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Economic Recovery Nonsense Continues
For the duration of what I estimate to be a 10 year economic slowdown (we are entering year 4), you will hear countless experts proclaim that the economy has recovered. Economic recovery evangelists were temporarily silenced earlier in the year, but they have now come out in force.In today's FOMC statement, the Fed actually had the chutzpah to say: "The economic recovery is continuing, though at a rate that has been insufficient to bring down unemployment". That the Fed can continually get away with saying such asinine comments this far into the recession is very surprising.
The economic recovery crowd will no doubt point you to the rise in retail sales. However, they will probably leave out a couple of key points. They probably won't tell you that wholesale prices rose 0.8% in November, the most in 8 months. They also won't tell you that the rise in retail sales was driven largely by the rise in food and energy costs. I keep hearing that oil prices are rising show that the economy is recovering. In that case, would $10 gasoline evidence an economic recovery for the ages? Is the weak dollar, not demand, not driving wholesale prices higher?
Retail sales are denominated in dollars, so you would expect a rise in sales year after year on a nominal basis. Also, core inflation has been relatively stable compared to headline inflation, which includes the price of the goods that retailers are selling. Given the relatively muted inflation figures of our government, this implies some core prices are falling.
Retailers announced a "surprising " jump in apparel sales. Well let me tell you that this shouldn't be so surprising since apparel was one of the few items in the CPI that went down year-over-year. Revenues (sales) may be up, but margins are down. Discounts started earlier this holiday season and lasted longer. Please see Best Buy, which was down 15% this morning on weak earnings figures. So all in all, let's not get too bent out of shape about buoyant retail sales.
The government will never tell you that it is inflation that is driving economic statistics higher. The strong rise in commodities reflect an undercurrent of inflation that is eased away via government statistics. People will consistently be puzzled by the phenomenon of high unemployment and supposedly rosy economic statistics because the data has becomes so skewed at this point. This is why I always say to focus on the gold, dollar. and bond markets. Focus on gold first and foremost, since it is a globally traded asset that is not easily manipulated by central banks, especially since they have drained there reserves over the years. Government statistics are just noise in this ongoing economic drama.
Expected Returns is a blog focused primarily on gold investing.
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Kinda off-topic:
Best. Holiday. Spending. Season. Period!
"The government will never tell you that it is inflation that is driving economic statistics higher."
god bless you!!
actually the fomc is correct right now. The recovery is continuing. If we have a real bond sell off then all bets are off. A slow sell off is healthy and confirms a bull market.
I have what has been a pretty reliable barometer for where the economy is headed. I work for a large company that makes industrial automation equipment. We sell to other companies that "make stuff". When companies that make stuff aren't ... then they don't buy our stuff.
Our management has always been pretty conservative. When things start looking bad, they cut back -- travel, then expenses, then layoffs, no bonuses, no raises, etc. They always cut more than is needed, and are usually slow to put things back (much to employees' dismay).
I've seen this cycle I think 4 times in 25 years. 2008/2009 was the worst, when they did all of the above plus stopped 401k match and then made us take furlough days.
When they start cutting, it's always been a clue to get defensive on investments.
Now ... we have our 401k back, raises, and we have lots of stuff going on, and have lots of open positions in R&D and elsewhere. So many that we cannot find enough qualified applicants. Our management does not do this stuff willy-nilly, especially hiring people. They are old-school.
Not to sound pollyanna-ish ... but I can tell you that things have definitely changed from 2 years ago, from my view on the ground, not by macro numbers.
Even "conservative" management will sometimes badly misread things. This will be the case here, I assure you....
Heart warming story......but is anyone else seeing this 'hiring' going on out there? When exactly will all this hiring start moving the unemployment numbers? Troll?
no troll, and not 'heart warming'. just reality. we stopped hiring in '07, started cutting -- deeply-- in '08. I looked on our job board the other day and we have over 500 openings. honestly, it is hard to find qualified engineers in the US. yeah, lots of 20-year veterans who have fewer skills as someone 3 years out of school.
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Inspiring. It is true that a class losing it's wealth due to fraud, it is wise for them to stand up when you still? have the ability to, before the strife.
please don't say "chutzpah". it's even annoying in writing. right up there with moxie and schtick. granted we are talking about bankers.
The bottom of the economy will be the day Bernanke is jailed.
I'd consider that an apex of sorts.
The ONLY reason Americans are not standing in "soup lines", YET, is because Uncle Sambo is still sending out welfare, food stamps, and unempoyment checks to 50%+ of Americans.(and that is a LARGE voting block). I totally agree with every word in your article except you should've used the word DEPRESSION, instead of recession.
Interesting. Gold, dollar and bond markets, the same followed by investors in the 1980s. In 1982, I wrote a program on an Apple IIe to perform near real-time calculation and plotting of the 1st and 2nd derivatives of these market indicators for a well to do dentist and his fiancee (systems engineer with a masters degree), both having had attended numerous investor seminars. Received a spaghetti dinner for my effort. I inquired as to how many others were following these indicators (probably thousands), and offered my conjecture as to the likely outcome of a significant number of investors tracking the same indicators using similar computer programs -- Black Monday, 1987 is now history.
You already had my at Economic Recovery!
But the key word was Nonsense.
A slow death spiral propped up by PRAVDA and QE. The mind set of the masses is proof of the slow deaath spiral, yet they all "believe" as they descend into oblivion. Until people in US suffer a bit more(no UE/food stamps/whatever assistance? fluff) nothing will actually change. So far that hasn't happened for the grace of TPTB or the men behind the curtain whichever you choose to call them. They aren't done pillaging quite yet as taxpayer funding is still plentiful even if only borrowed into the future ? The masses still have not figured this out yet because their checks still arrive. Why worry? everything is just fine, said so on TV last nite.
Remember thay Cheney told them "deficits don't matter..."
That is right. They sure printed enough, didn't they, to triple gas prices, double food prices, and don't talk to me about the price of electicity or my land taxes when Cheney said that. "Deficits don't matter..." Cheney to Treasury (Jan 2004).
The thing to really watch will be commodity & energy prices...
'The government will never tell you that it is inflation that is driving economic statistics higher', as said above.
Somebody should tell the asshole ponzi scam Robert Prechter that inflation is real. He still sells FEAR and deflation.
He thought silver was a sell at 15, 17 and 20 something. What is he thinking now. Fire Rodriguez or somebody.
Prechter should just copy Marc Faber and learn a lesson on economics. All would be better off. Faber called this perfect so far.
"The economic recovery is continuing, though at a rate that has been insufficient to bring down unemployment".
So what exactly *is* an economic recovery suppossed to do for the nation then? Aside from lining a small minority's pockets, this has accomplished nothing.
It has done exactly what they hoped it would do...buy more time. For each iteration of continued loose money policy however, the duration is shorter and the side-effects more damaging.
Seems to me like it's a massive game of musical chairs where really bad things will happen to the players left with no chair at the end.
Some folks never even had to get out of their cushy recliners to join in the fun.
...and they never will.