More of Less

Politicians, economists, and Wall Street "analysts" have relied on various statistics to justify an upbeat economic outlook. However, based on recent reports, it appears that at least three critical data series have been casting an overly positive light on day-to-day conditions:

Unemployment

"Can America Regain Most Dynamic Labour Market Mantle?" (Financial Times)

America is employing a decreasing proportion of its people. At the start of the recession, the employment-to-population rate was 62.7 per cent. The rate is now 58.5 per cent. Last month, unemployment fell from 9 per cent to 8.6 per cent. On the surface, this looked like a welcome leap in job creation. In reality, more than half of the fall was accounted for by a decrease in the numbers “actively seeking” work. The 315,000 who dropped out of the labour market far exceeded the 120,000 new jobs.
Case study: Michigan

According to government statistics, if the same number of people were seeking work today as in 2007, the jobless rate would be 11 per cent. Some have moved from claiming unemployment benefits to disability benefits, and have thus permanently dropped out of the labour force. Others have fallen back on the charity of relatives. Others still have ended up in prison. In 1982 there were just over 500,000 in jail; today there are 2.5m – more than the combined population of Atlanta, Boston, Seattle and Kansas City, according to the Economic Mobility Project of the Pew Center, a Washington-based think-tank.

Cash

"The Myth Of Cash On The Sidelines – An Update" (The Big Picture)

Yesterday the Federal Reserve released its quarterly Flow of Funds data, current through September 2011. One of the more popular headlines from this data concerns the record amount of “cash on the sidelines“. Through Q3 2011, nonfarm nonfinancial corporate businesses held $2.11 trillion in liquid assets on their balance sheets. As the argument goes, this must be a sign of pent-up demand just waiting to be unleashed on the market.

Liquid assets held on companies’ balance sheets is a nominal number, much like the nominal level of GDP, that rarely decreases. Of course cash on the sidelines is at a record nominal level, it usually is. This series must be compared to other balance sheet items for relevance. The chart below shows liquid assets as a percentage of total nonfarm nonfinancial corporate business assets since 1952. By this measure, the “cash on the sidelines” argument is far less compelling.

Home Sales

"Inflated Home Sales Figures From 2007-10 To Be Lowered" (Associated Press)

National home sales figures will be lowered dating back to 2007 after the private trade group that collects them said the numbers were too high.

The National Association of Realtors said Monday it will release the downward revisions for previously occupied homes on Dec. 21.

Among the reasons for the inflated figures, the Realtors group says: changes in the way the Census Bureau collects data, population shifts and some sales being counted twice. Last year's total sales figure of 4.91 million was the worst in 13 years.

...

CoreLogic estimated that the Realtors group overstated sales in 2010 by at least 15 percent.

In light of all this, I wonder if the optimists will be tempering their views? (Yeah, right.)

Comments

[The myth of an economy]

The $30 Trillion "Problem" At The Heart Of Shadow Banking - A Teaser

Why was it $30 trillion? Simple: because at its heart, the "shadow banking" system has a $30+ trillion diabolic funding mechanism, where when one cuts out all the fancy nomenclature, acronyms, abbreviations, and jargon, the bottom line is that there are increasingly less and less hard assets (i.e., cash-flow generating), funding ever more and more liabilities, and where one's assets are another's liabilities in a "fractional reserve" recursive loop, and which in that shadowy sub-center of modern banking - London (because New York is just for regulatory diversion)- the loop can go on literally in perpetuity.

http://www.zerohedge.com/news/30-trillion-problem-heart-shadow-banking-teaser?

[ugg boots]

compared to other balance sheet items for relevance. The chart below shows liquid assets as a percentage of total nonfarm nonfinancial corporate business assets since 1952. By this measure, the “cash on the sidelines” argument

[Sucked dry]

We Speak with Dylan Ratigan on Bank Extraction from the Economy

http://www.nakedcapitalism.com/2011/12/we-speak-with-dylan-ratigan-on-bank-extraction-from-the-economy.html

[Mucks Malarky]

Guaranteed the NAR will use the revised numbers to say current sales are signs we are past the bottom, while the quiet release of the downward sales revisions will be ignored.

The average person only pays attention to what is happening right in front of them, and ONLY if it has an immediate impact on their lives. They have little ability to understand real cause and effect, or differentiate between causation and correlation, which is why the Dem and Repub leadership are so effective convincing their base what is the source of their anger - the other side (although that appears to be slowly changing).

I don't see jam packed stores (except Target, the Dollar Store, etc., and have not had a problem finding parking when I go to the malls (Boston metro 128 suburbs).

And although it has been pretty warm in the NE, any oil tank fill ups should remind people not to splurge too much on Xmas.

The only thing that has surprised me is how long this is all taking to play out. I just can't believe how long our 'leaders' have been able to lie and kick the can down the road.

"Has it ever occurred to you, Winston, that by the year 2050, at the very latest, not a single human being will be alive who could understand such a conversation as we are having now?... The whole climate of thought will be different. In fact, there will be no thought, as we understand it now. Orthodoxy means not thinking-not needing to think. Orthodoxy is unconsciousness."
- George Orwell, 1984, Book 1, Chapter 5

"In the end we shall make thoughtcrime literally impossible, because there will be no words in which to express it. Every concept that can ever be needed, will be expressed by exactly one word, with its meaning rigidly defined and all its subsidiary meanings rubbed out and forgotten." ....... (This is probably the next iteration of 'twitter' - the fewer words we use the better! Yes, we are getting there slowly).

I support the Occupy movement.

[Ripe for the harvest...that's you]

Listen to it...

Ann Barnhardt - Gold Silver - Near Future, "Monumental Market Disorder?"

Warren Pollock interviews Ann Barnhardt of Barnhardt Capital Management. Ann shut the doors of her brokerage because she felt customer capital was no longer safe. Ann gives us her opinions on gold and silver, the stability and conduct of markets, regulators, potential for systems and currency collapse, the failure of regulators. Other cutting topics not previously covered include the need to barter as the system fails and the mathematical impossibility of correcting the over-leveraged financial mess now coming to conclusion thereby creating a future full of "monumental market disorder"

http://www.youtube.com/watch?v=LPPxOP3na5o&feature=colike

[MSM misleads viewers once again]

Retail Sales Disappoint on False Black Friday Reports

Retailers themselves may pay the price for their massive discounting: Not only might their quarterly earnings be affected by the margin pressure, but they continually train investors to hunt for discounts. Retail therapy and sport shopping are being replaced by extreme couponing and sites like Living Social and Groupon.

We are left to ponder what those folks who were lining up late at night at Wal-Mart and Best Buy for bargains were doing. No, it was not a sign of “shopping enthusiasm,” it was a sign of extreme economic distress. No one who can afford otherwise goes out Thanksgiving night to stand in the cold with a crowd, to fight the stampeding, pepper-spraying mob for a discounted X Box.

Here is your simple formula:

Thanksgiving Thursday night shopping + record food stamps = Bad Economy

Won’t someone please call the NRF and tell them to STF up?

http://www.ritholtz.com/blog/2011/12/retail-sales-dissappoint-on-false-black-friday-reports/

[Don't be Corzined]

Excellent Point Being Made In Ag Committee on MF Global

Senator Harkin is making an excellent point: Prior to the CFMA of 2000 customer funds could not be invested in other than municipal or US Government debt fully guaranteed by the US Government.

And the Republicans want less regulation, not more, and they are not calling for people to go to prison and every dime missing taken back from the executives who ran the company so the customers are made whole.

Yep.

As it stands right now any account you hold at any brokerage can be effectively stolen through being lost via the same mechanism. Got that? Good. Your 401k, IRA, anything -- all at risk.

http://market-ticker.org/akcs-www?post=199057

[Double counting adds up]

Upon Further Review

And here's another key economic indicator that needs to be further reviewed. The existing home sales report - a well-spun, highly massaged data series published by the hyper-promotional National Association of Realtors - will be downwardly revised going all the way back to 2007. Hmmm. This particular economic report in the last few months has been giving many "hope" that a rebound in the housing market is developing. However, I have noticed - because I tend to read the whole news release and not just the headline plus the first few sentences - that the NAR chief economist has actually been uncharacteristically demur in the comments he issues that usually get buried toward the bottom of the press release. Now we know why. As you'll see in this news release, which I have not seen anyone mention, especially in the mainstream media, the NAR issues a well-spun "cover" explanation for the fact that their systems have "double-counted" home sales in many areas:

The NAR said the "up-drift in sales projections developed over time between the fixed model for calculating sales rates and the actual marketplace, including growth in multiple listing service coverage areas, geographic population shifts, a decline in for-sale-by-owner transactions, some new-home sales trickling into MLS data and some individual sales being recorded in more than one MLS."

http://truthingold.blogspot.com/2011/12/upon-further-review.html#comment-form

[Hope and change not working]

Howard Davidowitz: Consumers In TERRIBLE Shape and “It’s Going to Get Worse”

In his own inimitable style, Davidowitz explains why the consumer is in "terrible shape" and why "it's going to get worse," citing the following:

Crushing Debt Load: Consumer debt is 117% of disposable income.
Help Not Wanted: Even November's "strong" report included more people dropping out of the labor pool (315,000) vs. those who found work (278,000), according to the Labor Department's household survey.
Reverse Wealth Effect: Household net worth fell 4% in the third quarter, a drop of $2.4 trillion, according to the Fed. That's the biggest drop since 2008 and would be hard to overcome even if wages were rising sharply, which they're most certainly not.
Housing Bust Rolls On: Residential housing remains depressed, which is putting tremendous pressure on Americans' net worth and sense of financial confidence. Davidowitz, among others, sees more downside for housing prices and another increase in foreclosures in 2012.

http://www.fundmymutualfund.com/2011/12/videos-howard-davidowitz-grumpy-as.html

[Doable Finance]

The comments mad by economists are done for one purpose and one purpose only. And we all know what that is. Crazy political gains.