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Something weird is happening with the economic data in September: It’s OK!Datapoint after datapoint screams: The economy is mediocre, but it’s not collapsing.
- The September jobs report was a lot better than the August jobs report.
- Rail traffic is growing.
- Car sales were downright HOT in September.
- Retail sales? Check.
- Construction spending was fine too.
There was certainly some weak data, as things are not amazing, but the numbers haven’t been heart-stopping the way some of the August numbers were (like that goose-egg jobs report, which later got revised higher).
So what’s going on?
One theory that’s clearly pretty hot: The economy this summer suffered a confidence shock with the debt ceiling crisis, causing an artificial slowdown.
There’s a basis for this. A poll showed that the whole fiasco hit consumer confidence in the same way as Katrina and 9/11 did.
This table from Calculated Risk shows how long it’s taken, historically, to rebound from external shocks in consumer confidence.
Event Driven Declines in Consumer SentimentEvent Date Bounce BackImpact on ConsumptionOther Factors1987 Market Crash Oct-87 2 Months None None Gulf War Aug-90 6 Months PCE declined Recession, Oil Prices Doubled 9/11 Sep-01 4 months PCE declined 3 out of 4 months Recession Iraq Invasion Mar-03 2 Months None Oil Prices increased 10%+ Hurricane Katrina Aug-05 3 Months PCE declined 2 months Oil Prices increased 10%+ Debt Ceiling Aug-11 — — European Crisis, Weak RecoverySo this is the hot new meme: The economy is OK, but we had a damaging freakout at an inopportune time and now we’re recovering (knock on wood, anyway).
Regardless, even the bears have to marvel, we think, at the resilience of the U.S., which has had so much thrown at it this year (Japan, the oil shock, the debt ceiling, the general Washington embarrassment, the European collapse), and yet still the economy isn’t collapsed.