Economic News Articles in the Great Recession — Archive for the week of 04/29/2012
The first and most notable thing I did while working on this website last week was laugh at the optimistic headlines I was posting. MSNBC reported, “New claims for unemployment benefits tumbled more than expected in the latest week, raising hopes that the job market remains on the mend.” NPR reported the same story this way: “The number of Americans seeking unemployment benefits fell last week by the most in more than three months. The figure was a hopeful sign one day before the government releases the April jobs report.”
False optimism in new articles about job improvements
Once again media reports were trumpeting the idea of an economic recovery. My first thought was, Never mind that the previous three months they are comparing to were nothing worth talking about, so beating them doesn’t mean much. My second thought was, By the end of the week this jobs improvement will fade like a mirage anyway. Some might say I’m dismal. I’d just say that I’m willing to look at reality for what it is, whether I like it or not.
You see, other reports that same day supported my belief that the press was, once again, missing the point. In my opinion, jobless claims for unemployment benefits were down only because people were dropping off the unemployment roles due to ineligibility. Either their time was up because they have been on the roles so long, or they just fatigued of looking for anything after months without success. The drop in jobless claims, in other words, was anything but positive news! Most reporters, however, just don’t look or think deeper than the facts that are fed to them.
They wouldn’t have had to look far either in order to decide to choke back their accolades for the job market. One of the other reports that same day said, “Economic Worries Weigh on Wall Street. U.S. factory orders took their largest drop since March 2009. ‘Steep and accelerating downturns’ were reported in Italy, Spain and Greece.” Clearly jobs could not be on any mend that promised “hope” for recovery with news that factory orders were plummeting all over the world. It’s not hard to do the math.
Within the next two days, all news agreed with me: claims for jobless benefits had, indeed, only gone down because people quit looking and were, therefore, not eligible for benefits. The BBC reported, “Employers in the US added fewer workers than forecast in April and the jobless rate unexpectedly declined as people left the labour force, underscoring concern the world’s largest economy may be losing speed.”
Indeed. Is that not what I have been saying all winter would happen in the spring? What several news agencies had reported early in the week as a sign of continuing recovery turned out by weeks end to be only proof of ultimate job-hunting malaise.
Deciphering conflicting economic reports
Other economic news was mixed and confusing last week, too. The Washington Post reported, “US economy shows resilience as manufacturing grows at fastest pace in 10 months!” Whoopeeee! I would have fallen off my tuffet in glee while eating curds and whey, except that I saw a spider in the report. The article stated, “The index of manufacturing activity reached 54.8 in April, the highest level since June. The sharp increase surprised analysts, who had predicted a decline after several regional reports showed manufacturing growth weakened last month.”
My opinion upon reading this was that gauges (indexes) still had to be out of whack. Which should one trust — the indexes that showed improvement or the regional reports that said manufacturing slowed? Without trying to untie this knot, I put my money on the actual regional reports because the indexes are human calculations set up by economists, and we know economists are the last to know what’s happening in the economy. They’re part of the problem because too many leaders are listening to them, even though nearly every one of them failed to see all of this coming, obvious as it should have been.
I also noted at the beginning of the week that the Dow closed at a four-year high and thought, That won’t last long. The very next day, Fox ran the headline, “Economic Worries Weigh on Wall Street.” So, the market went from a four-year high in one day to “worried.” By the end of the week, the Dow dream was over. The Economic Times of India reported, “Wall Street was set for its worstweek this year on Friday after a disappointing jobs report heightened concerns that the economic recovery is slowing down. The jobs retreat was a blow to investors who hoped the S&P would break into new recovery highs.” Whoa! It didn’t just go from a four-year high to “worried.” It went to its worst week of the year. CNN added, “S&P ends worst week of 2012. U.S. stocks sold off Friday. The major indexes all ended lower for the week, after posting two consecutive weekly gains.”
This was not just a sell-off to realize profits. CNN also stated, “Investors made a broad flight to safety in the bond market as they learned that the pace of job creation is well below last year.” So much for jobs being the sign of hope! By the end of the week, they were the cause of a massive sell-off.
The lesson here is clearly, “Beware of economic optimism in the press, and think for yourself.” The optimistic news at the beginning of the week frequently turns on its head before the end of the week because most reporters are not thinking when they tack on their hopeful little comments. Such is the nature of our present times. This is bear season, but financial reporters who cut their teeth in the bull days strain out any sign that the times they understand are returning. They are too quick to give a positive spin to the tiniest glimmer of hope without making any effort to think about what may have caused that glimmer — to test it to see if the basis for hope is sound. As a result, they completely missed the obvious at the start of last week — that not as many people are filing for unemployment benefits because 1) they have been on those benefits so long they have used them up; and/or 2) they have been applying for work so long, they have given up and quit trying to find jobs so are no longer eligible.
The press is not asking tough questions. It is not thinking. It is parroting the data that are fed to it.
Other confusing economic news
Here is another example of seemingly conflicting data when you compare last week to this week: Last week’s news in The Economic Times claimed, “Earlier data from Germany, Europe’s largest economy, showed its manufacturing sector contracted for a second successive month in April…. German manufacturing output showed a renewed decline, attributed by many firms to weak demand from southern Europe.” Yet, today’s news in the same publication said, “German industry recorded a surprise surge in output in March. The total volume of output from the country’s factories, power stations and building sites rose a seasonally-adjusted 2.8% in the month, according to official data.”
To sift that out, just note that January through March was the period in which many economic pundits were gleeful about economic recovery because signs were looking up, even though I kept saying recovery was a phantom that would quickly disappear in the spring. The good news article, though it was published a week later than the bad, actually looks to data further back in time — to March — and reports this week that things are looking up because of March’s data. The bad news last week, on the other hand, came from the more recent spring data, even though the article appeared a week earlier, and says that German industry is now in decline.
Here is how you sort that out: the good news for March was about factory production; while reading on in the other article about April reveals the bad news comes from a decline in new orders. Which is more indicative of where the German economy is going? High production back in March? Or seriously declining orders in April? Obviously, March was just a fulfillment of orders that came in earlier in the year. April’s orders are where Germany is headed.
So, everything is going as I anticipated. Don’t be confused by glimmers of untimely good news. You have to dig deeper than reporters are willing to go … or maybe than they even know how to go. If you don’t have time to dig deeper, come back here. I’ll dig on your behalf. Well, either way, come back here
What the news really says about the economy for the near future
Here is the general trend of reality that you can see in the news from last week. Talk of more quantitative easing is gradually increasing because the stock market is now a bubble built on such Fed programs, just as the housing market was a few years ago. The Fed is becoming increasingly split on the benefit of further Q.E., but the pressure for more Q.E. will grow because the market is addicted to it … and we have to see the market rise, even if the rise is just a bubble … because that is what we do in the current economy.
Congress is making absolutely no headway toward meaningful budget reforms so the likelihood of “Taxmageddon” increases at the end of 2012 as does the likelihood of another credit downgrade. Europe is solidly in full recession now, in spite of the glint presented about Germany this week. All of the steam has gone out of the first-quarter improvements in U.S. jobs that so many were crowing about in the U.S., and European jobs have been in decline all year. Global investors are continuing to exit European debt so that the prospects for Europeans to finance their debts at interest rates they can survive continue to get worse, not better.
How is any of that a picture of recovery?
Oh, and one in seven people believe the end of the world will come in 2012 or, at least, very soon!
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China syndrome — following the Great Recession to the Great Wall
- 05/01 China manufacturing activity expands for fifth month China’s manufacturing activity has expanded for the fifth month in a row, easing concerns about a sharp slowdown in the world’s second-largest economy.
Economic indicators seen in the news this week
- 05/01 Australia’a central bank cuts rates by more than forecast The Reserve Bank of Australia has cut interest rates more than expected due to increasing signs that its economy is being hit by a slowdown in global growth and demand for its resources. Housing sales fall.
- 05/01 Chrysler Sees Best April Sales In Four Years Chrysler’s U.S. sales rose 20 percent in April as the company continued its comeback from financial disaster.
- 05/01 Dow Notches Four-Year Closing High After a tepid April showing, the blue-chip average kicked off May by closing at the highest level since December 2007. April was a weak month for Wall Street in which the broad S&P 500 ended with a 0.75% loss, snapping a four-month winning streak.
- 05/01 GLOBAL MARKETS-Shares fall on growth worries, Aussie tumbles Global stocks slipped on Tuesday and the U.S. dollar dropped to a two-and-a-half month low against the Japanese yen as worries about the U.S. economy and Europe overshadowed signs of recovery in China’s vast factory sector.
- 05/01 GM, Ford see declines as April auto sales ease Strong gains in U.S. auto sales over the last six months eased in April, with General Motors Co.and Ford Motor Co. both doing less business.
- 05/01 Manufacturing Picks Up The pace of growth in the U.S. manufacturing sector unexpectedly picked up in April. Meanwhile, U.S. construction barely edged upward.
- 05/01 US economy shows resilience as manufacturing grows at fastest pace in 10 months The index of manufacturing activity reached 54.8 in April, the highest level since June. The sharp increase surprised analysts, who had predicted a decline after several regional reports showed manufacturing growth weakened last month.
- 05/02 Economic Worries Weigh on Wall Street Markets slid solidly into the red on amid worrying economic reports from several of the world’s biggest economies. U.S. factory orders took their largest drop since March 2009. “Steep and accelerating downturns” were reported in Italy, Spain and Greece.
- 05/02 Report Points To Weaker Growth In Jobs The private sector tacked on far fewer jobs than expected, meaning the April stall is carrying into May, and the number of people applying for unemployment benefits is rising again. New jobs in April fell off 40% from March’s already sluggish figures.
- 05/03 Jobless claims post biggest drop in a year New claims for unemployment benefits tumbled more than expected in the latest week, raising hopes that the job market remains on the mend.
- 05/03 New Claims For Jobless Benefits Drop Sharply The number of Americans seeking unemployment benefits fell last week by the most in more than three months. The figure was a hopeful sign one day before the government releases the April jobs report.
- 05/03 U.S. Retail Sales in April Disappoint Recovery Hopes “There was a lot of enthusiasm in the March numbers, which were really good, and the hope was they weren’t borrowing from April sales but were showing an exciting new trend. It doesn’t look like that was the case.”
- 05/03 Wall Street drops as data increase uncertainty; Nasdaq off 1.3% The Institute for Supply Management’s report on Thursday showed the pace of growth in the large U.S. services sector slowed more than expected in April, with drops in both new orders and employment.
- 05/03 Wall Street slips on day ahead of jobs report While earnings were strong and the latest jobless claims report was encouraging, a slower-than-expected reading on growth in the huge US services sector and weakness in retail stocks drove the day’s trading.
- 05/04 Jobs Below Forecast in U.S. Employers in the US added fewer workers than forecast in April and the jobless rate unexpectedly declined as people left the labour force, underscoring concern the world’s largest economy may be losing speed.
- 05/04 Jobs Slow and Work Force Shrinks The U.S. had another month of job disappointment. April’s net gain of 115,000 jobs was way below March’s bad figure and way less than economists predicted. While the unemployment rate dropped, that was entirely because 342,000 people gave up looking.
- 05/04 More on the loss of jobs in the U.S. “The drop in the unemployment rate was actually an unhealthy drop – you had less people looking for work, which shows a bad sentiment.”
- 05/04 S&P ends worst week of 2012 U.S. stocks sold off Friday. The major indexes all ended lower for the week, after posting two consecutive weekly gains. Investors made a broad flight to safety in the bond market as they learned that the pace of job creation is well below last year.
- 05/04 Wall Street faces worst week this year Wall Street was set for its worst week this year on Friday after a disappointing jobs report heightened concerns that the economic recovery is slowing down. The jobs retreat was a blow to investors who hoped the S&P would break into new recovery highs
Economic predictions / forecasts that made news headlines
- 05/02 Peter Schiff: ‘Junk’ US Treasurys, Dollar Headed for Collapse While some Fed officials say the economy needs no more easing, Chairman Ben Bernanke has said he can’t rule it out. “Unfortunately, we are going to get more QE than Rocky movies, because the only thing keeping this phony economy going is this QE,” Schiff said.
- 05/01 US at Risk of Another Credit Downgrade The U.S. could suffer another credit downgrade, similar to the Standard & Poor’s decision to strip the country of its coveted AAA rating in 2011, says Bill Gross, founder of Pimco, manager of the world’s largest bond fund.
- 05/03 Gold set for biggest drop in month “Things will have to look very weak tomorrow morning to see any upside momentum come back [to gold prices]. If the nonfarm payrolls number is stronger, then we’ll see gold really test [the bottom at] $1,600 an ounce,” said one precious metals trader.
- 05/03 ‘Taxmaggedon’ Deal Unlikely Before Year End: Orszag Congress is unlikely to reach a deal before the end of the year that would derail the coming “taxmaggedon,” when several tax cuts expire, a former White House budget director said. The coming storm is expected to siphon $500 billion out of the economy.
Euro crisis updates as the Great Recession goes viral
- 05/02 Euro zone downturn taking root among core members. Second dip is here! Euro zone manufacturing slipped further into decline as the downturn in smaller nations spread among core members France and Germany. Workers have been laid off at the fastest pace in more than two years as new orders fell for the 11th straight month.
- 05/02 Eurozone jobless rate hits record high For all 17 nations in the eurozone, the jobless rate rose again to 10.9%, the highest since the euro was formed in 1999. Even in Germany, the jobless rate rose to 6.8% as austerity measures throughout Europe ate into German production. Spain stands at 24.
- 05/02 German inflation angst returns in new threat to Europe “There’s nothing dramatic happening at the moment, but the inflation dangers for Germany over the next two to three years are very high. There is a significant risk that this ends in disaster.”
- 05/02 Greek debt raised out of default by Standard and Poor’s S&P upgraded the crisis-hit nation to “CCC” from “selective default” after the country completed the biggest debt restructuring in world history earlier this year.
- 05/03 European Central Bank Says Economic Outlook More Uncertain “Latest signals … highlight prevailing uncertainty…. There are indications that the global recovery is proceeding. Looking beyond the short term, we continue to expect the euro-area economy to recover gradually in the course of the year.”
- 05/03 Global Investors Resume Exit From Euro Debt Global investors resumed their exit from euro zone bond markets in April, cutting their holdings of the bloc’s bonds to their lowest level in over a year
- 05/03 How the Head of the Bank of England Spins Sir Mervyn needs to get new glasses. His cooky rewrite of history misses seeing any of his own mistakes and typifies bankers and economists all over the world who missed calling the coming of the Great Recession. He adds enough spin to make a monkey dizzy
- 05/03 Spain sells more bonds but at higher rates The Bank of Spain sold 3-year bonds at average yields of 4.04%, up from 2.6% at its last sale on March 1. Interest rates on 10-year Spanish bonds – the benchmark for borrowing costs – are edging closer to 6%. Spain currently has 24.4% unemployment.
- 05/03 U.K. House prices fell again in April Housing slide continues in U.K. The Land Registry for England and Wales said house prices fell by 0.6%, which also left them 0.6% down from a year ago. The Nationwide building society said prices had fallen four times in the past five months.
- 05/04 Eurozone private sector ‘contracts sharply’ In the sharpest fall since October, the eurozone economy contracted sharply in April. News was worse than economists had anticipated, and one economist described it as “truly dire.” The steepest contraction in almost three years even brought Germany to a decline.
Federal Reserve actions tracked in the economic headlines
- 05/01 Fed Hawk and Dove Agree: No More Easing Two top Federal Reserve officials — one with a dovish, employment-focused bent, and the other a self-avowed inflation hawk — on Monday both said they see no need for the U.S. central bank to ease monetary policy any further.
Articles of Justice during the Great Recession
- 05/03 Is shareholder rebellion over executive pay at UK’s Aviva a sign of things to come? Aviva, one of London’s best known financial institutions, suffered a humiliating shareholder revolt at its annual meeting. In one of the largest rebellions in corporate history, nearly two-thirds of investors failed to back the pay of company executives.
Occupy Wall Street (OWS) / the Occupy Movement updates
- 05/01 Protesters hit streets for May Day rallies; violence flares in Oakland, Seattle Although demonstrators backed off a pledge to occupy San Francisco’s Golden Gate bridge, activists hailed the day’s events as a step forward in the movement that had grown inactive and cash poor since capturing world attention last fall.
Other economic updates / miscellaneous economic news articles
- 05/03 Gold Standard is for Nuts … or Not? Nut cases. That’s what they are. And if you take an interest in them, you are a nut case, too. That’s the consensus among credentialed economists who describe advocates of a return to the gold standard. A Bank of England report questions that assumption.
- 05/03 Job numbers: Are the books cooked? [Yes, the gov't cooks the books, and people are now talking about what I said all of last year ... that the unemployment rate seriously undercounts the number of unemployed.]
- 05/03 One in seven people believe end of world is coming soon Whether they think the world will end through by hands of God, or a natural disaster or a political event … one in seven people believe the end of the world is coming. Of those, more than half believe it may end in 2012 according to the Mayan calendar.