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Seven Charts That Leave You No Choice But To Not Feel Optimistic About The US Economy

Tyler Durden's picture




 

Submitted by Shane Obata-Marusic of Triggers

Seven charts that leave you no choice but to (not) feel optimistic about the US economy

At the end of July, 2014, Quartz posted an article called “seven charts that leave you no choice but to feel optimistic about the US economy”.

Although the facts that they presented are correct, the conclusion that they drew is not.

In the following sections, we will examine and refute each of the seven pieces of evidence that were presented by QZ.

 

Jobs

Growth in nonfarm private payroll employment (NFP) has been steady since 2012.

That said, it’s taking more money printing – aka Quantitative Easing (QE) – to achieve the same number of job gains month over month.

The following chart shows that if you deflate the gains in NFP by the increase in the Fed’s assets then you’ll see a diminishing return on QE.

Despite the fact that the labor markets have been improving for years, the Fed’s actions are having less and less of an effect.

 

Unemployment

The unemployment rate has been in decline since it peaked it late 2009.

But that’s not the whole story.

In contrast, the employment to population ratio has barely moved since 2010.

The next figure shows that, since the financial crisis, the falling unemployment rate has not been matched by a rising employment to population ratio.

 

This means is that unemployment rate is falling for the wrong reasons; i.e. because people are leaving the labor force.


Job Openings

Job openings have been on the rise since the middle of 2009 and are now as high as they were in 2007.

Be that as it may, job hires have been lagging openings since the summer of 2010.

As you’ll see in the following graph, hires are still well off their peak in 2006.

 

The labor market is better than it was but it’s still far from strong.


Housing

The housing market has improved significantly since the last depression but it’s still extremely weak by historical standards.

Often times, the financial media will present housing statistics that begin right after the last crisis.

That’s a great way to show the improvement that’s occurred this cycle; however, it doesn’t give you the proper context.

The subsequent diagram shows that new one family houses sold are still at a level that’s been associated with recessions in the past.

If this recovery was as strong as some people say it is then new home sales would be much higher than they are.

 

Autos

As a result of cheap financing, car sales are now at post-crisis highs.

But is the auto market as strong as it seems? Maybe not.

The ensuing chart shows that domestic auto inventories are now at their highest levels since early-mid 2001.

This means that, although sales have been rising, so has the number of autos available for sale.

If demand starts to fall off then there will be a lot of outstanding supply.

That scenario would not be good for the auto market.

 

Consumer Sentiment

Sentiment has been increasingly positive since 2009.

That said, it’s still lower than it was in 1995.

The succeeding figure shows that consumer sentiment has been making lower highs – i.e. lower peaks – since 2000.

This could be indicative of a loss of confidence in the financial industry.

In other words, after each bubble – first the Nasdaq, then the housing, and now the Fed bubble? – the consumer loses confidence in the system.

Intuitively this makes sense because of how many people were negatively affected by market crashes.

 

Stocks

The S&P 500 has been on fire since it bottomed in early-mid 2009.

S?t?e?v?e? ?L?i?e?s?m?a?n?  Some will argue that its performance is a reflection of an improving economy.

Others say that it’s been driven by the Fed’s monetary policy.

Take a look at the following graph – the S&P 500 divided by the Fed’s balance sheet – and then decide for yourself.  ;)

This chart is just hilarious.

It goes to show that the Fed is to the S&P what steroids were to Barry Bonds.

 

Do I have to?

After reading through this piece, it should be quite clear that you don’t have to be optimistic about the US economy.

Yes, there are some bright spots; but everything’s relative.

The current expansion has been ongoing for quite some time.

Therefore, it’s unlikely that “this is just the beginning” of secular bull market.

 

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Sat, 08/16/2014 - 19:13 | 5103295 intotheblack
intotheblack's picture

... because I felt so optimistic before I read these charts, yo.

Sat, 08/16/2014 - 19:14 | 5103297 intotheblack
intotheblack's picture

But now that I have read the charts I'm all like ... and then I'm like ... You know. Like that.

Sat, 08/16/2014 - 19:16 | 5103307 TeamDepends
TeamDepends's picture

Rational non-exuberance?

Sat, 08/16/2014 - 19:23 | 5103319 r00t61
r00t61's picture

When I look at old receipts from a few years ago for things like beef, sugar, bread, chocolate, ice cream, etc., and compare prices to today, I feel anything but exuberance.

Sat, 08/16/2014 - 19:33 | 5103347 Seasmoke
Seasmoke's picture

Don't forget to check the ounces !!!

Sat, 08/16/2014 - 21:26 | 5103568 Grouchy Marx
Grouchy Marx's picture

Then think of it this way: if you could see what your receipts in the future are *going* to look like, then you would be absolutely ecstatic that you're getting everything so incredibly cheap right now. 

Sun, 08/17/2014 - 06:22 | 5104473 BeetleBailey
BeetleBailey's picture

I wish I could morph into a sitting member of the Congressional committees that sit in front of Dammit Janet Smellin like a Printin Felon Yellen ....

AND WHIP THOSE BABIES OUT THE NEXT TIME THE FUCKING CUNT SAYS/UTTERS/REFERS TO "INFLATION REMAINS LOW" ....

...AND FUCKING LAUGH IN HER FACE AND HAMMER THAT POINT HOME LIKE A NAIL AT AN AMISH BARN RAISING....ENOUGH SO THAT THE LAME STREAM PRESSTITUTES SHIT THEIR DIAPERS...AND HAVE TO REPORT SUCH A RANT....

Sat, 08/16/2014 - 19:31 | 5103343 Sudden Debt
Sudden Debt's picture

Yeah!
But there should be more graphs!
Like that unemployment graph with labor participation should also include the increase in retirments and disabilitie applications.

Sun, 08/17/2014 - 06:18 | 5104472 BeetleBailey
BeetleBailey's picture

Exactly. I'm smart enough to know that I don't know that answer.

Sat, 08/16/2014 - 19:15 | 5103299 spinone
spinone's picture

We are at the end of a 100 year demographic and monetary cycle.  It ends with bankruptcy and chaos.

Sat, 08/16/2014 - 19:16 | 5103305 negative rates
negative rates's picture

We told um that 100 years ago, but they didn't understand.

Sat, 08/16/2014 - 20:57 | 5103515 Da Yooper
Da Yooper's picture

The bankers & the Government have yet to learn

 

Ya cant have a viable economy when the "PEOPLE"

 

have no money

 

The people cant pull money out of thin air like the banker & government do & SPEND it

 

sooooo at some point this house of cards is going TU

Sun, 08/17/2014 - 08:19 | 5104603 yogibear
yogibear's picture

"Ya cant have a viable economy when the "PEOPLE" 

have no money"

That's why their trying to force wage increases through mandatory minimum wage increases. Their trying to force inflation. 


Sun, 08/17/2014 - 09:28 | 5104695 U4 eee aaa
U4 eee aaa's picture

That's just a sham to keep the slaves from revolting. Another shell game. If you study the history of the Fed (especially during the Greenspan years) You'll see that as soon as labor rates start to rise (IOW when the last guy in the lineup finally gets compensated), the Fed starts raising interest rates

Sat, 08/16/2014 - 21:09 | 5103531 Bossman1967
Bossman1967's picture

Cant you read the charts man all os good matter of fact all is fantastic . Its time to have s block party and loote like Fugessson. ,an look at thos peeps free cloths food starting fires tear gas and barbecue dominos. All those negative talk is fucking with my saturday beer biz y'all. Lighten up and have a moos head

Sat, 08/16/2014 - 19:16 | 5103302 Carpenter1
Carpenter1's picture

OI!! Methinks me animal spirits is about to bust loose!!

 

 

Sat, 08/16/2014 - 21:15 | 5103548 Captain Obvious.
Captain Obvious.'s picture

No. That's just gas.

Sat, 08/16/2014 - 19:17 | 5103308 Fuku Ben
Fuku Ben's picture

I'm optimistic about my Puts

Sat, 08/16/2014 - 19:21 | 5103315 Ban KKiller
Ban KKiller's picture

As long as some asshole doesn't "reach out" to me I am fine.

Sat, 08/16/2014 - 19:23 | 5103321 db51
db51's picture

Luke 21:28  GSIV   (Goldman Sachs International Version)

So when all these things begin to happen, stand and look up, for Tuesday is Coming!     BTFD

Sat, 08/16/2014 - 19:26 | 5103328 luna_man
luna_man's picture

 

 

Yeah, the only "bright spot" for me, still have income to pay for the things I think I still need.

 

could change for the worse any day now...all I see is change for the worse

Sat, 08/16/2014 - 19:25 | 5103329 Peter Pan
Peter Pan's picture

The mess reminds me of someone trying to cook three different meals in the same pot. The result is not going to be good.

Unless large swathes of unserviceable and therefore unpayable debt is wiped.
Unless military expenditure is curtailed.
Unless corporate welfare is reigned in.
Unless speculation through derivatives is reigned in.
Unless big pharma and medical costs are reigned in.
Unless bankers are jailed for the same things other people are jailed such as laundering.
Unless we make a start on this list......no chart is going to be intrinsically hopeful and promising.

Sat, 08/16/2014 - 19:25 | 5103330 seek
seek's picture

I love it when mainstream news stories get called out like this. The original feel-good Quartz story was an absolute crock of shit.

It just goes to show how carefully selected "facts" can paint a completely false picture of reality to those unaware.

Sat, 08/16/2014 - 19:56 | 5103392 PeeramidIdeologies
PeeramidIdeologies's picture

Easily on of my favourite aspects of ZH. There are two sides to every tale, and usually the more bias one is, the father from the truth be the tale.

Sat, 08/16/2014 - 22:17 | 5103674 Yen Cross
Yen Cross's picture

How's that pyramid working out SEEK?

   I levitate @ GMT minus-8

Mon, 08/18/2014 - 14:37 | 5109917 seek
seek's picture

Just caught this. Still up 100s of % but man is pricing acting strange the last few days.

Sat, 08/16/2014 - 19:28 | 5103332 Spitzer
Spitzer's picture

I'm greatfull that some people still have the energy to expose this Keynesian claptrap for what it is. Cuz I sure don't

And someone please send this to Kyle Bass. He is bullish. I repeat, Kyle fcking Bass is bullish.

Sat, 08/16/2014 - 19:35 | 5103350 El Hosel
El Hosel's picture

Show the chart for the increase in MOAR..... for us slowsky's.

Sat, 08/16/2014 - 19:38 | 5103361 MedicalQuack
MedicalQuack's picture

Well you missed one here:)  Zero Hedge  does such a good job on manipulation of gold for sure but I ran across this article in the New York Times.  They did some really good investigative reporting here.  Now it's all about manipulating the power grid, electricity in other words.  Some quants found their way around the abilities of the utility companies to siphon off profits there too.  According to the article it has not received a lot of attention, but it explains why electricity keeps going up and the utility companies don't get to share in the derivatives here and hedge when there's demand on the power grid to where congestion contracts come into play. Heck Monsanto is making it hard for farmers to hedge as well with planting seeds that now carry IP protection..it's nuts! 

They nail them, power companies are screwed as the Quant have figured out to how siphon that money off as well.  So think of it this way, when power demands are high the quants are out after those contracts to make a few million in a matter of maybe 48 hours or a little less or maybe a little more.

http://ducknetweb.blogspot.com.es/2014/08/quant-run-investment-companies...

We need to start also calling foul on some of these proprietary models too, whether it's in finance or health care or whatever, and stop believing every news article or marketing scheme that's put in front of us.

http://ducknetweb.blogspot.com/2014/08/somebody-needs-to-start-calling-f...

 

 

Sat, 08/16/2014 - 20:05 | 5103401 Dead Man Walking
Dead Man Walking's picture

great, so now our utility bills go straight to some parasite banker.  WTF !

Sat, 08/16/2014 - 21:19 | 5103556 Captain Obvious.
Captain Obvious.'s picture

They nail them

Has a special meaning around here.

Sat, 08/16/2014 - 21:26 | 5103567 adr
adr's picture

There is no limit to the depths the tribe will go to squeeze every penny from the populace. Never adding anything of value.

Sat, 08/16/2014 - 19:45 | 5103371 Icebramovich
Icebramovich's picture

All the empires fall down, and the empires fell down for economic problems.

 

Although USA still has a powerful  big  army, they will fall down because of this problems. I´m sure of this

Sat, 08/16/2014 - 19:54 | 5103387 DirkDiggler11
DirkDiggler11's picture

Another ZH article that leaves you with just one remaining investment "thesis" is you will... Buy guns, Ammo, Gold, Silver and of course food.

Sat, 08/16/2014 - 19:57 | 5103390 Atomizer
Atomizer's picture

Just print moar counterfeit USD 

Pat the lambs on the head . Bhha, bhaa.

Sat, 08/16/2014 - 20:02 | 5103396 alexcojones
alexcojones's picture

Optimistic? you Bet!

Gonna get me an Elio, 86 MPG, a Ukraine or Russian Bride, and some "Bad Idea" T-shirts,

ALL of THIS from the side ads on ZEROHEDGE.

Would YOU drive this 'car'? £4,000 Elio needs stabilisers
Sat, 08/16/2014 - 20:10 | 5103413 NoPension
NoPension's picture

Got my eye on the "seed vault" in the blue dress. And those eyes!

Sat, 08/16/2014 - 20:42 | 5103480 MrSteve
MrSteve's picture

Just a thought brother, but You ought to go real slow on ordering up one of those Uke or Russkie brides or the current Old Lady might get really torqued up. Plus, you don't really want your new bride's brothers and cousins coming to "visit" so soon after the wedding night. Might get kinda jammed up in more ways than you can imagine.... just sayin'.

Sat, 08/16/2014 - 20:04 | 5103399 homiegot
homiegot's picture

Long Ferguson, MO.

Sat, 08/16/2014 - 20:13 | 5103419 NoPension
NoPension's picture

Get the popcorn ready for the curfew.
Gonna be a "reelly good shew" this evening .

Sat, 08/16/2014 - 20:10 | 5103415 Dead Man Walking
Dead Man Walking's picture

Seriously, in an article about how bad off the Ukraine is, I was looking at their houses..they  seemed pretty nice, and they were on acreage.  Sure, maybe their electricity in undependable, but do they pay 20cents per KWH like i do, and are their taxes and mortgage overwhelming?  Probably not.  I bet it's nicer to live there than NJ. We pay 1/2 of our salary to the govt and the other half to the bankers.  I bet their  kids are not autistic from poison vaccines, either.

 

Sat, 08/16/2014 - 21:08 | 5103534 TeethVillage88s
TeethVillage88s's picture

Repost from other thread:

;

I think you are Identifying "Trans-National Government or Trans-National Government Officials & Diplomats"

Trends:

A) Presidents that Lie about war & Suppress Individual Rights & Constitutions... and otherwise abandon Geneva Conventions that made us GREAT and Stated that as a People we abhorred Aggressive War
B) Personally now I am Questioning if US Federal Government had a Coup in 1947 or before this... in favor of acting like an Empire
C) Reasons for House of Lords, House of Commons, or US Congress to Lie has always been clear, It is the Influence of Money, Power, Status, Legacy
D) Royal Families were never fully Denounced, Haciendas were never Reformed with Land Reforms... and Today we live with Government Service Families who are rich & believe they are Royalty... while we create a new threat... the Tech Dynasties or the Newly Rich who join Government Personalities knowingly or unknowingly to advance Fascist Agendas

But I don't stop there.

Knowledge is power, and all European Families seem to know this and work to keep education from commoners. Petroleum, Bitumen, and Gas products have lead to a new age starting in like 19th Century. But what if this is based on Sumerian Technology that was known to Germans, Jews, the Vatican, the French, the Dutch, and the British Empire?

We see Royal Families in Europe that have done well... same as the above but add the Luxemburg, Lichtenstein, Belgium, and Switzerland. Norway & Sweden discovered oil later I guess.

Knowledge creates classes. The french & English explored Egypt & ancient Iraq and discovered the knowledge of the Sumerians in use for Alcohol in medicine and the value of bitumens.

A) German Drive for ancient knowledge and a pipe line from Iraq considered major in WWII
B) UK Colonized Middle East and confiscated all ancient artifacts
C) Africa was old mining resource that attracted Germany, France, British Empire, and Dutch.
D) "Naphta" is the most commonly used word for petroleum product and is linguistically derived from Sumeria
E) Sumeria is situated on Iraq
F) Sumeria was an agricultural, animal husbandry & metallurgy based society that also had the most words for Petro, Oil, Gas, Alcohol, and Bitumen

- Trans-National Government Officials could give a crap about your economic well being...
- you are just labor, military fodder, or a source of energy
- Profits & Wealth mean more to these Sociopaths.
- US & UK States of Serfdom & Indentured Servitude.

Sun, 08/17/2014 - 13:54 | 5105470 photonsoflight
photonsoflight's picture

SHHHH. Thats forbidden knowledge.

Sun, 08/17/2014 - 20:13 | 5106570 BeetleBailey
BeetleBailey's picture

"B) Personally now I am Questioning if US Federal Government had a Coup in 1947 or before this... in favor of acting like an Empire"

That was in 1913. The Federal Reserve Act.

ALLLLLLLL DOWNHILL FROM THERE

Sat, 08/16/2014 - 21:17 | 5103551 Grouchy Marx
Grouchy Marx's picture

It's nicer to live anywhere rather than NJ.

Just sayin'.

Sat, 08/16/2014 - 20:11 | 5103417 dolbiere
dolbiere's picture

next step will be to add estimations for the drug trade and prostitution to the gdp and everything will be rosy.

Sat, 08/16/2014 - 20:19 | 5103433 Atomizer
Atomizer's picture

The dispatched group of illegal aliens will save the day. US educational book editors are working hard to release the new publication of Spanglish.

Book sales are expected to reach the trillions. Spokesmen stated, words by phonetics is a outdated platform in teaching children today. 

/ sarc 

Sat, 08/16/2014 - 20:31 | 5103460 Yen Cross
Yen Cross's picture

 Blahh...Blahh. Burp.

 Long corrugated cardboard.

  It'd be  FUCKING  " ground hog' day!

Sat, 08/16/2014 - 20:46 | 5103489 Atomizer
Atomizer's picture

Glad to see your doing well, Mrs Atomizer just returned from a 2 week stint. Today was my first time in posting. Gave it a break. Focused on her. Missed her nagging 

;-)

Sat, 08/16/2014 - 22:13 | 5103660 Yen Cross
Yen Cross's picture

 NOTHING! Will change my mind Atomizer/ I'd expect NOTHING less from you!

  Okay fuktrards, refuktards<  The Dail;y chart usd/jpy peaked in 8-"13

  usd/jpy is going to get ass>raped over the next  (4) weeks.

 I'm stealing your "ash tray" coin!

Sat, 08/16/2014 - 22:35 | 5103712 disabledvet
disabledvet's picture

We don't have a Fukushima (yet) in the USA, we didn't have a Trichet in 2008 yet either. We do have Barry problem....which gives lie to the whole "put one their own in the White House and that will keep them appeased." Nay, veerily...the riots go on apace.

We have a solution to what ails America all right...it's called a MILITARY solution! Eeeee hawww!

Sun, 08/17/2014 - 06:09 | 5104463 BeetleBailey
BeetleBailey's picture

Yen....how many dicks down in this ass raping do you see?

102.66 tops it?

 

Sat, 08/16/2014 - 21:18 | 5103555 MedicalQuack
MedicalQuack's picture

Here's one more example of Quants in business and this is with Medicare as some of quants that used to work at hedge funds are over there now.  Felix Salmon made a statement earlier this year and he was right "Quants just literally destroy any business they get in to as they don't know when to stop" and I think there's some logic to that.  I used to program and I know the addictive process of queries and trying to find value but this is sophisticated up beyond that level and watch the Quants of Wall Street if you don't understand what they do.

http://ducknetweb.blogspot.hk/2012/09/quants-alchemists-of-wall-street-v...

Quants don't know when to stop and their big rush is a math model that makes money and I don't know how many anymore follow the modelers code of ethics in the video above created by Paul Wilmott and Emanuel Derman but I get the impression not too many of late.  Those two are the good guys who started out in the early days and saw this evolve and got out and now just teach and no more hands on models to make banks rich. 

Here's the next chapter with Quants with insurance companies and Medicare and we all know they were seeing some nice profits.  Well let's do a little math here and take our billings that we bill Medicare for with providing Medicare Advantage policies for seniors.  It's a very complex model, but let's whip it up a level ad we can bury some code in here and collect more money.  They did that to the sound of $70 billion for 5-6 years until a recent audit from Medicare just caught it.  Hey it worked for years before an audit, right?  Where does the manipulation come in?  Same old thing "risk"...so as patients were covered longer they had a model that would upwards adjust risk so they could get paid more.  It's the opposite of hiding risk in this case.

The auditors indeed noticed some patterns here so that tells me this was very algorithmically plotted and modeled and insurers figured it would be a while before Medicare caught up with them so $70 billion over 5-6 years, sounds like their profits if you ask me.  They had nothing to lose here because any under any threats, they just start cutting services for Grandma and Grandpa.  It really pretty much stinks as a model.  The government threatened to cut their Medicare Advantage rates so they just went in and created a model to get it anyway.

http://ducknetweb.blogspot.com/2014/08/cms-discovers-that-insurers-offer...

But for one insurer, United it was not enough and mind you these folks got caught at this game before by Cuomo for short paying MDs for out of network for 15 years and had to settle an AMA class action lawsuit a couple years ago.  They are firing MDs right and left who take care of Medicare Advantage patients and offer no reason.  Won't tell MDs a thing.  Grandma and Grandpa have to change doctors, etc. And again, it's a model where they cut down their bookkeeping on how many MD NPI accounts they have to manage and of course somewhere in there they get a chance to maybe reduce the MD pay once more.

HHS just loves these folks though, and United makes a killing off the government as they have at least 15 pages of subsidiary companies and many have big government contracts too. 

http://ducknetweb.blogspot.com/2014/08/the-secret-scoring-of-americas.html

So that's the latest bad quant rip if you will and when the government will hire some good quants, God only knows but another example of how this works with math models, just like Wall Street to make money, as their weapons are their brains on how do this with computer code. 

The only government agency that's getting a little wise is the Office of the US Comptroller and MIT is helping them out with better quants to double check math models use by banks and how much code they really get to see I don't know.  This is the federal agency that gets to collect all the bank and financial fines so it's a good place to start. 

 

Sat, 08/16/2014 - 22:44 | 5103743 q99x2
q99x2's picture

BTFD

Sat, 08/16/2014 - 23:16 | 5103835 22winmag
22winmag's picture

Chart 7 is why I'm stacking gold, bullets, and sardines.

Sun, 08/17/2014 - 01:28 | 5104182 hooligan2009
hooligan2009's picture

where is the chart for total hours worked = part time hours plus full time hours?

Sun, 08/17/2014 - 07:19 | 5104525 goldhedge
goldhedge's picture

Amerika Stronk Crew where are you?

Sun, 08/17/2014 - 08:53 | 5104648 Bemused Observer
Bemused Observer's picture

If I have to consult 7 charts to find out how the economy is doing, then I'm thinking the answer is probably "Not so good."

Either that, or I need to get out more.

Sun, 08/17/2014 - 17:30 | 5106144 Hohum
Hohum's picture

The credit is still flowing, so it's all good.  When that stops, it's all not good.

Do NOT follow this link or you will be banned from the site!