Speaking today at the New York Economic Club in New York City, New York Federal Reserve President William C. Dudley shared his opinion that central banks should take a more active role in fighting asset bubbles…more

ADP released its National Jobs Report for March 2010 this morning, noting that the continued decline in jobs was “the smallest decline since employment began falling in February of 2008.” This report also included revised numbers for February 2010. These revisions were down in all sectors except Service.…more

The Bureau of Economic Analysis has released its report for February 2010 Personal Income and Outlays showing very small to no gains from January.…more

Gross Domestic Product and unemployment are two economic indicators that are reported frequently and thought to be closely related. One attempts to measure everything that is produced in an economy and the other attempts to measure the amount of the labor force that is currently out of work. I have charted out the numbers for both figures since 1990. First, we will look at Gross Domestic Product.…more

$34 billion dollars in 4 Week Treasury Bills were auctioned off today as the discount rate edged up slightly, but remained near zero…more

The National Association of Home Builders released their housing index report for March, on Monday, showing a decline of 2 points, back under it’s level from May of last year. The worst news came in a drop in traffic to below its levels from last March…more

The Federal Reserve release the Industrial Production report yesterday, showing a slight overall increase in production. The report is based on the 2002 industrial output average and the numbers are stated as a percentage of that average …more

The Congressional Budget Office released its budget report for February 2010 this past week, reporting a $655 billion deficit for the first five months of the fiscal year. The report states that outlays remained essentially unchanged from the year before, but the deficit was $65 billion more because of a 7% decrease in revenues…more

Last week I posted a piece regarding the dramatic rise in national debt. Alarming enough on its own, the national debt statistics only show part of the picture of government debt in the United States. Though the aggregated states and municipalities have not taken on as much debt as the national government, the numbers are still significant. Every state in the union currently carries a negative debt balance, but some are far worse than others.

When measured per capita, the states carrying the highest debt are Connecticut, Massachusetts, Hawaii, New Jersey and New York, holding between $2,000 and $5,000 of debt …more

The Bureau of Labor Statistics released the February 2010 Employment Situation Report today, showing the employment situation in the U.S. is largely unchanged since January…more

The Consumer Credit Report for January 2010 was released by the Federal Reserve last Friday, showing a modest gain in total consumer credit. The trend has been declining since 2008, with 2009 total credit going into the negative, representing a contraction in the credit market.

The most dramatic drops have been in revolving credit. This trend did not change for this report. Most non-revolving loans are collateralized, whereas revolving credit is represented mainly by credit cards and revolving credit lines at banks and credit unions. Declines in both markets were seen throughout 2009, with revolving credit bearing the brunt of the …more

JERUSALEM — Israel is still the third-strongest housing market in the world after losing its number-one ranking to Hong Kong and Taiwan in the second half of 2009, according to the Global Property Guide. Home prices were 15.5% higher in inflation-adjusted terms in the fourth quarter of 2009 than the corresponding quarter of 2008.

Israel is widely seen as the last Western country to fall into recession and the first to resume growth as a result of its monetary and fiscal polices combined with stricter lending-standards that caused the country to avoid the subprime-mortgage collapse.

In related news, the …more

No matter how large a country’s debt may seem when it is reported in the daily headlines, a debt figure in nominal terms is a useless statistic unless it can be placed in an relevant, economic context. A headline like “U.S. debt explodes to $13 trillion” is meaningless by itself.

To judge the debt level of a country, economists generally use a statistic that is the government debt as a percentage of gross domestic-product (GDP). The reasoning is simple: as long as government revenue grows more quickly than debt payments, the country is fiscally sound. (The government receives more revenue from …more

The Federal Reserve Money Supply Report was released today, showing an almost 1% contraction in January 2010. The chart below shows the month to month percent change in money supply since January 2008…more

The preliminary Factory Orders Report for January 2010 was released today by the U.S. Census Bureau, showing a modest increase in new orders at 1.7%. This number was revised down from the 3% gain reported in the advanced report for January 2010 on February 25.

The Department of Labor Jobless Claims report out today shows a 6% drop in initial unemployment claims when adjusted for seasonal variations, with 469,000 new claims this week compared to 498,000 last week…more

The European Central Bank decided today to keep the euro’s interest rate at 1% as analysts had expected. The annualized inflation-rate (PDF) is expected to reveal a decrease from 1.0% in January to 0.9% in February. Quarter-over-quarter GDP growth (PDF) across the continent remained level at 0.1% in the fourth quarter of 2009, in line with expectations.

Growth in retail sales (PDF) — an important measurement of consumer spending, roughly thirds of the economy — fell from 0.5% in December to -0.3% in January, matching expectations (see chart). Productivity PMI (PDF) declined from 56.9 in January to …more

The Monster Job Index for February 2010 was released this morning, showing gains in employment across most sectors of the economy…more

The Beige Book, a report issued by the Federal Reserve in advance of it’s next policy setting meeting on March 16 noted several key factors in the economy. It states that consumer spending is up in many districts but also notes that February snowstorms also hampered activity in others.

Commercial real estate was reported as weak in many districts as well as construction. Loan demand is also weak, and lending standards remain tight throughout the country.

Overall, the Fed states that economic conditions are improving, though the details show many areas of the economy remain weak.

The full report can be found here.

The measure of a successful partnership is not commonality in success but perseverance in hardship.

Take Europe. The continent is known for many things. It was the core of a Roman Empire that ruled and brought modernity (for the time) to the Iberian Peninsula, Gaul, Britain, central and southeastern Europe, northern Africa, Egypt, east Asia, and the Middle East. It nurtured an adolescent Christianity and brought the faith to the world. Its colonial empires brought civilization — and bloodshed — to every part of the world. Its kings and prime ministers waged war with each other for centuries over land …more

The ADP National Employment Report for February 2010 came out today. Here are some highlights from the report. These data are seasonally adjusted…more

Amid these turbulent economic times we have seen many changes, not least of which is the change in the U.S. National Debt. The debt, which has been steadily climbing since the beginning of the last century, has, of late, taken an unprecedented surge…more

The economic calendar was fairly slow today, but a few officials from the Fed were out and about speaking, as reported by >Mortgage News Daily. …more

The Baltic Dry Index was up 22 points yesterday, trading at 2760, capping off a 53 point (1.96%) gain for the past five days of trading. Over a year in volatile trading, the index gained 746 points (37.04%), though down 40.56% from its peak of 4643 on November 18, 2009. …more

The Consumer Price Index (PDF) in the European Union fell slightly from 1.0% in December 2009 to 0.9% in January 2010, according to statistics released today. Analysts had expected the CPI measurement, a general reading of the cost of consumer goods, to remain level instead of indicating minor deflation.

The Producer Price Index (PDF) in the region rose from 0.1% in December 2009 to 0.7% in January 2010 as expectations has forecast (see above). The index measures the change in prices that sellers pay for products from industrial, commodity, and state-of-processing-based companies.

Italy

CPI remained level (PDF) at 0.1% from January …more

The US Census Bureau released its Construction Spending report yesterday, showing declines in construction in the private sector, with some public sector increases. Here are some highlights: …more

The Institute for Supply management released its February 2010 Manufacturing Report on Busines this morning: …more

The Bureau of Economic Analysis released it’s Personal Income and Outlays report for January 2010 this morning, showing a slight increase in personal income before adjusting for inflation. The inflation adjusted numbers show a decrease in disposable personal income as well as an increase in personal consumption expenditures.

Carlton Smith is a Project Manager and Programmer living in Southeast Michigan. He is also the founder and Executive Editor of the web literary magazine Troubadour21.com. His blog can be found at UncleSol.net. Email Carlton at carlton@unclesol.net

The unemployment rate in the European Union (PDF) remained unchanged at 9.9% from December 2009 to January 2010, according to the official report released today.

The European Commission’s Manufacturing Purchasing Manager’s Index (PMI) rose slightly from 54.10 in December to 54.20 in January. Analysts had projected the index to stay at the prior month’s level. The measure indicates the overall health of the manufacturing sector and production growth across the countries that use the euro. A level of higher and lower than 50 indicates growth and contraction, respectively. Most of the growth came in the emerging economies of Easter Europe, …more

Federal Reserve Bank of Richmond President, Jeffrey Lacker spoke to Bloomberg Television today, as reported by BusinessWeek.

Federal Reserve Bank of Richmond President Jeffrey Lacker said the central bank is “being made a scapegoat” to satisfy anger over bailouts as Congress seeks to limit its consumer-protection and bank-supervision powers.

“People are mad at us,” Lacker said today in an interview with Bloomberg Television. “I can understand the ire after what happened in 2008. It was so unexpected, and it seemed to over- step boundaries that everyone thought we were going to obey.”

Lacker said he wouldn’t “second guess” moves by Federal Reserve Chairman …more

The FDIC announced last Tuesday that the number of troubled banks has risen from 552 in the third quarter of 2009 to 702 for the fourth quarter and that the fund may have to cover up to $20 billion in additional losses by 2013.

JERUSALEM — Israel has always been viewed, at least by its supporters, as a miraculous place. And as the Great Recession continues to ravage the West, the Jewish state has surprised the world again by outperforming many countries during the crisis.

Israel’s GDP (see above) remained strong in 2008 and shrunk only slightly in 2009. Moreover, growth is expected to surge this year and then return to pre-recession levels. Israel also avoided deflation in 2009, raising hopes here that the country would not fall victim to a Japanese-style Lost Decade that still threatens much of the West. (The data is from …more

The primary driver of the American economy has not been manufacturing efficiencies, the transformation to a service economy, immigrant vibrancy, favorable tax policies, or financial innovation. It has merely been an near-continuous increase in the amount of debt, which presently stands around 375% of GDP. As the chart comparing the percentage of annual GDP growth (green line) to the percentage of total commercial bank loans (blue bars) indicates, continued GDP growth does not look to be sustainable because the total amount of outstanding commercial bank loans has been rapidly contracting since its peak in October 2008. The …more

As expected, the Bureau of Economic Analysis has further revised the third quarter of 2009 downward, from 3.5 to 2.8 and now 2.2 percent.  Although the contribution of Cash for Clunkers has also been revised downward, from 1.66 percent to 1.45 percent, the automotive stimulus program now officially accounts for two-thirds of the reported Q3 growth.

This chart shows what debt-deflation looks like. To put it into perspective, the 8.71% decline in commercial bank credit from the October 2008 peak represents the disappearance of $637 billion in debt. (7.34% of that decline has taken place in 2009, as shown in the chart.) That represents 1.87% of the $34 trillion in total debt that will have to be deleveraged to reduce debt/GDP to post-Great Depression levels. For a very good explanation of how the debt-deflation process takes place, I recommend reading the article Debt-Deflation: Just the beginning?

“Since the rate of bank failure has been increasing, from 25 in all of 2008 to 45 in the first half of 2009 alone, total deposits in failed banks for 2009 will likely be in excess of $105 billion and 1.4% of total deposits held by U.S. depository institutions.”
- The Return of the Great Depression, p. 147

“U.S. Bank, NA, of Minneapolis, Minnesota, Assumes All of the Deposits of Nine Failed Banks in Arizona, California, Illinois and Texas…. the banks had combined assets of $19.4 billion and deposits of $15.4 billion.”
- FDIC, October 30, 2009

This brings the 2009 total of failed …more

Recession unofficially ends as economy grows 3.5 percent. The U.S. economy grew in the third quarter for the first time in a year, beating market expectations, as consumer spending and new home-building rebounded, signaling the end of the worst recession in 70 years.

While the stock market and the mainstream economists are busy celebrating the end of the recession, it is probably wise to contemplate the reliability of these GDP Advance reports before joining in the party. Less than a year ago, the Q4 2008 Advance reported -3.8 percent growth, which was revised downward to -6.2 percent growth in …more

“[T]he rulers of the exchange of mankind’s goods have failed, through their own stubbornness and their own incompetence, have admitted their failure, and abdicated. Practices of the unscrupulous money changers stand indicted in the court of public opinion, rejected by the hearts and minds of men. True they have tried, but their efforts have been cast in the pattern of an outworn tradition. Faced by failure of credit they have proposed only the lending of more money. Stripped of the lure of profit by which to induce our people to follow their false leadership, they have resorted to exhortations, pleading …more

It is becoming increasingly obvious that equating economic growth with GDP is not a reasonable thing to do.  Since 1973, nominal U.S. GDP growth has averaged 6.8 percent.  So-called “real” GDP has averaged 3 percent, but this result is achieved by applying a different measure for inflation, known as the GDP deflator, than is normally used.  The GDP deflator understates the changes in price levels that are reported for the rest of the economy by the Consumer Price Index.  Because the CPI-U has averaged 4.6 percent growth in the last 37 years, real GDP growth has been closer to 2.2 …more

Further demonstrating the inability of mainstream economists to correctly calculate the present, let alone predict the future, the UK Office of National Statistics reported an unexpected contraction of -0.4% GDP growth in the third quarter. This confounded widespread expectations of 0.2% growth and extends the length of the “recession” to six quarters, which is the longest continuous contraction since the 1950s. The news prompted Edmund Conway, the Economics Editor of The Telegraph, to declare the recession had just become a depression, while financial traders openly mocked the economists who had announced the onset of economic recovery over the …more

On October 23rd, the FDIC shut down seven insolvent banks with $1.03 billion in deposits. FDIC-estimated losses as a percent of assets were 30.6%. This brings the total number of seized banks in 2009 to 106, the amount of failed deposits to $91.8 billion, estimated losses as a percent of deposits to 29.3%, and the percentage of failed deposits to 1.21 percent. The percentage of failed deposits in 2008 and 2009 is averaging 2.3% annually, which is twice as high as the 1.1% average rate of failed deposits in 1929 and 1930.  Note also that even estimated …more

While the differences may look fairly small in percentage terms, note that the variance from one report to the next – for the same quarter – can be as much as 3.2 percent! This is remarkable, especially considering that this is not only equivalent to failing account for $460 billion, but is more than the average annual rate of GDP growth since 1973. When one realizes that the Advance GDP reports are a major datapoint upon which policymakers are basing their decisions, it quickly becomes apparent why those decisions so often go awry. For nearly half of …more