The Recovery is Real

Fed Watch ^ | 3-21-2013 | Tim Duy

[Sir Napsalot]

A lot of ink has been spilled over the past three years fretting about the fragility of the economy. But the reality is largely the opposite. The economy has proved to be very resilient. We have weathered external demand shocks, external financial crises, and even fiscal contraction, and all the while economic activity continued to grind higher. Looking back, it seems that the biggest risk the economy faced was the Fed's start/stop approach to quantitative easing. That problem appears solved with open-ended QE linked to economic guideposts.

At the risk of sounding overly optimistic, I am going to go out on a limb: The recovery is here to stay. Not "stay" as in "permanent." I am not predicting the end of the business cycle. But "stay" until some point after the Federal Reserve begins to raise interest rates, which I don't expect until 2015. This doesn't mean you need to be happy about the pace of growth. But it does mean that a US recession in the next three years should be pretty far down on your list of concerns.

Consider a handful of recent data. Last year's slowdown in manufacturing activity has proved temporary:

Remember, this was the data that ECRI claimed was a smoking gun in their hypothesis that the US economy slipped into recession in the middle of last year. Retail sales continued to gain in February despite the end of the payroll tax break:

Sure, you might complain about weak consumer confidence, but I think it best to pay more attention to what household do.

(Please read more at link)

[Smokin' Joe]

Sure retail and food service sales are up: It costs more to buy the same stuff as last year. (duh.)

[Smokin' Joe]

Those look just like a guns and ammo boom!

That, and stocking the pantry...

[Wyatt's Torch]

Total net worth is almost back to pre-recession peak:

Driven by housing price improvement and equity gains: Bloomberg

[Sir Napsalot]

My #20 should have said, ‘economy numbers’ is on the rise, that does not mean we have a ‘recovery’.

[Wyatt's Torch]

Okay... so if an economic recovery is not driven by improving measurements of the economy, what is your definition of a recovery and what does it look like?

[Georgia Girl 2]

“But it does mean that a US recession in the next three years should be pretty far down on your list of concerns.”

This guy is on drugs. Most economists are predicting we are already sliding back into recession. The rest of us know we never came out of the first one. Wait til Obamacare kicks in next year and the companies start laying off to get to 40 employess and all on 29 hour weeks. Yeh the economy will really take off then.

[Sir Napsalot]

It does not matter what my definition of a recovery is.

Tell me more about this economic recorvery what it looks like then, see if you can convince others to see the same.

[fatima]

My daughter and her husband are buying their first house.We only have about 10 in our area and as soon as a new listing comes up it is sold.Sometimes same day.Hot housing market right now.

[Thorliveshere]

Whatever "resiliency" the economy is exhibiting is not the result of anything Big Bro is doing, it is DESPITE what Big Bro is doing to it.

This has always been my thought, too, just imagine how much QUICKER the recovery would have been if conservative principles and actions were in place.

[Sir Napsalot]

Still it is serendipity ‘pure dumb luck’ (!!!) that nothing major happened these past three years.

Lots of people know current situations is Fragile. And they see recent development in Greek/Cyprus, elsewhere in EU, slow down in China, etc. and the HOPE of such luck continuing is slimmer than the previous three years.

[Graneros]

I know you are stating the obvious and you know you are stating the obvious but the vast majority of Americans will hear the MSM talking heads tell them the economy is in recovery and believe every word of it. They will believe it even as they and their neighbors are getting pink slips and struggling to survive.

Low information voters is such a nice term. Sounds so much more genteel than “dumber than a box of rocks voters.”

[Wyatt's Torch]

You mean besides the IP, housing, household wealth data already posted in this thread?

Okay. You won't want to see it but here goes anyway...

Employment - 4 WMA of claims now at the lowest point since January 2008 and 7% below the long run average of 363K

GDP back above pre-recession peak and at a record high

Personal consumption back above pre-recession peak and at a record high.

After tax corporate profits at an all time high:

Disposable personal income back above pre-recession peak

Capacity utilization rebounded off all-time low and approaching pre-recession peak

Non-defense capital goods up substantially and nearing pre-recession peak

Personal consumption durable goods orders at all time highs

Personal consumption - non-durables at all time highs

[Wyatt's Torch]

Whatever "resiliency" the economy is exhibiting is not the result of anything Big Bro is doing, it is DESPITE what Big Bro is doing to it.

EXACTLY RIGHT. As I've said, this is a weak recovery. It could be so much better if Obama wasn't smothering the economy with regulations on every conceivable front.

[dfwgator]

Hot housing market right now.

Are those home buyers or are they investors swooping up housing properties to rent out?

[Wyatt's Torch]

It’s a good market. Long way to go to get back to “normal” though which is the good news. Average housing starts of 1.5 million (1959-present) and 2012 we had 780K so we are only 50% of “normal”. Good news is that household formation is strengthening which is what drives the 1.5 million. household formation averaged about 1.4 million SAAR in 2012.

[fatima]

Home buyers,she just found out the house they were to look at tom.is sold.No-one was to get in to see it till tom.A house just went up today and she demanded to see it cause her agent said she was busy.I just hung up with her.They go at 5 PM.My husband drove by and it’s nice-cross your fingers.Not enough houses on the market.

[fatima]

I say if you were thinking of selling throw it up.

[Dead Corpse]

My assessment from the County dropped my house value another $15k. At least my property taxes went down.

Also, paying more for health insurance, fuel, food, electricity...

Yeah... Someone’s cooking the numbers on that household balance sheet ‘cause is doesn’t match reality.

[Wyatt's Torch]

Property taxes typically have about a 3 year lag to actual property values (Atlanta Fed). Property tax collections peaked and then started declining well after the collapse in housing and are still declining:

Property taxes are a very lagging indicator.

[M Kehoe]

Good afternoon.

The data from the Fed is in nominal, not real (index adjusted) dollars. Graph the real dollars to nominal dollars and there is a statistically significant difference. In the GDP, to the DPI. Really, the only wild card is a price index. Not much movement (inflation) in the CPI, PPI or the CPE index. None the less, the economy is not showing much growth (see last quarter).

If the Fed's QE 1-n, and near zero rates weren't there, or it's expansionary influence on M1 velocity, you wouldn't see a market at 14400, nor small growth in the housing market.

I'm not going to mention the higher taxes affecting the economy, persistent high unemployment, nor 0bamacare and all that comes with it. I'm just going to say, things aren't looking too good.

5.56mm