November 24, 2015

Percentage of Late-Nov. Media Mentions of ‘Christmas Shopping Season’ at a 10-Year Low

As we head into the Christmas shopping season, yours truly regrets to inform readers that the relative frequency of late-November media mentions of the “Christmas shopping season” is at the lowest level in all of the years I have been tracking it — probably meaning that it’s at an all-time low, period.

This is Year 11 of an effort which began in 2005. Each year has involved Google News searches on “Christmas shopping season” and “holiday shopping season” (both terms in quotes). In the past few years, after Google News merged its archive with its regular one-month news results, I’ve made sure to only search on the past month. As seen in the graph which follows, this year’s result is down to one “Christmas” mention for every 16.5 “holiday” mentions:

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Year 11 Christmas/Holiday Layoff and Shopping Searches: Round 1

Filed under: Economy,MSM Biz/Other Bias,MSM Biz/Other Ignorance — Tom @ 10:13 pm

Background behind these annual searches is here and here.

Here are the results of this year’s first round of searches:

Here goes (for the past month):

That is the lowest “Christmas” component ever in 11 years of such searches, coming in below last year’s. The lowest-ever result for a full Christmas season (three searches) was 8.5% in 2012. The press seems determined to separate “shopping” from the reason for the season.

Now on to the second set of searches (for the past month):

  • Christmas layoffs (not in quotes, also excluding the word “challenger” to ensure that about 30 items relating to the mass layoffs report issued by Challenger & Christmas were exluded) — 6,880 (22.5%)
  • Holiday layoffs (not in quotes) — 17,300 (56.6%)
  • Holidays layoffs (not in quotes) — 6,370 (20.9%)

As has been the case in previous years, the press is far more likely to use “Christmas” in connection with layoffs (4 times as likely in the most recent set — 27.5% vs. 7%), an obviously negative thing, than it is to use “Christmas” in connection with shopping and commerce, a generally positive or neutral thing.

Additional searches will take place in roughly two and four weeks.

‘Victim’ of ‘Islamophobia’ Three Years Ago Arrested in Turkey as Part of ISIS Cell

There are plenty of problems with the government’s “no-fly list,” and especially the plans by some congressmen and senators to abuse it. That said, it appears, almost three years later, to have gotten one name right.

In late 2012 and early 2013, leftists like Chris Hayes at MSNBC, Glenn Greenwald and Kevin Drum at Mother Jones were upset that Saadiq Long, a U.S. Air Force veteran who was living in Qatar, had been put on the no-fly list. After making a stink, Long’s name was apparently removed so he could fly into Oklahoma to see his ailing mother, only to see his no-fly listing reinstated so he couldn’t leave. He returned to Qatar, but only after taking a bus down to Mexico City and flying from there. End of story? Hardly, as PJ Media’s Patrick Poole reports:

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Reuters: 2.1 Pct. GDP Growth Is ‘Respectable’; 2 Pct. Is Economy’s ‘Long-Run Potential’

Call it the triumph of the “new normal.”

At Reuters today, after today’s first revision of third-quarter gross domestic product showed that the economy grew by an annualized 2.1 percent, up from the late-October estimate of 1.5 percent, reporter Lucia Mutikani and Editor Paul Simao demonstrated that they have completely given in to the artificially lowered expectations of past seven miserable years. Despite the fact that annual growth in the U.S. economy averaged 3.4 percent from 1946-2007 — a period which included ten recessions — and that it has seen four-year spurts averaging over 4 percent several times in the past three decades, the Reuters pair claims that its “long-run potential” is now only 2 percent, thus making today’s 2.1 percent result “respectable.”

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AP’s Boak: Consumer Confidence Drop Occurred Despite ‘Strengthened’ Economy

There was yet another sighting of the U-word (“unexpectedly”) in connection with disappointing economic news today.

Bloomberg News, which most frequently employs the word, told readers thatConsumer confidence unexpectedly declined in November to the lowest level in more than a year as Americans grew less enthusiastic about the labor-market outlook.” Expectations were that confidence would increase from October’s value of 99.1 to between 99.6 and 101.0, not drop like a rock in just one month by almost 9 percent to 90.4. Over at the Associated Press, aka the Administration’s Press, economics writer Josh Boak clearly wanted his readers to believe that the news was a one-off “curveball” in an economy which he contended “has strengthened by many measures over the past month.” All one can say is that he must not be looking at the same economy as the rest of us.

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3Q15 GDP, 2nd Reading (112415): An Annualized 2.1 Percent, Up From Original 1.5 Pct.; Inventory Adjustment Adds 0.85 Pts., All Other Elements Subtract 0.27 Pts.; Inventory-Driven GDP Crash May Be on the Horizon

Filed under: Economy,Taxes & Government — Tom @ 8:24 am

Predictions per Yahoo’s Business Calendar: Briefing.com says it will come in at an annualized 2.1 percent, up from the original reading of 1.5 percent, while the “markets” predict 2.0 percent.

The theory is that the inventory-related GDP decrement wasn’t as large. If that’s the case, this quarter’s pickup may hurt fourth-quarter results (update: currently estimated at 2.3 percent by the Atlanta Fed and 2.4 percent by Moody’s).

I keep waiting for the realities of lower orders and sales to affect GDP, which they thus far haven’t, because consumer spending, while far from robust, hasn’t tanked. But if there’s going to be a big downside surprise, I don’t think we’re going to see it in this report … but I do think it’s coming in the next 3-5 releases.

The report will be here at 8:30.

HERE IT IS (full report text link):

Real gross domestic product — the value of the goods and services produced by the nation’s economy less the value of the goods and services used up in production, adjusted for price changes — increased at an annual rate of 2.1 percent in the third quarter of 2015, according to the ”second” estimate released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 3.9 percent.

The GDP estimate released today is based on more complete source data than were available for the “advance” estimate issued last month. In the advance estimate, the increase in real GDP was 1.5 percent. With the second estimate for the third quarter, the decrease in private inventory investment was smaller than previously estimated.

The increase in real GDP in the third quarter primarily reflected positive contributions from personal consumption expenditures (PCE), nonresidential fixed investment, state and local government spending, residential fixed investment, and exports that were partly offset by a negative contribution from private inventory investment. Imports, which are a subtraction in the calculation of GDP, increased.

The deceleration in real GDP in the third quarter primarily reflected a downturn in private inventory investment and decelerations in exports, in PCE, in nonresidential fixed investment, in state and local government spending, and in residential fixed investment that were partly offset by a deceleration in imports.

Profits from current production

Profits from current production (corporate profits with inventory valuation adjustment (IVA) and capital consumption adjustment (CCAdj)) decreased $22.7 billion in the third quarter, in contrast to an increase of $70.4 billion in the second.

I’ll have the line-item comparison chart up shortly.

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UPDATE: Here it is —

GDPcomponents3Q15round2

The inventory change revision added 0.85 points to GDP, while other changes subtracted 0.27 points (consumption, -0.14; fixed investment, +0.07; net exports, -0.19; government, -0.01).

So the revision shows that the third quarter was fundamentally a bit weaker.

UPDATE: Zero Hedge — “we now expect substantial downward revisions to Q4 GDP in the coming hours as Wall Street has no choice but to assume the inventory reduction will now be shifted to Q4.”

UPDATE 2: Let’s also be clear about the impact of inventories. It’s potentially confusing and I’ll have to confess that I barely understand why it works as it does, but here’s how the inventory change factor affects GDP (original source; see Page 7-4):

GDPinvChangeExplained

In the third quarter, we had the opposite of scenario (2) above (in 2009 dollars, annualized, so divide by 4 to roughly determine the actual changes):

  • Second-quarter inventories increased by $113.5 billion (see Table 3 at today’s text release).
  • Third-quarter inventories increased by $90.2 billion. (This contradicts the original post-release Associated Press report — since corrected without notice — which told readers that the negative inventory contribution to GDP occurred because stockpiles were sharply reduced.)
  • Third-quarter inventories increased, but by $23.3 billion less than they increased in the second quarter.
  • The decrease in the amount of additional accumulation is what led to the GDP decrement of 0.59 points.
  • Before today’s revision, the decrement had been 1.44 points, because the third quarter’s original accumulation (still positive) was only $56.8 billion (before being revised to the $90.2 billion noted above).

This has HUGE implications for the fourth quarter of this year and the first quarter of next year.

Imagine how serious the hit to GDP will be if manufacturers and wholesalers actually reduce their inventory levels — which, based on inventory-to-sales ratios and inventory-to-shipments ratios, are dangerously high in historical context — or even just cease additional net stockpiling.

If a $23.3 billion annualized reduction in additional accumulation meant a 0.59-point GDP hit, no additional accumulation in the fourth quarter, which would be a $90.2 reduction in additional accumulation, would crash GDP by over 2 full points (0.59 times 90.2 divided by 23.3 equals 2.28).

If businesses actually reduce inventories by $50 billion — which would still leave the ratios noted earlier uncomfortably high — the GDP hit would be over 3-1/2 points.

I suspect that the Obama administration’s economic team is desperately trying to figure out how to convince companies to keep those stockpiles growing at least modestly for at least another year, even if business conditions don’t justify it, so this problem of inventory overaccumulation gets dumped on the next presidential administration.

Note that an interest rate hike by the Fed would instantly increase inventory holding costs and likely spur inventory reductions.

Based on that factor alone, and the potential economic/political impact just described, it would seem wise to bet against the Fed increasing rates.

Tuesday Off-Topic (Moderated) Open Thread (112415)

Filed under: Lucid Links — Tom @ 6:05 am

This open thread is meant for commenters to post on items either briefly noted below (if any) or otherwise not covered at this blog. Rules are here.