November 29, 2015

AP’s Rugaber, Despite Wednesday’s Weak Economic Data: ‘Fundamentals Remain Solid’

As yours truly noted in several posts at my home blog on Wednesday and at NewsBusters on Friday and Saturday, the torrent of pre-Thanksgiving “getaway day” economic data was largely disappointing.

That didn’t stop the Associated Press’s Chris Rugaber from pushing the “All is well” meme late Wednesday afternoon, declaring, contrary to what anyone’s eyes could see, that “the fundamentals of the U.S. economy remain solid,” that “Consumers appear relatively confident in the economy,” and that “Americans are unleashing pent-up demand for big-ticket items such as homes and cars.”


November 28, 2015

AP’s Rugaber Hides the Overall Decline in Thanksgiving and Black Friday Sales

Filed under: Economy,MSM Biz/Other Bias,MSM Biz/Other Ignorance — Tom @ 6:30 pm

The truth about this year’s Thanksgiving and Black Friday store and online sales is out there. It’s just that Christopher Rugaber at the Associated Press, aka the Administration’s Press, wasn’t interested in clearly revealing all of it.

Instead, the AP economics writer told readers about the dollar amount of this year’s and last year’s Thursday and Friday store sales, but failed to quantify the increase in online sales. People who don’t follow the economy closely likely don’t know that an increase in online sales is quite unlikely to offset a decrease in brick-and-mortar store sales. The way Rugaber wrote up his piece ensured that news of the economy’s continued malaise will remain elusive for low-information news consumers and, ultimately, low-information voters.


AP’s Boak Says New-Home Sales ‘Recovered’ In October; No They Didn’t

On Wednesday, the Associated Press’s Josh Boak added to the wire service’s collection of weak “Getaway Day” business journalism by declaring that new-home sales “recovered in October.”

No they didn’t. The seasonally adjusted annual rate of 495,000 units reported by the Census Bureau was the fourth-lowest monthly level seen this year, even well below the 521,000 and 545,000 reported in the supposedly unprecedentedly awful winter months of January and February, respectively. Boak also claimed that “Americans recovered much of their appetite for owning new homes this year,” even though current levels are at best about 70 percent of what one would expect in a pre-”new normal” healthy market.


November 27, 2015

AP: Japan, in a Real Recession, Is Trying to ‘Pump Up (a Non-Existent) Recovery’

Twenty years of average economic growth of less than 1 percent have failed to convince Japan’s leaders — and apparently its citizens — that Keynesian-style government spending and handouts are not the answer to turning that long-suffering nation’s economy around.

So the Shinzo Abe government, fresh from learning that the country is in yet another recession — its fifth since 2008 — is doing more of the same, while counting on press shills around the world like the Associated Press’s Elaine Kurtenbach to be gentle in their coverage. Kurtenbach cooperated as expected early Friday morning (bolds and numbered tags are mine):


AP Accentuates and Makes Up Positives, Ignores Most Negatives, in Covering October Durable Goods Report

Ever since the White House changed hands almost seven years ago, press reports on the U.S. economy have annoyingly overaccentuated whatever positives reporters might find (or think they have found), while ignoring glaring negatives and omitting key items.

One example of such biased reporting came from the Associated Press’s Martin Crutsinger on Wednesday. In covering the Census Bureau’s October Durable Goods report, Crutsinger praised its one-month seasonally adjusted increases in new orders and shipments. While that news was welcome, the AP reporter ignored the ugly fact that October’s actual (i.e., not seasonally adjusted) year-over-year figure was lower than October 2014, marking the seventh straight month of year-over-year declines. He also didn’t address shipments, which have been flat compared to to the same month last year for the past four months, at all.


AP Headlines Oct. Consumer Spending As ‘Weak’; Crutsinger Opens by Claiming a ‘Modest Increase’

Economic news on Wednesday’s pre-Thanksgiving “Getaway Day” was largely dismal. The government’s report on October’s personal income and outlays headed up the disappointing news. While incomes increased nicely — at a rate which needs to be repeated about two dozen more times before it can be seen as genuinely impressive — spending only rose by 0.1 percent, and prior months were revised significantly downward.

Perhaps because they were all in a pre-holiday hurry, the headline writers at the Associated Press and AP economics writer Martin Crutsinger had fundamentally different takes on the news. Additionally, Crutsinger was apparently in such a rush that he didn’t worry about the fact that his first two paragraphs’ characterizations of the result disagreed. Finally, the AP reporter failed to note that total consumer spending in October was lower than what was originally reported in September after the previously mentioned downard revisions.


November 25, 2015

October Durable Goods: Orders Up 3.0 Pct. (But Down Slightly ex-Aircraft), Shipments Down 1.0 Pct.; Raw Numbers Are Worse

Filed under: Economy,Taxes & Government — Tom @ 10:58 am

A mixed bag, but with more coal than presents, from the Census Bureau:

New Orders

New orders for manufactured durable goods in October increased $6.9 billion or 3.0 percent to $239.0 billion, the U.S. Census Bureau announced today. This increase, up following two consecutive monthly decreases, followed a 0.8 percent September decrease. Excluding transportation, new orders increased 0.5 percent. Excluding defense, new orders increased 3.2 percent.

Transportation equipment, also up following two consecutive monthly decreases, led the increase, $6.1 billion or 8.0 percent to $82.1 billion.


Shipments of manufactured durable goods in October, down two of the last three months, decreased $2.5 billion, or 1.0 percent, to $240.1 billion. This followed a 0.2 percent September increase.

…  Inventories

Inventories of manufactured durable goods in October, down five of the last six months, decreased $0.7 billion, or 0.2 percent, to $397.4 billion. This followed a 0.6 percent September decrease.

The good news on orders is that they went up. The not-so-good news is that but for the big increase in the volatile nondefense aircraft and parts (+$7.8 billion), net orders in all other sectors declined by $0.9 billion.

Not seasonally adjusted October orders of $240.2 billion trailed October 2014 by 1.0 percent. This is seventh straight year-over-year monthly decline.

Not seasonally adjusted October shipments of $246.2 billion trailed October 2014 by 1.7 percent. This is a rare year-over-year decline in this area — only the second in the almost six years, and the biggest such decline since December 2009.

The inventory come-down is necessary from a business standpoint, but it’s probably going to hurt fourth-quarter GDP.

Overall, the trends here are decidedly not our friends.

New-Home Sales: Annualized 495K in Oct.; Previous 3 Months Revised Down by a Total of 40K

Filed under: Economy,Taxes & Government — Tom @ 10:37 am

From the Census Bureau:

Sales of new single-family houses in October 2015 were at a seasonally adjusted annual rate of 495,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 10.7 percent (±17.7%)* above the revised September rate of 447,000 and is 4.9 percent (±17.6%)* above the October 2014 estimate of 472,000.

Today’s result was in the expected range of 490K to 504K, but previous month revisions reduced July through September sales by a total of 40K:


Given that the three previous months got revised down today, it’s not unreasonable to believe that today’s not-great, not-terrible number won’t hold up in future revisions.

If Consumers Are Going to Save the Day, They’d Better Show Up Soon

Filed under: Economy,Taxes & Government — Tom @ 9:56 am

The Bureau of Economic Analysis has just told us that personal income went up nicely in October, but that people didn’t spend the extra money:

Personal income increased $68.1 billion, or 0.4 percent, and disposable personal income (DPI) increased $56.8 billion, or 0.4 percent, in October, according to the Bureau of Economic Analysis. Personal consumption expenditures (PCE) increased $15.2 billion, or 0.1 percent. In September, personal income increased $27.4 billion, or 0.2 percent, DPI increased $27.0 billion, or 0.2 percent, and PCE increased $9.5 billion, or 0.1 percent, based on revised estimates.

Real DPI increased 0.4 percent in October, compared with an increase of 0.3 percent in September. Real PCE increased 0.1 percent in October, the same increase as in September.

Additionally, as seen in the second of the two tables which follow, spending increases in previous months were were revised significantly downward, despite income increases getting revised upward:


Here’s the underlying data for this year, which shows a 2.1 perent increase through 10 months:


Since it came out only a day after GDP, I wouldn’t know whether today’s downward revisions were or weren’t considered in yesterday’s GDP report. If they weren’t, the above data, which shows PCE increasing by just 0.6 percent in the third quarter (2.4 percent annualized), would seem to dictate the need to take what the government reported yesterday — a 3.0 percent annualized increase in PCE — down significantly. If they were, yesterday’s result doesn’t seem defensible.

(UPDATE, Nov. 27: The Atlanta Fed reduced its fourth-quarter forceast from 2.3 percent to 1.8 percent based on today’s news. So if the government didn’t bake today’s income/outlays news into yesterday’s GDP report, it seems that the third quarter will be revised down in late December by a more than minor amount.)

In general — It’s more money, but barely more consumption. I say, with support found here, that the explanation is higher debt payments, which aren’t part of consumption, but certainly work to empty consumers’ pockets.

Initial Unemployment Claims (112515): 260K SA; Raw Claims 12 Pct. Below Same Week Last Year

Filed under: Economy,Taxes & Government — Tom @ 8:37 am

Predictions were for 270,000 to 272,000 seasonally adjusted claims, which averages out to the same as last week.

Here are the key paragraphs from the Department of Labor’s report released at 8:30:


In the week ending November 21, the advance figure for seasonally adjusted initial claims was 260,000, a decrease of 12,000 from the previous week’s revised level. The previous week’s level was revised up by 1,000 from 271,000 to 272,000. The 4-week moving average was 271,000, unchanged from the previous week’s revised average. The previous week’s average was revised up by 250 from 270,750 to 271,000.


The advance number of actual initial claims under state programs, unadjusted, totaled 305,757 in the week ending November 21, an increase of 40,941 (or 15.5 percent) from the previous week. The seasonal factors had expected an increase of 54,977 (or 20.8 percent) from the previous week. There were 357,202 initial claims in the comparable week in 2014.

I’m not sure why raw claims would have topped 300,000 for the first time in a while, but apparently, given both years’ relatively high seasonal adjustment factors (117.5 this year, 118.0 last year), the last full week before Thanksgiving typically has a higher level of claims than previous weeks.

So there’s nothing particularly cheering or alarming here.

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:


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.

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.”


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.


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: 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.


UPDATE: Here it is —


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):


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.