Thursday, December 3, 2009

Hey, Is That A Gauntlet Over There?

While I don't consider myself a "doom and gloomer" -- more a realist, I'd hope -- I tried on the shoe my co-blogger NDD offered up and while it didn't fit exactly, it came close enough.

So first, to try to demonstrate that I'm not Chicken Little, here are some excerpts that I think portray a balanced point of view (in response to NDD's challenge):

Dec 1

Industrial Production appears to have carved out at least (let's hope) a temporary bottom, and is one metric we can look at as a positive, notwithstanding that it's taken a whole lot of government largesse to get us there.

November 24

This [referring to FOMC minutes excerpt], to me, encapsulates exactly where we are right now -- still on life support without a clue as to how the patient might fare if it were withdrawn. In all, I think the FOMC minutes were another "things are less bad" report, but there are still very real concerns about the fragility of whatever recovery we may experience and the ease with which it might jump the tracks.

November 24

Though not necessarily cause for concern, the decline [in the CFNAI 3-mo MA] is certainly worth keeping an eye on. As one data point does not a trend make, I'll simply suggest this could be a yellow flag.

November 9

There were, in my opinion, only two needles to be found in Friday’s NFP haystack:

1) The previous two months’ revisions were positive to the tune of about 91k
2) There was a 34k add in temp help (often a leading indicator for the labor market)

November 2

To be crystal clear on where I stand:

1) My primary concern is -- and always has been -- about the "handoff" or sustainability of growth. I think we can all agree that the government can't -- and shouldn't -- prop up the economy indefinitely. I get all the Keynesian stuff, but the government "bridge," such as it is, has to let you off on the other side at some point. My visibility as to where that might be is still extremely hazy.
2) I was for the stimulus package. In fact, I was for a bigger stimulus package. And while I'm not bemoaning -- only pointing out -- that last week's 3.5 print was largely government subsidized, I always seem to be left wondering, "Where do we go from here?" What is going to be the driver, the growth catalyst, to get GDP back up the sustainable trend (~3.0 or so) we require to get to fuller employment and see some wage growth? This is something that could have been -- should have been -- under discussion six months ago and is, as best I can see, still not.
3) My concern about sustainability is focused on the consumer.

Sept. 19

I’d be a fool not to acknowledge that most of the recent economic releases have been better than expected, particularly as relates to the [sic] most of the headline numbers. However, I’m still not sold on the sustainability, and in some cases I don’t necessarily like what I see lurking beneath the surface. I continue to believe that when it comes time for the government to hand-off the spending baton to the American consumer, the transition might not go as smoothly as everyone seems to think it will.

And on C4C:
The question needs to be asked: How many more vehicles/driver are we going to put on the road? How many cars/driver do we really need? Further, I will respectfully disagree with Bonddad and state for the record that there’s little doubt in my mind that Cash for Clunkers pulled forward some (perhaps unquantifiable) amount of future sales. The run rate didn’t go from ~9MM annually to ~13MM annually on its own. Unfortunately, it appears we’re headed back down toward ~9MM again, so it’s hard to believe the Clunker program didn’t cannibalize some Q4 sales. Keep in mind, too, that scrappage is about 12MM vehicles/year so we are, in fact, taking cars off the road, which would be consistent with the trend of the chart above beginning to turn down.
I think my Sept. 19 comment -- 2 1/2 months later -- is beginning to play out, and as NDD mentioned, Paul Krugman invoked the specter of a double-dip on his blog just yesterday.

To me, it really all boils down -- as I've said countless times -- to the consumer and jobs, jobs, jobs. To that end, I intend to have some employment-related posts (with what I hope will be some nifty chart work) up fairly soon. (Let's just say I don't think we need to debate whether or not this will be a jobless recovery -- it already is.)