines than big companies, which are more inclined to do their new hiring offshore.”

However optimistic we may want be having reached bottom and returned to positive growth doesn't automatically mean that growth will assume a pace anywhere near 4-6 billion/week in money supply expansion.

It may happen, it may not.

 

[william the wie]

I think one of the external bubbles will pop and at least partially derail this process. The upper half and especially the upper quarter of incomes in the US have been in a bubble economy for 30-40 years. There are growing numbers of former billionaires and millionaires in IT and the financial sector but the shake out is nowhere close to finished. Even though the US has been less affected by automation, demography and silly financial games than most of the world (Canada which is highly dependent on the US and New Zealand [so small that correctly spelling its name triggers the board's spell check] are minor exceptions to that rule.) this is not enough. The US is in for at least a decade of rolling corrections.

 

[Ravi]

We are bidding on a 3.5 million dollar job.

:drool:

 

[loosecannon]

I think one of the external bubbles will pop and at least partially derail this process........ The US is in for at least a decade of rolling corrections.

Those are my thoughts too, but you never know. Like you said we already sustained 30-40 years of bubble economy, and that may be an understatement. In 100 years historians may look back on this era and reflect that our entire global economy has been nothing but a bubble since the industrial revolution began.

How can "growth" be an industry?

If that is true, then we have no option but to reinflate new bubbles or die.

 

[william the wie]

I think one of the external bubbles will pop and at least partially derail this process........ The US is in for at least a decade of rolling corrections.

Those are my thoughts too, but you never know. Like you said we already sustained 30-40 years of bubble economy, and that may be an understatement. In 100 years historians may look back on this era and reflect that our entire global economy has been nothing but a bubble since the industrial revolution began.

How can "growth" be an industry?

If that is true, then we have no option but to reinflate new bubbles or die.

Good point about the industrial revolution and there is the strong possibility that we are at or near the peak of the product life cycle for the industrial revolution. New products at lower (real) prices but not creating net new jobs is becoming a common problem that will become the rule rather than the exception in the future.