U.S. Consumer Spending Increases 0.5%
This is a sign people are feeling a little bit more confident. Not only did consumer spending rise, but the savings rate when down at the same time. Overall we need to increasing savings and investments in the United States and get our federal and state budgets in order. Too long we have relied on borrowed money and consumer spending to fund our GDP. Regardless, this news is a good sign and if we see jobs started to be created then we will be going in the right direction again.
Wall St. Journal - Americans spent more in January than expected but growth of their income was weak, while a gauge of inflationary pressure within the slowly recovering economy rose at a slower rate.Separately, the expansion at U.S. manufacturing firms softened in February but remained very broad based, according to the Institute of Supply Management’s survey released Monday.
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Jobless rate falls to 9.7 percent in January - its due to discouraged workers not true gains
This news does sound good on the outside but when you read into the report you find that we still shed 86,000 jobs after you add in the gains. Also and this is the biggie, the drop to 9.7% is because people simply gave up looking for work and fell off the unemployed rolls and are just not being counted. If you look at the U6 number in the report, you will see the “discouraged” works and unemployed together and that gives a much more accurate picture. The U6 number is well over 15% and that is a pretty big number. The stock market slid under 10,000 and we could be in for a major correction going forward. I’ll keep you posted.
Reuters, New York - KEY POINTS:
* The Labor Department said the economy shed 150,000 jobs in December, compared to 85,000 previously reported, but November was revised to a gain of 64,000, up from 4,000. Annual benchmark revisions to payrolls data showed the economy has purged 8.4 million jobs since the start of the recession in December 2007.
* Analysts polled by Reuters had forecast payrolls gaining 5,000 and the unemployment rate to edge up to 10.1 percent. Median estimates from the top 20 forecasters expected payrolls to be unchanged last month.
* A sharp increase in the number of people giving up looking for work helped to depress the jobless rate. The number of ‘discouraged job seekers’ rose to 1.1 million in January from 734,000 a year ago.
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U.S. GDP & economy grows at 5.7% but can it keep up?
It sounds like a robust number but when you look what it is compromised of, 3.4% of it is from inventory restocking from the holidays, not growth in spending. According to the article, the major impact of inventory rebuilding is a red flag for numbers going forward. The market has priced some real recovery in 2010 and it might not happen so we could see another leg down in the economy. We will be watching the next 2 quarters closely and if it doesn’t not support the recovery, we will have a choppy September and October.
Forbes - The U.S. economy crushed expectations by growing at a 5.7% clip in the fourth quarter of 2009, but even as Wall Street rallied on the news there are plenty of warning signs of a slower pace ahead.
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Fed keeps key interest rates steady despite board member’s disapproval
Interesting they are still keeping interest rates low for an “extended period” even though we are in a recovery. They must know something we don’t. They called the recovery moderate for sometime and that tells me that the earnings will not keep up with where the market is priced so we should see a correction.
LA Times - Washington D.C. - Reporting from Washington - Amid the political rancor over Federal Reserve Chairman Ben S. Bernanke’s bid for a second term, central bank officials encountered some dissension in their first policy-setting meeting of the year, even as they affirmed their pledge to keep interest rates at near zero for “an extended period.”
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U.S. weekly jobless claims up 36,000 to 482,000
Interesting we are in full recovery but our weekly jobless claims are rising? With these numbers and Obama making some tough statements against the large banks, the market are starting to wake up from their euphoric high and maybe question if we are really in a sustainable recovery or just a cash fueled bear market rally. With the dollar rising and commodities rising, it doesn’t look good. Looks like the safety trade is back in vogue and the means earnings reports need to hit expectations or we are going to see a major leg down in the markets….again.
The number of U.S. workers applying for new unemployment benefits unexpectedly rose last week and regional manufacturing activity slipped in January, hinting at some slowing in the pace of economic recovery.
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The Federal Reserve Made $52 Billion In 2009
The Federal Reserve reaped quite a nice reward for its rescue efforts during the financial crisis. According to its preliminary unaudited 2009 results, the central bank made a whopping $52.1 billion in profit. Somewhere, Ron Paul’s blood is boiling. But before populist outrage at these profits take hold, let’s consider a few things.
First, the vast, vast majority of these profits are going back to taxpayers — $46.1 billion. As the release says:
Under the Board’s policy, the Reserve Banks are required to transfer their net income to the U.S. Treasury after providing for the payment of statutory dividends to member banks and equating surplus to paid-in capital.
Those statutory dividends were $1.4 billion, while the surplus capital was $4.6 billion. Taxpayers get the rest.
So the first point is that taxpayers actually benefit from the Fed’s profits. A lot. They got 89% of its net income. As a taxpayer, I’m pretty happy about that.
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U.S. Initial Jobless Claims Rose 17,000 to 551,000 in September 2009
Can someone please explain to me what a “jobless recovery” is? If these exist then Santa Claus and the Easter Bunny must be real. Sure if you were fortunate to have income to apply in the stock market then you saw an “equity recovery” but using this language in the context of macr0-economics is misplaced in my opinion.
These “green shoots” we keep talking about must be weeds coming up. At the time of this writing we are in the midst of a sellout on Wall Street, I agree with the consensus that is growing saying that we got ahead of ourselves with all the recovery and new bull market talk. The real question is can earnings hold up and can the private sector start creating jobs? Sure if we borrow money and use it for stimulus we will create jobs but what about when there is not government intervention, that is the real test to see if we are seeing an actual recovery.
Bloomberg, Washington D.C. - The number of Americans filing first-time claims for jobless benefits rose more than forecast last week, a sign companies are still cutting workers as the economy pulls out of the recession.
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