The monthly PCE and income figures that were released this week were already incorporated into the advance estimate for Q1 GDP. Given that March wasn’t as bad as it could have been, and that PCE within the GDP report was, that kind of gives you a sense for the serious deterioration in the US consumer; “unexpectedly.” If there is a [...]
With retail sales and some other recent indicators flashing deeper warnings about the current economic climate, the concerns I raised last week and before about the “bunker mentality” have increased in relevance as well as probability. Specifically, if recession on the consumer side is rightfully characterized by households taking on a “bunker mentality” then it is appropriate to suggest what [...]
It wasn’t supposed to be the case that China would steal all the attention from Japan. We are only a few days away from QQE’s second anniversary and all expectations were purposely set to be a full-blown revival by now. The dedication and skill with which the Japanese economy was handled was meant to conclusively demonstrate with no debate that [...]
One of the primary pillars of even the tepid “recovery” of this cycle is undoubtedly auto sales. We can have a debate as to the influence of monetary policy in this arena, especially as auto loans have (along with student loans) been practically the only direct conduit of credit into the real economy. Clearly, despite the heavy flow there, auto [...]
Part of the rewriting of GDP in the middle of last year involved adding more components that are not directly observable, leaving them susceptible to more imputations and adjustment processes than GDP normally counts. Changing “fixed investment” to include less well-defined concepts like R&D, “intellectual property” and “entertainment” makes sense intuitively until you actually try to piece together how they [...]
Stocks had a great day today unshaken by whether the manufacturing part of the economy was growing more quickly or at the slowest rate in 13 months. Confusion isn’t part of the asset inflation lexicon. In economic news, the U.S. manufacturing sector had its best gains since October, according to Markit's final Manufacturing Purchasing Managers' Index that rose to 55.1 [...]
Despite all evidence to the contrary, an imbalanced ledger of data that grows more imbalanced by the month, commentary continues to describe QE as pro-growth stimulus. As usual, the purest form of rebuke to that sentiment can be found in Japan where QQE has performed a global service just not in the way its theorists and practitioners had envisioned. The [...]
For almost a year now, even before 2014’s version of winter, the constant theme has been one of growing and robust jobs. It had become so ubiquitous as to infiltrate every economic data point, including the housing market. There was some correlation last year between the sentiment about payroll expansion and at least a tepid rebound in home sales, but [...]
With new figures on Japan’s GDP released, it is becoming increasingly clear the disparity between what is supposed to happen and what has actually taken place. The main operative theory by which everything has been supported takes “aggregate demand” literally; in that all demand is essentially a perfect substitute for itself. In other words, monetary theory posits that demand of [...]
The problem with a high rate of inventory build is that it eventually has to go somewhere. In an actual economic “boom” that isn’t much of a concern as businesses remain relatively confident that even if inventory is high in one month it will be easily disposed, profitably, in the next. That is the dominant narrative that seems to be [...]
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