Oped pages in recent months have been regular hosts to pieces extolling some of the unsung benefits of the US shale-gas revolution. Some of these have gone so far as to proclaim that shale gas is, or will be, a significant benefit for the country’s entire economy.
Lately, though, the narrative is beginning to sound hollow. Read more
Self-explanatory, and they come via RBC Capital Markets: Read more
From a note Wednesday morning by ConvergEx (emphasis ours): Read more
Welcome to see such punchy prose from an executive, surely.
“Have you ever had one of those weeks where your best- prepared plans weren’t good enough to accomplish everything you set out to do?” Geiger asked in a Feb. 1 e-mail to executives. “Well, we just had one of those weeks here at Walmart U.S. Where are all the customers? And where’s their money?” Read more
As the festive season draws nearer, Albert Edwards brings us good cheer:
Expect the New Year to bring nothing but disappointment.
Yes, our favourite bear argues that even though we’re getting relatively decent US economic data, it’s falling corporate profits to come we should be concerned about. In short, he argues the US is already entering another recession. Read more
Well we’re no longer off 300 points on the Dow. (Off 265, as we went to pixels.) But what went on here?
The estimates of $10bn to $20bn for damage caused by hurricane Sandy fall well short of the costs incurred by hurricane Katrina ($113.4bn) and 1992′s hurricane Andrew ($58.6bn), Goldman Sachs’ Jan Hatzius says. But it’s difficult to know how much to rely on the cost estimates so early on, as Hatzius highlights:
These numbers are likely to strike many readers as surprisingly small given the scale of the devastation in several mid-Atlantic states. It is certainly possible that they are too small, as initial cost estimates for natural disasters have sometimes proved too low in the past. For instance, the damage from Tropical Storm Irene was about twice as large as the initial estimates had suggested, and the damage from Hurricane Katrina was about four times as large. However, it is also likely that the concentration of the impact in the area between Washington and New York has magnified its media impact, even relative to the population density and the value of the real estate in this part of the country.
(Ouch – the media card? Really?) Read more
In attempts to explain why companies (particularly in the US) are so reluctant to invest and hire of late, the word “uncertainty” will usually make an appearance. “Policy uncertainty” is generally seen as the enemy of business confidence, and the combination of post-crisis regulatory reforms and ever-increasing partisanship in the US Congress make it a very big theme of late. Intuitively it makes sense that uncertainty would affect business decisions, but can that be separated from the effect of actual economic activity itself? Read more
Says this guy here with our paraphrasing, naturally (click through for the full paper):
It is less than a month away from the next FOMC meeting (September 12-13), and Bernanke’s speech at Jackson Hole is at the end of August.
Check this week’s posts at Calculated Risk or this series of charts from Joe Weisenthal for detail, but the short story is that quite a few economic indicators have outperformed expectations in the last couple of weeks. Read more
It’s GSEs. It’s a guilty pleasure of sorts in housing recovery indicators. It’s also – arguably – the future of US housing reform.
Freddie Mac posted $3bn of net income in the second quarter. That means it has positive net worth (well a pat on the back for you, Freddie) and hence, it’s paying far more back to the US Treasury this year than it’s taking out, in dividends on the government’s preferred stock. (See also Fannie, earlier.) Read more
Since we found it a useful exercise, here’s a quick, simplisticfied snapshot of the US recovery. Or non-recovery, whatever it is. Not all of these carry equal weight, naturally:
Stuff that looks good Read more
Another notable increase in US consumer credit, this time for May…
We already discussed at length the evolving and (yet again) disappointing relationship between jobs and profits growth, along with the not-so-anomalous-in-context swings in productivity growth these past few years.
But it’s worth mentioning one more time given this morning’s crapadocious jobs report and the start of earnings season on Monday. Read more
A few notes on the report as we make our way through it:
– This sentence caught our eye: Read more
A US GDP factoid that we missed last week, spotted by the econ team at Credit Suisse:
We would note that the profit share of GDP in the first quarter, reported in [last Thursday's] GDP revision, shrunk for the first time in the current business recovery/expansion. Without much stronger nominal GDP growth, and with the low hanging fruit of lower interest rates and debt service costs already having been harvested, restoration of margins is achieved mainly through reducing labor costs. This factor may prove more enduring for the employment data. Read more
Consensus had been 150k. A big revision downward in April’s figure of 115,000 too:
The change in total nonfarm payroll employment for March was revised from +154,000 to +143,000, and the change for April was revised from +115,000 to +77,000. Read more
Real gross domestic income (GDI), which measures the output of the economy as the costs incurred and the incomes earned in the production of GDP, increased 2.7 percent in the first quarter, compared with an increase of 2.6 percent in the fourth. For a given quarter, the estimates of GDP and GDI may differ for a variety of reasons, including the incorporation of largely independent source data. However, over longer time spans, the estimates of GDP and GDI tend to follow similar patterns of change.
By contrast a 0.3 percentage point, or $11.4bn, fell off the US economy in the first quarter, according to the BEA’s ‘second’ estimate of real GDP. The annual rate rose 1.9 per cent instead of the first-estimate 2.2 per cent. Read more
With a hat tip to Blood and Treasure, the Committee of 100 (how mysterious does this lede sound already?) has released a big survey of how the US and China see each other. Previous one was in 2007.
There are some fun financial/economic sidelights… and some confused elites: Read more
Consensus had been 160k. Unemployment rate came in at 8.1 per cent. March payrolls revised up from 120k to 154k though, and February up from 240k to 259k.
Full Bureau of Labour Statistics release below… Read more
First quarter GDP in the US rose 2.2 per cent, coming in slightly under estimates for a 2.5 per cent increase and well below the 3 per cent recorded in the last quarter of 2011.
From Reuters: Read more
Heather Scott: So you’ll guarantee that every agency will be connected to the Internet at exactly the same millisecond?
Carl Fillichio: I’m not going to guarantee anything. Read more
The Federal Reserve’s Beige Book has reported an unexciting but continuing pace of growth in the US since the beginning of the year, Bloomberg reports. “Manufacturing continued to expand at a steady pace across the nation,” the Fed survey added. Ben Bernanke’s tempered view of the jobs recovery in Congressional testimony earlier on Wednesday gave no clues on further QE, however, Reuters says. Gold tumbled on the remarks by the Fed chair, dropping more than 3 per cent, the FT reports. Treasury futures also plummeted, with traders unsure whether a fat finger or a large algo-driven trade provided the cause, Dow Jones adds. Read more
The second half of last year was puzzling to anyone trying to understand future trends in US consumption. Or at least it was to us.
Spending climbed more quickly than incomes, the savings rate decreased and consumer credit increased. Yet this decline in the savings rate happened against a backdrop of further declines in US home prices, followed a big fall in equities during the summer, and coincided with below-average consumer confidence — all of which you would expect to push the savings rate up, not down. Read more
President Barack Obama will announce details of his plan to allow millions of home owners to refinance into lower-cost loans later on Wednesday, the WSJ says. The proposal appeared in President Obama’s State of the Union address, but remains controversial in Congress for its up to $10bn costs. Republicans have said they will oppose taxing banks to pay for the measure. The White House is nevertheless also likely to pursue policies that avoid Congressional approval, such as a plan to auction foreclosed homes en masse to investors seeking to develop them as rental property. Read more
US economic growth will slow dramatically if tax rises and spending cuts come into effect as planned in 2013, according to new figures from the Congressional Budget Office. The FT reports the expiry of tax cuts originally passed by president George W. Bush, the end of a 2 per cent payroll tax holiday and automatic spending cuts agreed last August will reduce growth to just 1.1 per cent in 2013 unless changes are made. The figures from the bipartisan CBO, which on Tuesday projected a fourth consecutive trillion-dollar deficit for 2012, show how high the economic stakes will be when tax policy is hammered out after November’s presidential election. Under an “alternative fiscal scenario” that assumes most tax cuts will be extended and spending cuts delayed, the CBO’s growth forecast for 2013 rises to 2.75 per cent. Read more
If you’re keen for yet another post comparing the US recovery against prior editions, we think this table sent by Credit Suisse on Friday is worth a quick look:
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