Saturday, September 17, 2011

Weekly Indicators: ominous signs of jobs and economic contraction edition

- by New Deal democrat

In monthly reports released during the last week, consumer prices were up more than expected, +0.4% in August and up 3.8% YoY. Retail sales, however, were flat in August and further, July's report was revised down to +0.3%. This means that for the last two months, real retail sales have turned negative. This is a number watched by the NBER and also is a leading indicator specifically for jobs in the coming months. New York and Philadelphia region manufacturing indexes were also negative. On the positive side, industrial production was up as was capacity utilization. Consumer confidence also rebounded slightly in the first half of this month.

There has now been enough contraction in enough of the high frequency weekly indicators to make me think that overall economic contraction, and specifically job contraction, may have begun. Let's start with the ominous reports bearing on September nonfarm payrolls:

The BLS reported that Initial jobless claims rose 14,000 to 428,000. The four week average increased to 419,500. This is unwelcome and does not bode well for the September jobs report.

Adjusting +1.07% due to the 2011 tax compromise, the Daily Treasury Statement showed that for the first 10 days of September 2011, $69.7 B was collected vs. $70.8 a year ago, meaning that there was an actual decrease of $1.1 B. For the last 20 days, $121.9 B was collected vs. $122.3 B a year ago, for a decrease of -0.3%. That this has turned in a YoY loss is also ominous for the September jobs number. Matt Trivisonno also keeps note of these reports, and he has posted a detailed note here, along with an excellent graph. As of his last report, YoY withholding is still up about 1.5%. While we have to track these YoY due to seasonality, this means that the data will lag the actual turning point. Thus I am particularly concerned with any negative report.

Here are the other numbers in contraction, in general order of their importance:

Oil finished at $87.58 a barrel on Friday, essentially unchanged from a week ago. Gas at the pump fell $.01 to $3.72 a gallon. Gasoline usage was -1.9% lower than a year ago, at 8848 M gallons vs. 9019 M a year ago. With the exception of a few weeks, gasoline usage has been negative for half a year. While measured as West Texas Crude, oil is about $7 below its recession trigger level, gas at the pump may be the better measure, and this is about $.30 above its inflation adjusted recession trigger level from 2007.

The Mortgage Bankers' Association reported that seasonally adjusted mortgage applications increased 7.0% last week. For the fifth week in a row, however, the YoY comparison in purchase mortgages was negative, down -7.2% YoY. On the other hand this decrease does not change the overall flatness of purchase mortgage applications for the last 16 months. Refinancing increased 6.0% w/w with near record low interest rates.

The American Staffing Association Index decreased again one point to 87. This series has completely stalled at the 87-88 range for close to 3 months.

Weekly BAA commercial bond rates fell 0.16% to 5.24%. Yields on 10 year treasury bonds decreased .18% to 1.99%. This continues the recent trend of increasing spreads between these two rates, as well as overall weakness, and so indicates a continuing slight increase in the relative distress in the corporate market, further indicating increased relative fear of rising corporate defaults.

Retail same store sales showed their first sign of turning south. While the ICSC reported that same store sales for the week of September 3 increased 3.3% YoY, and also increased 1.7% week over week, Shoppertrak reported that YoY sales were completely flat -- the worst showing all year -- and were up a poor 0.8% week over week increase.

There are still several reports supporting optimism, however:

YoY weekly median asking house prices from 54 metropolitan areas at Housing Tracker showed that the asking prices only declined -1.8% YoY. This is yet another record smallest YoY decline in the 5 year history of this series (YoY measurements were possible beginning in April 2007). . The areas with YoY% increases in price increased by one to 14. The areas with double-digit YoY% declines also increased by one to 4. If the current trend continues, nationwide asking prices will be YoY positive by the end of this year, meaning that a bottom has occurred. Whether the recent restart in the foreclosure process by several big banks in several states reverses this trend becomes the next question. Probably most observers think it will be awful no good terrible rotten, but they have also completely missed the trend towards stabilization this year. Personally I think the result will be much more muted.

The American Association of Railroads reported that total carloads increased 1.0% YoY, up 5400 carloads YoY to 539,200. Intermodal traffic (a proxy for imports and exports) was up 2300 carloads, or 1.0% YoY. The remaining baseline plus cyclical traffic was also up 3200 carloads, or 1.1 YoY%. Using the breakdown of cyclical vs. baseline traffic from Railfax, baseline traffic was down 3200 carloads, or -1.7%YoY, while cyclical traffic was up 5400 carloads, or +5.0% YoY. Rail traffic has been negative YoY for 5 of the last 10 weeks.

Money supply continued to surge. M1 was up 0.6% for the week, and also increased 1.5% m/m, and 21.4% YoY, so Real M1 was up 17.6%. M2 increased 0.2% w/w, and also increased 0.9% m/m, and 10.4% YoY, so Real M2 was up 6.6%. The YoY increase in both M1 and M2 continue near historic high levels. To reiterate my statement from last week, while I believe that European panic is a likely source for this recent sharp increase, which means it is "hot money" that could decrease just as quickly, nevertheless this time it's not different. Over a very long history an increase in real money supply has been a good thing and in my opinion should be regarded as such now.

The NBER dating committee is known to watch at least 5 indicators: nonfarm payrolls, aggregate hours worked, industrial production, real retail sales, and real income. Two of these have now turned negative, one is flat, and two remain positive. Should the negative trends continue - and I emphasize that there is no guarantee that they will - at some point the NBER could date a new recession from this month, September 2011.

Nevertheless enjoy this early autumn-like weekend!

Friday, September 16, 2011

No -- REALLY -- austerity is anti-growth

From the FT:

Sharply-revising down growth forecasts for the 27-country region, the Brussels’ executive warned on Thursday that prospects had been hit by financial market turmoil, fiscal austerity, tumbling business and consumer confidence and weaker global demand.

I realize I'm beating a dead horse.  However, austerity cuts growth.  It's that simple.   It's the commonly accepted economic position and it's the actual result that occurs in the real world when the policy is implemented. 

Bonddad Linkfest

  1. Operation twist isn't all its cracked up to be.
  2. Fiscal fix needed for jobs situation
  3. Boehner affirms no taxes in deficit reduction plan
  4. Economists say recession more likely
  5. Lagarde sees crisis of confidence
  6. Possible early freeze might hit corn crops
    China is still buying treasuries

USDA Releases Crop Update

From the USDA:

Corn production is forecast at 12.5 billion bushels, down 3 percent from the August forecast but up fractionally from 2010. If realized, this will be the third largest production total on record for the United States. Based on conditions as of September 1, yields are expected to average 148.1 bushels per acre, down 4.9 bushels from the August 1 forecast and down 4.7 bushels from 2010. If realized, this will be the lowest average yield in the United States since 2005.

Soybean production is forecast at 3.09 billion bushels, up 1 percent from August but down 7 percent from last year. Based on September 1 conditions, yields are expected to average 41.8 bushels per acre, up 0.4 bushel from last month but down 1.7 bushels from last year. Compared with last month, yield forecasts are higher in the Central Great Plains and along much of the Atlantic Coast. If realized, the forecasted yield in Nebraska will be a record high. Yield forecasts are below last month across the Southern Great Plains and portions of the Southeast as hot, dry conditions persisted during August. Area for harvest in the United States is forecast at 73.8 million acres, unchanged from August but down 4 percent from 2010.

All cotton production is forecast at 16.6 million 480-pound bales, up fractionally from last month but down 9 percent from last year. Yield is expected to average 807 pounds per harvested acre, down 5 pounds from last year. Upland cotton production is forecast at 15.8 million 480-pound bales, down 10 percent from 2010. American Pima production, forecast at 737,200 bales, was carried forward from last month.

While energy gets the headlines, the condition of the US agricultural complex is just as important from an inflationary perspective.  

Morning Market

The dollar is in interesting technical shape.  Prices have moved higher -- above he 200 day EMA and through important technical price levels -- but we haven't see a big move up in the A/D and/or CMF.  However, the MACD is very bullish, but perhaps over extended.  In other words, the underlying technicals are weak.  This is somewhat backed-up by the fundamentals, as EU officials have done a pretty good job of battling back against negative publicity.

The five minute chart shows prices consolidated for a 5-day period, and have now moved lower.  But prices have settled around a price level established before the gap higher.  On the daily chart, we're right at the 10 day EMA. 

The 5-minute chart shows that prices have broken through key resistance and are now in a three day uptrend.  However,

Prices are still contained in an upward sloping trend line and, currently, by the 50 day EMA.  The A/D and CMF show a slight move into the market.  Additionally, the MACD is also positive (but still in negative territory).   Overall, my guess is that the market is currently waiting to see how the jobs bill pans out to see if the economy is going to get a meaningful nudge. If not, I would expect a sell-off as that is the only possible good news on the economic horizon.

Thursday, September 15, 2011

Treasury Market Update -- Safety or Inflation?

The treasury market is in an interesting place.  On one hand, it is the beneficiary of a safety bid in the market -- that is, traders see US treasury bonds as a safe bet in a churning sea.  At the same time, 12 month CPI is at 3.6%, so all treasury bonds are underwater from a real return perspective.  This leads to the question, how much higher can they go?

The SHYs (1-3 years) have been moving sideways for the last month, indicating the inflation issue is controlling.

Both ETFs in the belly of the curve (3-7 years) have recently broken uptrends.

The long end of the Treasury curve is approaching the trend line, but has not yet broken trend.

The charts indicate that, despite the safety bid occurring in the market, inflation concerns appear to be keeping treasury gains at bay.

Euro Convincingly Below Important Levels

The above chart is a two year chart of the euro ETF.  Prices have now moved below the 200 day EMA, a year and a half long trend line and recent lows in the 139/139.5 area established over the last 6 months.  The recent six month move can be viewed as a sideways rectangle consolidation after a long rally.  This is a strong and important technical development. 

The above chart is simply a close up of the price action.  Gaps are common on this chart, as the ETF is only open for trading during NY hours, but currency markets are 24 hours in length. However, the size of the recent drops is important.  Also note the high volume over the last week on the gap lower along with the bearish development in the EMAs -- the 10 day EMA has moved through the 200 day EMA and the 20 is about to do so as well.  Both will provide upside resistance should prices snap back.

Ideally, I'd wait for a move higher into one or more of the EMAs before shorting.  But this chart is developing into a nice short situation, which is bolstered by the fundamental EU situation.

Morning Market

As shown on the daily chart, the dollar is now consolidating gains right about the 200 day EMA -- a situation better shown on the 5-minute chart as a tight range between 21.79 and 22.05.  A consolidation -- especially after such a large move -- should be expected.  The dollar is in somewhat of an off place right now.  Although the US economy is clearly slowing and has incredibly low interest rates, we're the last safe haven around with both Japan and Switzerland demonstrating they will intervene to lower the value of their currency and the EU in disarray.  On the daily chart, don't be surprised to see the dollar fall back to the 10 day EMA, which is currently a bit above 21.6.

The 5 minute SPY chart shows prices have clearly moved out of a consolidation pattern, but the daily chart is still very weak: prices are still in a channel, the EMAs are still neutral and prices are below the 200 day EMA.  The equity markets are still very sick.  Ideally, prices need to move through the 50 day EMA on decent bars to convince me things are going to improve.  However, I still think we'll eventually move lower; there's just too much weight from the EMAs -- especially the longer one.

Gold is also consolidating.  The shorter EMAs are moving sideways and prices are using the 20 day EMA for technical support.  The EMAs are still bullishly aligned.  The 50 and 200 day EMA signal a very strong market.  My assumption is gold will continue to be a beneficiary of the safety trade, especially as US treasury yields continue to move into deeper negative territory. 

Wednesday, September 14, 2011

Why Supply Side Economics Won't Solve the Current Economic Malaise

There is currently a debate regarding the appropriate policy response to the current economic situation.  The arguments can be broken down along two lines -- supply side and Keynesian.  While supply side economics may be appropriate in some situations, they are completely inappropriate for the current problems we face.  

In general, supply side economics can be described thusly:
Supply-side economics is a school of macroeconomic thought that argues that economic growth can be most effectively created by lowering barriers for people to produce (supply) goods and services, such as lowering income tax and capital gains tax rates, and by allowing greater flexibility by reducing regulation. According to supply-side economics, consumers will then benefit from a greater supply of goods and services at lower prices. Typical policy recommendations of supply-side economics are lower marginal tax rates and less regulation
In thinking about the preceding, consider this simple chart of supply and demand:

What supply side policies are attempting to do is increase the supply of goods and services.  The underlying idea is that an increase in supply will satisfy more consumers wants thereby lowering prices for the economy as a whole and increasing overall growth.

Let's consider some of the general policies advocated.

Perhaps the most important policy advocated by supply side advocates is a reduction in overall taxes.  Now, let's think about what this would do by looking at the standard corporate income statement:

Notice the general orientation of the deductions (which apply both to individuals and companies).  First, the income statement lists a host of expenses to arrive at "net income before taxes" after which taxes are deducted.  So, the central idea of a cut in marginal tax rates is this will lead to an increase in income for the business and individual.  As to what is done with this increased income, little to no incentive is given.  Perhaps it will be spent in the economy, reinvested in the business or distributed to investors.  However, the central idea behind a reduction in tax rates is to increase the bottom line income thereby spurring the creation of business start-ups or increasing investment in ongoing businesses.  It's exceedingly important to remember that national income is the flip side to GDP -- and is considered by some economists to be a better measure of national growth. 

However, as the following data indicates, the above results are not needed in the current economy.

First, corporations have more than enough money on their respective balance sheets right now, as evidenced by the following chart:

Above is a chart from the St. Louis Reserve's FRED data system of total checkable deposits and currency assets on the balance sheet of non-farm, non-financial corporate business.  As the chart demonstrates, corporations have move than enough cash -- in fact, they have the highest amount of cash in the last 50 years.

Also consider that people are in fact saving again:

The above chart shows the savings rate has increased over the last 5 years.  As such, individuals need to start spending the money to get some velocity going (more on that below).

Secondly, tax rates are near their lowest in 50 years:

As explained by Reuters:

  • Federal taxes are the lowest in 60 years, which gives you a pretty good idea of why America’s long-term debt ratios are a big problem. If the taxes reverted to somewhere near their historical mean, the problem would be solved at a stroke.
  • Income taxes, in particular, both personal and corporate, are low and falling. That trend is not sustainable.
  • Employment taxes, by contrast—the regressive bit of the fiscal structure—are bearing a large and increasing share of the brunt. Any time that somebody starts complaining about how the poor don’t pay income tax, point them to this chart. Income taxes are just one part of the pie, and everybody with a job pays employment taxes.
  • There aren’t any wealth taxes, but the closest thing we’ve got—estate and gift taxes—have shrunk to zero, after contributing a non-negligible amount to the public fisc in earlier decades.
Put another way -- the country is not over-taxed.

Third, remember that the central idea of supply side tax cuts is to increase income.  It does nothing to increase spending.  As a result, there would be no increase in monetary velocity as a result of the policy -- meaning nothing would happen to the pace of transactions in the economy.  As the charts below indicate, this is a central problem with the current economic malaise -- things simply aren't moving in the economy:

As the three charts above indicate, the pace of transactions in the economy is very slow and dropping.  The reason is people and businesses are hoarding cash -- meaning that once they make a profit, they are banking that profit and not spending it.  While there is nothing inherently wrong with savings, the economy also needs transactions which the above data indicates are occurring at a snails pace.  In short, we need policies that encourage people to spend their money -- not hoard it.  And cutting taxes is not the answer to that problem.

And finally, consider this fact: taxes are already incredibly low and companies have ample cash.  Yet they are not creating jobs in any meaningful way.  As such, it's difficult to conclude that the current rate of low taxation needs to be lowered in any way to create jobs.

As for the regulation argument, consider this:
McClatchy reached out to owners of small businesses, many of them mom-and-pop operations, to find out whether they indeed were being choked by regulation, whether uncertainty over taxes affected their hiring plans and whether the health care overhaul was helping or hurting their business.

Their response was surprising.

None of the business owners complained about regulation in their particular industries, and most seemed to welcome it. Some pointed to the lack of regulation in mortgage lending as a principal cause of the financial crisis that brought about the Great Recession of 2007-09 and its grim aftermath.

Also consider this post from Mark Thoma.  Additionally, consider that lack of regulation -- in other words massive deregulation -- was a primary cause of the recent financial crisis.  Finally, the incredibly low monetary velocity numbers indicate there is a dearth of transactions in the economy -- meaning people and businesses are not spending money.  In short, the excessive regulation argument fails to provide an adequate answer for our current problems.

As the above data indicate, supply side policies are not needed in the current environment.  Businesses have ample cash on their balance sheets and yet are still not hiring people.  Neither businesses nor individuals are overtaxed; in fact, taxes as a percent of GDP are near their lowest in over 60 years.  And finally, there is no evidence that regulation is in fact the job killer many tout it to be.

There may be a time when supply side economics will be an appropriate policy response.  But now is not such a time.

Morning Market

The 5-minute, 10 day chart shows the SPYs are still consolidating in a triangle pattern.  Also note the extremely volatile nature of trading, especially in the last seven days.  There are 4 large gaps -- three lower and one higher.  That's a pretty extreme trading environment -- and one usually indicative of a bear market.

For the last three days, prices have hovered around key support levels.  Also notice the shorter EMAs are clearly providing resistance for trading.  If prices are going to move higher, they need to make a strong move through the 10 and 20 day EMA (which are also bearishly aligned).  I'm still of the opining prices will retest the 112 area over the next few weeks -- the fundamental news has nee too bearish and the chart has few positives.

While the technical of the long-end of the Treasury market are still positive, notice that prices have not moved significantly higher over the last few weeks -- despite having ample fundamental fodder to do so.  Remember the high negative yield the Treasury has right now -- meaning the only real return for a Treasury investor is capital appreciation.

On could argue the TLTs have formed a double top on the 5-minute charts.  But I think this is a bit of stretch -- the tops are not clear and strong.  I would instead argue prices are simply moving sideways.  111.50 is clearly an area of support for this market.

So, the equity and treasury markets are consolidating,

Tuesday, September 13, 2011

Copper Says Markets Suck

I was going to write a post on copper -- but Dragonfly capital beat me to it.  For those of you unfamiliar with the site, Greg Harmon is a great technical analyst who writes a lot about the market.  If you like charts, he should be on your regular reading list.

Bonddad Linkfest

  1. Job growth set to slow globally
  2. Global Slowdown Occurring
  3. Cotton prices my become more volatile
  4. IEA cuts global oil demand forecast
  5. Corn market downgraded
  6. Auto industry uses two tier wage system
  7. Italy turns to China for help
  8. Bachman comes back to life in GOP debate
  9. Perry goes on the defensive
  10. Portugal making reform progress

A Closer Look At Manufacturing

Manufacturing was a very important area of the economy for the last two years, as it was a big factor in getting the US out of recession.  However, over the last few months, there have been signs of a big slowdown.  So, let's take a look at the data to see where we are.

The overall ISM manufacturing index was doing well until four months ago when we saw a major drop.  While the overall readings are still above 50 -- indicating expansion -- there is a clear weakening trend to the numbers which is concerning.  According to the latest report, 10 of 18 industries are expanding while 6 are contracting.  Regarding the macro environment, consider these anecdotal comments from the same report:
  • "Earlier chemical price increases are beginning to soften." (Chemical Products)
  • "Business is soft, confidence is down, and we are cutting inventory and expenses." (Machinery)
  • "Exports continue to be strong — domestic weak." (Computer & Electronic Products)
  • "Domestic sales are showing small improvements. International sales are showing larger improvements." (Fabricated Metal Products)
  • "Demand remains constant and strong." (Paper Products)
  • "Current headwinds in the national and international economic environment have increased uncertainty, and are affecting our customers' willingness to commit to high-dollar equipment purchases." (Transportation Equipment)
  • "We continue to post solid numbers, but the situation seems tenuous." (Plastics & Rubber Products)
  • "Automotive business (represents 52 percent of our sales portfolio) continues to be strong. Core business has pulled back slightly." (Apparel, Leather & Allied Products)
  • "Sales continue to be sluggish." (Furniture & Related Products)
The comments indicate that international demand is still the driving force while domestic demand is weakening.  There is also a growing concern about the future, leading to customers pulling back on purchases.

The latest Empire state reading was decidedly negative:
The August Empire State Manufacturing Survey indicates that conditions for New York manufacturers continued to worsen. The general business conditions index fell four points to -7.7, its third consecutive negative reading. The new orders index also remained below zero, at -7.8, while the shipments index was positive at 3.0. The unfilled orders and inventories indexes dropped further into negative territory. Price indexes continued to retreat, with the prices paid index falling fifteen points to 28.3 and the prices received index falling three points to 2.2. The index for number of employees was slightly positive, while the average workweek index was slightly negative. Future indexes weakened significantly. The future general business conditions index plummeted twenty-four points to 8.7, its lowest level since February 2009, and the future new order 2001 readings. The capital expenditures index was also down sharply.
Three months in negative territory is a very bad development.  In addition, the internals are also weakening.  About the only positive in the report was that the level of negativity was shallow.  However, that does not make the situation that much better.

The Philly Fed is in fact weaker:
The survey’s broadest measure of manufacturing conditions, the diffusion index of current activity, decreased from a slightly positive reading of 3.2 in July to -30.7 in August. The index is now at its lowest level since March 2009 (see Chart). The demand for manufactured goods, as measured by the current new orders index, paralleled the decline in the general activity index, falling 27 points. The current shipments index fell 18 points and recorded its first negative reading since September of last year. Suggesting weakening activity, indexes for inventories, unfilled orders, and delivery times were all in negative territory this month.

This was in fact a crashing of the index; all the internals are much weaker over the last few months.  The severe drop into very negative territory in a one month period is deeply concerning.

The latest Richmond report is just as bad:
In August, the seasonally adjusted composite index of manufacturing activity — our broadest measure of manufacturing — declined nine points to −10 from July's reading of −1. Among the index's components, shipments lost sixteen points to −17, and new orders dropped six points to finish at −11, while the jobs index inched down three points to 1.
There is literally no good news in the above summation; it's all bad.

The Dallas report also shows weakness:
Texas factory activity was largely unchanged in August, according to business executives responding to the Texas Manufacturing Outlook Survey. The production index, a key measure of state manufacturing conditions, remained positive but fell from 10.8 to 1.1, suggesting growth stalled this month.

Most other measures of current manufacturing conditions indicated slower growth in August. The new orders index fell from 16 to 4.8 this month, suggesting order volumes continued to increase, but at a decelerated pace. The shipments index was positive and little changed, edging down from 7.8 to 6.7. The capacity utilization index dipped into negative territory in August, with one-quarter of manufacturers noting a decrease.
The latest KC manufacturing index was also weak:
The month-over-month composite index was 3 in August, unchanged from 3 in July and down from 14 in June (Tables 1 & 2, Chart). The composite index is an average of the production, new orders, employment, supplier delivery time, and raw materials inventory indexes
Manufacturing activity slowed in nondurable goods factories, while growth in factory activity increased in durable goods producing plants, particularly for machinery, fabricated metal, and electronic equipment products. Other month-over-month indexes were mixed in August. The
production index fell from 2 to -2, and the shipments index also moved into negative territory.
However, the new orders index rebounded after dropping last month, and the employment and new orders for export indexes also rose. Both inventory indexes fell for the second straight month.
The above data is very clear.  At the national level, overall manufacturing activity is right above contraction.  At some of the regional levels, we're seeing outright contract.  Regardless, the conclusion is clear: manufacturing is slowing and in fact may be near a stall.

Morning Market

Yesterday, equity prices did a bit of consolidation for most of the day.  The QQQs formed a triangle pattern in the AM, moved lower in a nicely organized channel and then broke out, moving sharply higher on extremely strong volume.  The reason for the jump was the news story that China and Italy were in talks, with China possibly providing financing not only for Italian bonds, but also possibly providing capital for some Italian companies. 

Pulling back to the 10 day view, we see the QQQs are consolidating in a triangle pattern. 

On the daily chart, the QQQs are right below an important two year trend line and the 200 day EMA (which is also moving lower).  But the shorter EMAs are moving sideways and are intertwined, indicating traders are neutral on the short-term outlook.  Prices are consolidating, with the upper and lower bands of their consolidation range tightening.

The dollar -- which was in a strong upward trend for most of the day, formed a double top near the end of trading, and then sold-off big on heavy volume on the Italy news.  As I mentioned yesterday, the dollar is very over-extended so a sell-off to consolidate gains wouldn't be a bad thing.

Monday, September 12, 2011

The great stock market crash of September 12, 2011

- by New Deal democrat

The latest Big Crisis in finance happened this morning. I know it happened because the lead Doomers said it would almost certainly happen today.

So, how bad was the carnage?

Bonddad Linkfest

  1. Italian industrial production drops
  2. Turkey continues growing at a strong pace
  3. More on the Turkish economy
  4. Indian industrial production slows
  5. India's inflation is a lesson for growing economies
  6. European costs to borrow dollars are increasing
  7. Is manufacturing falling off the US Radar screen?
  8. OPEC lowers oil demand projections
  9. Beef exports continue to surge
  10. Looking at education for clues on structural unemployment

Word Cloud of the Public's Perception of the Debt Ceiling Debate

I spent a fair amount of time talking/writing about the debt debate -- mostly in negative terms.  The fact Congress nearly sent us into default -- and was a leading cause (if not the leading cause) of the recent drop in economic activity -- shows just how incredibly stupid Congress actually is.

Now we have new research from Poling Opinion Strategies indicating the debate was a game changer.  To get a small idea of the research, I've included a word cloud of the description given by various focus group participants to the debate.  The entire research piece (given in power point) is a must read.  In short, Congress really dropped the ball.