Practically speaking, that is. Initial claims are rough. The official number for this week is 386K, but last week's number was revised up to 392K, perilously close to new recession levels. The four week moving average creeps ever higher on a like-to-like basis.
I do not believe at this time that this claims number indicates that we fell through the ice - I think it reflects the disproportionate contribution of school system employment. The big question now is auto sales - if they stay high enough to keep inventory moving through and production up, then we skip through the summer. If not, the real weakness in the economy takes over.
Final US GDP Q1 was released
. Not much in the way of surprises. Although real gross private domestic investment was low in the quarter, it increased. Also Gross Domestic Income came in at over 3% in comparison to GDP's 1.9%. However corporate profits after inventory valuation and capital consumption adjustments shifted sharply negative (Table 11), dropping by over 4%. Cash flow also went negative, dropping by over 5%. That should tell you all you need to know about why the second quarter economy has been slowing and claims are creeping up.
US growth is slowing and becoming more regionalized. The manufacturing surveys tell us that. Later today we will get Kansas. So far in June Philly was a recessionary shocker and Dallas was the best economic date of your life. Those should be the two extremes. The big fall in Chicago PMI at the beginning of the month makes the Kansas survey more important.
Housing is a bit of a help right now, although not much. Lord knows mortgage rates are a hefty economic stimulus. Anything below 4% is pretty much economic crack. We can only hope this does not end with us chewing each other's faces off in a drug-induced economic zombie attack.
The first day of the Euro summit to solve absolutely nothing is today. Presumably the real remaining question is what the ECB will do in response to what will come out of this summit. ECB has been pleading for action but won't get it, and you have to think they will act. Merkel has said "Nein!" Everyone else south is humming "Du, du hasst, du hasst mich" in response, although everyone north is quietly sending Germany love notes with hearts and flowers. Finland especially. If Merkel stands they will send die gnaedige Frau flowers and chocolates.
ECB could throw money into the banks to keep Spain and Italy alive. Optimism is not running high, and Spanish 10 year yields touched 7% again today in response. Euro is probably weakening in response. German unemployment rose a tad last month and rose more this month - it is obvious that Europe is tipping into deeper recession, and the Euro is weakening. However Mr. Market will not be that enthused, because the more ECB dumps money into the banks, the more the risk retracts to the countries in question. Short yields are a huge problem for both Spain and Italy.
India is preparing to spend a lot of money on roads to try to boost growth. They don't have the money to spend, so the currency will probably continue to weaken. Also, the monsoon has been bad so far. If this continues India's economic and fiscal difficulties could mount rapidly.
Oh yeah, isn't the US AG supposed to get cited for contempt this week? Nothing like chaos to make an election season fun!