Economic News/Discussion

[Orangutan]

http://www.iht.com/articles/2007/11/...ess/08econ.php

Stock markets plummeted and the dollar sank to a record low against the euro Wednesday as investors worldwide grew skittish over rising oil prices and the prospect of a substantial economic slowdown in the United States.

The Dow Jones industrial average fell 360 points and the broader stock market dropped nearly 3 percent, driven down by fear that the troubles in housing are likely to continue well into next year, contributing to further losses in credit markets and spreading pain to the rest of the economy. After a relatively strong summer, consumer spending is expected to tighten and business profits slow in the months ahead, analysts said.

"We are experiencing among our clients an awakening that the United States is in big trouble," said Erik Nielsen, chief Europe economist at Goldman Sachs...

[Orangutan]

http://money.cnn.com/2007/11/08/news...ex.htm?cnn=yes

Bernanke: Slow going predicted for economy

Federal Reserve Chairman Ben Bernanke today warned Congress that higher inflation and weaker economic growth could be in store. Bernanke said growth of economic activity is expected to "slow noticeably in the fourth quarter.

[Dutchcedar]

...higher inflation and weaker economic growth could be in store.

We hear that from someone with a title every week.

[AMDScooter]

We hear that from someone with a title every week.

It's been CNN's weekly prediction for over 5 years now. Sh*t.. even a broken clock is right twice a day.

[jimzinsocal]

Operative words being "could be"

Why clowns like Schumer irritate me. He trys to politicize dollars and cents. Data. Information. Asking the guy for a one to ten about a recession.
Brain dead politician verses someone who is studied in the field.

My thinking? We talk ourselves into a receding economic attitude?
Sure as shit well have one.
So who wins with that crap?

Just the politicians who are dumb as dirt about economics.
Save a few like Rangel and a few others that can actually
make sense of economics.

And yes. I just paid a compliment Charlie Rangel. Dont repeat it please

[AMDScooter]

^^^ Another recent example:

Nets Lead w/ 'Awful' Economic News, Not So Excited About Job Gains

When the Labor Department on Friday announced a strong gain of 166,000 jobs during October, double expectations, ABC and CBS gave it a few seconds while NBC ignored the good news, but on Wednesday night NBC, as well as ABC and CBS, led with a bad day on Wall Street they painted as a harbinger of impending economic doom. NBC anchor Brian Williams piled on the bad news as he insisted he took “no pleasure” in highlighting it. With “DANGER SIGNS” on screen, Williams announced: “Good evening. The following sounds pretty awful -- and we take no pleasure in reporting it -- but today Wall Street fell, the U.S. dollar fell, GM is in bad shape and the housing market continues to be in big trouble.”

CBS displayed “MARKET TURMOIL” on screen as Katie Couric opened with how “investors were carrying a world of worries on their shoulders today” because of “the falling dollar, record high oil prices, the mortgage mess, the housing slump, and a possible economic slowdown. And they responded by dumping stocks. That sent the Dow plummeting more than 300 points for the second time in a week.” Over on ABC, Charles Gibson teased his top story: “Tonight, oil gushes and Wall Street plunges.” Gibson cutely led: “Wall Street today took a nose dive sharp enough to make investors' ears pop.”
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On Friday, November 2, however, the CBS Evening News gave the good news on unemployment less than ten seconds as Couric reported: “The markets got a boost today from the unemployment report. It held steady in October at 4.7 percent and job creation was strong with 166,00 jobs.” The positive news earned only a few more seconds from ABC's Gibson on World News: “Wall Street ended a volatile week with stocks recovering a little, after yesterday's big losses, thanks to a strong jobs report that cooled fears of a recession. 166,000 new jobs were added last month, twice what was expected and unemployment held steady.”

NBC Nightly News didn't consider the jobs gain newsworthy at all.

Downplaying good news and hyping the bad is nothing new in recent months.

The CBS Evening News last week ignored, and NBC barely noted, the 3.9 percent GDP growth in the third quarter. For details, check this posting by the MRC's Business & Media Institute: “GDP Growth Missed by CBS, Downplayed by NBC.”

My October 5 NewsBusters item recounted how the network evening newscasts, in early September, showcased a loss of jobs in August but, in early October, when that number was revised to a big gain and even more jobs were created in September, CBS didn't bother with the upbeat developments while NBC failed to correct the earlier misinformation:

When the Labor Department reported a net loss of 4,000 jobs for August, the September 7 ABC, CBS and NBC evening newscasts highlighted the bad news as evidence of an impending recession, but on Friday, when the Bureau of Labor Statistics revised the August number to a gain of 89,000 jobs and reported 110,000 new jobs for September, only ABC bothered to mention the revision while CBS didn't utter a syllable about either jobs gain. The CBS Evening News anchored by Harry Smith, however, found time to note the Postal Service's decision to honor two CBS journalists -- Eric Sevareid and George Polk -- with stamps.

A month ago, Katie Couric plugged an upcoming look at “new worries about the U.S. economy following a disappointing jobs report.” Harry Smith then cited “new concern about the economy tonight following a report which showed the number of jobs in the U.S. dropped by 4,000 in August, the first monthly decline in four years.” Anthony Mason asserted “it had a lot of economists uttering the 'r' word today, recession,” and fretted: “These job numbers are the most worrisome sign yet, Harry, that the housing slump and the mortgage crisis could take the entire economy down with them.” ABC anchor Charles Gibson teased: “The economy loses jobs for the first time in years as the housing crisis raises the risk of recession.” Betsy Stark declared: “The risks of a serious slowdown, even a recession, are rising. Today's jobs report was shockingly bleak.”...

MSM recipe:

If it's good news.. there is no news. If it's bad news.. it's a headline for weeks.

Keep moving..

[jimzinsocal]

CNN: "Stocks Take Another Beating"

Some beating.

13,246.29 -53.73 / -0.40%

Im up 312.00 on the day. Boo hoo.

[AMDScooter]

CNN: "Stocks Take Another Beating"

Some beating.

13,246.29 -53.73 / -0.40%

Im up 312.00 on the day. Boo hoo.

Still well over 13K... ya.. I'm sure people will be launching themselves out tall skyscraper windows any minute now..

[AMDScooter]

Be nice if more of the media covered this aspect a bit more instead of continually focusing on the lenders only. Personal responsibility seems to have been tossed out the window.

DEBT
Who’$ responsible?

Networks blame business, not borrowers,
for America’s spendthrift ways

More than 600,000 homes are currently in foreclosure; both houses of Congress and the president have proposed different bailout plans for the mortgage “crisis;” and Americans are drowning in $2.4 trillion worth of red ink.

But the problems of consumer debt are made worse because the liberal media ignore personal responsibility and instead use the issue to beat up on businesses that lend money to people who want to borrow.

Two divisions of the Media Research Center analyzed evening news reporting on debt from Nov. 28, 2006, (shopping’s Black Friday) through Aug. 31, 2007. The Business & Media Institute and Culture and Media Institute examined 156 stories and found that ABC, CBS and NBC overwhelmingly blamed business for “luring” consumers to make bad decisions. At the same time, the three networks ignored personal responsibility and portrayed borrowers as helpless victims who had no hand in their own financial failures. These are some of the findings:

* Irresponsible Borrowers off the Hook: Sixty-two percent of the stories on the three networks ignored the consumer’s responsibility for debt. - Just as many portrayed borrowers as victims, such as the North Carolina family “living off peanut butter and jelly” just to make the mortgage payment.

* Business Gets a Black Eye: Lenders and related companies were blamed for borrowers’ debt troubles six times as often as borrowers. ABC and NBC even blamed the National Football League for retired players’ financial woes.

* A Penny Saved or Spent: While network reporters occasionally complained about Americans’ negative savings rate, the ideas of savings and thrift were virtually ignored throughout the nine-month period. Only 14 percent of debt-related stories mentioned a savings or thrift theme.

* Scary Words about the Economy: Exaggerated descriptions were often used to describe the economy. The terms “economic tsunami,” “chaos,” “crisis” and “meltdown” painted a bleak scenario that could undermine consumer confidence. Networks included doom-and-gloom remarks from ordinary people and experts 88 times, and the term “recession” was mentioned 10 times.

* NBC the Worst: “Nightly News” blamed business nine times as often as borrowers (19 to 2), and tied with “World News with Charles Gibson” in ignoring the issue of personal responsibility. Both networks omitted it in 66 percent of the stories but NBC outdid itself with its poor coverage.

* CBS the Best: CBS was the network most likely to address or promote personal responsibility and also had eight stories promoting savings. The “Evening News” also portrayed fewer people as victims than the other networks.


To improve coverage, BMI and CMI recommend:

* Include business perspective: The media should include the business side more often by interviewing lenders, brokers, bankers, etc. This would help balance reports and educate viewers about how businesses assess risk and make other important decisions. When businessmen are unavailable or unwilling to talk, reporters should interview industry associations and think tanks to ensure a balanced report.

* Personal responsibility is a vital component of the debt story: No one forces anyone to take out a loan or get a credit card. The inclusion of personal responsibility in stories related to debt and finances is important because it tells a more comprehensive and honest story. Journalists who use profile pieces to humanize their stories should include the personal responsibility angle.

* Borrowers aren’t automatically victims: Journalists shouldn’t simply take the side of borrowers and depict them as victims. The media need to remember that every financial agreement includes at least two parties taking risks and desiring the same outcome – to pay off the loan. Don’t save all the hard questions for businesspeople. It is reasonable to ask borrowers tough questions about the assumptions and financial decisions they made.

* Savings and thrift are important stories, too: One of the most responsible things any American can do is to save money for a rainy day. Rather than reporting doom and gloom on issues related to finance, the networks can report on how Americans are saving and securing their own financial futures.

* Take a cue from the morning shows: Networks utilize financial consultants and experts who give good financial advice to viewers of their morning shows. Evening newscasts would be well served by employing these same experts in their coverage of finance.

[jimzinsocal]

Just when the news is fully saturated with the idea that the U.S. economy is on the brink of a recession caused by the bursting of the sub-prime lending bubble, we get some surprising news last week: The U.S. economy grew at a 3.9 percent (all growth rates are annualized) from July through September, the fastest rate in six quarters. Exports surged 16.2 percent and consumer spending remained strong.

What's more, jobs are being created and the unemployment rate remains low. While economists had expected a paltry 80,000 new jobs for October, the government reported 166,000.

Nevertheless, we continue to get doses of worrisome news: home prices are falling, oil prices are rising and consumer confidence (as measured by the Conference Board) is now at the lowest point since Hurricane Katrina.

There is a longstanding tradition of legislative intervention to address the consequences of economic change. How might the economic outlook shape the Congressional agenda?

What's Happening to the Economy?

Consumer Spending

The economic expansion of the last five years has been heavily fueled by strong consumer demand. Personal consumption currently consumes 70 percent of total U.S. output and while overall real economic growth has averaged 3.0 percent since 2002, personal consumption has averaged 3.2 percent growth. Many economists -- including former Federal Reserve Board Chairman Alan Greenspan -- have remarked that some of this surge has been driven by rapidly rising home prices and the ease by which a homeowner can get an equity line of credit or refinance a mortgage and "cash out" the increase in home value. If this is correct, then there is valid concern that falling home prices will result in less consumer spending and a weaker economy.

And, if fact, home prices are declining. The S&P/Case-Shilling Home Price Index has dropped 4.4 percent over the 12 months through August; the latest available data. Meanwhile, consumer spending has remained strong at 3 percent. Perhaps we just need to wait a while longer before we see a drop off in spending as a result of the housing market's weakness; or perhaps this link is more tenuous than some had suggested.

One place to look to try to see if this is just a matter of time before consumers collapse is to look to see if personal debt is rising. Are Americans simply borrowing on their credit cards when they can no longer borrow from their home? The best answer will come from the Federal Reserve Board's quarterly report indicating the fraction of after-tax income that households spend servicing their debt obligations. The data for the third quarter won't be available until December but the recent trend has been down, not up.

Exports

The U.S. and the world economy have tended to be in relative synch in terms of growth. When the U.S. economy slipped into recession in 2001, the world economy slowed considerably as well. Today, things appear different. While forecasts for U.S. growth are marked down, forecasts for global growth are increasing. Above trend growth in Europe combined with a dramatically cheaper dollar has led to an increase in U.S. exports. Over the last year, U.S. exports have increased nearly 10 percent while the overall economy has grown by 2.6 percent. This export surge added 1.8 points to overall U.S. growth in the last quarter. After accounting for the offsetting surge in imports, overall trade boosted growth by nearly a percentage point.

Investment

Further good news last week was that business investment in equipment and software remains strong. This sometimes volatile statistic increased 5.9 percent in the third quarter compared to just 1.4 percent over the last year. Given rising costs of borrowing money and discussions of tax increases on business investment, sturdy growth in this category is an important indicator that there is long-term confidence in the global economy.

Jobs and Income

In addition to a strong boost in output in the U.S. economy last quarter, last week we received good jobs numbers as well. The net increase in employment was 166,000 in October and the U.S. has increased employment by 1.7 million jobs in the last twelve months. While neither of these statistics is stellar, they are consistent with solid economic performance and not consistent with an economy teetering on the edge of recession.

Blip or Turning Point?

The question for economists trying to peer into the 2008 economy is if last week's data is the beginning of a new course for the U.S. economy or just noise in the data. Both the jobs data and the GDP data will be revised twice in the next two months and big changes can show it in revisions. In addition, the fastest single quarter of growth since 2003 (Q3, 2003) occurred in the slowest of the four most recent years and the second faster quarter (Q1, 2006) occurred in the second slowest year. So, even an entire quarter of data may not clearly point to the broader trend for growth.

Furthermore, the weak consumer survey data, continued slide of the housing market and oil prices heading towards $100 all suggest that the risks for the U.S. economy remain despite last week's good news.

What's A Politician to Do?

Politicians do not like to sit idle while the economy undergoes any type of negative change, whether it is a loss of manufacturing jobs, a deceleration of median wages or a full blown recession. At present, Congressional intervention aimed at the natural ebb and flow of the economy is focused on providing assistance for those caught in the downturn of the housing market, just like the large legislative action focused on the devastation after Hurricane Katrina. Much as economists worry about contagion effects from housing on to the broader economy, there is rightful concern of contagion effects in Congress, too. If the labor market deteriorates, expect additional unemployment assistance. If the trade deficit worsens, expect more assistance to import sensitive industries. If home heating prices rise too high this winter, expect relief to lower income families.

[AMDScooter]

^^^ Funny.. the reporting on NPR is virtually praying for a recession. I was listening to their "coverage" of Bernanke's predictions for the next quarter. He states a slowing economy... that was pretty much it. No panic over oil prices or the sub-prime's. Seemed like an entirely reasonable assessment to me.

Then the NPR commenter's and guests chime in despite what he just reported and go on to strongly allude that a recession is all but inevitable. Seriously stuck on stupid. "Ignore the facts... the end is nigh!"..

[AMDScooter]

Is causality the werd I'm looking for here?

Trade Deficit Drops to 28-Month Low As Falling Dollar Spurs Foreigners to Buy American

Trade Deficit Drops to 28-Month Low As Falling Dollar Spurs Foreigners to Buy American

WASHINGTON (AP) -- A falling dollar boosted U.S. exports to record highs, pushing the trade deficit down to its lowest level in 28 months.

The trade gap with China, however, worsened as retailers brushed aside worries about a string of high-profile recalls to stock their shelves with Chinese imports for holiday shoppers.

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The Commerce Department reported Friday that the trade deficit dipped 0.6 percent in September to $56.5 billion, the smallest imbalance since May 2005.

The improvement came from a 1.1 percent jump in U.S. exports, which climbed to a record $140.1 billion. The dollars' decline against many major currencies has made U.S. goods cheaper and more competitive in foreign markets. American producers are also benefiting from stronger growth overseas.

While the weaker dollar boosts exports, it also raises worries on Wall Street about whether foreign investors may at some point start dumping their dollar-holdings because of the declines. The dollar's decline to a record low this week against the euro helped to trigger a 361-point drop in the Dow Jones industrial average on Wednesday.

Treasury Secretary Henry Paulson said Friday that he was not worried that the U.S. dollar might at some point lose its position as the currency of choice for investors.

"The dollar has been the world's reserve currency since World War II and there is a reason. We are the biggest economy in the world. We are as open as any economy to investment," Paulson said, speaking to reporters at Treasury.

Paulson predicted that despite the current troubles in housing and the credit markets, the U.S. economy would continue to expand because "you are going to see our strong economic fundamentals ... shine through."

The trade report showed that imports were also up in September, climbing by 0.6 percent to $196.6 billion, the second highest level on record. Oil imports fell, however, by 0.8 percent to $10.5 billion, an improvement that is likely to be temporary given the recent surge in oil prices to close to $100 per barrel.

The deficit with China rose to the second highest level on record, up 5.5 percent to $23.8 billion, reflecting big gains in shipments of Chinese-made televisions, cell phones, computers and toys as retailers stocked their shelves for Christmas.

Those increases were occurring despite a rash of recalls of Chinese products this year of everything from toys with lead paint to defective tires and chemical-tainted toothpaste and pet food ingredients. Critics said the rise in imports was occurring because many of the Chinese goods are not made in the United States any more because companies have moved their factories overseas.

"These figures highlight our dependence on imports even when millions of toys and food are being recalled," said Sen. Sherrod Brown, D-Ohio. "Job-killing trade agreements shut down our factories, hurt our communities and send toxic toys into our children's bedrooms."

So far this year, the trade deficit is running 7.4 percent below last year's record of $758.5 billion, putting the country on track to record a smaller trade gap after five straight years of record highs.

The Bush administration, which scored a trade victory this week when the House passed a free trade agreement it had negotiated with Peru, hailed the surge in demand for U.S. exports as evidence that the administration's strategy of opening overseas markets is working.

"We need to build on our export growth momentum and the best way to do that is to pass the four free trade agreements with Peru, Colombia, Panama and Korea," said Commerce Secretary Carlos Gutierrez.

While the Peru deal is expected to clear the Senate this year, the other three agreements are unlikely to come up for votes given strong opposition from many Democrats and labor unions who contend the playing field is still stacked against American workers who have seen 3 million manufacturing jobs disappear since 2000.

"American workers need real action from Congress on dealing with our trade deficits ... not more disastrous free trade agreements," said Teamsters President James Hoffa.

Private economists said the boom in exports is coming at a crucial time for the economy, helping to cushion the blows from the housing crash and a severe credit crunch.

"Foreign trade is providing key support to U.S. growth at a time when domestic demand is faltering," said Nigel Gault, an economist at Global Insight, a private forecasting firm.

Gault said the better-than-expected trade performance in September would help boost third quarter growth to over 5 percent, up from an original estimate of 3.9 percent. He said further export gains in coming months would be crucial to keeping the country out of a recession. Many economists look for overall growth to slow to 1.5 percent or less in the final three months of this year and the first part of 2008.

Federal Reserve Chairman Ben Bernanke told Congress on Thursday that growth is likely to slow significantly in the current quarter, reflecting the deeper-than-expected housing downturn, but he predicted a rebound by mid-2008.

For September, America's foreign oil bill dropped by 0.8 percent to $10.5 billion reflecting a drop in volume. The average price for a barrel of imported crude rose to a record $68.51 in September and is expected to climb even higher with the recent spike in spot oil prices, which traded this week near $100 per barrel.

The imbalance with the European Union dropped a sharp 37.1 percent to $6.4 billion. The dollar has fallen to record lows against the 13-nation euro currency, which means U.S. products are cheaper in those markets while European goods are more expensive for American consumers.

Trade report: http://www.census.gov/ft900

[jimzinsocal]

I cant help but notice how quiet the "the trade deficit crybabies" are these days. I guess a weaker dollar is what they prefer.
Where is Schumer and that weasel from South Carolina?
Amazingly silent.
The two of them should stick to law and get their noses out of economics.

Just imagine where we might be if WE had discovered a pile of oil like Brazil just did.

The cost of imported oil is becomming a bigtime drag on the macro.

[AMDScooter]

I cant help but notice how quiet the "the trade deficit crybabies" are these days. I guess a weaker dollar is what they prefer.
Where is Schumer and that weasel from South Carolina?
Amazingly silent.
The two of them should stick to law and get their noses out of economics.

Better to be silent and have people think you a fool....

[jimzinsocal]

Someone needs to tell me why this news about discretionary income isn’t as significant as I believe it is.
But first, three warnings:

1. I’m not about to spend the $250 needed to read the full report from the Conference Board that backs the story (their “about” page is here).
2. I don’t feel totally comfortable with how the statistic is measured — “Households with discretionary income, as defined by the study, are those whose spendable income exceeds that held by households with similar demographic features.”
3. I don’t feel totally comfortable that the statistic has been measured consistently.

Now with the disclaimers out of the way, here’s the stunning news:
More Americans have “money to burn,” technically known as “discretionary income,” than at any time in the past quarter-century, and perhaps in the country’s history.
A lot more.
A whole lot more.
So many more that I went as far back as I could for comparable stats.
Here is what I found:

• San Francisco Chronicle; December 18, 1985 (from ProQuest library database) — (Headline) “One-Third of U.S. Households/Americans With ‘Extra’ Cash.” The article doesn’t say what year the study by the U.S. Census Bureau and the Conference Board looked at. Let’s assume it was 1983.
• Wall Street Journal; June 1, 1989 (from ProQuest library database) — “Only about 30% of American households have extra money to spend after paying taxes and buying the necessities, according to a report released by the U.S. Census Bureau and the Conference Board.” This report referred to a 1987 Census Bureau/Conference Board report.
• A reference to an early 2005 Conference Board Report that appears to relate to 2003 and/or 2004, saying, “About 57 million U.S. households now have discretionary income, up from nearly 54 million in 1997-1998, according to a new study released today by The Conference Board. But the percentage of the American population with discretionary income has edged down to 51 percent, compared with 52 percent six years ago.”
• Finally, from the Conference Board earlier this week — “Between 2002 and 2006, the percentage of U.S. households with discretionary income increased from 52.1 percent (57 million households) to 63.5 percent (73 million households).”

Summarizing, here is the progression of Americans with discretionary income:
– 1983 - 33%
– 1987 - 30%
– 1997/1998 - 52%
– 2002 - 52.1%
– 2003/2004 - 51%
– 2006 - 63.5%
In everyday language, this means that about 12% of the population went from just getting by to having money to spare in a span of two or three years.
Again, someone needs to tell me why this news isn’t as significant, or as remarkable, as it appears.
You might think that in the non-stop Old Media hype about how the alleged crises in housing, mortgage lending, currency strength, and who knows what else, that good news like this might be welcome, if only as a change of pace.
As has been the case almost non-stop for almost 7 years, you would be wrong.
It’s no longer anything resembling a surprise that there’s nothing about this at the New York Times (search is on “conference board”). But here’s the result of a Google News search done this morning on [”conference board” discretionary income], typed exactly as indicated: