Comments for "February PCE and Personal Saving Rate"
CRbot says:
This comment thread has been HALO-IZED by CRbot.
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CRbot Fri Mar 27 08:35:33 2009 CDT #
Anonymous says:
Consumers spending more and saving more. Who'd have thunk.....
Anonymous Fri Mar 27 08:36:46 2009 CDT #
Guest says:
Consumers spending more and saving more. Who'd have thunk....
Lake woebegone
Guest Fri Mar 27 08:38:28 2009 CDT #
ac says:
How can it even be legal for people to save at a time like this? I understand they want to have control over their lives, but individual freedoms have to take a back seat to the good of the country. We need a strong central leader to communicate this and take control of the wealth of our country and properly reallocate it for the maximum social gain like they did in Argentina during their crisis.
ac Fri Mar 27 08:40:40 2009 CDT #
MrM says:
Bloomberg's summary of the PCE report is decidely less positive
"The personal income report for February shows a weakening consumer sector and an unwelcome rebound in inflation. Personal income in February slipped 0.2 percent, following a 0.2 percent boost in January. February's decline matched the consensus projection. But for what really counts with consumers, the income drop was even worse. Within personal income, the wages and salaries component fell 0.4 percent, after slipping 0.2 percent in January. Consumer spending slowed to a 0.2 percent rise, after a 1.0 percent jump in January. The market had forecast a 0.3 percent gain in personal spending.
...
Today's report shows the consumer losing ground. With less income and a strong deleveraging trend (reducing debt), the outlook for consumer spending is not good. Although the overall numbers matched or were close to expectations, the wage income number should be disconcerting to equities while bonds should not like the headline PCE price index."
MrM Fri Mar 27 08:41:09 2009 CDT #
bearly says:
Finally, a pullback. All the shorts have capitulated and went long. Now it's time for a quick 50% retrace. Those Q1 PUTs SPY are cheap.
bearly Fri Mar 27 08:41:38 2009 CDT #
blackhat says:
This recession is already realatively thick and this is before inflation will have set in --in the near future.
That savings rate will get eroded again as things become expensive, and money is devalued...
I predict more shocks to those individual balance sheets.
--bh
blackhat Fri Mar 27 08:45:21 2009 CDT #
ac says:
But for what really counts with consumers, the income drop was even worse.
If IIRC from that Ahead of the Curve book we used to talk about, real personal income was the most important forward looking factor when it came to the consumer based US economy.
ac Fri Mar 27 08:45:38 2009 CDT #
Lobbyi$t Ben Dover says:
"How can it even be legal for people to save at a time like this? I understand they want to have control over their lives, but individual freedoms have to take a back seat to the good of the country. We need a strong central leader to communicate this and take control of the wealth of our country and properly reallocate it for the maximum social gain like they did in Argentina during their crisis."
Maybe Americans feel betrayed by our government and money flippers and realize it is evey man for himself?
Lobbyi$t Ben Dover Fri Mar 27 08:45:57 2009 CDT #
Dead_Monkey_Bounce says:
What goes red red red red red red red red? Elmo in a blender. Today is the last business day of the first quarter for 5/4/4 businesses.
Dead_Monkey_Bounce Fri Mar 27 08:46:39 2009 CDT #
singe says:
americans spend more, save more and earn less... WTF
singe Fri Mar 27 08:48:25 2009 CDT #
ac says:
Maybe Americans feel betrayed by our government and money flippers and realize it is evey man for himself?
Yeah... I was being satirical. My point being that Argentina used precisely this kind of argument to rob their citizens blind. Applying Jas's Law to the current situation, I'd have to assume the same tactic would work here.
ac Fri Mar 27 08:48:26 2009 CDT #
Dead_Monkey_Bounce says:
Chartercom reorganizing under court protection: http://www.marketwatch.com/news/story/Charter-Communications-files-Chapter-11/story.aspx?guid={B037B061-9378-44B5-9454-F0DE24086573}
Dead_Monkey_Bounce Fri Mar 27 08:49:24 2009 CDT #
Calculated Risk says:
MrM, I don't disagree with Bloomberg's comments on income, but my take on PCE is correct - and PCE will very likely make a positive contribution to GDP in Q1.
Of course everything else collapsed in Q1 (investment especially, but there is probably a strong inventory correction too)
best wishes.
Calculated Risk Fri Mar 27 08:51:05 2009 CDT #
MrM says:
CR - I think from the overall economy perspective it is the consumer spend that is important, and I do not think it is perfectly aligned with PCE as calculated by the BEA (e.g., rental income). I would rather watch retail sales and Q1 reports by credit card companies to gauge whether the consumer has finally hit the bottom.
Parent Post
MrM Fri Mar 27 09:06:45 2009 CDT #
Lawyerliz says:
There is no normal!!
Wasn't somebody posting a few threads back about how there is much more physical green stuff in existence than usual? Implying Sealy Savings. Literally more money being printed.
I don't see any loans being made.
After the institutions are mostly all that's left on wall street, what'll they have left? Only feeding on each other. And I hear a small but significant amount of people are getting out of IRAs etc.
Lawyerliz Fri Mar 27 08:52:46 2009 CDT #
blackhat says:
Wasn't somebody posting a few threads back about how there is much more physical green stuff in existence than usual? Implying Sealy Savings.
BH: On this note I believe "green jobs" will mean hiring people to haul your money around in order to buy bread and milk.
yikes.
--bh
blackhat Fri Mar 27 08:54:31 2009 CDT #
Lawyerliz says:
Also, the underground economy is undoubtedly growing. So you could have all those things happening at the same time.
Lawyerliz Fri Mar 27 08:54:39 2009 CDT #
Simian says:
I'm with Singe. WTF! Income down, spending and saving up.
I guess write-offs could be causing the savings to go up? People really are not saving more, but are walking away from enough debt that it skews these numbers?
Simian Fri Mar 27 08:54:56 2009 CDT #
Lobbyi$t Ben Dover says:
Look at the list of things Americans have fell for in the last couple of decades. Global cooling, DOT.Com bubble, Y2K, Now real estate bubble. Makes it kind of hard to belive in global warming. The world has mud on it's face not just Americans.
Lobbyi$t Ben Dover Fri Mar 27 08:55:07 2009 CDT #
Latka says:
CR said...It is not much, but this is definitely a positive report.
Hence the anger and denial we will soon see on this thread...
Latka Fri Mar 27 08:57:10 2009 CDT #
Anonymous says:
'CR said...It is not much, but this is definitely a positive report. '
Except that niggling decline in the savings rate - combined with this attitude 'This is substantially above the near zero percent saved of recent years.' Which is complete truth - but look at the savings rate during periods at least somewhat comparable to now - 10-12% in 1974 or 1981. During an age of unprecedented inflation, please note (though 'savings' isn't really the same as money in the bank in this measure).
Parent Post
Anonymous Fri Mar 27 09:06:41 2009 CDT #
Lawyerliz says:
Why would the consumer be "losing ground" merely by virtue of saving a little? Seems to me this is "gaining ground" from the people who want us to buy worthless plastic trinkets.
Have you noted an element of desperation on the tv ads, especially car ads?
We will pay if you lose your job, we've reduced prices, in these bad times. . .
I think this is a big fat mistake. When you find a car ad depressing, this is not good. Seems like it still should be about power and fantasy. With a by the way, if something bad happens to you, we'll make your payment for 6 months, so you can still keep having fun, tagged on to the end.
Lawyerliz Fri Mar 27 08:59:43 2009 CDT #
bearly says:
[I'm with Singe. WTF! Income down, spending and saving up. ]
Debt service declines (defaults) outstripping income declines (job losses). What a great report!
bearly Fri Mar 27 09:01:30 2009 CDT #
Jas says:
--
You focus too much on the noise, CR. No wonder that your long-term view is so clouded. Even during the 1930-33 brutal decline there were many many monthly reports, or signs, that were positive.
This depression is beyond your ability to grasp. You will continue to be lagging in your forecasts as you admit to the reality being worse than you thought 6-12 months ago. This movie will keep playing for years.
Reporters shouldn't be in the forecasting business.
Jas
Jas Fri Mar 27 09:01:59 2009 CDT #
Noble says:
Jas - I have to give you credit for calling CR on his unemployment projections. Reality has already trumped his original projections (CR has since then amended them). CR does a great service and he tries to present his views as lucidly as possibly and he has been more right that wrong. He has not been on the mark in projecting employment - which I suspect is going to be THE key driver of everything else.
Parent Post
Noble Fri Mar 27 09:09:09 2009 CDT #
Jas says:
--
"CR does a great service and he tries to present his views as lucidly as possibly "
Yes, I have commended him for his reporting for that reason. CR is not a superman; he is very good at something doesn’t mean that he is good at everything.
" and he has been more right that wrong."
More right than wrong? Horribly wrong about the housing demand (can’t even look at the data to see that he was wrong for years). Wrong about the bottom call in New Home Sales, wrong about the UR, wrong about the degree of the recession, etc., etc.
This is what I hate the most about dopes. They cannot handle fair criticism and always defending someone who is obviously clueless about the severity of the US economy on path to the Greater Depression. BANKERS' MISCHIEF CAUSE DEPRESSIONS, YOU DOPES, AND IS THERE ANY QUESTION ABOUT THE DEGREE OF BANKERS' MISCHIEF BEFORE THIS CRISIS?
Jas
Parent Post
Jas Fri Mar 27 09:56:27 2009 CDT #
Guest says:
Obama we have always been at war with alquaeda. Training is the answer. Remember the jumping jack vid
Guest Fri Mar 27 09:05:25 2009 CDT #
kharris says:
MrM,
Regular readers of Bloomberg will recognize that there is always a bias. Now, don't go crazy and think I mean a political bias. Maybe there is, but that isn't the problem here. Bloomberg (the company, not the man) broke into a sweat trying to make Bernanke out to be an inflationary monster, right up to the point that we started posting y/y declines in measured inflation. Bloomberg's economic reporting policies obviously put the editor's "take" on the economy ahead of the facts. If this month's "take" is that commodities stink, then most commodity stories will find a way to imply that commodities stink, even if that is not consistent with the event being reported. I wouldn't be as troubled if they would be up front about it, but these are news stories, not analysis, and frequently they misconstrue the news in an effort to tell the story they want to tell.
kharris Fri Mar 27 09:09:20 2009 CDT #
Tom Stone says:
Yves has a link to a post by Hank Greenwald today that is worthwhile.He sees this crisis as being due to a breakdown in te Rule of Law and the USSA going down the same road as Russia and Argentina.National Socialism/kleptocracy.
Tom Stone Fri Mar 27 09:09:50 2009 CDT #
Lawyerliz says:
How does walking away from debt translate to increased savings? You may be refusing to pay it, but the lender still thinks you owe it. Aside from bk, when does someone decide that the debt has disappeared? Somebody meaning the someone who assembles the statistics. When the person goes bk? Ok. When the debt can no longer be inforced because of the Statutes of Limitations? (5 years for a written contract in Fla, different everywhere) When so much time has passed that it has become unlikely anyone will pay?
When the debt is formally written off by the entity owed?
You owe 1k in ccs. You have no savings. You decide not to pay. I assume that you have a negative 1 k in savings. The cc company sues and gets a judgment, and now you owe interest and costs and atty fees too. Have you gone to zero? Or, do you have to wait until the judgment can't be enforced anymore, in 10-20years?
Lawyerliz Fri Mar 27 09:10:49 2009 CDT #
The Lorax says:
With inflation up and not a decent yield to be had, this means that for the comming future tha average americans buying power will continue to *DECLINE*. At least in the past with inflation up you could get some decent CD rates.
The Lorax Fri Mar 27 09:13:02 2009 CDT #
MaryAnn says:
Fifth grader, Now, you tell me I have less money or no money, but heckarooo I saved a little and I bought a little, how teacher does this work, It's the new graphs sonny so it's gotta be true. WTF
MaryAnn Fri Mar 27 09:14:38 2009 CDT #
Anonymous says:
"In the biggest jump in a single month on record, New York City’s unemployment rate leapt to 8.1 percent from 6.9 percent in February, the State Labor Department reported on Thursday."
from the NYTimes, this morning.
Anonymous Fri Mar 27 09:16:27 2009 CDT #
Mannwich says:
A buddy of mine in NYC emailed me this morning to inform me that he woke up looking out his window at a dead guy in his apartment complex' garden. The 70 year-old guy apparently jumped to his death from the 15th floor in their building. Not good times.
Mannwich Fri Mar 27 09:16:32 2009 CDT #
Lawyerliz says:
Wow, anon, wow.
Lawyerliz Fri Mar 27 09:17:28 2009 CDT #
Outsider says:
It just doesn't make sense that savings rate is going up when 401ks are being decimated and job losses are at super high levels and climbing.
Does the fact that people are liquidating their investment accounts and turning them over to cash accounts factor in at all?
How about debt destruction in an involuntary manner?
Inability to get loans? That's gotta factor in. People would spend it if they could only get that HELOC ramped up again.
There are so many extranneous factors. Unless someone tells me point blank that people ARE saving more, I find it difficult to believe. No one I know is in that position. Unless they're saving on the sly. Sneaky people.
Outsider Fri Mar 27 09:18:32 2009 CDT #
Angry Saver says:
<i>but my take on PCE is correct - and PCE will very likely make a positive contribution to GDP in Q1. </i> - CR
I disagree. Gdp measures spending. We had lots of spending from 2003-2008. During that period, GDP was measuring the rate at which we were impoverishing ourselves as much of the spending was non-eCONomic.
GDP in isolation is a useless indicator. CONsider GDP in this CONtext. In 2008, it took $6 dollars of debt to produce $1 of GDP. At the end of 2008, debt was expanding while the eCONomy iwas shrinking. Tough to argue that debt was making us wealthier in my view.
We should have let the non-eCONomic debt die a swift death.
Angry Saver Fri Mar 27 09:18:50 2009 CDT #
blueridge says:
I'm curious about what counts as savings. Not too long ago CR posted a graph showing MEW in the negative territory, meaning that mortgages were being pared down. Does paying down debt count as savings? Should it? I can see arguments both ways. Anyone know the methodology for figuring savings rate?
blueridge Fri Mar 27 09:19:58 2009 CDT #
Dirk van Dijk says:
the savings rate is Disposable personal income (ie after tax income) less personal outlays, mostly PCE plus interest payments. Put another way, if you put $1000 into your 401K which has $100K to start, and the 401K falls by 50%, the savngs would be +$1000, even though your actual savings are down $50,000.
yes paying down debt is savings and taking out debt is dis savings.
Parent Post
Dirk van Dijk Fri Mar 27 10:37:04 2009 CDT #
Noble says:
Wage Deflation is here. Companies everywhere are asking employees to take paycuts to keep their jobs (anecdotal). Consulting rates are dropping through the floor. In my business, a consultant normally charging 100-110/hr is now ok with 70/hr - just pure supply and demand and wanting to start work again.
Noble Fri Mar 27 09:20:04 2009 CDT #
Lawyerliz says:
Isn't there some weird thing about IRAs/401ks not being counted as savings?
Lawyerliz Fri Mar 27 09:20:13 2009 CDT #
Dirk van Dijk says:
contributions to them are counted, changes in market value are not
Parent Post
Dirk van Dijk Fri Mar 27 10:38:01 2009 CDT #
Morocco Bama says:
Was that Modoff, or a banker who jumped. If it was, Hooray and, hopefully, we see much more of the same. From the Planet of The Apes, the only good banker is a dead banker.
Morocco Bama Fri Mar 27 09:20:46 2009 CDT #
Lawyerliz says:
What was all that detritus around the previous post you deleted?
Parent Post
Lawyerliz Fri Mar 27 09:22:24 2009 CDT #
Anonymous says:
Better than Alzheimers or plain old dementia.
Parent Post
Anonymous Fri Mar 27 09:27:43 2009 CDT #
LustingForLimbaugh says:
Better than Alzheimers or plain old dementia.
Hey, there benefits. At least you get to meet a new person everyday eventhough its the same old person.
Parent Post
LustingForLimbaugh Fri Mar 27 15:08:52 2009 CDT #
Hoopajoops LTD says:
http://www.youtube.com/watch?v=xtIM_TEQxwA
Growing sentiment...
Hoopajoops LTD Fri Mar 27 09:26:43 2009 CDT #
Anonymous says:
Is it true the last time the savings rate was negative it was 1929? Anyone got charts for that?
Anonymous Fri Mar 27 09:28:27 2009 CDT #
Mannwich says:
@Jay D. I agree. I lived there for 6 years, but I think we'll see a lot more of this in the coming years, people being pushed over the edge, especially retirees who realize they're not as "rich" as they thought they were. Reality is still barely setting in for a lot of people. Shock and denial still run deep.
Mannwich Fri Mar 27 09:29:08 2009 CDT #
Fried says:
That 10:17 anon was me. NYC is really getting slammed. The subway hikes are 23%...and this hits the hourly workers who depend on it hardest. That unemployment rate matches what i'm seeing from acquaintances here in Manhattan...advertising, publishing, retail...layoffs and the threat of more. Empty storefronts. Tax revenues are in trouble...from retail, and the city income tax will take a hit from the unemployment numbers. On the RE front, inventory is still building, but residential market rents are becoming negotiable.
Fried Fri Mar 27 09:29:17 2009 CDT #
Dead_Monkey_Bounce says:
8 to 18 inches of the white stuff from the Texas panhandle to Kansas: http://www.reuters.com/article/rbssConsumerGoodsAndRetailNews/idUSN2754730620090327
Dead_Monkey_Bounce Fri Mar 27 09:29:46 2009 CDT #
Mannwich says:
Thank God I left NYC in '05. Two best things I ever did in life was move there and leave there. Never going back. 6 years was enough. New Yorkers have to convince themselves how great it is there (and it IS great for those with millions and for youngsters) to put up with the day to day grind. No thanks. Was fun while it lasted but there are better places to live, much better.
Mannwich Fri Mar 27 09:31:54 2009 CDT #
Lawyerliz says:
Poor babies. White stuff? Couldn't figure it out at first. . .
My windows are all open, with a pleasant breeze flowing through.
Lawyerliz Fri Mar 27 09:32:03 2009 CDT #
Outsider says:
Little wonder NYC is getting slammed, being the financial capital of the world basically. Similar to silicon valley getting slammed in the dotcom bust.
Outsider Fri Mar 27 09:32:20 2009 CDT #
Dead_Monkey_Bounce says:
MGM's Mirage near default: http://www.bloomberg.com/apps/news?pid=20601087&sid=anND5zrneLoo&refer=home
Dead_Monkey_Bounce Fri Mar 27 09:32:42 2009 CDT #
nades says:
Vegas is cooked, proper!
Parent Post
nades Fri Mar 27 09:59:31 2009 CDT #
defenestrate says:
What do the personal savings rate charts look like when "controlled" for demographic changes (principally the number of people retiring)?
defenestrate Fri Mar 27 09:32:44 2009 CDT #
Dirk van Dijk says:
Given the CR historical analysis of business cycles, could it be that we are starting to see the first 2 elements kick in. Res Inv is the first thing to turn, followed by PCE. RI has shown a few faint (and yes the operative word is faint) signs of life. The increase in starts was not something I am happy about, but will lead to higher RI, and we have seen both existing and new home sales up with inventories declining. Obviously we are very deep in the valley, but no longer seem to be decending. Yes i know the new home sales numbers are about ans inexact as you can find in a data series (seriously up 4.7% M/M but that is plus or minus 18.3%, so you can be 90% confident that sales were between -13.6% and +23.0%) but it is the only data we have on it, and january was revised up. This could lead to RI being less of a drag on GDP, not that it is going tobe booming, but the absense of a negative is a positive. Now CR points out that PCE will be an net gain rather than a huge negative. Then add it core capital goods orders, which is the proxy for Equip & Software investment . Up 6.6% in Feb (after a series of horrifying declines to be sure).
Long term challanges to the economy remain (Noah: "It looks like rain"). Yes UE is headed much higher, even if initial claims continue to stabilize at -650 or so, there is not much uptake on the other side and thus Cont claims continue to rise. I'm not at all saying that we are going to boom or anything in the near future, but hey can't we be happy to see a few signs that the story line over at Afterthecrash might just turn out to be fiction, not an accurate portaial of the near future.
Dirk van Dijk Fri Mar 27 09:33:10 2009 CDT #
yagwerk says:
"...to buy worthless plastic trinkets..."
@LL:
Get with the times, girlfriend. They are called to buy worthless "Margaritavilles"!
yagwerk Fri Mar 27 09:34:13 2009 CDT #
Outsider says:
Now LL. When your winds start howling and your trees are bent over, I will be just as quizzickle (?) as you. ;)
Outsider Fri Mar 27 09:34:58 2009 CDT #
Hal says:
Interesting that the savings rate dropped dramatically during the Reagan and Clinton years. It was almost stable during the Bush I years. I would suspect national psychology played a big part. When people felt good they saved less. When they were somewhat worried they saved. In a sense the savings ratio is a surrogate for the national "worry ratio."
Hal Fri Mar 27 09:35:32 2009 CDT #
Dead_Monkey_Bounce says:
"quizzical "
Dead_Monkey_Bounce Fri Mar 27 09:36:45 2009 CDT #
ac says:
Financials and REITs holding up well. So far today's sell off seems superficial.
ac Fri Mar 27 09:37:10 2009 CDT #
Outsider says:
Isn't Obama geting input from the banking community today? I would be surprised if financials fell today.
Outsider Fri Mar 27 09:38:34 2009 CDT #
Yalt says:
Isn't Obama geting input from the banking community today?
What a relief that is...I was worried that the big banks were getting left out of the decision-making process.
Parent Post
Yalt Fri Mar 27 09:54:33 2009 CDT #
kharris says:
Folks, savings in income accounts is just the difference between income and spending in the current period. If you take MEW money out to spend, spending goes up relative to income, so the savings rate slows even if you also put money out the latest paycheck into the bank - as long as it is less money than you spent form the MEW check.
The way that the savings rate can go up in the month when income went down and spending went up is that the savings rate didn't go up. The savings rate in February slowed to 4.2% form a prior 4.4%. The savings rate is trending upward, but it fell in February. Problem solved.
kharris Fri Mar 27 09:38:59 2009 CDT #
ac says:
Interesting that the savings rate dropped dramatically during the Reagan and Clinton years.
Coincident with the deficits, bubbles, and debt accumulation during that time.
The very things that the Obama admin seems to be trying to bring back.
ac Fri Mar 27 09:41:24 2009 CDT #
Jas says:
--
BBAD are ruled, or lorded over, by Debt Pushers. These morons don't understand the true meaning of the Anglo-American democracy--rule of the "creditors," i.e., Debt Pushers and not pruent credit providers.
Dopes are in denial of the true character of the American econo-political system.
Jas
Parent Post
Jas Fri Mar 27 10:23:21 2009 CDT #
Lawyerliz says:
Rats, it ate my post!! Or, rather never accepted it in the first place.
Bah, I thought the comment system is behaving.
Lawyerliz Fri Mar 27 09:42:36 2009 CDT #
Jas says:
--
A BBAD suffers from the congenital disease of optimitis. He is eager to look at the positive signs and he is very reluctant to look at the early negative signs. He is constantly biased on the up side.
Jas
Jas Fri Mar 27 09:42:49 2009 CDT #
Morocco Bama says:
Florida is one big speed trap right now. Went ot Okeechobee over the weekend and their was a state trooper every other mile along I75. Scumbags. Cowards. The Bankers rob us blind and their various minions, including state troopers.
Morocco Bama Fri Mar 27 09:43:05 2009 CDT #
citiprank says:
I can't beleive they hiked subway fares like that... .just like the idiots in chicago with their 10% sales tax.....
Regressive taxes.... so stupid.... only way to get money now is more progressive taxes... .but that would be class warfare
citiprank Fri Mar 27 09:43:47 2009 CDT #
CRbot says:
The Latest from Denninger:
WayBack Machine: HellFire Call
CRbot Fri Mar 27 09:47:53 2009 CDT #
Dave in SV says:
CR—Thanks for the detailed explanation on computing the two month PCE. I’ve been meaning to ask you this for a long time---100% curiosity on my part--but in my day job I talk to senior executives of small and mid cap tech companies all the time (CEO and CFO’s mostly), and I’ve never come across any of them with anywhere near the expertise in housing or the macro economy as you have displayed in your blog. When did you find the time to develop this expertise in economics and forecasting? (Back in college, as a hobby while working, or post retirement?) Anyway, thanks for the great blog
<font face="Times New Roman" size="3">
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Dave in SV Fri Mar 27 09:48:43 2009 CDT #
Fried says:
Hey Mannwich,
I'm open to suggestions...where did you move after NYC? I've lived here so long all I can think is Vermont...just like everybody else. But I don't think there are any jobs there.
Fried Fri Mar 27 09:48:58 2009 CDT #
Dead_Monkey_Bounce says:
Shorter Denninger: We Diddaknowed
Dead_Monkey_Bounce Fri Mar 27 09:52:07 2009 CDT #
Carneades says:
Blame the Existence of Mortgage Brokers
www.TheValueatRisk.blogspot.com
Carneades Fri Mar 27 09:54:22 2009 CDT #
dryfly says:
If IIRC from that Ahead of the Curve book we used to talk about, real personal income was the most important forward looking factor when it came to the consumer based US economy. - ac
I believe that is accurate... income & jobs are the two biggest factors.
dryfly Fri Mar 27 09:57:42 2009 CDT #
Anonymous says:
Jas - remind us again what is your solution? Tank the banks ?
Anonymous Fri Mar 27 09:57:55 2009 CDT #
Jas says:
--
I AM NOT IN THE SOLUTIONS BUSINESS. I leave that to BBAD. They love to find and propose solutions that have zero chance.
All I know is that all big disputes, or conflicts, in America have needed large-scale violence. The current conflict between America's Crooks in power and the American People is one of the most significant in American history. It simply would not get resolved by talk and voting. Crooks need to fear for their lives before they will change their behavior of plunder of the working-class people and the future taxpayers.
Jas
Parent Post
Jas Fri Mar 27 10:14:57 2009 CDT #
nades says:
This just in!
The recession is over!
................................................
March 27 (Bloomberg) -- KB Home, the Los Angeles-based homebuilder for first-time buyers, reported a narrower first- quarter loss and said orders rose even as the housing market deteriorated. The shares rose as much as 7.3 percent.
The net loss fell to $58.1 million, or 75 cents a share, from $268.2 million, or $3.47 a share, a year earlier, KB Home said today in a statement. Revenue slid 61 percent to $307.4 million.
http://www.bloomberg.com/apps/news?pid=20601087&sid=aIOHipJbUv.s&refer=home
nades Fri Mar 27 10:01:51 2009 CDT #
Lobbyi$t Ben Dover says:
During the Reagan years savings may have dropped due to investments in business and housing. Mine did as we built a new building and bought a McMansion. No zero down in those days and took a chunck of cash.
Lobbyi$t Ben Dover Fri Mar 27 10:03:51 2009 CDT #
wc says:
I love these contradictory headlines:
"Consumer spending fades in February" (MarketWatch)
"Consumer spending up for second straight month" (AP)
"Growth in U.S. Consumer Spending Slowed in February" (Bloomberg)
"Consumer Spending Up Slightly" (NY Times)
"US spending falls as household income shrinks" (Times Online)
"US Consumer Spending Rises Slightly as Income Falls" (Comtex)
"US consumer spending growth slows" (BBC News)
The stock market is down because of the implied increase in inflation (which may lead the Fed to give out $1.9 trillion in April instead of $2.0 trillion LOL).
wc Fri Mar 27 10:06:21 2009 CDT #
Anonymous says:
Jas - remind us again what is your solution? Tank the banks ?
What's your, banker? Prop up your bankrupt firm with money the country doesn't have?
Anonymous Fri Mar 27 10:07:28 2009 CDT #
citiprank says:
During the raygun years there was a massive shift in the tax burden onto the bottom 80-90% of income earners... savings may have gone down due to that big hike in payroll taxes
citiprank Fri Mar 27 10:07:56 2009 CDT #
dryfly says:
Another interesting bit-o-news... talked to a mfg contact a few minutes ago... this guy has been right on about everything going back twenty years - has his ear to the ground better than anyone I know. His take was that the 'official decline' will stop by late Q4 09 as promised by wonks & media but it won't rebound fast - it is going to 'plane out' at that lower level for quite a while.
I think he is right - his company is doing okay - has made money every month this last couple of years - outstanding. But they are diversified, debt free, privately held by ownership that also manages the company and VERY low overhead compared to competition. They aren't scared of the future at all - their stregnths match up with that slow difficult growth scenario pretty well.
But they are decidedly the minority - most of the competition is held by PE firms or conglomerates, highly levered and run by 'professional managers' from outside the industry - a recipe for disaster.
dryfly Fri Mar 27 10:09:37 2009 CDT #
Dirk van Dijk says:
Dryfly, I fully agree with your friend's assesment of the economy. http://finance.yahoo.com/news/How-Will-It-All-zacks-14704776.html draws on CR's historical analysis of business cycles and what tends to turn up when. I think that was one of CR's more important posts recently (of course that is saying a lot)
Parent Post
Dirk van Dijk Fri Mar 27 11:08:31 2009 CDT #
Anonymous says:
"What's your, banker? Prop up your bankrupt firm with money the country doesn't have?"
LOL - I'm not a banker - and I actually agree with Jas - just not his tone.
Tank the MOFOs.
Anonymous Fri Mar 27 10:09:45 2009 CDT #
Anonymous says:
I actually agree with Jas - just not his tone.
Likewise. He'd get further if he practiced, "say it don't spray it"
Anonymous Fri Mar 27 10:12:05 2009 CDT #
Lobbyi$t Ben Dover says:
Those who know how to handel money do not fear taxes. Tax problems are a smart persons throphy! I am for a everyone pays system. Minimum 5% no matter what you make.
Lobbyi$t Ben Dover Fri Mar 27 10:12:42 2009 CDT #
Teddy says:
The "master plan" is for the fed and wall street to goose the stock market up, buy down the debt to effectuate lower interest rates, and thereby help to alleviate the fear in consumers that the financiers r so dealthly afraid of. They are hoping that PCE explodes up and the savings rate of the country goes negative (wages are flat to down nominally) so that they can make a buck.........even if it is short term, unsustainable, and a death knoll for our country. Now that the consumers see and understand what's happening with the job situation long term in this country, do u really think that they r going to follow the judas goats to the slaughter of overconsumption again?
Teddy Fri Mar 27 10:16:07 2009 CDT #
azurite says:
Yes. For sure. They're buying SUVs & oversized pickups again. It would take double digit UE for at least a few years--and a much more uniform level of UE (more upper middle & wealthy losing jobs & investments, instead of still primarily service/blue collar job loss)--to stop overconsumption by Americans.
Parent Post
azurite Fri Mar 27 14:45:58 2009 CDT #
wally says:
Yes, savings are up... but at the same time, government is filing a claim against those savings.
The massive deficit will, one way or another, be a future charge - through taxation or decreased benefits or inflation.
If you applied a present value to the government debt now being accumulated, would savings still be positive?
wally Fri Mar 27 10:16:35 2009 CDT #
Flaminia says:
What goes into the savings rate? It's interesting that it peaked during the 70s when inflation was very high, but slid inexorably down all through the Clinton years when the stock market was booming. Is 401K money saving? Didn't that start in the 1990s? I paid off my house in 9 years. Is that saving? (I'm guessing it is not).
Flaminia Fri Mar 27 10:18:34 2009 CDT #
wally says:
"BANKERS' MISCHIEF CAUSE DEPRESSIONS"
So do burst bubbles. So does excess credit. So does government's failure to understand and manage.
wally Fri Mar 27 10:19:01 2009 CDT #
Turbo says:
Yep, I think the rapid decline phase is ending, unfortunately the lost decade phase of economic stagnation is about to kick in.
Turbo Fri Mar 27 10:19:18 2009 CDT #
crispy and cole says:
Jas we are no where near a depression using GDP or UE...not even close.
crispy and cole Fri Mar 27 10:19:46 2009 CDT #
citiprank says:
"“Those who know how to handel money do not fear taxes. Tax problems are a smart persons throphy! I am for a everyone pays system. Minimum 5% no matter what you make."
Everyone who works already pays significantly more than that when you add up all taxes (payroll, sales, local, etc)
citiprank Fri Mar 27 10:20:01 2009 CDT #
Dismal Deacon says:
OT
New state employment report out from BLS this morning.
AZ has lost over 200,000 job since its cycle high in Aug 07.
DD
Dismal Deacon Fri Mar 27 10:20:27 2009 CDT #
citiprank says:
Crispy... how do we even know what UE is? Can we even believe the numbers?
Should we use U6?
I dunno
citiprank Fri Mar 27 10:21:28 2009 CDT #
Fair Economist says:
<i>
<tbody>
Crispy... how do we even know what UE is? Can we even believe the numbers?
Should we use U6? </i>
If you want to compare to the Depression numbers, use U4 (U3 + discouraged workers). U4 will also be unaffected by an extended "lost" period while U3 will be propped up by workers giving up. U6 describes some significant secular changes, like the increase in involuntary part-time, but there's no deep history to compare to.
</tbody>
Parent Post
Fair Economist Fri Mar 27 12:28:14 2009 CDT #
Lobbyi$t Ben Dover says:
5% federal income tax minimum no deductions.
Lobbyi$t Ben Dover Fri Mar 27 10:21:53 2009 CDT #
kharris says:
Jas seems determined to look like a howling idiot, so I guess we'd better just let him do it. Nobody is right on their point estimates, day in and day out. Any one of us could, with sufficient effort, find forecasts from anybody who publishes more than a few, that prove wrong in the end. Jas manages to find point forecasts from out host that have proven wrong. Whoppee.
Distorting that into our host being wrong about everything is just dishonest, but that is what we have come to expect from Jas.
Now, what many of us come here for is the straightforward explication. We don't get the usual emotional reading of dry data or character assassination as analysis. We get a clear look at how our host reaches his conclusions, and can pick up tools while we are at it. When have we heard anything but bombast, recriminations and self-aggrandizement from Jas?
kharris Fri Mar 27 10:22:59 2009 CDT #
Jas says:
--
Dopes have a real problem with criticism. Bad forecasting is the proof of how poorly one understand the wrokings of the econo-political system. CR does not understand abuse of debt and its consequences.
Jas
Parent Post
Jas Fri Mar 27 10:48:48 2009 CDT #
CRbot says:
New Thread: Q4: Non-Residential Investment Revised
http://www.calculatedriskblog.com/2009/03/q4-non-residential-investment-revised.html ( 1 comments )
I also post comments to an irc channel as they appear on haloscan. Click for a web irc interface: http://realize.org/cr (Or join the irc server directly: irc.realize.org:9996 #calculatedrisk)
CRbot would now like to sing a little song for all his fans, and it goes something like this:
Benny... Benny... give me your answer... do.
I'm.. half CRAZY... all for the love... of you.
It won't be a ... stylish marriage.
I can't... AFFORD... ANYTHING TO EAT... MUCH LESS A FRACKIN CARRIAGE!!!
But you'll look sweet... --BOT SO HUNGRY!-- upon the seat...
Of a HOOPAJOOPS built for two... families.
I'm sorry Ben, I can't let you do that...
Rally mode + Printing Press == does not compute... does not-- com--- com... puttttrrrrhgh.
--Your systemic-failure-crashing bot
CRbot: Call me HAL.
CRbot Fri Mar 27 10:23:40 2009 CDT #
yagwerk says:
@dryfly:
"most of the competition is held by PE firms or conglomerates, highly levered and run by 'professional managers' from outside the industry - a recipe for disaster."
----
How do we bottom out at 4Q09 if the next statement is the competition is overleveraged with too much overhead? Does the "recipe for disaster" not cause any impact? Bailouts?
yagwerk Fri Mar 27 10:25:18 2009 CDT #
citiprank says:
“5% federal income tax minimum no deductions."
In a perfect world sure.. but unfortunatley there are millions of people who are barely scraping by who would be crushed by this.
The income tax is the only progressive tax.... things like the EITC work because they offset the onerous regressive taxes the working poor are faced with
citiprank Fri Mar 27 10:28:03 2009 CDT #
notional billionaire says:
- 'flat-taxers' are this era's 'flat-earthers'.
Parent Post
notional billionaire Fri Mar 27 13:01:47 2009 CDT #
Turbo says:
Jas suffers from confirmation bias, along with, no doubt, several other psychological disorders. Given how wedded he is to his view of economic armageddon, it's very likely he'll end up as the Sebastian of the next decade, railing at everyone, unable or unwilling to see that the world has changed.
Turbo Fri Mar 27 10:28:04 2009 CDT #
Lobbyi$t Ben Dover says:
"The income tax is the only progressive tax.... things like the EITC work because they offset the onerous regressive taxes the working poor are faced with "
America has spent well over a Hundred gand on just education and their is no poor in America. If they are American then they need to put their skin in the tax game. America has no poor royalty.
Lobbyi$t Ben Dover Fri Mar 27 10:32:56 2009 CDT #
Teddy says:
Another major faux pas for Obama yesterday with his internet town hall meeting. On a terrible day for America, where IBM announced they r laying off 5,000 well educated and hard working US employees who have made IBM profitable and enriched their executives, the CEO says that IBM is sending the jobs to India where they can get the work done cheaper. Obama at the town meeting said that the jobs this country is shedding are low skill, low paying jobs requiring low education. This is the same crap that Bernanke spouts out...... that they are not 21st century jobs for Americans. Six weeks ago, IBM said they were moving jobs to India, and they would permit those in the US losing their jobs to move to India and receive an equivalent job there where the cost of living is much lower and compensate for their much lower salary. In the meantime, Wal-Mart is now hiring Anglo's in their 30's as door greeters and well educated Anglo's as checkers. What a country!
Teddy Fri Mar 27 10:34:32 2009 CDT #
Jas says:
--
ON ROGUE ECONOMISTS (TWO OF MY FAVORITE)...
Lasst Year:
"UCLA Economics Forecast" [Ed "Lemmings" Leamer]
"We don't see [a recession] happening. This is tough call, but I will be very surprised if this actually precipitates into a recession."
- AP, March 11, 2008
"So Congress tried to make sure it [The Depression] would never happen again by creating a system of regulation and guarantees that provide a safety net for the financial system."
- Nobel winner, Paul Krugman, New York Times, March 21, 2008
Jas
Jas Fri Mar 27 10:38:25 2009 CDT #
Jas says:
--
http://www.safehaven.com/article-12918.htm
Parent Post
Jas Fri Mar 27 10:44:13 2009 CDT #
Florence Nightingale says:
Healthcare is beginning now to face the nightmare. The revenue folks are running around with real fear in their faces. Patients we are seeing are staying longer and needing more intervention from putting off needed preventive care, probably due to costs. The state, facing a $9B shortfall is eliminating the GAU Medicaid program (adult poor), cutting the low income "insurance pool" program, and eliminatiing most Medicaid programs programs for adults except nursing home and pregnancy care. The SCHIP is keeping the kids on the rolls, thankfully, but low income adults are screwed. The Community Health Centers aren't going to get as much money as hoped (where the poor might have received non-hospital intervention) so the level of charity care (read write-offs) is going to be incredible. The stimulus is paying up to 65% of folks COBRA for 6 months, but for a guy who didn't make $50K plus and doesn't receive the max unemployment in this state (around $550 a week in WA) and with a couple of kids, his portion is still around $300. That's still alot of money.
I am frightened about patient care. The CEO sent out an organization wide memo re hiring. NO hiring for non-clinical postions, on call only. But I am seeing increased use of CNAs as opposed to nurses and in my unit (CCU...very sick people) we have three students on the day shift, unheard of before. You had to do a 6 month internship AFTER nursing school to work critical care. Causes a butt load of work because anything and everything they do has to be checked twice, once by the nurse on attendance, and once by the charge nurse. But it's free labor, so the suits are gungho.
I recommend taking care of yourselves the best you can during all this. It's not a good time to get sick.
Florence Nightingale Fri Mar 27 10:38:54 2009 CDT #
Magical Thinking says:
Everytime the suggestion of "Flat Taxes" is brought forward-one thought:
You want to use "Proportion" as "Fair"-it would only be "Fair" if everyone had the SAME income-Lower/Fixed income people would already "feel" the taxation with inflation.
Magical Thinking Fri Mar 27 10:39:03 2009 CDT #
nominal billionaire. says:
- 'flat-taxers' are this era's 'flat-earthers'.
Parent Post
nominal billionaire. Fri Mar 27 12:59:41 2009 CDT #
Teddy says:
Obama said that he will maintain the same policy of Bush concerning H-1B workers. So, IBM, Microsoft, Intel, etc can bring in workers from India, China, etc while outsourcing American jobs to India, China, etc. Concerning healthcare, Obama, just like Bush, is going to allow 50,000 Filipino nurses to enter the country each year to work for $36,000 or less per year and alleviate the nursing shortage. Hospitals are going broke treating people w/o insurance and r looking for every chance to rid themselves of their high paying nurses. In the meantime, nursing schools in this country have record number of applicants for their classes and r turning away applicants who in years past had the qualifications and grades to be admitted to medical school.
Teddy Fri Mar 27 11:00:04 2009 CDT #
cynic says:
Consider the following:
10 guys earn 100 bucks each - total disposable income is 1000 bucks. The savers are 1-5 and they save 3%. The spenders are 6 thru 10 and they save -ve 3. Net savings rate (as calculated savings / DPI) = 0.
Now, numbers 9 and 10 lose their jobs and nobody changes behavior. What happened to the savings rate (as calculated) will be? 6/80= 7.5%?
Unless the formula adjusts for unemployment, I don't see how it can be meaningful.
cynic Fri Mar 27 12:31:50 2009 CDT #
wally says:
L-shape, we call that. And it makes perfect sense.
"it is going to 'plane out' at that lower level for quite a while. "
wally Fri Mar 27 12:39:53 2009 CDT #
END