August 2011

Residential New Construction July 2011

Submitted by on

The July 2011 Residential construction report showed Housing starts decreased -1.5% from June, to a level of 604,000. This is 9.8% above July 2010, or 550,000 housing starts. New Residential Construction has a margin of error often above the monthly percentage increases, so take these monthly changes with a grain of salt. July, for example, has a error margin of 10.8 percentage points.

July 2011 Industrial Production & Capacity Utilization Increase

Submitted by on

The Federal Reserve's Factory Production report shows a 0.9% increase for July 2011 Industrial Production, otherwise known as output for factories and mines. June, May and April were all revised, +0.4%, +0.2% and -0.3% respectively. June's revision is a +0.2 percentage point increase. To sum up a conclusion on this month's statistics: reports of America's economic death are greatly exaggerated.

Economic Creationism is the New Science

Submitted by on

perry godIowa has joined the ranks of crazy, putting first in a straw poll someone out to destroy social security and medicare. This agenda would lead to the biggest increase in abject poverty the United States has ever seen. Meanwhile, Texas Governor Rick Perry is being touted as the new savior of the radical right, proof positive all economic theory comes from God.

This fundamentalist radical right is nothing new. The Tea party is simply the moral majority, wrapped in a new bow.

What is new is the bold faced economic fiction being spun right, left and center. It's like the idea that Creationism is equal to Evolution and the biological sciences has invaded the world of Economics, Mathematics and Statistics.

We are re-entering the dark ages. Down is up, left is right and if you float in water, you must be a witch. Most economists know in a severe recession increasing government spending to take up the slack in demand is a good thing to do. Yet, a group of crazies have kidnapped the national discourse and demanded public policy to cut government spending in a time of very weak economic demand. Once again, up is down and down is up.

The S&P Debt Downgrade: What It Means

EisenhowerOriginally published by OpEd News.

On Friday, August 5, the credit rating agency, Standard & Poor's, downgraded US debt from AAA to AA+.

Gerald Celente's view that S&P's downgrade of the US Treasury's credit rating reflects a loss of confidence in the political system was confirmed by the rating agency itself. S&P explained the downgrade as the result of heightened political risks, not economic ones. The game of chicken over the debt ceiling increase and the GOP's ability to block tax increases indicate that "America's governance and policymaking is becoming less stable, less effective, and less predictable"

The reduction in the government's credit rating to AA+ from AAA is a cosmetic change. It remains a very high investment grade rating and is unlikely to have any effect on interest rates. It is revealing that despite the downgrade, US bond prices rose. It was stocks that fell. The financial press is blaming the stock market decline on the bond downgrade. However, stocks are falling because the economy is falling. Too many jobs have been moved offshore.

Consumer Sentiment Lowest Since 1980 - O RLY?

Submitted by on

The University of Michigan Consumer Sentiment index hit a new low, 54.9. The headlines blare it's the lowest since 1980. That's true, the index hit 51.7 in May of 1980, but the reality is the index is only slightly lower than November 2008, when sentiment hit 55.3.

 

Consumer Sentiment August 2011

 

Reuters and the University of Michigan refuse to publicly release the data for the past 6 months. The below graph was reconstructed from digging around in press releases.

Pages