Or select individually:
- Here’s The Trend Obama Is Fighting, If He Wants To Save American Manufacturing
- In Case It Wasn’t Obvious That The Homebuyer Tax Credit Created A Huge Distortion
- The “Distressing Gap” Between New And Existing Home Sales Still Isn’t Closed
- Today’s ‘Good’ Unemployment Data Masked A Huge Jump In Emergency Claims
- Without Government Spending, GDP Growth Would Have Been Less Than Half Of What It Was
The economy goes in and out, and from time to time the US manufacturing sector booms.
But this chart, put together by Paul Kedrosky, makes it pretty clear: as a share of total non-farm payrolls, manufacturing jobs are only going in one direction (down).
What's more, it's not even choppy. It's just a straight line sloping down.
That's quite a trend to turn around.
This morning the NAR reported that existing home sales in July plunged 27.2%.
Not surprisingly, the end of the homebuyer tax credit caused these sales to fall off a cliff. People just didn't realise how high that cliff was.
In case there were any doubt that it made a difference, check out this chart from Waverly Advisors which shades in the period of the tax credit.
Home sales started rising immediately, and have fallen off immediately with the tax credit's expiry.
Quick Congress, time for another! (Kidding!)
Bill McBride of Calculated Risk points out the 'distressing gap' between between existing home sales and new home sales. Notably, most of the buying on the market has been of distressed properties and, according to Calculated Risk, this is what is allowing existing homes to remain above the less flexibly priced new homes.
Here's why today's jobless claims data wasn't quite as good as the headline number made it out to be. Yes, initial jobless claims for the week ending August 21st were 473,000, which was lower than consensus had forecast, and below the 500,000 level broken one week ago. Continuing unemployment claims also shrunk.
The latest report described a 200,000 jump in people seeking emergency unemployment extensions (Emergency Unemployment Compensation, EUC*), for the week ending August 7th, which is the latest data. As shown by a chart from Waverly Advisors below, emergency unemployment claims have shot up markedly as percentage of the workforce.
The number of claimants under all emergency extensions for the week ending August 7th expanded by 200k to 4.9 million. In context, the total receiving benefit extensions is now back over 3% of the civilian work force and at the highest level since April.
*Emergency Unemployment Compensation is provided as a temporary Federal extension for the unemployed who have already used up their regular state benefits.
The latest revision for U.S. Q2 GDP came in at 1.6%, which was higher than the 1.3% reading expected by consensus, but well below the 2.4% value previously reported by the government. Thing is, the latest GDP report shows just how dependent the U.S. economy was on government spending during the second quarter.
Government spending contributed +0.86% to the 1.6% GDP growth value, which was one of the highest quarterly government contribution to GDP since at least 2007. The only quarters to beat it since the beginning fo 2007 were Q3 of 2008 and Q2 of 2009, at +1.04% and +1.24% respectively.
Sans the 0.86% government spending boost, U.S. GDP would have grown by just 0.74% during Q2 of this year. This is shown by the right-hand bar below.
Yes the economy is more complex than such straight subtractions, but while the exact GDP effect by government is debatable, what's clear is that Q2 relied heavily upon government spending. Government spending's +0.86% contribution accounts for more than half of GDP growth. To put this in perspective, even during all of 2009, the 'big stimulus' year, government spending only contributed +0.32% to GDP. Thus Q2's +0.86% is nothing to sneeze at relative to a tiny +1.6% total growth rate.
This sheds light on the challenge for U.S. Q3 GDP, as government spending support is expected to wane going forward.
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