Archive for August, 2009
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Scrapping the Worst of the Worst, Right?
The Cash For Clunkers program represented a new wave of American thinking: let’s get the bottom tail of the fuel-efficient autos distribution off the road. Scrap the environmentally unfriendly clunkers. Although the program did get the auto inventory moving, did it really scrap the worst of the worst? This is a sample of [...]
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Follow up on Debt-Fueled Consumption Growth
Wow, this post got a lot of attention/criticism on the web (see comments on RGE Economonitor, Investment Postcards from Cape Town, and of course News N Economics). I guess it’s hard to believe that the mortgage buildup over the last decade was financing health care rather than durable-goods consumption. The chart illustrates annual real spending, [...]
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The Misunderstanding of “Debt-Fueled Consumption”
Today I plan to rant just a bit about consumption because I was reading Yves Smith’s article today, and she referred to “debt-fueled consumption” – the now pejorative phrase that just rolls off the tongue. She says: “no where does the article [referenced WSJ article in her post on the consumption share] acknowledge that the [...]
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June TIC Data: Returning to Risk? Possibly, Definitely Treasuries
I don’t know how Brad Sester did this every month. The Treasury International Capital System (TIC) is one of those reports where the headline number, a -$31.2 drop in foreign net accumulation of US assets in June, doesn’t give you a whole lot of information. One must dig and dig. Even the FT got it [...]
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The Oncoming Q4 Surge in Home Sales
Are we going to see a surge in home sales at the end of the year? With the tax credit expiring, that is effectively an expected increase in the price of a home (all else equal). Hmm…I am a first time homebuyer (I personally am not, but let’s use the abstract version of “I”), the [...]
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Can Firms Simply Add Hours to Recover Output? No.
The RGE Monitor recently uploaded one of my articles on productivity. I believe that the corresponding comment deserves a public response; it refers to the tradeoff faced by employers between laying off workers or reducing hours worked (chart to left, where July hours worked remains at a historical low of 33.1 hours per job). [...]
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A Staggering Term of Productivity Growth
Usually productivity growth tumbles during a recession. Firms incorporate economic conditions at a lag, cut marginal costs (i.e., jobs), and the unemployment rises. Not this time. The chart illustrates annual productivity growth per quarter since 1950. As you can see, productivity growth dropped below zero in six of the last ten recession (including this one). [...]
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Failed Banks List Still Surprises
Friday the FDIC closed another three banks: Community First Bank in Prineville, OR, Community National Bank of Sarasota County in Venice, FL, and First State Bank in Sarasota, Fl. While the FDIC transfers the deposits and liquidates the assets, one must wonder how many more bank failures are to come? With 97 banking institutions having [...]
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The Oddities of this Recession
It is not a rule that the personal saving rate rises during a recession, just in this one. Take a look at the cumulative trajectory of the personal saving rate for this Great Recession compared to its predecessors, as represented by the “average recession” since 1960. The chart illustrates the cumulative growth of the saving [...]
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This is why the ISM is an Important Indicator
Today’s ISM number is just another clue that the recession is ending. From MarketWatch: Conditions for the nation’s manufacturers continued to get better in July, the Institute for Supply Management reported Monday. The ISM index rose to 48.9% in July from 44.8% in June. The July index is the strongest since September. The consensus forecast [...]
