The Good News is we’re doomed! Part II
by JohnHuang2
Early Tuesday morning I was tuned to Squawk on the Street on CNBC. Big economic report about to be released. During the wait, the ominous drumbeat from the TV box: ‘Period of anxiety’, ‘period of uncertainty’, ‘period of fear’, ‘worst yet to come’, ‘credit collapse’, ‘credit crunch’, ‘subprime collapse’, ‘housing collapse’, ‘recession ‘round the corner’, ‘recession already here’ — and then, just as I was standing slack-jawed on the ledge of the 20th floor and ready to jump, hot anchor babe Erin Burnett rescued me with the ISM index for August! Economy still going strong. Index was 52.9, so manufacturing oddly was still expanding during The Month when supposedly the economy had collapsed.
Ever since the start of the Bush Boom, libbies have predicted recession. Just ‘round the corner. Any Day Now. Hang in there, economy’s in its last throes. The corporate scandals will cause a recession. When that didn’t happen, Chimpy’s war in Iraq will cause a recession. When that didn’t happen, $60 per barrel oil will cause a recession. When that didn’t happen, hurricane Katrina will cause a recession. Didn’t happen, but $70 oil will cause a recession. Didn’t happen, but high interest rates will cause a recession. Didn’t happen, but the Housing Slump will cause a recession. Hasn’t happened and the “housing slump” — already six months old — has made little headway in crimping BushCo’s economy. Here are some more recent stats (since last week’s column) about the state of the economy during The Worst Housing Slump In Human History:
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* The Commerce Department on Friday reported that consumer spending in July surged by 0.4 percent — twice the rate in June — and income rose a solid 0.5 percent, the biggest increase in four months. “Analysts”, after much analyzing, expected income to rise by half of what it actually did. Their forecast for spending was just as good — off on the low side, 0.3%. The jump in spending comes even though the savings rate has been rising steadily for three months.
The Commerce Department also reported on Friday that orders to factories in July had surged by 3.7 percent. “Analysts” expected a 3.3 percent increase. A good chunk of the July increase was attributable to a big surge in demand for transportation goods, especially for cars, which saw its biggest surge in over four years.
* The Chicago Purchasing Managers’ Index (PMI) rose to 53.8 for August, when liberals claim the economy was collapsing. In fact, the August reading was slightly higher than the July reading — 53.4.
* The Fed’s favored gauge for inflation — the core-PCE deflator — inched up just 0.1%. Analysts had predicted 0.2%. Year-to-date, the rate is just 1.9% — well within the Fed’s target.
* The Dow Jones industrial average is up almost 8 percent for the year, 18 percent year-to-date. The S&P 500 is up 5 percent for the year, 14 percent year-to-date. The NASDAQ is up 9 percent for the year, 20 percent year-to-date. The Dow, S&P 500 and NASDAQ finished higher after the “selloff” in the month of August. The Dow is just off 4 percent from its all-time high of 14K. The Dow was up 1.1 percent in August; the S&P 500 was up 1.3 percent in August; the NASDAQ surged 2.0 percent in August. In the post-war period, the market is usually flat in August — despite the fact that Congress is in recess.
* The median existing home price in July was $228,900 — a “collapse” of $1,300 from a year ago, when the median existing home price was $230,200. Less than 15 percent of the subprime home mortgage market, which is 13 percent of the $10.4 trillion mortgage market, is late in payment; 98.7 percent of mortgages are not in foreclosure.
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Up until now, recession cheerleaders blew off the good July numbers as ‘rear view mirror’ stuff — August killed the Bush Boom, man. Then the bullish PMI and ISM numbers for August come out, so libbies now say August numbers don’t count, instead it’s July’s drop in construction spending that counts — which drives my point home: The economy is expanding despite the “housing slump” and “credit crunch” liberals keep yapping about. Second-quarter GDP growth came in at 4% amid the “housing slump”. Overseas sales accounted for 1.4% of that 4% — the highest in 11 years. The labor market remained at full-employment. As for the August “credit crunch” that recession cheerleaders predicted would sink the economy, if you look at the tech sector, you’re seeing lots of takeover activity. The annualized sales rate for autos in August was 16.3 million vehicles — best showing since May and a big improvement from July’s figures, despite the high gas prices and falling home values. The ISM’s employment index for August ROSE more than a point, 50.2 to 51.3; the production index ROSE to 56.1 from 55.6; new export orders ROSE to 57 from 56.5.
So the stock market ends up higher during The Worst Liquidity Crisis In History, and the economy keeps growing during The Worst Housing Slump In Human History. If this is a “crisis”, I only hope it gets worse.
Anyway, that’s...
My Two Cents
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