With the stock market closed on Friday, Wall Street waited for the Non-Farm payrolls report, also referred to as the "Jobs Report", with baited breath. Earlier in the week, optimism was running unchecked, as the hopelessly perma-bullish investor community began to predict that the number would be a blowout.
Then came the ADP (Automatic Data Processing) employment report, which showed that private sector jobs were LOST, not gained, and suddenly a more sober Wall St. began to ratchet down expectations.
Even with the projections running above a hoped-for gain of more than 200,000 jobs, down from the 300,000 anticipated a week earlier, the final number still stunk. Monthly job gains were a poor 162,000, of which 48,000, were made up of temporary census hires.
Therefore, as reported, March payrolls were up by a net of 114,000. The latest data also included upside revisions totaling 62,000 to prior January and February reporting. Part of the relatively stronger March report has been attributed to rebound effects from February’s blizzards. There we go with the weather again!
Logically, any weather-related impact would be non-recurring. But, who knows, maybe as the snow melts, we'll have floods to blame!
Dr. Williams, of the marvelous site ShadowStats (http://www.shadowstats.com/), believes that the government currently overestimates monthly payroll growth by at least 250,000, which suggests that more-accurate current reporting still would be very much in negative territory. On the unemployment-rate side, the broader measures increased and the headline number would have too, except for some rounding and census hiring.
The trend of reported monthly decline has continued to slow sharply against prior-year comparisons, indicating a bottoming process. The year-to-year decline in total non-farm payrolls narrowed to 1.7% (1.8% net of census effects) in March, versus an unrevised 2.5% decline in February and from a post-World War II record 5.0% decline in July 2009.
The July 2009 decline was the most extreme annual drop seen since the production shutdown at the end of World War II, which reflected an annual trough of 7.6% in September 1945. Otherwise, the current annual decline would be the worst since the Great Depression!
The Obama administration was jubilant over the tremendous news and couldn't wait to begin its ritualistic back-patting. Have they forgotten that 8.4 million jobs have been lost in the last 2 years? Oh, yes, that's all George Bush's and Ronald Reagan's fault!
Beneath the surface, however, a more dangerous trend and un-noticed by most economists, is the VERY ominous decline in liquidity as measured by the contraction in the broad money supply aggregates. According to Dr. Williams, "real (adjusted for inflation), broad systemic liquidity, as reflected in M3 (SGS Continuing Estimate), continues to shrink year-to-year. As of March, the series appears to be down by the largest percentage in modern reporting. The negative effects of this liquidity squeeze on the economy should become increasingly obvious in the next month or so, including subsequent employment data, ex-census."
Historically, sudden, sharp fall-offs in money supply growth have been closely followed by both stock market sell-offs and economic decline. In addition, this contraction bodes poorly for commodities, despite the recent strength.
Here's to hoping everyone has a Happy Easter with a booming PERSONAL money supply!
Marko's Take
Please visit us on YouTube at http://www.youtube.com/markostaketv. The very excellent Phoenix Film Group is now placing the final touches on our next episode on the legality of the Personal Income Tax.
Showing posts with label money supply. Show all posts
Showing posts with label money supply. Show all posts
Saturday, April 3, 2010
Monday, March 29, 2010
Recovery, Recession, Or Depression ?: An Update
Nothing like economic "statistics" to clarify things. Unfortunately, the numbers coming out of Washington are now so "massaged" that it's absolutely impossible for us mere mortals to understand what on Earth is going on with the economy. Our first-hand experience is generally sending us messages that things still stink. Yet, we are constantly told that things are improving and handed a slew of data supposedly proving it.
We posted a "Marko's Take" on this very topic in December (http://markostake.blogspot.com/2009/12/recovery-recession-or-depression.html) and were equally as confused as we are now. Here we are 3 months later... and things continue to baffle.
Corporate earnings for the end of 2009 have been reported and they came in strongly. Pretax profits increased 8% to a seasonally-adjusted $1.5 trillion annual rate in the fourth quarter from the third quarter, the Commerce Department said Friday, as well as slightly revising its estimate of fourth-quarter economic growth downward.
Gross Domestic Product (GDP) grew at a 5.6% inflation-adjusted annual rate. The small adverse change of 0.3% stemmed from weaker than previously estimated business and residential investment, as construction spending declined. Economists are currently projecting more modest growth for the first quarter, with most estimates around 2.8%.
The 8% quarterly increase in profits, which isn't adjusted for inflation, followed a 10.8% increase in the third quarter. Profits were stimulated by an increase in output, as companies re-stocked inventories and non-existent growth in wages, which boosted profit margins.
The combination pushed fourth quarter pretax profits 30.6% higher than a year earlier — marking the biggest increase in 25 years. For the full-year, however, 2009 profits were down 3.8% from 2008.
While conditions are clearly improving for companies, consumers still aren't yet confident in the economic recovery. An index of consumer sentiment remained flat at 73.6 in March from the prior month, the University of Michigan and Reuters said Friday. Clearly this reflects the joblessness of the recovery.
Consumers' gauge of current conditions improved slightly, but their optimism about where the economy is headed declined.
While there is some good news to be sure, the bad news is quite troublesome. The nation's money supply, as broadly measured, has now begun to contract on a year-over-year basis. The falloff in real M3 since late-2009 is suggesting an imminent intensification of the extraordinarily protracted and deep economic contraction.
So, despite the apparent economic recovery, the ongoing pattern of job losses has yet to abate. Of course, this may change with the Friday jobs report, but thus far, all the stimulus and spending has yet to create any uptick in employment.
Here's to hoping YOUR sentiment remains positive!
Marko's Take
Please visit our YouTube channel at http://www.youtube.com/markostaketv. Our next episode on the legality of the Personal Income Tax will be posted within the next 48 hrs.
We posted a "Marko's Take" on this very topic in December (http://markostake.blogspot.com/2009/12/recovery-recession-or-depression.html) and were equally as confused as we are now. Here we are 3 months later... and things continue to baffle.
Corporate earnings for the end of 2009 have been reported and they came in strongly. Pretax profits increased 8% to a seasonally-adjusted $1.5 trillion annual rate in the fourth quarter from the third quarter, the Commerce Department said Friday, as well as slightly revising its estimate of fourth-quarter economic growth downward.
Gross Domestic Product (GDP) grew at a 5.6% inflation-adjusted annual rate. The small adverse change of 0.3% stemmed from weaker than previously estimated business and residential investment, as construction spending declined. Economists are currently projecting more modest growth for the first quarter, with most estimates around 2.8%.
The 8% quarterly increase in profits, which isn't adjusted for inflation, followed a 10.8% increase in the third quarter. Profits were stimulated by an increase in output, as companies re-stocked inventories and non-existent growth in wages, which boosted profit margins.
The combination pushed fourth quarter pretax profits 30.6% higher than a year earlier — marking the biggest increase in 25 years. For the full-year, however, 2009 profits were down 3.8% from 2008.
While conditions are clearly improving for companies, consumers still aren't yet confident in the economic recovery. An index of consumer sentiment remained flat at 73.6 in March from the prior month, the University of Michigan and Reuters said Friday. Clearly this reflects the joblessness of the recovery.
Consumers' gauge of current conditions improved slightly, but their optimism about where the economy is headed declined.
While there is some good news to be sure, the bad news is quite troublesome. The nation's money supply, as broadly measured, has now begun to contract on a year-over-year basis. The falloff in real M3 since late-2009 is suggesting an imminent intensification of the extraordinarily protracted and deep economic contraction.
So, despite the apparent economic recovery, the ongoing pattern of job losses has yet to abate. Of course, this may change with the Friday jobs report, but thus far, all the stimulus and spending has yet to create any uptick in employment.
Here's to hoping YOUR sentiment remains positive!
Marko's Take
Please visit our YouTube channel at http://www.youtube.com/markostaketv. Our next episode on the legality of the Personal Income Tax will be posted within the next 48 hrs.
Sunday, February 28, 2010
Fourth Quarter GDP A 'Healthy' 5.7%... Or Was It?
As is frequently the case in government provided numbers, the headline numbers mask a much different story than that which is revealed by closer examination. And, so is the case with the rather robust growth rate in the fourth quarter Gross Domestic Product (GDP).
Strained budgets in states and local governments don’t just affect the area residents — they can cause a drag on the whole U.S. economy.
Spending from state and local governments fell at a 2% annual rate in the fourth quarter, a revised (GDP) report showed today. That’s much worse than the 0.3% drop in the original estimate, or the 0.6% decline in the third quarter. And, upcoming quarters could show similarly bad numbers as revenues continue to fall.
According to ShadowStats (http://www.shadowstats.com/), the FED continues to act like a serious problem exists in the economy. One example is the ongoing explosion in the money supply.
The St. Louis Fed’s Adjusted Monetary Base, seasonally-adjusted surged by $90 billion (an annualized 198% pace of increase) in the two weeks ended February 24th, to a record $2.184 trillion. The prior record high had been in the previous two-week period.
The monetary base — currency in circulation plus bank reserves — is the Fed’s primary tool for adjusting broad systemic liquidity, as measured by the money supply.
However, ShadowStats own monetary estimate of M3, the broadest form of monetary aggregate, is still on track for a deepening contraction.
As a result, according to ShadowStats, economic reporting increasingly will surprise the markets to the downside. Recent data in weaker home sales, new jobless claims and consumer confidence have not been of substance, but negative market reactions to those numbers likely foreshadow significant negative market reaction as the general outlook shifts, from one of ongoing economic growth and recovery, to one of renewed recession. Marko's Take agrees.
Nearly 6% growth is considered an outright economic boom, but few believe the current economy is booming, despite the revised report of official 5.9% annualized growth in the fourth-quarter GDP. As discussed later, most of the reported growth was due to relatively stronger non-farm inventories, yet the inventory improvement is not supported by strong orders.
When consumption fails to support production and inventories build-up, manufacturers tend to cut back production and GDP falls. This sets up renewed quarterly contractions beginning as early as the current quarter. Such would be viewed popularly as a double-dip recession.
So while the talking heads tout the so-called recovery, readers of Marko's Take know that this way of thinking will be quite short-lived. How can there be a real recovery until the unemployment rolls start coming down?
Think we're in a recovery? TAKE ME ON!
Marko's Take
Episode 3 of our YouTube series is now posted here (http://www.youtube.com/markostaketv). Please pay us a visit as more episodes, based on early blogs, will be added weekly, care of the Phoenix Film Group (http://www.phoenixfilmgroup.com).
Strained budgets in states and local governments don’t just affect the area residents — they can cause a drag on the whole U.S. economy.
Spending from state and local governments fell at a 2% annual rate in the fourth quarter, a revised (GDP) report showed today. That’s much worse than the 0.3% drop in the original estimate, or the 0.6% decline in the third quarter. And, upcoming quarters could show similarly bad numbers as revenues continue to fall.
According to ShadowStats (http://www.shadowstats.com/), the FED continues to act like a serious problem exists in the economy. One example is the ongoing explosion in the money supply.
The St. Louis Fed’s Adjusted Monetary Base, seasonally-adjusted surged by $90 billion (an annualized 198% pace of increase) in the two weeks ended February 24th, to a record $2.184 trillion. The prior record high had been in the previous two-week period.
The monetary base — currency in circulation plus bank reserves — is the Fed’s primary tool for adjusting broad systemic liquidity, as measured by the money supply.
However, ShadowStats own monetary estimate of M3, the broadest form of monetary aggregate, is still on track for a deepening contraction.
As a result, according to ShadowStats, economic reporting increasingly will surprise the markets to the downside. Recent data in weaker home sales, new jobless claims and consumer confidence have not been of substance, but negative market reactions to those numbers likely foreshadow significant negative market reaction as the general outlook shifts, from one of ongoing economic growth and recovery, to one of renewed recession. Marko's Take agrees.
Nearly 6% growth is considered an outright economic boom, but few believe the current economy is booming, despite the revised report of official 5.9% annualized growth in the fourth-quarter GDP. As discussed later, most of the reported growth was due to relatively stronger non-farm inventories, yet the inventory improvement is not supported by strong orders.
When consumption fails to support production and inventories build-up, manufacturers tend to cut back production and GDP falls. This sets up renewed quarterly contractions beginning as early as the current quarter. Such would be viewed popularly as a double-dip recession.
So while the talking heads tout the so-called recovery, readers of Marko's Take know that this way of thinking will be quite short-lived. How can there be a real recovery until the unemployment rolls start coming down?
Think we're in a recovery? TAKE ME ON!
Marko's Take
Episode 3 of our YouTube series is now posted here (http://www.youtube.com/markostaketv). Please pay us a visit as more episodes, based on early blogs, will be added weekly, care of the Phoenix Film Group (http://www.phoenixfilmgroup.com).
Saturday, December 5, 2009
Has A True Economic Recovery Actually Begun?
Right off the bat, I can tell you that I don't know. I've been as skeptical as anyone and said so in prior blogs. However, it appears POSSIBLE that we indeed are in the very early stages of some sort of recovery. But, the evidence remains a mixed bag. In addition, it's WAY too early to speculate as to how strong that recovery might become, if it's started at all.
On the positive side, a website called Shadow Stats (http://www.shadowstats.com/), which calculates various government-reported statistics and adjusts them for a variety of misleading alterations, has shown an actual slight "downtick" in the unemployment rate. Now, one month doesn't make a trend, but it IS the first time they show a drop since late 2007.
There is also the persistent strength in the stock market, which has historically led recoveries by 6 to 12 months. The stock market bottomed 9 months ago.
Another very reliable leading indicator is the money supply, which, thanks to Fed chief Ben Bernanke, has been exploding. Historically, high rates of growth in money supply have led to economic recovery within a period of between 6 to 18 months. All of the emergency stimulus and bailouts, which have caused the growth in money, began within the terminal months of the Bush administration, so they fall within the reliable historical precedent.
In addition, yesterday I became aware of a new program offered by certain banks of mortgage relief - EVEN FOR THE UNEMPLOYED! This was reported in an article by the Sacramento Bee, ironically titled "Mortgage relief program helps relatively few troubled homeowners". An unemployed friend of mine spent two hours talking to Wells Fargo, the holder of his mortgage, and found that this was indeed true. They went over his financial condition meticulously. They couldn't pre-qualify him for any immediate relief, but they are sending him a package requesting certain documents from which they can verify the information and consider the merits of his request.
Now, for the bad news! Retail sales remain DISMAL On "Black Friday", the day after Thanksgiving, one of the two most heavily trafficked shopping days of the year, Sacks reported a 26% DROP in year-over-year sales. Macy's and J.C. Penney also reported greater than estimated slides of about 6%. We don't yet know about Wal-Mart, as it has stopped reporting monthly sales statistics altogether! But, this bad news may be somewhat offset by some good news in online sales, which were UP 11% year-over-year.
According to the FDIC, six more banks were seized on Friday, with combined assets of $13.4 billion. And, as pointed out in recent blogs, the fortunes of states and municipalities continue to deteriorate.
So, the "recovery" theory remains quite speculative as the evidence is a mixed bag. However, I suspect that we will know the answer relatively soon. More evidence will arise after Christmas. Anecdotally, I know that most of my friends have, at most, a "token gift only" intention this holiday season.
Finally, the REALLY bad news is that any recovery is merely more evidence of a precursor to a vastly heightend level of inflation. Without exception, history shows that the "growth effect" of stimulus programs precedes the subsequent "price effect". And, as the "growth effect" tapers off, the "price effect" accelerates.
Therefore, we are sowing the seeds of an even greater crisis which is yet to be experienced.
I hope you found this essay useful, interesting and informative. I appreciate the rapidly growing readership and the questions, which I am delighted to answer.
Marko's Take
On the positive side, a website called Shadow Stats (http://www.shadowstats.com/), which calculates various government-reported statistics and adjusts them for a variety of misleading alterations, has shown an actual slight "downtick" in the unemployment rate. Now, one month doesn't make a trend, but it IS the first time they show a drop since late 2007.
There is also the persistent strength in the stock market, which has historically led recoveries by 6 to 12 months. The stock market bottomed 9 months ago.
Another very reliable leading indicator is the money supply, which, thanks to Fed chief Ben Bernanke, has been exploding. Historically, high rates of growth in money supply have led to economic recovery within a period of between 6 to 18 months. All of the emergency stimulus and bailouts, which have caused the growth in money, began within the terminal months of the Bush administration, so they fall within the reliable historical precedent.
In addition, yesterday I became aware of a new program offered by certain banks of mortgage relief - EVEN FOR THE UNEMPLOYED! This was reported in an article by the Sacramento Bee, ironically titled "Mortgage relief program helps relatively few troubled homeowners". An unemployed friend of mine spent two hours talking to Wells Fargo, the holder of his mortgage, and found that this was indeed true. They went over his financial condition meticulously. They couldn't pre-qualify him for any immediate relief, but they are sending him a package requesting certain documents from which they can verify the information and consider the merits of his request.
Now, for the bad news! Retail sales remain DISMAL On "Black Friday", the day after Thanksgiving, one of the two most heavily trafficked shopping days of the year, Sacks reported a 26% DROP in year-over-year sales. Macy's and J.C. Penney also reported greater than estimated slides of about 6%. We don't yet know about Wal-Mart, as it has stopped reporting monthly sales statistics altogether! But, this bad news may be somewhat offset by some good news in online sales, which were UP 11% year-over-year.
According to the FDIC, six more banks were seized on Friday, with combined assets of $13.4 billion. And, as pointed out in recent blogs, the fortunes of states and municipalities continue to deteriorate.
So, the "recovery" theory remains quite speculative as the evidence is a mixed bag. However, I suspect that we will know the answer relatively soon. More evidence will arise after Christmas. Anecdotally, I know that most of my friends have, at most, a "token gift only" intention this holiday season.
Finally, the REALLY bad news is that any recovery is merely more evidence of a precursor to a vastly heightend level of inflation. Without exception, history shows that the "growth effect" of stimulus programs precedes the subsequent "price effect". And, as the "growth effect" tapers off, the "price effect" accelerates.
Therefore, we are sowing the seeds of an even greater crisis which is yet to be experienced.
I hope you found this essay useful, interesting and informative. I appreciate the rapidly growing readership and the questions, which I am delighted to answer.
Marko's Take
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