Posted on 09/09/2009 11:23:21 AM PDT by Stayfree
The majority of Districts reported flat retail sales. Loan demand was described as weak and many Districts reported that credit standards remained tight. Consumer spending remained soft in most Districts. The majority of Districts reported that retail activity was flat. Reports on house prices generally indicated ongoing downward pressures Reports on commercial real estate markets indicated that demand for space remained weak and that construction continued to decline in all Districts. Demand for transportation services were mixed, with some Districts noting stabilization at weak levels. Most Districts reported modest improvements in the manufacturing sector. Labor market conditions remained weak across all Districts, but several also noted an uptick in temporary hiring and a decline in the pace of layoffs. Wage pressures remained low across all Districts. Drought and weak market conditions were significantly affecting livestock industries. Increased oil and gas inventories as a result of reduced consumption. Contacts in the natural gas industry noted that subdued demand continued to suppress prices and has lead to cutbacks in extraction activity.
(Excerpt) Read more at federalreserve.gov ...
Green shoots as far as the eye can see....
/sarc
Why are men so dumb that they can go around a circle forty times and think the next one, they will fly off in a straight line instead?
Can't argue here.
Tops happen when everything looks rosy, bottoms when everything looks bad.
Yup. Problem is that bottoms can stay with us for quite awhile, and then turn down AGAIN so what we then have (or had) is a false bottom and a double bottom.
Except all the forward indicators...
And they are...
Thanks for the web site.
I scanned thru the report and from what I could see, it looks pretty DOWN. I get no good feelings from this report. For sure, I’m not going to invest more because of this report.
You know what they say, you have your economists and i have mine. Some say another HUGE wave of Mortgage defaults coming, Commercial real estate set to crash, etc. Consumer spending has and is contracting, down 33% over last year when it sucked anyway and consumer spending IS 67% of the economy. As for the stock market? Sure it’s SUPPOSED to be a forward indicator but if it were always right we’d all be rich. Besides it’s a forward indicator based on what a few investors see TODAY and like me and you they have no clue what’s happening tomorrow.
No one seems to be addressing the 800 lb Gorilla in the room, the deficit and the worthless dollars being churned out by the treasury. Since most of what we buy is imported the price of all of it will shoot up.
The market is near the end of a dead cat bounce and may even go to 10,000 but it is based on hopes and wishes not earnings which is generally how it makes it’s advances.
I think I’ll stick with my experts for now but I wish you the best of luck. Even if you are right I’ll still get close to 5% on the Cd’s I bought almost 2 years ago after I dumped everything and went to cash (100%).
More importantly, there are millions more ARM mortgages that will re reset over the next 3 years and there are billions of dollars of commercial loans that are going into default with our nation’s smaller banks’ loan portfolios consisting of 48% of commercial mortgages. Imagine the amount of loans for cars, boats, jetskis, trailers, motor homes, motorcycles, ATV’s, etc. that are in default....
Hardly. You have pundits feeding you ideological pap that you are invested in.
"another HUGE wave of Mortgage defaults"
Are defaults huger in capitals? The sober reality is that there are plenty of additional mortgage defaults in the pipeline due to unemployment remaining elevated, sure. But the loss rate on residential loans is running 2.34% of loans per annum, and last I checked banks charged a triffle more than that for mortgage money. It is the usual story of one entry accounting.
A mortgage behind on payments is presented as a total loss. But whoops, half of them aren't, they transact instead (refinance or sell or return to current when a laid off worker gets a new job etc). The half that foreclose aren't exactly write offs, there is this stuff called the collateral. Losses are high on mortgages written at high LTVs at the peak prices of 2006 and 2007, but all the other years have low net losses, because the collateral actually covers most of the loan. Add all of it up and banks lose a couple of percent of their mortgage loan book each year. Well, their cost of capital has cratered to next to nothing(1-2% tops), and they still charge north of 5%.
Average net interest margins north of 3% cover a lot of gross write offs, before any net loss. The only category of loans on which the write offs exceed the interest rate charge on that loan category, to date, are the original subprimes that touched it all off. For every other loan category, loan losses mean lower profits sure, but profits not net losses.
Look at what savers collect in CDs these days. 1-1.5%. They are the ones that pay when people don't pay their loans back. Banks are middlemen. The total loss rate on all loans is 2.64% per year.
"Commercial real estate set to crash"
It is overpriced and weak certainly. Loan losses on commercial properties loans are running 2.24% of loan books. That is higher than recently, sure. It isn't higher than what they charge in interest. In the early 90s that loss rate was elevated for 3 straight years, and didn't exactly end western civilization.
"Consumer spending has and is contracting, down 33% over last year"
Ha ha ha. No. Personal consumption expenditures as of July of this year are running at a $10.066 trillion annual rate. July of last year they were running at a $10.231 trillion annual rate. That is down 1.6%, not 33%. Meanwhile personal income after taxes is running $10.878 trillion annual rate this year vs. $10.907 trillion this time last year, down all of 29 billion or a quarter of 1 percent. The balance has gone to increase the personal savings rate dramatically, from its record lows at the top.
Disposable income has held up despite higher unemployment precisely because of government - tax collections are off 17% while transfers are up etc.
"Sure it’s SUPPOSED to be a forward indicator"
It isn't supposed to be, it is a forward indicator. Its crash last year accurately predicted the present, and its rise since March is accurately predicting recovery.
"if it were always right we’d all be rich"
We are all rich. Richer than any other society in the history of the world and that our own at any other time in our own history. The entire period when the net worth of the American people was higher than today, is the last four years of bubble top. It will be as high again in a few years time. That is always how it is, every cycle. Over any 10 year period, we are always richer; over any five year period, it depends entirely on where you are in the cycle and you can flip a coin.
"they have no clue what’s happening tomorrow."
False. You have no clue, but the market does and so do I. We are capable of doing actual econometrics and we can see the actual causal forces at work in the US economy. It is a normal economic cycle and it has bottomed, same as the last forty eight times. "the worthless dollars being churned out"
They are not worthless. The crisis of last year in fact consisted in a ton of people betting their would be worthless and turning out to be completely wrong. Too high a price for a house compared to the mortgage written on that house is precisely the dollars being worth more than the house. Oil going from $147 a barrel to half that (and at one point a quarter) is precisely the real oil being worth less than the supposedly fake dollars. Enough, there is nothing fake about them. Everybody and his brother went short dollars on an epic scale (that is what *debt*, *is*), and for their inflationary brainstorm they got their heads handed to them.
Oh and incidentally, the Fed's balance sheet peaked in April. People have been paying it back all its short term emergency support loans faster than it has been buying longer dated securities. The "printing" that everyone is hyperventilating about went into reverse starting April 23rd of this year. The market took off like a rocket over the same stretch.
"most of what we buy is imported"
Hardly, gross imports are about a quarter of the economy and net imports are a twentieth.
"the price of all of it will shoot up."
As a fact, the drop in the price of oil alone since last year has saved us 3% of GDP. The terms of trade moved in the US's favor in the crisis, reversing the trend that brought that crisis about in the first place.
But men stuck on the same falsified inflationary forecast that created the housing bubble and the oil bubble and all the rest of them, will not give up their busted prediction. They've lost a cool $15 trillion betting that dollars are worthless and anything you can hit with a stick is worth infinity, but they are still predicting the exact same thing.
"I’ll still get close to 5% on the Cd’s I bought almost 2 years ago"
I got 35% in corporate bonds over the last 10 months alone. YMMV.
I am over 65 years of age and have no desire to go back to work after doing enough things right with my money to be able to retire at the age of 52. I am well aware of the chance to make considerably more then the 5% I am now earning, but my money is as safe as it can be anywhere except in on hand commodities, while still earning something. You may be making an annual return of 70% but there is great risk, risk I am not willing to take. Perhaps you are younger then me and can, if things go south begin again. I simply have no desire nor any need since I am 100% debt free in all areas. I sleep soundly each night knowing there is nothing more I could be doing to protect my life's savings. There is no chance in inflation (it'll be here soon)eating up my savings to any extent it will be a problem since my Cd's are laddered from 9 months to 4.5 years beginning about 18 months ago. Anyway, here is the info on consumer spending and it is confirmed on any number of sites available by doing a search. Boomers’ Spending, Like Other Generations’, Down Sharply Most generations’ reported spending down $30 per day from last year
by Jeffrey M. Jones
PRINCETON, NJ -- Baby boomers' self-reported average daily spending of $64 in 2009 is down sharply from an average of $98 in 2008. But baby boomers -- the largest generational group of Americans -- are not alone in pulling back on their consumption, as all generations show significant declines from last year. Generation X has reported the greatest spending on average in both years, and is averaging $71 per day so far in 2009, down from $110 in 2008. http://www.gallup.com/poll/122546/Boomers-Spending-Generations-Down-Sharply.aspx
PCE series at FRED II database
If you try to gather economic news from main stream journalist, you will believe anything. They are functionally illiterate hacks on everything with a number involved, let alone accounting concepts, let alone macroeconomic aggregates.
It is just ludicruous to report that 70% of the economy shrank 30%, implying a 20% contraction in overall GDP, and nobody noticed. The reality is consumption expenditures fell 1.6% in nominal terms, and prices for the items consumed fell almost 1%, leaving real consumption down less than 1%, year over year. Compared to its usual expansion that is certainly a slowdown. But there is no epic fall in consumption.
The main hit to GDP occurred in a $400 billion reduction in the rate of business investment, and in the widening budget deficit as the government stoked final demand at its own accounting expense, longer term. Consumer incomes held up due to lower taxes ($367 billion lower in 2Q 2009 compared to 3Q 2008) and higher government transfers (up $250 billion year on year), and they used that to increase their personal savings, and to halt the growth in consumer and mortgage debt.
Everyone noticed, that's why we are in a recession now
LOL, tell you what, slick, you keep those corporate bond earning you 70% annually and I'll stick with my CD's for now.
You know, there are lies, damn lies and then there are statistics. You have yours and I have mine. You have nothing to indicate yours are any more valid then mine and won't until this thing plays out. If you are right then you win and make lots of money (70% is very good) while I'll only get my 5% but in return I'm guaranteed no erosion in my principle and will have an opportunity to get back to my 32+ year average of just under 13% return annually, compounded on my investments in the markets.
Here's another "stat" for you which belies your 1% drop in consumer spending.
********************************************************** U.S. corporate profits fell by $250 billion in the closing months of 2008, a staggering decline that many businesses are still struggling to offset.
Profits at corporations in the fourth quarter fell 16.5% from the previous quarter, the Commerce Department said Thursday. In the financial sector, profits fell by $178 billion -- and that figure doesn't reflect the industry's massive write-downs as the value of assets soured. The drop in pretax corporate profits was the steepest in 55 years. Compared with the same quarter in the previous year, the decline was more than 20%.
"It's horrendous," said Joshua Shapiro, chief U.S. economist at forecasting firm MFR Inc. in New York. "It destroys the ability of corporations to pay salaries, invest in equipment and do everything else that helps the economy grow."
http://econompicdata.blogspot.com/2009/03/corporate-profits-dropped-most-since.html
bttt
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