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Tuesday, April 15, 2008

Da Newz Iz Mixed

Maybe we should start a LOLEconomikz site.

Producer Prices show continuing and significant escalation in prices. Release. Table 4.

Table 4.  Producer price indexes for the net output of selected industries and industry groups, not seasonally
adjusted
__________________________________________________________________________________________________________________
| | | Index | Percent change
Industry | Industry 1/ |Index|_______________________|to_Mar._2008_from:
code | |base | | | | |
| | |Nov. |Feb. |Mar. | Mar. | Feb.
| | |2007 2/|2008 2/|2008 2/| 2007 | 2008
__________________|______________________________________________|_____|_______|_______|_______|________|_________
| | |
|Total mining, utilities, and manufacturing | |
| industries.................................. |12/06| 106.8 107.8 110.3 8.2 2.3

                |Total manufacturing industries............... |12/84| 168.0   169.4   173.4      8.3      2.4  

                |Total traditional service industries......... |12/06| 102.6   101.9   101.3      1.2     -0.6  

Table A.  Monthly and annual percent changes in selected stage-of-processing price
indexes, seasonally adjusted
______________________________________________________________________________________
| | | | |
| | Finished goods | | |
| | | | |
| |---------------------------------------------------------| | |
| | | | | | Change in | | |
| | | | | Except |finished goods| Inter- | |
| | | | |foods and|from 12 months| mediate | Crude |
| Month | Total | Foods | Energy | energy | ago(unadj.) | goods | goods |
|--------------------------------------------------------------------------------------|
2007
Mar. 0.9 1.5 3.2 -0.1 3.1 1.0 2.5
Apr. .7 .5 2.6 .2 3.2 1.1 1.0
May .6 -.7 2.9 .2 3.9 1.0 1.0
June .1 -.2 -.3 .2 3.3 .4 .8
July .5 -.1 2.2 .2 4.2 .7 .3
Aug. -.8 0 -4.2 .1 2.3 -.9 -3.5
Sept. .5 1.1 1.2 .1 4.4 0 .9
Oct. .5 1.3 1.1 .1 6.1 .6 4.0
Nov. 2.6 r -.2 11.7 r .3 r 7.3 r 2.9 r 6.8
Dec. r -.4 r 1.2 -3.0 r .1 6.3 r -.1 r 2.4

2008
Jan. 1.0 1.7 1.5 .4 7.4 1.4 2.5
Feb. .3 -.5 .8 .5 6.4 .8 3.7
Mar. 1.1 1.2 2.9 .2 6.9 2.3 8.0

Labor costs are a much higher component of net output costs for service industries. Over the last six months a lot of cost pressures have been built in.

However, the idea that the economy is collapsing into a severe depression and that all things are getting worse is not supported by data such as Treasury receipts, rail and truck freight, employment data, etc.

Today's Empire State Manufacturing survey reversed its recent highly negative trend:


One of the most optimistic indicators I have is the consistent first quarter rise in federal unemployment tax receipts. Even better, so far in April the YoY increase is accelerating rapidly. That indicates relative strength in the small business sector. Small businesses are one of the accelerator pedals in the US economy - when large businesses falter, more talent and time seems to be shifted to that sector, and then smaller businesses pick up the slack.

It is amazing to see these fundamental stats so strong (reversing several years of YoY decreases) while the auto industry, many retail businesses, financials and housing are experiencing contractions, but that just shows the flexibility of the US economy. This is a classic recession with the classic corrections proceeding in a relatively classic course.

What's not classic about it is that it is extremely drawn out. The manufacturing/production decline extended for almost two years before 2008, troughed in late 2007, and is now resurging. The consumer recession is just truly beginning and will extend for some years.

Treasury receipts April 11th for 2007 & 2008:
1                            DAILY TREASURY STATEMENT                            PAGE:    7
Cash and debt operations of the United States Treasury
Friday April 11, 2008
(Detail, rounded in millions, may not add to totals)


___________________________________________________________________________________________
TABLE IV Federal Tax Deposits |
___________________________________________________________________________________________
| | | This | Fiscal |
| Classification | Today | month | year |
| | | to date | to date |
___________________________________________________________________________________________

Withheld Income and Employment Taxes $ 5,486 $ 61,900 $ 998,862
Individual Income Taxes 483 1,549 5,526
Railroad Retirement Taxes 39 147 2,577
Excise Taxes 88 727 31,408
Corporation Income Taxes 658 1,596 157,637
Federal Unemployment Taxes 18 123 2,459
Estate and Gift Taxes & Misc IRS Rcpts. 4 32 397
Change in Balance of Unclassified
Taxes 24 148 157
Total 6,800 66,223 1,199,024
These Receipts were deposited in:
Federal Reserve Account:
Directly 96 637 19,629
Collector Depositaries 1,594 15,892 279,843
Tax and Loan Accounts 5,086 47,007 863,943
Inter-agency Transfers 24 2,687 35,608
TABLE V Tax and Loan Note Accounts by Depositary Category |

2007:
1 DAILY TREASURY STATEMENT PAGE: 7
Cash and debt operations of the United States Treasury
Wednesday April 11, 2007
(Detail, rounded in millions, may not add to totals)


___________________________________________________________________________________________
TABLE IV Federal Tax Deposits |
___________________________________________________________________________________________
| | | This | Fiscal |
| Classification | Today | month | year |
| | | to date | to date |
___________________________________________________________________________________________

Withheld Income and Employment Taxes $ 6,659 $ 59,232 $ 950,939
Individual Income Taxes 173 769 3,567
Railroad Retirement Taxes 25 170 2,523
Excise Taxes 383 665 31,736
Corporation Income Taxes 192 906 168,111
Federal Unemployment Taxes 18 113 2,441
Estate and Gift Taxes & Misc IRS Rcpts. 6 32 438
Change in Balance of Unclassified
Taxes -28 199 199
Total 7,430 62,085 1,159,955
These Receipts were deposited in:
Federal Reserve Account:
Directly 85 826 22,211
Collector Depositaries 3,238 15,703 275,171
Tax and Loan Accounts 4,067 43,493 829,793
Inter-agency Transfers 40 2,063 32,780
TABLE V Tax and Loan Note Accounts by Depositary Category |

What you are looking at is a redistribution of economic impetus away from the coasts and into the heartland,
away from bubblenomic banking and into fundamental production, and away from glitzy industries and into
the old fashioned stalwarts.

Comments:
I agree with you on the promising nature of the fundamental economic statistics, especially the manufacturing index. Although sectors of the economy leveraged to available credit, and basic consumer confidence, are experiencing contractions the current outlook is nowhere near as bad as the mainstream media and democrat party would like to portray.

Given the precipitous drop in the federal discount rate, necessitated by the mortgage lending and bundling debacle, it is incredible that the falling dollar has not propelled our inflation rate into the stratosphere. In fact, were it not for the, frankly bone headed, subsidies on corn that are fueling (pardon the pun) the increase in both wheat and feed related products (beef, pork, and poultry), as well as the mostly speculative bubble in oil prices, the average consumer might not be feeling the effects of the current economic downturn as much.

With the exception of the sub prime mortgage meltdown on Wall Street, and the accompanying "normalization" of vastly over inflated housing prices, the metrics of our economy on the whole are not that different from the mid 1990's; indeed in some ways they are better. And, according to both the political left and the mainstream media this was a time of amazing, almost unprecedented, prosperity.

A strong argument can be made that the sub prime mortgage accumulation in the portfolios of major banks, which were subsequently bundled and bought by a wide variety of professional investors, was in large part caused by the dictates of the community re-investment act of 1995. Also, as I mentioned before, the increases in the prices of some agricultural commodities can likely be attributed to corn subsidies that promote the panacea of ethanol bio-fuels. In both cases the un-necessary meddling of our government in markets have come back to haunt us as a nation (dare I say it-our chickens have come home to roost!). It's important that we take advantage of our agricultural prowess at the current time in world history. Food prices are rising astronomically around the globe. We should look upon our potential agricultural abundance to both mitigate the cost of living here at home as well as a means to balance the wealth we send overseas in the form of oil. and other goods, purchased.
 
Publius Novum - no on the CRA. Really, that's not true.

Otherwise they are good points. We do have a really bad recessionary situation on some fronts, but the fundamental production is picking up.

The concerns going forward are what the ROW does, and whether the flow of money to companies that are viable gets cut off by a really sharp credit contraction.

So far that has not happened, but trade credit is tightening up.
 
But MoM, in April 2007 there were three weekend days from the 1st thru the 11th, versus only two this year. The FUT
difference looks about proportional. The YTD numbers show less increase than you would expect just from population growth and inflation.
 
And in Small-Business Economic Trends - April 2008 the NFIB reports ...

The Index of Small Business Optimism fell 3.3 points in March to 89.6
(1986=100), the lowest monthly reading since the monthly surveys began
in 1986 and the lowest reading since the second quarter of 1980 when it
was 80.1.

 
"Maybe we should start a LOLEconomikz site."

There sort of already is one. Have you seen LOLFed.com?
 
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