October 5, 2016

Given Two Years’ Dismal Failures, Polls’ Continuing Poor Response Justify Skepticism

This is a volatile election year, to say the least. The two major-party candidates are far less than perfect, routinely commit gaffes (or perceived gaffes), and have been hurt by a variety of negative disclosures and actions. Two other challengers have gained a degree of attention and apparent support not seen since Ross Perot’s presidential runs in the 1990s. Meanwhile, mistrust of the establishment press is at or near an all-time high, and several journalists have publicly decided that the idea of even trying (or pretending) to report in a fair and balanced manner is not appropriate this year.

In this environment, the nation’s pollsters, who have seen huge prediction failures during the past several years — virtually all understating support for conservative candidates and causes — still expect the public to believe that the tiny percentage of people they contact who actually complete their surveys and interviews reflect the opinions of everyone else.


ISM Non-Manufacturing Jumps the Shark: Sept. Value Is 57.1 Percent, Up From 51.4 Percent in August; Markit’s Value is 52.3 Percent

Filed under: Economy — Tom @ 10:46 am

The positive selection-driven ISM Non-Manufacturing Index just rose by the largest amount ever (bolds and most paragraph breaks are mine):

(Tempe, Arizona) — Economic activity in the non-manufacturing sector grew in September for the 80th consecutive month, say the nation’s purchasing and supply executives in the latest Non-Manufacturing ISM® Report On Business®.

The NMI® registered 57.1 percent in September, 5.7 percentage points higher than the August reading of 51.4 percent. This represents continued growth in the non-manufacturing sector at a faster rate.

The Non-Manufacturing Business Activity Index increased substantially to 60.3 percent, 8.5 percentage points higher than the August reading of 51.8 percent, reflecting growth for the 86th consecutive month, at a noticeably faster rate in September.

The New Orders Index registered 60 percent, 8.6 percentage points higher than the reading of 51.4 percent in August. The Employment Index increased 6.5 percentage points in September to 57.2 percent from the August reading of 50.7 percent.

The Prices Index increased 2.2 percentage points from the August reading of 51.8 percent to 54 percent, indicating prices increased in September for the sixth consecutive month.

According to the NMI®, 14 non-manufacturing industries reported growth in September. The comments from the respondents are mostly positive about business conditions and the overall economy. A degree of uncertainty does exist due to geopolitical conditions coupled with the upcoming U.S. presidential election.”


The 14 non-manufacturing industries reporting growth in September — listed in order — are: Agriculture, Forestry, Fishing & Hunting; Utilities; Retail Trade; Management of Companies & Support Services; Information; Health Care & Social Assistance; Transportation & Warehousing; Finance & Insurance; Construction; Other Services; Wholesale Trade; Public Administration; Accommodation & Food Services; and Professional, Scientific & Technical Services.

The four industries reporting contraction in September are: Mining; Real Estate, Rental & Leasing; Arts, Entertainment & Recreation; and Educational Services.

Backlog of Orders, the other GDP driver besides New Orders and Business Activity/Production, went from tiny contraction (49.5 percent) into expansion (52.0 percent).

The ISM result is so at variance with the hard-data numbers seen in so many reports in the past several days that it’s hard to take it seriously — which is very unfortunate, because ISM used to be the gold standard of business sentiment.

By contrast, “Markit’s Services PMI bounced modestly in September to 52.3, but ‘business optimism about the year ahead is at one of the lowest levels seen since the global financial crisis.’” Markit believes that “even with the latest increase the surveys are indicating that the economy is growing at an annualized rate of only 1%.”

Wish it weren’t so, but Markit seems far closer to the mark than ISM.

More Hits to 3Q16 GDP: Trade Deficit Increases, Factory Orders Drop

Filed under: Economy,Taxes & Government — Tom @ 10:40 am

Today’s 8:30 a.m. trade report from the Census Bureau was not helpful for third-quarter GDP:

The U.S. Census Bureau and the U.S. Bureau of Economic Analysis, through the Department of Commerce, announced today that the goods and services deficit was $40.7 billion in August, up $1.2 billion from $39.5 billion in July, revised.

Expectations were for a deficit of $39.1 billion. The monthly trade deficit has been creeping upward for several months.

The news from the Census Bureau at 10 a.m. on Factory Orders, Shipments and Inventories was even worse:

New orders for manufactured goods in August, up two consecutive months, increased $0.7 billion or 0.2 percent to $453.1 billion, the U.S. Census Bureau reported today. This followed a 1.4 percent July increase.

Shipments, up five of the last six months, increased $0.1 billion or virtually unchanged to $458.1 billion. This followed a 0.4 percent July decrease.

… Inventories, up two consecutive months, increased $1.0 billion or 0.2 percent to $622.0 billion. This followed a 0.2 percent July increase. The inventories-to- shipments ratio was 1.36, unchanged from July.

The inventory increase will protect GDP a bit, but the orders and shipments numbers won’t. July’s originally reported orders increase was +1.9 percent, and now it’s 1.4 percent. The reported August increase of 0.2 percent leaves seasonally adjusted orders ($453.1 billion seen above, and seen here) well below July’s original figure of $454.8 billion.

Zero Hedge notes that this month’s year-over-year orders decline, the 22nd in a row, is “by far the longest streak of contraction in US history and obviously has never before occurred without a US recession.”

As to shipments, July’s 0.2 percent decrease was revised to -0.4 percent, and, as with orders, August’s seasonally adjusted value of $458.1 is below the $458.9 billion originally reported in July.

Obama: Syrian Droughts Contributed to Civil War

Uh, no sir, you did, as Robert Cornwell at the UK Independent demonstrated in February:

… I’ve been living in the US for 25 years, arriving just as the first President Bush was staging a stunning projection of American power and leadership in the first Gulf War. A quarter of a century on, the ghastly war in Syria has left Barack Obama looking weaker and less effectual on the world stage than any of his predecessors since Jimmy Carter.

… US policy over Syria has been a terrible failure. The blame extends to the West as a whole, but it is the US, the leader of the West to whom the world instinctively looks at such moments, that must bear the brunt of it.

… Obama has been America’s leader since the Syrian crisis began in 2011, and since then it has been much talk but little action. The Assad regime, we were told, must fall, and would do so quickly. Yet the US did not give aid to rebel groups that might have made this happen, nor did it set up a safe area for civilians in northern Syria, protected by a US-enforced no-fly zone, as many were urging at the time.

Then came Obama’s infamous declaration about Bashar al-Assad crossing “a red line” if he used chemical weapons against civilians. The regime did use them, but Obama blinked and did nothing – other than allow Russia, protector power of Assad, to take the initiative in negotiating a deal to get rid of those weapons.

… Cool, detached and supremely rational, he believes that others will act rationally and decently as well. In Syria, tragically, they have not, and America has been humbled. Clinton has been haunted by his failure to stop the slaughter in Rwanda. Syria may well be the nightmare that haunts Obama.

The death toll in Syria is now 300,000 to 470,000. Syria is Obama’s Rwanda. As Clinton did with Rwanda, Obama will likely escape accountability during his lifetime. The history books won’t be as kind.

The Syrian debacle has led to the “migrant” crisis in Europe, and given perfect cover to terrorists whose mission in life is to target infidels for mayhem. Cynics can be excused for believing that Obama doesn’t mind what’s happening in Europe all that much.

Never absorbing any blame himself, now is partially blaming the Syrian debacle on climate change:

There’s already some really interesting work — not definitive, but powerful — showing that the droughts that happened in Syria contributed to the unrest and the Syrian civil war. Well, if you start magnifying that across a lot of states, a lot of nation states that already contain a lot of poor people who are just right at the margins of survival, this becomes a national security issue.

And that’s why, even as we have members of Congress who scoff at climate change at the same time as they are saluting and wearing flag pins and extolling their patriotism, they’re not paying attention to our Joint Chiefs of Staff and the Pentagon who are saying that this is one of the most significant national security threats that we face over the next 50 years.

Well, that’s because if they don’t say that, they won’t stay on the Joint Chiefs of Staff.

Stevie Wonder has a great song about a guy who was determined to avoid accountability for his actions (“Blame It on the Sun”):

September ADP Employment Report: +154K Private-Sector Jobs Added (with Conference Call Notes)

Filed under: Economy — Tom @ 8:32 am

Against expectations of 171,000 – 181,000, the September ADP employment report came in with 154,000 seasonally adjusted private-sector jobs added.

From the press release:

“Job gains in September eased a bit when compared to the past 12-month average,” said Ahu Yildirmaz, vice president and head of the ADP Research Institute. “We also observed softening this month in trade/transportation/utilities, possibly due to a continued tightening U.S. labor market and lackluster consumer spending.”

Mark Zandi, chief economist of Moody’s Analytics, said, “The current record of consecutive monthly job gains continued in September. With job openings at all-time highs and layoffs near all-time lows, the job market remains in full-swing. Job growth has moderated in recent months, but only because the economy is finally returning to full-employment.”

August and July are now 175K and 196K, respectively. In last month’s report, they were 177K and 194K, so there no net change to previous months.

“Full-employment” is usually accompanied by wage pressures. Despite continuing contentions that there are wage pressures, the numbers from other government reports don’t show it. The linked report shows a 2.4 percent increase in average hourly earnings and a 1.5 percent increase in average weekly earnings during the 12 months ended in August. In the context of 1.1 percent (all-inclusive) to 2.3 percent (excluding food and energy) inflation, that’s not evidence of wage pressures, and calls into question either the idea that we’re near full employment, the government’s unemployment rate measurement — or both.


MARK ZANDI: Another month, another solid employment number.

Pretty much in the middle of monthly employment gains (!?).

Energy and parts of mfg. continue to be weak. Info services is laying off. Otherwise, stronger growth. Some softness among smaller companies and in construction. Larger companies are picking up. All in all, looks pretty good.

Job openings are at record highs, layoffs are as low as you can get. Quits are where they were at the end of the last business cycle peak. Hard to put finger on any blemishes.

ADP will be providing more sector data in future reports. Also re-specifying the data relationships with BLS report. Believes model “accuracy” will improve measurably and meaningfully.

Job growth broad-based around the country. Relatively weak in OH and PA but OK in other swing states. Strong in CO, NC, NV, and NH not too bad. Economic backdrop in the swing states looks to be pretty good, and none are struggling.

Longest string of positive numbers ever.


Chris Rugaber, AP — Want broader context given weak consumer spending, mixed other data. Any sign of slowing.

Answer: The economy has been growing at a remarkably stable pace. GDP growth is tracking 2.5 – 3.0 percent in the third quarter. We’ll get around 2 percent this year, consistent with past five years. There will be slowing in job growth because we are close to full employment, and will slow to 85K per month, which is workforce growth. Then wage growth will pick up.

In terms of the Fed, it should begin to raise rates consistently. Won’t raise rates before election. Should be a December rate hike. Rates should rise next year more consistently. Inflation target is 2 percent. Pressure to normalize will intensify. Expected them to raise rates more quickly this year, but they didn’t. Diff between what they do and what Z thinks they should do (supposedly unusual).

ME (policy given weak growth): Growth has been weak, insists that we have been in seven years of expansion. Great Recession was very severe, and would have been close to 1930s Depression without interventions. The downturn’s severity and its leverage problems b/c of “financial crisis.”

GDP potential growth is lower than its been because of labor force growth. (2-2.5 percent during 1970s and 1980s, now it’s 0.5 percent and will go lower if we don’t change immigration law. 2 percent today is like 3 percent during 1970s and 1980s (!)

Wednesday Off-Topic (Moderated) Open Thread (100516)

Filed under: Lucid Links — Tom @ 8:00 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.

Positivity: Great Race runner who went into cardiac arrest thankful

Filed under: Positivity — Tom @ 7:55 am

From Pittsburgh, Pa.:

… Danielle Bajus was running her first Great Race 10k.

She was near the back of the pack. Just after the two-mile mark, she saw a crowd form on Fifth Avenue near Craig Street.

Panicked runners surrounded a man, face down on the concrete. They waved at a police officer and shouted, “Man down!”

A retired doctor from Punxsutawney who was watching the race ran onto the course to check for a pulse.

Bajus, an acute care nurse practitioner at UPMC Presbyterian, looked at the runner’s face and thought: This guy is in trouble.

“Turn him over, turn him over!” she yelled. Racers did as instructed.

“Elevate his head!” she yelled, and again they obeyed.

Bajus dropped to her knees and began chest compressions.


(Bruce) Cornrich fell face first.

He scraped his knees and hands. He chipped a front tooth. Blood covered his face.

He was in full cardiac arrest, and only 10 percent of people who go into cardiac arrest survive.

Cornrich lived because everything fell into place perfectly:

Bajus and two other paramedics — Jennifer McDermott-Grubb and John Dombrowski — were there to immediately perform CPR; EMS crew chief Mark Bonasso arrived quickly and shocked him back to life with a defibrillator; ambulance paramedics maintained a pulse until doctors took over.

And it all happened in the shadows of a hospital that excels in heart care.

“The whole system worked for him,” said Dr. Jon Rittenberger, associate professor of emergency medicine at the University of Pittsburgh and Cornrich’s post-cardiac arrest physician at UPMC Presbyterian.


Cornrich is scheduled for open heart surgery on Tuesday.

Until then, he is on the fourth floor at Presby — down the hall from where Bajus works.

“What can I say to someone who saved my life?” he told Bajus when they met Friday. “You’ll always be a part of my life.”

Cornrich is certified in CPR. He’s never had to use it, and he’s always wondered how he’d react if he did.

“Thank God she didn’t panic,” he said.

He added: “It’s good to be alive.”

Go here for the full story.