Fed Cuts a (Final?) Quarter
Today, the Federal Reserve lowered the fed funds rate another quarter percentage point to 2%.
The move was what most folks were expecting, but the fact that they didn't pause (as some were beginning to suspect they might) seems to have relieved investors, further fueling a stock market rally already in progress.
From the FOMC policy statement (excerpted and edited to highlight changes to
last month's statement).
Recent information indicates that economic activity remains weak
has weakened further. Household and business spending has been subdued and labor markets have softened further. Growth in consumer spending has slowed and labor markets have softened.Financial markets remain under considerable stress, and tight the tightening ofcredit conditions and the deepening of thehousing contraction are likely to weigh on economic growth over the next few quarters.
Inflation has been elevated,Although readings on core inflation have improved somewhat, energy and other commodity prices have increased, and some indicators of inflation expectations have risen in recent months. The Committee expects inflation to moderate in coming quarters, reflecting a projected leveling-out of energy and other commodity prices and an easing of pressures on resource utilization. Still, uncertainty about the inflation outlook remains high has increased. It will be necessary to continue to monitor inflation developments carefully. Today’s policy action, combined with those taken earlier, includingThe substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time and to mitigate risks to economic activity. However, downside risks to growth remain. The Committee will act in a timely mannerThe Committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.
Most of the changes are ones of tense (e.g. things haven't weakened further, but they remain weak; the inflation outlook hasn't increased, but it remains high).
And that last change in the last paragraph constitutes the shift in bias - from easing to neutral. The removal of the reference to "downside risks to growth" lets us know inflationary risks once again balance out growth risks and that, barring anything (else) unforeseen that causes them to shift course, we can expect a pause in rate cuts when the committee next meets in June.
Update: Bah - investors didn't have the nerve to see it through. By the end of the session, stocks gave up all their gains and dipped into the red. Seems like a pretty arbitrary change of heart to me, but I guess that's not a rarity on Fed policy days. Especially Fed policy days that are also GDP days and ADP employment days and Dow component earnings days.
Eh, what can you do? Anyway, there's plenty more excitement the rest of the week.
GDP Accelerates In First Quarter
The market consensus was 0.5% (following multiple upward revisions in recent days) and the headline growth rate came in at 0.6%. Pooh-poohers, perhaps in frustration over the economy's failure to dip into recession, will lament the fact that this was no better than the previous quarter.
But it was actually a bit swifter. Not enough to move the tenth-of-a-percent needle used to calculate the headline, but some (xls).
In 4Q07, real GDP grew at an annualized rate of 0.58%. In 1Q08, it grew at a rate of 0.60%.
The acceleration was, in a word, mild. But when both the growth rate and the acceleration rate are positive, it becomes more difficult for the recessionistas to sell their gloomy prophecies. Yes, growth is slow, but it's above zero and edging higher. That means we're neither in a recession, nor trending toward one. It doesn't mean a recession is impossible later this year, just that the odds have now gone from unlikely to unlikelier.
Whatever the market makes of the modest upside surprise, it'll likely be overshadowed by the rest of the day's noise, with multiple Dow components reporting earnings, ADP's April employment report (which also beat expectations), and a Fed rate decision all on the docket.
Update: Some dissenting opinions.
Lies, Damn Lies, and the Accelerating Decline In Home Prices
Today, S&P published its monthly home price index and at first blush, the reading is somewhat daunting. And if you're not sufficiently daunted by the raw data, the Associated Press is happy to help freak you out.
Housing prices dropped in February at the fastest rate ever, a widely watched index showed on Tuesday, reflecting that the housing slump is gaining momentum and showing no signs of letting up.
The Standard & Poor's/Case-Shiller home price index of 20 cities fell by 12.7 percent in February versus last year ...
Of course by "ever" they mean...
the largest decline since the [the 20-city index's] inception in 2001.
Admittedly, S&P's 10-city index has been around since 1987 and it just set a record year-over-year decline too, so it warrants some attention.
What the AP is less eager to point out is the vintage of the data in the S&P index. With some quick figuring, we can deduce easily enough that the February data is at least a couple months old. But when we poke our noses in on the calculation methodology (pdf), we learn:
The index point for each reporting month is based on sales pairs found for that month and the preceding two months. For example, the December 2005 index point is based on repeat sales data for October, November and December of 2005.
The February 2008 index point is based on data from December-February, meaning the transactions observed are on average roughly 3.5 months old. So while the mildly editorial comment that "the housing slump is ... showing no signs of letting up" is a nice touch (if a familiar one... do you get the feeling AP economics writers pull their stories together by shuffling around a handful of ominous stock phrases printed on refrigerator magnets?), it might be more accurate to say the housing slump (as measured by home prices) showed no signs that it had started letting up a quarter ago.
But S&P data say nothing about more recent activity, which may well show signs of improvement. If only there were an available data set without such a lengthy lag.
And the modern world of economic data gathering being what it is, there is just such a data set. Last week, the National Association of Realtors released their March 2008 existing home sales report, which showed a significant uptick in median home prices. If the NAR and S&P data ultimately tend to move in tandem, we might expect a similar upward move in the 20-city index a couple months from now, when the data first incorporate March transactions.
For ease of comparison, I've indexed the initial S&P point value to the NAR value (which shows median home price, in $000), which is just as well since it's an index value to begin with.
The S&P data, despite showing such a steep decline in its most recent reading, hardly "[reflects] that the housing slump is gaining momentum and showing no signs of letting up" given both the staleness of the indicator and the contrary indications of fresher data.
Lies, Damn Lies, and the Unabating Housing Slump
Lies, Damn Lies, and the Downside Joblessness Surprise
Lies, Damn Lies, and Consumer Confidence At an All-Time Low
Lies, Damn Lies, and Unprecedented Pessimism About the Economy
Lies, Damn Lies, and the Great Depression of 2008
PETA Makes Michael Vick Blush
Yesterday, Newsweek put out an article about the lethality of the bloodthirsty activists at PETA, noting the terrible survival odds of animals "rescued" by the group.
The organization has practiced euthanasia for years. Since 1998 PETA has killed more than 17,000 animals, nearly 85 percent of all those it has rescued.
That's a pretty impressive kill rate, when you consider the comparatively mild fatality rates of other hazardous conditions.
Ashley Dupre Learned a Trick Or Two From Her Gubernatorial Trick
It seems Eliot Spitzer's call girl has a beef with Girls Gone Wild founder Joe Francis. And in a move certain to make Client #9 beam with pride, she's taking him to court in pursuit of exorbitant self-enrichment.
The lawsuit seeks more than $10 million in damages. In legal documents, Dupré alleges that Girls Gone Wild representatives approached her while she was vacationing in Florida in 2003, offered her alcohol and cajoled her into exposing her breasts for their cameras when she was just 17 (and not of proper legal age to sign a release form allowing her to be filmed).
Since then, the suit claims, Girls Gone Wild has illegally exploited Dupré's name, picture, voice and likeness in a number of deceptive ad campaigns and on Web sites.
Francis said he was "surprised and in fact amazed" by the lawsuit, noting he has not released new video of Dupré "due to corporate policy of not using footage of individuals younger than 18" and asserting she gave her consent on video, providing identification.
"She's seeking $10 million for topless photos taken in front of a room full of people, including two newspapers and multiple crews we had in the room," adds Francis. "These images were taken in public places and contain no sexual contact. We expect to triumph in this matter."
Hillary, Queen Of Pork
Sen. Hillary Rodham Clinton (D-N.Y.) has requested nearly $2.3 billion in federal earmarks for 2009, almost three times the largest amount received by a single senator this year…
Clinton’s huge earmark requests have some speculating that the former first lady is preparing for a soft landing should she lose the Democratic primary to Obama and refocus her energy on winning a third Senate term…
She did warn us.
"I have a million ideas. The country can't afford them all."
(HT: Hot Air)
NYC Councilman of Unknown Party Diverting Cash To Shyster Buddies and Staffers
New York City Councilmember Hiram Monserrate has some splaining to do.
Hiram Monserrate, a city councilman from Queens, has supplied more than $400,000 in city funds in recent years to a nonprofit agency that has been run by some of his closest aides and whose financial records have devolved into what its current director calls “a mess.”
The organization, Libre, which offers a wide array of programs and services for the Latino community, has not filed a tax return for the past two years. It has never registered as a charity with the state attorney general’s office, as required. And its director says unpaid bills and poor record-keeping grew so problematic that he had to all but shutter Libre last year.
“Libre is a mess,” said Rodolfo Herrera, the director. “I don’t think it’s a mess because they were stealing money. I think it’s because they didn’t know what to do with paper.”
The millions of dollars that council members dole out to community groups each year rarely received attention until last month, when it was revealed that the Council had been using the names of fictitious groups to park money that it could later spend without going through the normal budget review process.
Beyond the dirty favors, misappropriations of taxpayer money, abuse of non-profit status, and the other trappings of typical shady spending, Monserrate's gilding of Libre may have had a directly self-dealing component.
Until November, Libre operated out of a two-story building on National Street in Corona, where neighbors said the organization sometimes held evening English classes but generally opened for only part of the day and rarely had more than three people working.
The building’s superintendent, Ismail Gaiby, said the office grew more crowded when Libre sponsored voter registration drives, which he said were often attended by Mr. Monserrate.
For sake of posterity and thoroughness, I'd like to be able to disclose Monserrate's party affiliation, but nowhere in the Times' 1,500-word story is it mentioned. And if the Paper of Record and the 6 reporters who worked on the story were stumped, I wouldn't presume to be able to crack it.
Stoopidest Movie Of the Year
It’s the summer of 1994, and the streets of New York are pulsing with hip-hop and wafting with the sweet aroma of marijuana—but change is in the air. The newly-inaugurated mayor, Rudy Giuliani, is beginning to implement his anti-fun initiatives against “crimes” like noisy portable radios, graffiti and public drunkenness. Set against this backdrop, Luke Shapiro (Josh Peck) spends his last summer before college selling dope throughout New York City, trading it with his shrink (Ben Kingsley) for therapy, while crushing on his step daughter (Olivia Thirlby). Famke Janssen, Mary Kate Olsen,and Method Man round out the cast in this edgy, bittersweet, and funny coming of age story.
What an asinine premise.
It won the audience award at Sundance this year, I guess because Giuliani was still in the race at that point and the film set enjoyed the idea of a hit piece on the possible nominee.
I'm not sure the "anti-fun" label would've stuck though. Cracking down on petty crime was a key component in Giuliani's very successful initiative to reduce serious crime (and not being mugged is all kinds of fun).
If there's really a significant subculture that feel oppressed for not being able to do drugs and vandalize property as easily as they used to, how must they feel about the nanny state measures that have been adopted under Bloomberg - like banning styrofoam, spinning rims, the n- word, the b-word, the h-word, iPods in intersections, trans fats, cigarettes (even the candy kind), aluminum bats, and the circus, to name a few?
Groan. Watch the thick-witted trailer here.
News Media Pleased To Report People Are Noticing Their Reports
Today, Reuters and the University of Michigan released their monthly survey of consumer sentiment, which they regret to report has fallen to a 26-year low.
But what effect is this survey really measuring?
In its own words:
More consumers reported hearing news reports of unfavorable economic developments in April than any other time in the fifty years history of the survey, with job losses, rising prices, and the fallout from the housing and credit crisis dominating the reports.
Bracing For the Race War; Councilman Barron, Please Report To Makeup
The NYPD officers involved in the shooting death of Sean Bell outside a Queens strip club in November 2006 have been found not guilty of manslaughter and reckless endangerment.
Gescard Isnora and Michael Oliver were acquitted of manslaughter, assault and reckless endangerment in the shooting death of 23-year-old Sean Bell outside the Kalua club in the South Jamaica section of Queens. Marc Cooper was found not guilty of reckless endangerment.
Outside the courthouse, news of the verdict caused the crowd that had gathered there to begin chanting obscenities at the more than 100 police and court officers posted outside the building.
[New York Supreme Court Justice] Cooperman rendered his verdict after a seven-week trial in Kew Gardens. More than 50 prosecution and six defense witnesses testified.
Witnesses said that, at about 4 a.m. on Nov. 25, 2006, Bell was arguing with a man outside the strip club. Isnora, dressed in plain clothes, claimed he heard mention of a gun in the argument and followed Bell and two of his friends to their car and stood in front of it with his gun drawn.
Oliver, 36, who allegedly fired his gun 31 times, and Isnora, 29, who fired 11 times, faced as much as 25 years in prison. Cooper, 40, faced as much as a year in prison. Prosecutors said he fired his gun four times.
No word yet from New York City Councilmember and New Black Panther Charles Barron, who has endeavored tirelessly to inspire the city's black population to spark a violent race war with the police, if justice (as he predetermined it) did not prevail in this case.
In late 2006 and early 2007, there were several rallies held throughout the city (often headlined by Barron) in which the elected official was unmistakable in his desire to see black New Yorkers visit physical violence on police officers. As it turned out, two of the four officers involved in the shooting were black, though Barron didn't let that get in the way of his insistence that the shooting was racially motivated. In Barron's eyes, those are simply "house Negroes who will shoot us at the behest of their masters."
Below is video I captured at one such rally and a partial transcript of the radical legislator's comments.
What we need here is a regime change. What we need here is a radical, up, down, turn upside down – this police department is out of control.
Any time, in any institution in America, racism permeates every institution in America. And the police department is no exception. And we don’t care whether the shooters were Black, Latino, because the Negroes who were in – the house Negroes during slave time, they were Black too. But slavery is still racist. So just because we got some house Negroes that will shoot us at the behest of their masters, once some of those police officers joined the police department, White, Latino or Black, they all turned blue. And because the victims are Black, we are under a racist, out of control police department.
I don’t care what they say about me. They say Charles, you’re a [undecipherable] radical. Charles, if you call for an explosion, that I’m the one that’s calling for violence. Let me tell you something. We need to let the system know that they have to fear us. They have no fear for us. And once you put the fear into some people’s hearts, whether it’s politically, economically, or physically, they will leave you alone.
So brothers and sisters, I want to say to you today, just as we said over and over again, if we don’t get justice in this case, don’t ask us to demonstrate again. If we don’t get justice in this case don’t tell us to be cool, to be calm.
Don’t blame me, as a social forecaster, for forecasting an explosion, just like you don’t blame the weatherman for forecasting the storm.
We’ll let everybody know that we’ve had enough. Enough is enough is enough. We’re fired up. We won’t take no more.
Barron was reportedly outside the courthouse this morning, so I don't think we'll have to wait long before he starts "forecasting" again.
Take This Joblessness and Shove It
Good news out of the Labor Department this morning, showing initial jobless claims falling by 33,000 last week, from a revised 375,000 to 342,000.
The market was expecting to see claims to increased by 3,000, so the unusually steep (less-frequent-than-once-a-year unusual) decline was quite a surprise.
A few other happy bits lurk in today's data:
- Jobless claims have dipped back under their long-term average (curious, given our ostensibly Depression-harkening economy).
- Next week, the 4-week moving average (another closely watched number, given its lesser volatility) is likely to drop dramatically, once that ugly late March number falls out of it.
- The 3-week decline (from the ugly March week to this week) of a whopping 64,000 is the largest 3-week decline since 2001.
The market started the day in a correspondingly good mood, but quickly soured when it got a look at disappointing new home sales at 10 o'clock. This followed Tuesday's lackluster - but not as bad as many made it out to be - report on sales of existing homes.
Throw in a weak durable goods report to break the tie and mild net glumness seems to be the result.
Update: The durable goods data didn't turn out to be as weak as they seemed. The fact that the weakness was contained primarily to transportation seems to be mitigating the initial disappointment. And, critically, the "core shipments" component that helps determine GDP growth (or contraction) was up by more than 1%.
That, combined with strong inventory growth, prompted Lehman Bros. economists to raise their estimate of first-quarter GDP by nearly half a percentage point to 0.7%. Macroeconomic Advisers, a GDP-tracking firm, raised their estimate of first-quarter growth by two-tenths to 0.4%.
And Morgan Stanley revised their estimate from -0.1% to growth of 0.3%. They expect the softness that has spread throughout the economy in recent months to intensify in the April–June period. “Indeed, we now see [second-quarter growth] tracking at -2.0%,” they said in a client note.
So perhaps we’ll finally see contracting GDP in the second quarter? Maybe. But with the government’s tax rebate checks getting into Americans’ hands next month, most economists had previously considered that to be enough of a stimulus to keep GDP in positive territory during the second quarter.
Disappointing news if you had your heart set on a recession...
Meanwhile, the market's spirits are re-buoyed, with the Dow Industrials and the Nasdaq Composite jumping to fresh 3-month highs.
Does Conservatism Make You Happy Or Does Happiness Make You Conversative?
Professor Arthur Brooks, blogging at Freakonomics, ponders a pesky phenomenon.
- In 2004, 44 percent of respondents who said they were “conservative” or “very conservative” said they were “very happy,” versus just 25 percent of people who called themselves “liberal” or “very liberal.” (Note that this comparison uses unweighted data — when the data are weighted, the gap is 46 percent to 28 percent.)
- Adults on the political right are only half as likely as those on the left to say, “At times, I think I am no good at all.” They are also less likely to say they are dissatisfied with themselves, that they are inclined to feel like a failure, or to be pessimistic about their futures.
- It doesn’t matter who holds political power. The happiness gap between conservatives and liberals has persisted for at least 30 years. Indeed, the difference was greater some years under Bill Clinton than it was under George W. Bush. Democrats may very well win the presidency in 2008, and no doubt many liberals will enjoy seeing conservatives grieving out about that — but the data say that conservatives will still be happier people than liberals.
Tax Freedom Day
Congratulations, America. It's April 23 - you now have permission to start working for yourself.
Tax Freedom Day® will fall on April 23 in 2008, according to the Tax Foundation's annual calculation using the latest government data on income and taxes.
“Government continues to dominate the American taxpayer’s budget,” said Tax Foundation president Scott Hodge. “Americans will still spend more on taxes in 2008 than they will spend on food, clothing and housing combined.”
In 2008, Americans will work 74 days to afford their federal taxes and 39 more days to pay state and local taxes. Meanwhile, buying food requires 35 days of work, clothing 13 days, and housing 60 days. Other major categories are health and medical care (50 days), transportation (29 days), and recreation (21 days).
If you live in the NY/NJ/CT tri-state area, please disregard. You've got a couple weeks of servitude left.
Here's a fun fact. Under President Clinton, Tax Freedom Day shifted from April 20 to May 3 (+13 days). Under President Bush, it's moved up from May 3 to April 23 (-10 days). Those were the biggest jumps forward and back in more than 60 years. Only 4 Presidents of the last 11 managed to avoid delaying Tax Freedom (all hailing from the same party).
I know what you're going to ask. And yes, there is a music video.
Robert Downey, Jr. Finishes Off His Career
Drug abuse and incarceration are easily enough forgiven (if not celebrated) in the land of tolerance and enlightenment, but this is a sin even Hollywood can't abide.
"I have a really interesting political point of view, and it’s not always something I say too loud at dinner tables here, but you can’t go from a $2,000-a-night suite at La Mirage to a penitentiary and really understand it and come out a liberal. You can’t. I wouldn’t wish that experience on anyone else, but it was very, very, very educational for me and has informed my proclivities and politics every since."
Iron Man is beyond the point of scuttling, but this might be the last work Downey gets unless/until Patricia Heaton and Kelsey Grammer find a place for him in their next sticom.
Pennsylvania Primary: Hillary's Severalth Last Stand
I'm not going to be able to (read: have zero appetite to) cover this one tonight, so I'm just going to point you over to the fully-featured open thread at Hot Air, where you'll find running updates, live chat, and reader polls.
For real-time county-by-county returns, your best bet is like the CNN Election Center.
As for predictions, eh, let's say Clinton by an even 10 points (and a pick-up of 15ish net delegates).
Bush Shows Off Rare Economic Prowess
Q Good afternoon, gentlemen. For President Bush, how deep and how long will the economic recession be in the United States ... ?
PRESIDENT BUSH: First of all, I -- we're not in a recession. We're in a slowdown. We grew in the fourth quarter of last year. We haven't had first quarter growth statistics yet. But there's no question we're in a slowdown.
First quarter growth data will be available on April 30th. Here's a quick analysis guide for members of the financial press that ought to drastically improve reporting accuracy:
- If 1Q08 GDP growth doesn't start with a minus sign, we're still not in a recession.
(HT: WSJ Real Time Economics)
Lies, Damn Lies, and the Unabating Housing Slump
Are you getting as sick of reading this series as I am of writing it?
It's not that I'm setting out to write them. The AP Economics desk just insists on continually squirting out these flagrantly misleading contortions, casting the economy in the worst possible light with the help of cherry-picked, poorly qualified, inaccurately defined, and asymmetric statistics.
At first glance, they seem fair enough, which is what any habitual data abuser counts on. But when you begin to pick them apart, you quickly turn up irregularities and mischaracterizations that might be mistaken for sloppiness, if it weren't for the fact that they consistently serve to skew the inferences the same way.
Sales of existing homes fell in March as a severe slump in housing showed no signs of abating. The median price of a home fell compared with the price a year ago.
The National Association of Realtors said sales of existing single-family homes and condominiums dropped by 2 percent in March to a seasonally adjusted annual rate of 4.93 million units.
The median price of a home sold last month was $200,700, a decline of 7.7 percent from the median price a year ago.
Note the cherry-picking. Units sold in March declined 2% from February. And the median price fell by 7.7% from year-ago levels. After all, it's less dramatic to note that the median price actually increased 2.6% from February (from $195,600 to $200,700).
As for sales volume, the article gets it nearly correct when it concedes that the 4.93 million units sold were in line with estimates (they slightly surpassed expectations by 10,000 units).
But the fattest, baldest-faced, most pants-igniting lie of the piece is right there in the first sentence: "a severe slump in housing showed no signs of abating."
It just ain't so. With prices seeing their biggest jump in 9 months and sales volume having held relatively steady since September, there are signs not only of slump abatement, but potentially of early recovery.
The median sales price (above in green) is a more volatile bit of data than sales volume, because it isn't seasonally adjusted. So the February-March increase has to viewed with corresponding skepticism. Without seasonal adjustments, we're left with the year-over-year data for true apples:apples comparisons. The downside is that year-over-year data will be slower to indicate a bottoming-out since the comparison punishes the current month for recent months' declines (e.g. comparing 3/07 to 3/08 above, you wouldn't notice the recent uptick in median price). You can remedy this in part by focusing on the first derivative of the year-over-year change (i.e. the change in the growth rate of sales volume and price).
This makes it a little clearer that, while sales and prices are still lower than they were 12 months ago, those declines are slowing. And in the case of sales volume, the year-over-year decline is - well - slowing quickly. Sales are slowing more quickly than they've slowed in well over a year.
The marked deceleration in year-over-year sales declines (above in blue) isn't too surprising, given that we've observed it having plateaued on a seasonally adjusted month-to-month basis in recent months (first chart).
The year-over-year decline in prices hasn't slowed as dramatically, but again, the unadjusted median sales price actually increased in this most recent report. Not just a decelerating decline, but actual positive growth. Serious growth too - 2.6% in a month is more than 36% on an annualized basis.
Lest we bask too long in the sunshiney bits - to be clear, this was a so-so housing report. Slightly better than expected, with a handful of interesting glimmers, suggesting ever so pendulously that the housing market may have indeed found a bottom and begun to get its feet under it again.
You can discard (or at least temper) those positive signs as tentative unless/until we see confirmation in subsequent months. But it's not remotely defensible to say this data indicates "a severe slump in housing showed no signs of abating."
If we didn't know the AP better, we might tend to chalk the error up to laziness and/or a lack of basic facility with numbers. But given the unwavering editorial pattern on display in recent months, it's seems more likely a matter of agenda.
Lies, Damn Lies, and The Downside Joblessness Surprise
Lies, Damn Lies, and Consumer Confidence At an All-Time Low
Lies, Damn Lies, and Unprecedented Pessimism About the Economy
Lies, Damn Lies, and the Great Depression of 2008
Recession Consensus Among Economists Skyrockets To... 30%
Avoid the summer rush - heed this minority opinion and get a head start on your looting and stockpiling today.
Thirty percent of economists now believe the economy will shrink in the first half of this year, up from 10 percent who thought this in January, according to a survey being released Monday by the National Association for Business Economics, known by its acronym NABE.
"That's a striking difference," said Ken Simonson, chief economist for the Associated General Contractors of America and the NABE's point person on the survey. The tone of the overall survey, he said, was "extremely gloomy."
To be clear, the prospect being handicapped is that economic output shrinks during the January-June period. That's similar to, but not quite the same as the formal definition of a recession, which requires two consecutives quarters of negative growth. If we were to see negative annualized growth of, say, (0.5)% in Q1 and positive growth of 0.5% or less in Q2, that'd still amount to first half net shrinkage, thus satisfying the condition polled. Any technical recession will necessarily be a recession as defined by NABE, but not vice versa.
So if you polled the same group about the prospects of a formal recession during the same time period, you'd presumably get fewer than 30% responding affirmatively.
Admittedly, the jump from 10% to 30% since January is notable, so long as the polling methodology was unchanged. But it doesn't nearly jive with the insistence by some Presidential candidates and media outlets that an early 2008 recession is a foregone conclusion.
It's also worth noting that the January NABE survey was conducted before the 4Q07 data (showing growth of just 0.6% that quarter) was released. So it's not particularly astonishing that the percentage of economists expecting that number to dip negative has since increased. The increase in recession-forecasters is no less valid, it's just not as meaningful as it might be if you didn't realize the comparison straddles that 3-month-old news.
Hillary Continues To Pimp Out Chelsea
Mark Steyn has the details.
Previously: Pimpin' Ain't Easy
McCain Raises $76 Million In One Minute
On April 21st, between 1:00 pm and 1:01 pm, Republican Presidential candidate John McCain raised a whopping $76.7 million.
John McCain (R)
Total Receipts: $76,691,826
This easily set a new 60-second fundraising record and speaks volumes about McCain's ability to inspire grassroots support and to raise money online.
Technically speaking, this war chest includes all campaign contributions received over the last 15 months, but because of the overwhelming support, it makes sense to credit them all to this single minute.
McCain's impressive haul stole a bit of the limelight from Obama's "one-minute" fundraising blitz of a mere $1 million, a feat that relied on similarly creative measurement.
An Obama Minute, a grass roots effort in which thousands of us will come together on April 21st to donate what we can at once, raising $1,000,000 in 1 minute, An Obama Minute.
Because of the overwhelming response, we are encouraging everyone to donate anytime today.
All donations will be counted towards the minute.
Clinton Campaign Phones Drudge To Announce "Controlled Excitement" About "Closely Guarded" Internal Polling
A Hillary insider has slyly tipped the Drudge Report to selective details of their super secret internal polling. If you've got a hat on, you'll want to go ahead and hold onto it.
Controlled excitement is building inside of Clinton's inner circle as closely guarded internal polling shows the former first lady with an 11-point lead in Pennsylvania!
"It's not a matter of if, it's a matter of how much," a senior campaign source said Monday morning.
The somewhat less closely guarded Suffolk poll also shows Clinton with a double-digit lead in Pennsylvania, so the numbers boasted in this de facto campaign press release aren't altogether interesting (except insofar as they suggest Clinton is bucking the tradition of lowering expectations before a key contest). But since Clinton is essentially finished if she doesn't wallop Obama in Pennsylvania, it's time to adopt a somewhat different end-game strategy.
At this point, Clinton has nothing to gain by exceeding artificially lowered expectations. Leaving Pennsylvania with a narrow win (even if she had convinced us that a narrow represented an outperformance) is roughly as fatal as losing flat out, given her increasingly insurmountable delegate deficit. Since only a thorough trouncing has any value to her, the only internal polling "leak" play she has is to try to catalyze a momentum shift by insisting one is already underway.
When pressed if the dramatic internal polling numbers could somehow be flawed in a state as demographically complex as Pennsylvania, and with new voter registration surging to unseen levels, the campaign insider held firm.
"Senator Obama would be wise not to unpack his bags quite yet."
Meh. If Clinton does win by 11 points, that will only earn her 17ish net delegates (depending on precisely how Pennsylvania's screwy allocation scheme shakes out). That would shrink her deficit from 137 to approximately 120, a fairly mild twiddle of the needle to be inspiring such controlled excitement.
Update: Kos and TPM are prodding and fumbling at it, but don't quite grasp what's happening. They know they detect an unflattering Clinton story, but they're having trouble putting it together. They're looking for Clintonian illogic and stoopidity to explain the new tactic, but it's Clintonian desperation (rational, reasoned, and well-calculated desperation) at work.
Lies, Damn Lies, and The Downside Joblessness Surprise
The AP's economics desk is getting craftier. Operating, as they do, on the bleeding edge of innovative pessimism, they've managed to contort today's weekly jobless claims data in a terribly clever way.
Here are the unvarnished facts for the week ending April 12th:
- Initial unemployment claims: 372,000 (3,000 lower (better) than expected)
- Revised estimate for prior week: 355,000 (12,000 lower (better) than previously estimated)
These are both happy surprises. But where economists see upside surprise, the AP sees only despair:
Weekly jobless claims rise more than expected, reflecting weak economy
That isn't precisely false, just impressively misleading. Since analysts expected 375,000 and last week's number was 367,000, the expected rise was 8,000. Actual claims were better (by 3,000), but the revision to last week was even better still (by 12,000), so the adjusted week-over-week increase was 17,000. And 17,000 indeed > 8,000.
But it warrants repeating that both data points were better than expected. It's a neat trick to combine these two upside surprises and squirt out such a melancholy headline.
Say you had your house appraised a year ago (you weren't considering selling - you were just curious) for $1 million. And say today, you expect it's worth only $800,000. You have it re-appraised and, to your delight, are told it's worth $900,000. Additionally, the appraiser apologizes for an error he made last year, when it turns out your house was actually worth $1.2 million.
Was this a good day? Are you concentrating on the fact that your net worth is $100,000 higher than you thought (and that when conditions normalize, it might be $200,000 higher than you thought)? Or are you the guy who's downtrodden by the house's value declining by $300,000, rather than the $200,000 you'd expected?
The AP is that guy. Don't you be that guy.
There's an argument to be made that the trend is what we ought to focus on, rather than the absolute level, in which case the increase of 17,000 is indeed worse than the expected increase of 8,000. But the impact that imperfect seasonal adjustments have on weekly data (particularly this year and particularly this time of year, coming off an unusually early Easter) make trend measurements based on individual week-over-week changes a lot less meaningful.
To reduce some of this noise and lumpiness in the data, analysts like to look at the 4-week average of initial jobless claims. In this light, the jobless data is once again surprisingly encouraging. The AP strains mightily and manages to acknowledge it.
The four-week average for claims was 376,000, down only slightly from 376,750, the previous week.
Based on the data up top, economists expected the 4-week average to increase 3,000 to 379,750. So while the 4-week average improved "only slightly" (down 750), it handily beat the expected deterioration (up 3,000).
Democratic Debate Setting In City of *Brotherly* Love Promises To Offend Both Candidates
Can you stand the excitement? Tonight (8 pm on ABC), you'll actually get to see Presidential contenders Hillary Clinton and Barack Obama share the same stage, engaging each other one-on-one in a high-stakes battle of feigned outrage and identity politics.
True, they've done this more than 20 times already, but don't you just get the feeling they've got something special and new to show us tonight?
No, me neither. I hadn't really noticed the debate frequency fading away, but we've just enjoyed a solid 7 consecutive weeks of debate-free prime times, and in retrospect, the respite has been refreshing.
Of course, with that much time elapsed, each campaign's scandal well has had a chance to refill - Obama with his wacky reverend and getting caught badmouthing Pennsylvanians to a crowd of fancy San Franciscans, and Hillary with her pathological lies ever more prominently exposed.
Despite the fact that we've already seen this show more times than we care to remember, it could be an interesting night. Public claims to the contrary notwithstanding, Clinton has to know that she needs to clobber Obama in Tuesday's Pennsylvania primary or the tide of superdelegates and other party so-and-sos will turn irrevocably (and probably fairly quickly) against her. With that in mind, were it not for Obama's bout of inadvertently candid elitism (by which I probably mean uppitiness), we might've seen Hillary go into true kitchen sink mode in tonight's confrontation, something I don't think we've actually ever glimpsed with the naked eye, but which must be rather horrifying. Instead, depending on which polls the Clinton camp is focusing on, they may believe Obama's guns and God rant was enough to secure her a convincing win in Pennsylvania without yet resorting to whatever rhetorical Hail Marys may constitute the eventual Clinton campaign death rattle.
get to have to see that beautiful disaster at some point. Just probably not tonight.
Like Die Hard, Only Boring
I can't imagine another ordeal that could be simultaneously so worrisome and so soul-smotheringly boring.
A quick cigarette break by Business Week employee Nicholas White turned into a nightmare when his elevator stopped dead in its shaft and trapped him there for a crazy 41 hours—all of it caught on a security camera.
White got into elevator car 30 to return to his office in the McGraw-Hill building on Sixth Avenue in New York. It was an express elevator, designed for traffic efficiency, with no stops below the 30th floor, and it jammed around the 13th late on a Friday night. ... Faced with a blind wall behind the doors, no answer to the alarm or shouting and a locked hatch, he got desperate then depressed.
He was just stuck in a box barely big enough to lie down in. Rescue finally came 41 hours later, and no one knows why the jam happened. The crazy part? Eight different security guards failed to spot him on the camera.
This took place more than eight years ago, but The New Yorker has just put up a time-lapse video of White's plight (as captured by the security cameras no one was bothering to monitor), so you can experience his 2-day descent into ennui in internets time.
Content warning: even sped up 1,000x, it's still pretty tedious.
Obama Binge Drinking Own Kool-Aid
It appears that months of unwaveringly fawning press treatment and a swooning Hollywood set have convinced Barack Obama that he's real and he's spectacular.
"And let me make one last point about the comparison to McGovern and Dukakis, both excellent men, but I'm a pretty darn good politician," he said. "I can give a pretty good speech, and I can connect and inspire the American people in ways that have become apparent. I wouldn't be here if I wasn't pretty good at mixing it up, and so much of the attack machine that's been built up is part of the old politics."
It wasn't the first time in recent weeks the freshman has lain his greatness bare. On the topic of foreign policy, Obama previously explained:
"...I know more and understand the world better than Senator Clinton or Senator McCain."
Get Congress On the Phone
Some people made money last year. No, it's not "illegal" per se, but we're talking about a lot of money.
There's no easy remedy here, but for starters, we could do with a round of televised hearings so we can see these hedge fund managers browbeaten for our amusement and catharsis.
Five of the more vulgar earners managed to crack 10 figures.
I'm just not going to feel right about this until I can watch Barney Frank and Chucks Schumer and Rangel yell at them for a while. It needs to be that really sanctimonious kind of yelling too, with the low-rider glasses and the flecking spittle, to distract us from the fact that the committee members are predominantly clueless gasbags.
Still, this is a pretty embarrassing level of value creation and we aren't likely to truly snuff it out without resorting to measures even more dramatic than posturing for the C-SPAN cameras. It seems like as good a time as any for the two remaining progressive Presidential candidates to prove their mettle as class warriors and redouble their commitment to double (or more) the tax rate on carried interest.
In fact, whichever can get out and flog this one faster, louder, and more demagogically might stand to collect 13 ready-made superdelegates.
Global Population Hits 6.66 Billion. Satan, Thomas Malthus Grimly Amused.
Wasn't it just a few months ago that we were
celebrating ambivalently acknowledging the arrival of the 6 billionth person? Apparently, over those few short months (actually 100 or so, depending on whose estimates you believe), we've added another two United Stateses' worth of humanity.
As a foundry for intelligent life, the earth is humming along nicely. With more than 200,000 new units rolling off the line every day, we've got the human being cycle time down to less than half a second.
Let's celebrate with some of Malthus' uplifting deliberations on population growth.
The germs of existence contained in this spot of earth, with ample food, and ample room to expand in, would fill millions of worlds in the course of a few thousand years. Necessity, that imperious all pervading law of nature, restrains them within the prescribed bounds. The race of plants, and the race of animals shrink under this great restrictive law. And the race of man cannot, by any efforts of reason, escape from it. Among plants and animals its effects are waste of seed, sickness, and premature death. Among mankind, misery and vice. The former, misery, is an absolutely necessary consequence of it. Vice is a highly probable consequence, and we therefore see it abundantly prevail; but it ought not, perhaps, to be called an absolutely necessary consequence. The ordeal of virtue is to resist all temptation to evil.
And, that the superior power of population cannot be checked, without producing misery or vice, the ample portion of these too bitter ingredients in the cup of human life, and the continuance of the physical causes that seem to have produced them, bear too convincing a testimony.
The Village Voice's Definitive Field Guide To Righty Bloggers
Because if any outfit has what it takes to catalog such a foul and hateful species dispassionately and objectively, it's the Village Voice. They are, after all, steeped in that luscious absolute moral authority.
Ace, for his part, seems satisfied with his 99/1 Stupid/Evil ratio.
I guess this means this is the most moronic blog of all major blogs, which, quite frankly, isn't so much an insult as "brand identity."
U.S. Consumers: "I'm getting better!" AP: "No you're not, you'll be stone dead in a minute."
Despite ongoing insistence to the contrary, the U.S. consumer is not yet worm food, clinically speaking, and is even showing modest signs of improvement, based on new retail sales data released today by the Commerce Department.
Given that consumer spending constitutes the bulk of economic output, however, those bent on seeing the U.S. plunge into depression have an incentive to make somewhat gloomier pronouncements.
WASHINGTON (AP) -- Consumers, beset by a credit crunch, rising energy and food costs and a prolonged housing slump, boosted spending only slightly in March with the gain reflecting soaring gasoline costs rather than any real strength in demand.
The Commerce Department reported Monday that retail sales edged up 0.2 percent in March after a 0.4 percent decline in February. However, without a 1.1 percent jump in sales at gasoline service stations, retail sales would have been flat last month.
Well, yes and no. March retail sales, excluding gasoline, weren't precisely flat from February, but rather grew by a modest 0.04%. While that's barely into positive territory, it's no less notable, given that it marked the first reading in six months that didn't show declining retail sales, excluding gasoline.
While the March "advance" data is subject to later revision, it tends to reinforce an apparent trend wherein growth in consumer spending bottomed out at the end of 2007 and has since been contracting less severely, to the point that it plateaued or even regained its expansionary footing in March.
Separation Of Powers, New York Style - Part II
We've only had three days to digest the news of the chief judge of New York suing the state legislature for not raising judicial salaries (or rather, for attempting to tie judicial raises to raises for themselves).
If that wasn't litigiously bizarre enough, today we learn that State Supreme Court Justice Jack Battaglia is jumping across the bar as well, by bringing a $1 million slip-and-fall suit against New York State (and a janitor).
A politically connected Brooklyn judge plans to file a $1 million lawsuit against the city after slipping on a just-mopped floor in his own courthouse, the Daily News has learned.
Supreme Court Justice Jack Battaglia - who hears civil cases and earns $136,000 a year - is even targeting the courthouse cleaning lady who wielded the mop, according to legal papers.
The judge fractured his knee in the Nov. 9, 2007, tumble outside room 452 and was forced to undergo surgery and physical therapy.
In his Jan. 31 notice of claim, Battaglia accuses the city of "negligently using a mop bucket and wringer" and "negligently using a mop and soapy water" to create a "dangerous and hazardous traplike condition."
Battaglia, who is the brother of Brooklyn Democratic boss Vito Lopez's girlfriend, did not return a call for comment. Lopez also couldn't be reached.
Battaglia's sister Angela is also New York's City Planning Commissioner. She and cohabitational beau Assemblyman Lopez have, as the Daily News put it, "occasionally drawn fire from snoopy journalists who contend the duo uses its combined clout to win friends and pork-barrel funding from City Hall and Albany."
Previously: Separation Of Powers, New York Style
Pre-order your copy of the year's most terrifying film.
- John Kerry
Customers who bought this title also bought:
Obama Continues To Unite
"A gaffe is when a politician tells the truth."
"And it's not surprising [that Pennsylvanians who live in small towns] get bitter, they cling to guns or religion or antipathy to people who aren't like them or anti-immigrant sentiment or anti-trade sentiment as a way to explain their frustrations."
- Barack Obama, post-partisan candidate for President of the United States
Or, as aptly paraphrased by Ace:
"Vote For Me, You Corncob-Smokin', Banjo-Strokin' Chicken-Chokin' Cousin'-Pokin' Inbred Hillbilly Racist Morons."
- American households owning guns: 45%
- Americans affiliated with organized religion: 88%
- Americans favoring reduction of illegal immigrant population: 65%
Update: A related photoshop, via Michelle Malkin.
Lies, Damn Lies, and Consumer Confidence At an All-Time Low
Another week gone by, another superlative headline about the unprecedented malaise afflicting the U.S. economy.
The Associated Press laments: Consumer Confidence Falls to New Low
No doubt, an impressively daunting newsflash.
Consumer confidence is after all a well-known indicator, one closely watched as a bellwether for consumption patterns, retail demand, and economic growth. That's why, for more than 40 years, policymakers and corporate decision-makers have looked to the Conference Board's definitive Consumer Confidence Index.
Only that's not precisely what the AP meant. They're referring to the RBC CASH (Consumer Attitudes and Spending by Household) Index, which has been around only since 2002. So by "new low" they mean "lowest in 6 years".
It's no wonder the AP opts for the CASH Index. The actual Consumer Confidence Index is not only not at an all-time low, it's not even at a 6-year low. The index currently sits at 64.5, higher than it was five years ago (61.4 in March 2003).
But for argument's sake, let's focus on this much younger, less standard gauge of consumer confidence. The Associated Press goes on to recount some of the poll's internal numbers that tend to support their implicit thesis that the country is teetering on utter destitution. But they leave out a few bits of disconfirming data which not only don't show deterioration in April, but in some cases show improvement.
If you thumb your way through to, let's see... Question #1: "Generally speaking, would you say things in this country are heading in the right direction, or are they off on the wrong track?"
- Right direction: 24 (up from 22 last month)
- Wrong track: 71 (down from 73)
- Spread improvement: 4 points
Or Question #10: "Rate your current financial situation, using a scale from 1 to 7, where 7 means your personal financial situation is very strong today and 1 means it is very weak."
- Average: 4.3 (up from 4.2 last month)
Or Question #17: "Thinking about the next 30 days, do you think it will be a good time or a bad time to invest in the stock market?"
- Good time: 28 (up from 25 last month)
- Bad time: 65 (down from 67)
- Spread improvement: 5 points
Or question #18: "Thinking of the next 30 days, do you think it will be a good time to buy real estate, such as a house, vacation property or investment property?"
- Yes: 38 (up from 36 last month)
- No: 60 (down from 62)
- Spread improvement: 4 points
Other questions about respondents' own comfort purchasing houses, cars, and households items also showed either improvement or no deterioration. It tended to be questions about respondents' opinions of the welfare of others that showed marked deterioration. As observed in other recent polls, the CASH index seems to be capturing a phenomenon whereby consumers' confidence about their own financial outlooks is holding steady or even improving, while their impression of the plight of others is worsening sufficiently to drag down the composite top-line numbers.
With this curious divergence, it's almost as if some external factor were falsely influencing people's impressions of the state of the economy...
Finally, it's worth noting that the April survey polled nearly 30% more Democrats than Republicans. Among the Democrats surveyed, most identified themselves as strong (versus moderate) Democrats, while among Republicans, the large majority identified themselves as moderates.
Separation Of Powers, New York Style
Perhaps envious of the dignity and decorum with which the state's executive branch oozes, New York's judicial and legislative branches have engaged each other in a terribly dignified slap fight.
The state's chief judge [Judith Kaye], having failed to persuade the Legislature to grant her a pay raise, is bringing her battle before a fellow state judge, filing a lawsuit asking him to give himself, herself, and their colleagues pay raises of tens of thousands of dollars each.
It all sounds rather self-dealing, but in fact it was the legislature's self-dealing ways that prompted the suit.
It all sounds rather self-dealing, but in fact it was the legislature's self-dealing ways that prompted the suit.
Repeated efforts in Albany to boost judicial pay have foundered because legislators have linked the question of pay raises for judges to pay raises for themselves. "This situation is not only untenable and disgraceful, it is unconstitutional," the complaint states.
New York Supreme Court judges are paid $139,600 per year, a salary that hasn't increased in nine years. Adjusting for inflation, that amounts to a 21% pay cut, which the suit alleges violates the state's constitutional provision that judges' salaries "shall not be diminished."
The Republican-led State Senate has already passed legislation that would increase judges' salaries, while the Democrat-led Assembly has yet to get on board.
The Senate majority leader, Joseph Bruno, responded to news of the suit with a statement. "Judges don't need to sue to get a pay raise, they need to step up pressure on the State Assembly to act on either of two judges' salary increase bills already approved by the State Senate," he said. "Last April, the Senate passed a bill (S.5313) that included Chief Justice Kaye's pay raise proposal. It would provide salary increases for state justices and establish commissions to review future compensation. In December, the Senate passed a nearly identical bill (S.6550) to raise judges' pay. The Assembly did not act on these, or any other, judges' pay raise bill. If it had, this issue could have been resolved long ago."
S5313 was a nearly perfect party line vote, with 33 of 34 Senate Republicans and just 1 of 28 Senate Democrats voting for the pay raise.
Debate Is Over: Hamburgers Do Cause Crime
Last week, we spent some time mulling the correlation between slaughterhouse employment and violent crime. While we weren't quite sold on the argument that the former causes the latter, we're now forced to swallow our pride and concede that the evidence is mounting.
This isn't exactly violent crime, but it's no less compelling an example of the effect of beef proximity on criminal proclivities.
Police on Wednesday arrested an adult movie producer, two cast members and crew for filming a porn movie at a McDonald's shop in Higashi-Matsuyama City, Saitama Prefecture, in January.
Producer Kunikazu Ishii, 51, an actress, 21, an actor, 29, and staff were arrested for allegedly shooting a porn film at the McDonald's outlet around 3 p.m. on Jan 24. A customer noticed them and called police. McDonald's staff were apparently unaware of what was going on.
One of the suspects was quoted by police as saying, "We didn't think it would be a problem as long as nobody noticed what we were doing."
Given that this took place in a Japanese franchise, we priggish westerners need to bear in mind that Japan has long held a somewhat, er, saucier view of McDonald's than our own.
In 2005, the goofy, non-provocative Ronald was replaced with the ravishing Ronette.
Fast food chain McDonald's is attempting to woo adults back into its outlets in Japan with a gender-bending makeover.
Gone are the clown shoes and baggy overalls, swapped for red-and-white striped bikini and flowing dress, thigh-length leggings and high heels.
Previously: An Affirmative Defense For the Hamburglar?
Mr. Shambles Hits the Airwaves
Barack Obama has a new radio screed blaring out across Pennsylvania, in which he gets to wield his favorite fallacious phrase.
Across Pennsylvania, we're living the problems.
An economy in shambles. Families struggling. Gas prices close to four dollars a gallon.
So if you've had your fill of that...
Vote for change we can believe in, Barack Obama for President.
The ad is mainly an attack on Hillary, which I can't fault him for, but he's been hauling out this "shambles" bunkum on an increasingly frequent basis and no one seems interested in calling him on it.
Based on all available data, the U.S. economy is in an economic slowdown, triggered (or at least exacerbated) by the related mortgage and credit crises, and that slowdown (i.e. slowing, but positive growth) may eventually be downgraded to a mild recession (i.e. slightly negative growth), but that can't and won't happen until at least July.
I'm compelled to stress "based on all available data" because Obama has been gradually dismissing the relevance of economic data, waving the evidence aside and pronouncing himself disinterested in "technical definitions" and more interested in steering national economic policy based on a couple of rending anecdotes - anecdotes so rending that only the utterly heartless might hear them without tearfully condemning the wretched shambles in which our economy finds itself.
Just for kicks though, let's keep one eye on the data.
Based on the most recent quarterly output data, the economy grew 2.5% over the last year. That's less than the 3.0% average growth rate over the last 30 years, but not by much. If you were to take this same reading every quarter going back to 1978, 32% of the time (more than one quarter per year), you'd come up with a weaker reading.
Based on the most recent monthly inflation data, retail prices rose 4.3% over the last year. That's slightly higher than the 30-year average of 4.1%, but looking at each month since 1978, you'd find that 29% of the time (more than three months in twelve), you'd see higher year-over-year inflation.
Based on the most recent unemployment data, the seasonally adjusted unemployment rate is 5.1%. That's higher than it was last month, but well below the 30-year average of 6.1%. Looking at the monthly readings going back to 1978, unemployment was higher than 5.1% more than 76% of the time.
You get the idea. Productivity: growing at 1.8% (nearly equal to the 30-year average and higher than the 30-year median). Average Hourly Earnings: Up $0.62 over the last year (more than 50% better than the 30-year average inflation-adjusted increase of $0.40).
So the data points are mixed. Some are great. Some are mediocre. And some that are still good are about to get a bit worse, once the 1Q08 data is released. Depending on what you want to focus on, you can make a reasonable case either that the economy is weathering these special headwinds with considerable aplomb and ought to recover nicely in 2009, or that things are deteriorating in a broad-based way and that the current economic cycle will eventually see a full-fledged recession of indeterminate length and severity.
What the data clearly do not support is an economy "in shambles" by any interpretation of that term.
Jobless Claims Take a Dive
This morning, the Labor Department released its weekly unemployment insurance report, showing initial jobless claims diving to a seasonally adjusted 357,000 (down 53,000 from a revised 410,000 last week). The market was expecting 380,000, so it's moderately sunny news. But this part of the year (particularly in a year with a strangely early Easter) is apparently difficult to seasonally adjust, folks don't seem to be reading too much into the big week-to-week decline. Further tainting the otherwise encouraging number was the 4-week moving average (a less volatile way to look at the same data), which ticked up 2,500 to 378,250.
Today, that data point is typically being followed by the observation that it's the highest the 4-week moving average has been since 2005. So can we file this one away as yet another indication that a Depression is upon us? Surely, there's a decent correlation between new jobless claims and economic malaise.
Except that there really isn't. Not a good one, anyway.
Below is a chart of the 4-week movingaverage of new jobless claims over the last decade (blue), set against real GDP growth (green).
A couple things are worth noting.
The highest levels of new joblessness occurred shortly after 9/11, with the 4-week average topping out at nearly 490,000 in October 2001. By that quarter, though, the U.S. had already pulled out of the brief recession it had just encountered. GDP growth not only stayed positive, but accelerated dramatically over the following two years, while new jobless claims stayed elevated near or above 400,000. And the swiftest economic growth of the last 10 years (7.5% annualized) took place in the 3rd quarter of 2003, immediately after jobless claims popped up to another relative maximum of 423,000.
The joblessness spike of October 2005 did coincide with a one-quarter economic slowdown, but growth quickly recovered to more than 4% and 2.5 years later, we still haven't seen a single quarter of contraction.
In short, today's report shows weekly new jobless claims falling, which is good. But the overall trend (as measured by the 4-week average) is edging upward, which is bad. But the economic implications of that overall upward trend (vis a vis foretelling recession) are questionable, at best.
High School "Fight Club" Breaks First, Second Rules, With Predictable Results
Tyler Durden would be appalled.
It's a violent and illegal form of entertainment that's popped up at a high school here. They're called "fight clubs" and they could have some students in La Vernia in big trouble.
La Vernia police say a group of teens would meet in a school bathroom and then start fighting. They got caught because they used the internet to let everybody know what they were doing.
Dr. Harvey first heard rumors about these secret fights two weeks ago, but learned they were real after watching them at youtube.com.
Ron Paul Is An Island
A lonely, crazy island.
According to CNN, the House voted 413-1 for a resolution "calling on China to end its crackdown on Tibet and release Tibetans imprisoned for 'nonviolent' demonstrations."
Ron Paul (R-TX) cast the lone "nay" vote.
I've got no problem with principled nay votes on resolutions, especially if the principle is that Congressional energies spent on symbolic resolutions are a waste of time and taxpayer money. But I have an inkling this vote has more to do with Paul's gonzo isolationism than a disdain for legislative thumb-twiddling.
After all, in the last 10 days, he's voted to congratulate the Army Reserve on its centennial; to support the goals and ideals of Borderline Personality Awareness Month; to support the observance of Colorectal Cancer Awareness Month, and to support the goals, ideals, and history of National Women’s History Month.
Yes, Congress would like you to know that it supports Women's History Month's history.
(HT: HA Headlines)
Raising the Bewilderment Of Fedspeak To New Levels
Alan Greenspan seems to be of two minds about the state of the U.S. economy.
48 hours ago, in an interview for Spanish newspaper El Pais, he was unambiguous about his opinion that we are not in a recession.
"We would have to see signs of this intensification: there are some, but not many yet," he said. "Therefore ... I would not describe the situation we are in as a recession, although the chances that we'll have one are more than 50 percent."
Today, we are.
Former Federal Reserve Chairman Alan Greenspan said the U.S. is “in the throes of a recession” and continued to publicly defend his legacy Tuesday in an interview with business-cable network CNBC.
And that wasn't the only apparent change of heart between Sunday and Tuesday.
Greenspan, the U.S. Fed chairman from 1987 to 2006, endorsed the Republican presidential candidate John McCain in the interview.
Greenspan: Not Endorsing Anyone
“I have been out of politics for more than 20 years and have no intention of getting back in,” he said.
Does El Pais have incompetent translators or am I missing something?
Quote Of the Day
"'W' will not be a documentary."
That, from Moritz Borman, producer of the not surprisingly factually challenged Bush-bashing film Oliver Stone is about to direct.
Stone is returning to that favorite family wellspring of actors through whom Hollywood prefers to malign Republican Commanders-In Chief, tapping Josh Brolin to play the current President. Rounding out the first families are Elizabeth Banks (Laura), James Cromwell (Bush 41), and Ellen Burstyn (Barbara).
I'm going to go ahead and spoil the ending for you: Bush shot Kennedy.
The Ugliest Chart You'll See All Day
In a Wall Street Journal opinion piece, Reaganite John Cogan and Glenn Hubbard (architect of the 2003 investment income tax cuts) ponder the coming tax bomb, waiting to detonate should one of the Presidential candidates who don't support extending such cuts (hint: there are two of them) be elected in November.
Letting the Bush tax cuts expire will drive the personal income tax burden up by 25% – to its highest point relative to GDP in history.
This would be the largest increase in personal income taxes since World War II. It would be more than twice as large as President Lyndon Johnson's surcharge to finance the war in Vietnam and the war on poverty. It would be more than twice the combined personal income tax increases under Presidents George H. W. Bush and Bill Clinton. The increase would push total federal government revenues relative to GDP to 20%.
Why this large tax increase? The tax code changes enacted in 2001 and 2003 are scheduled to expire at the end of 2010. If they do, statutory marginal tax rates will rise across the board; ranging from a 13% increase for the highest income households to a 50% increase in tax rates faced by lower-income households. The marriage penalty will be reimposed and the child credit cut by $500 per child. The long-term capital gains tax rate will rise by one-third (to 20% from 15%) and the top tax rate on dividends will nearly triple (to 39.6% from 15%). The estate tax will roar back from extinction at the same time, with a top rate of 55% and an exempt amount of only $600,000. Finally, the Alternative Minimum Tax will reach far deeper into the middle class, ensnaring 25 million tax filers in its web.
Much more here, where Hubbard and Cogan make the case that growth, not redistribution, is the best way not only to weather economic storms, but to invite long-term prosperity throughout the economic spectrum.
(Well-timed too, a week before April 15th and two weeks before Tax Freedom Day.)
France Submits To Semicolonoscopy
Having wrapped up debate on more pressing matters of state, France's latest linguistic obsession has the country "preoccupied with the fate of its ailing semicolon."
(HT: Marginal Revolution)
Stocks See Best 4 Weeks in Almost 5 Years
If the prevailing economic mindset can be kindly described as a wall of worry, the equity markets have been nimbly scaling it in recent weeks.
Since stocks bottomed out on March 10th, we've seen the implosion of a major investment bank, news of double-digit annual declines in home prices, unexpectedly weak March employment data, and newspapers aiming to convince that we're on the brink of another depression and that we've never been more pessimistic about our economic prospects.
But over those four weeks, stock prices have put up their biggest gains since mid-2003, with the S&P 500 rallying some 8.7%.
Obama Weighing Wikipedia, MS Word Grammar Check, Various 5th Graders As Possible Running Mates
Aiming to disabuse the country of the idea that his momentary experience in national politics translates into similarly thin expertise in foreign policy, Barack Obama dismissed the idea that he needs to shore up his world-cred with an internationally seasoned running mate.
"I would like somebody who knows about a bunch of stuff that I'm not as expert on," he said ...
"Ironically, this is an area - foreign policy is the area where I am probably most confident that I know more and understand the world better than Senator Clinton or Senator McCain."
Obama also dismissed Senator Clinton's fabulist tales of international intrigue as little more than ceremonial field trips that he too has gone on.
When Senator Clinton brags 'I've met leaders from eighty countries--I know what those trips are like! I've been on them. You go from the airport to the embassy. There's a group of children who do native dance. You meet with the CIA station chief and the embassy and they give you a briefing. You go take a tour of a plant that [with] the assistance of USAID has started something. And then--you go.
Real foreign policy experience isn't gained on such trips, you understand. Not even over the course of Hillary's 7 years in the Senate, nor John McCain's 21.
The makings of a truly worldly President - one who grasps both the theory and history of international relations and can ably ply the art of diplomacy in a changing world - that comes from spending a few years in a different country.
And not just lollygagging on a rice mat for five years, getting bayoneted and slapped around once in a while. One receives the gift of foreign policy wisdom only when one's mind is supple, ideally between the ages of 6 and 10.
So when I speak about having lived in Indonesia for four years, having family that is impoverished in small villages in Africa--knowing the leaders is not important--what I know is the people. . . .
For the truly hard core, a college trip makes a perfect lily gilder for a world-class grounding in foreign policy.
"I traveled to Pakistan when I was in college--I knew what Sunni and Shia was [sic] before I joined the Senate Foreign Relations Committee. . . .
In summary, the foreign policy arithmetic here is:
- Undergraduate poli-sci degree (as a junior transfer) from Columbia, in preparation for special trip to Pakistan > undergraduate degree from U.S. Naval Academy, in preparation for 23 years of military service
- 4 years as a young boy living in Jakarta > 5.5 years as a POW in Hanoi
I wonder if Obama has ever done spring break in Cancun. Or gone snowboarding with college buddies in British Columbia. If so, he ought to consider adding those to his stump speech, just to really nail home his marvelous claim:
"...I know more and understand the world better than Senator Clinton or Senator McCain."
As for his dilemma of finding a running mate "who knows about a bunch of stuff that I'm not as expert on," I don't envy him such an implausible task.
Greenspan Sees >50% Chance Of Recession, Media Pre-Reports By 13 Months
In an interview Sunday, former Fed chief Alan Greenspan reaffirmed he does not believe the U.S. economy is currently in a recession, but for the first time, he indicated a better than 50% chance that the current slowdown would become a recession.
"We would have to see signs of this intensification: there are some, but not many yet," he said. "Therefore ... I would not describe the situation we are in as a recession, although the chances that we'll have one are more than 50 percent."
The news that this is new news might be surprising to AP readers, who may have inferred from various breathless reports in early 2007 that Greenspan was forecasting recession even then. In truth, he had estimated 3:1 odds against a recession, but a rash of alarmist, blatantly inaccurate headlines like "Greenspan Warns Of Likely U.S. Recession" helped inspire the biggest one-day stock sell-off since 9/11.
This time around, the zone is likely sufficiently flooded that another spate of apocalyptic headlines seems less likely to trigger significant incremental panic.
And after last week's farcically shark-jumping "Great Depression" piece, it's hard to imagine the journalistic ante being upped any further without becoming truly asinine.
So we have that to look forward to this week.
Hillary's Embarrassment of Riches
A sparsely detailed story at the top of the Drudge Report gives a glimpse of the fire hose of money that's been aimed at the Clinton's (particularly Bill) since the former First Family left Washington.
The eye-popping headline: $109.2 million in combined income from 2000-2007.
It's worth noting that Drudge and Breitbart don't explicitly define what they mean by "income". Judging by some of the other numbers they give, this probably refers to a pre-tax, and pre-charitable donation total. The following figures are also given:
Feds Taxes Paid: $33.7 million
Charity: $10.2 million
Her Senate Salary: $1,051,606
His Presidential Pension: $1,217,250
Her Book Income: $10,457,083
His Book Income: $29,580,525
His Speech Income: $51,855,599
This also doesn't include state taxes, the mountains of personal debt they'd amassed toward the end of their legally adventuresome tenure in the White House, the loan Hillary recently made to her campaign, or annual living expenses.
Taking those into account, here's my quick estimate of their cumulative disposable income between 2000 and 2007:
I'm making rough assumptions about their debt in 2000 and their cost of living since. If you come across better published estimates, give me a shout.
The biggest jaw-dropper is Bill's speech income - $52 million over 7 years. The Clintons previously disclosed that Bill made $31 million in speech income between 2001 and 2005. Apparently, he became a lot more loquacious in 2006 and 2007, because his annual take jumped from $6.2 million to $10.5 million.
This line item is of genuine importance, of course, because of Hillary's campaign loan of $5 million of her "own money". There's no question that - as her husband's spouse - that money was indeed her money. But it would be illuminating to know where it came from. What sources were shoveling tens of millions of dollars at her husband, thus enabling her to afford such a bountiful loan to her campaign?
I mean I hate to be "that guy" who's all suspicious of the Clinton's financial dealings, but...
Update: Allah's got some more.
Per Clinton's campaign site, cumulative after-tax income was $57.1 million. Eh, I was pretty close with $58.5.
Update: On the 2007 summary (pdf), we also find this gem:
Advisor income from InfoUSA $400,000
How charming that they're still harvesting a few hundred thousand a year from InfoUSA's shareholders, via their pal Vin Gupta.
Until now, it had been more than two months since news of additional shady dealings between Hillary and Gupta had bubbled up (the last one being the time she was noticed (by this blog) selling her campaign contributor list to Gupta's company (the one still paying her enormous "advisor" fees) which had earlier been found to sell such lists to criminals who prey on senior citizens).
I was starting to worry they might've parted ways in the wake of that particularly unseemly revelation.
March Employment: The Good, the Bad, and the Kinda Bizarre
Let's start with the good, because there's not much of it. The good news (for the inflation-fearless anyway) is that the weakness in the March Employment Situation Report is likely to nudge the Fed into even more of a rate-easing bias, with many now expecting another half-point (instead of a quarter-point) cut. Second, additional dovish Fed action (and even the expectation thereof) will tend to keep the dollar weak, which ought to throw some more fuel on net exports. Third, the market's not freaking out about it. At least not yet. Fourth, average hourly earnings ticked up 0.3%. And... that's about it.
The bad. The economy lost 80,000 jobs in March (considerably worse than the expected loss of 45-50k and the biggest decline in 5 years). January and February estimates were revised to reflect a combined loss of 152,000 (worse than preliminarily reported). And the unemployment rate jumped from 4.8% to 5.1%.
You might find yourself asking - is it a recession? Or is it a nation-shattering depression?
Of course, it continues to be neither, so far as we know. If we are in a recession, that condition will - by definition - be unknowable until at least late July. Though one has to acknowledge that the three consecutive months of unappetizing jobs numbers bode poorly for positive growth in the first quarter. At this point, I think I'd be somewhat surprised (but certainly not floored) to see even a slightly positive growth reading in Q1. It seems more likely we'll blip into shallow negative territory. But three things are worth remembering, should you notice your knuckles turning white:
1) The last time we had three months of such bad employment data was February-April 2003, when the economy lost 419,000 jobs. From January-March 2008, we lost roughly half as many (232,000). And 2003 not only saw zero quarters of contraction, it achieved a generational high of 7.5% real GDP growth in the third quarter.
2) 5.1% unemployment is still nice and low. That puts March 2008 in the 65th percentile among its monthly peers going back to 1948.
3) The stimulus checks go out in a few weeks and the economic impact (estimated to boost GDP growth by 1 percentage point) is expected to start kicking in during the second quarter. With even the doomsayers (the mainstream ones anyway) looking for a short and mild recession, that extra point could go a long way toward keeping GDP's head above water.
In short, let's brace for a small negative reading for the first quarter, likely recovering to modest positive growth in Q2.
That brings us to the "kinda bizarre".
On Wednesday, ADP released its own March employment report, which saw private employment expanding by 8,000 (implying growth of 28,000 jobs, including the public sector). As this was significantly different from the job losses expected in the government report, we spent a little time looking at the growing divergence between ADP's and the Labor Department's payroll estimate. I noted that since September 2007, ADP's estimate has been drifting north of the government number by an average of 73,000 jobs per month. With that in mind, it turned out that ADP's March estimate of 28,000 added jobs was right where we might've guessed (73,000 above the market's expectations of -45,000 from the Labor Department).
While predictable, that ongoing divergence was strange enough. Now, it's gotten considerably stranger. The March divergence (+28k per ADP vs. -80k per DoL) was 108,000. Including the January/February revisions, the average monthly divergence since the trend began last September is now 81,000, with a cumulative divergence over those seven months of 570,000 jobs.
Certainly, ADP and the Labor Department have very different methodologies and it's not shocking that they might come up with significantly different numbers. But the speed with which such a divergence has opened up suggests something more. After all, as of last August, the two estimates were nearly identical (within 2,000).
I see three possibilities. 1) one indicator tends to be more or less of a laggard than the other, meaning we can expect gaps to open up during economic inflection points, 2) ADP, the Labor Department, or both have materially altered their methodology in recent months, and/or 3) methodologies are unchanged, but systemic changes in the composition of the workforce are resulting either in overcounting by the ADP report or undercounting by the Labor Department.
Whatever the cause(s), the phenomenon is there, though the reaction you'll hear most commonly is to simply disregard ADP as an increasingly unreliable predictor of the official estimates. But ADP isn't just failing to match the government numbers - it's steadily pulling away from it in one direction (by more than a half million jobs in seven months).
Lies, Damn Lies, and Unprecedented Pessimism About the Economy
A couple days ago, we took a look at British tabloid The Independent's cover story, insisting the United States would enter a "great depression" in 2008, based on new food stamps participation data. It took some doing, as that data needs to be considered slightly less superficially than the paper had seen fit, but it was a pretty clear example of sensationalized economic fearmongering with no statistical support, so we muddled through.
Today, it's a couple of stateside media outlets that are slinging the statistical snake oil. Happily, this debunking is considerably (almost embarrassingly) easier.
Per the breathless synopsis, from CBS News:
CBS Poll: Views On Economy At All-Time Low
Americans' views on the economy and the general state of the country have hit an all-time low in the history of the CBS News/New York Times poll. Eighty-one percent of those polled say the country is on the wrong track, while only 14 percent believe it is heading in the right direction.
Compelling! An "all-time" low. Color me demoralized. After all, this economy of ours has seen a heap of time. Turns out, though, by "all-time" CBS means "since we began asking... in 1986."
Mmmkay. So they could still get away with something like "Views On Economy Lowest In Recorded History" with the possible caveat "(As Recorded By Us and Excluding the Results of Other Polls That Date Back More Than Half a Century Before Ours)".
But is even that heavily qualified, less arresting proposition true?
The outlook on the economy is as bleak as views on the state of the country as a whole. Just 21 percent say the economy is in good shape - the lowest percentage recorded since October of 1992.
This "Condition of the Economy" question is the poll's primary gauge of public "views on [the] economy" (and therefore the metric a headline reader could be forgiven for assuming is the one described as being at an "all-time low").
But even in this vaunted 22-year-old poll, that metric only manages a 16-year low.
The question that did score the pollsters the unprecedented malaise they were looking for was whether the economy is worse off now than it was five years ago. 78% of respondents said they believed the economy is worse now than in 2003.
Well, that's not altogether shocking, either. 2003 was quite a year. The S&P 500 returned 26%. The economy was in its twelfth consecutive year of growth. And the President signed into a law a sweeping package of tax cuts that let Americans keep a lot more of their money, spurred widespread investment, and helped extend that economic growth another several years.
Finally, it's worth noting that the poll surveyed more than 50% more self-identified Democrats than Republicans (40% to 26%, after demographic weighting adjustments). These polls don't attempt to weight responses according to political party, so if your polling methods happen to over-represent one party, any resulting systematic bias is left in the results.
One can debate whether this poll's Democratic over-representation is ongoing and foreseeable (the poll database suggests this isn't a new phenomenon), but since we're dealing with a metric that surpasses the poll's own historical results (however heavily qualified and cherry-picked the metric may be), the results are still at least mildly notable, so long as that systematic polling bias remains constant.
Unfortunately for the tattered credibility remaining, it doesn't.
Two months ago, CBS conducted a similar poll, which found 71% of respondents labeling the economy "bad" (compared to 78% now). But in the January poll, the Democrat-Republican imbalance was a mere 10 percentage points (38%-28%). Still significantly stilted, but refreshingly objective when compared to this month's 14-point gap.
Sadly, if we want to stick with fully qualified, apples:apples comparisons, this forces us to adopt the further devitalized headline: "Views On Economy (As Recorded By Us and Excluding the Results of Other Polls That Date Back More Than Half a Century Before Ours (As Reported By a Predominantly Democratic Sample)) Lowest Since March 2008!"
An Affirmative Defense For the Hamburglar?
The Freakonomics fellows are nothing if not compelling post titlers:
Do Hamburgers Cause Crime?
Most of us who eat meat regularly would still rather not kill an animal with our own hands. So we have, for generations, delegated that work to others.
Jennifer Dillard, at Georgetown Law, authored a new paper looking at what that delegation costs the workers of industrial slaughterhouses. She argues that prolonged work on a kill floor exposes workers to the risk of psychological damage, including post-traumatic stress disorder, and that they should be compensated under O.S.H.A. for any ill effects they suffer.
Giving slaughterhouse workers therapy might also reduce another cost associated with the meat-processing industry: increased crime.
Writing for the American Sociological Association, Amy Fitzgerald finds a spill-over effect from the violent work of the slaughterhouse into the surrounding community. According to her research, U.S. counties that have slaughterhouses consistently have higher rates of violent crime than demographically similar counties that don’t.
Meh - I'm a little skeptical. Not of Dillard's findings, per se. I can swallow the idea that a career in meat slaughter and a tendency toward violence would positively correlate (though it may be that those already pre-disposed toward violence are more likely to select careers in flesh carving, rather than said careers turning the mild-mannered into monsters).
But the bone I'm looking to pick is the apparent implication that (from an economic standpoint) the delegation (and pleasantly complete obfuscation) of the process of slaughtering food for the general population amounts to a misleadingly inefficient arrangement, due to the unrecognized emotional, financial, and societal costs that Dillard argues result from concentrating all the skinning, draining, gutting, and chopping among relatively few people.
That might be true. But to evaluate the proposition fairly (even if you take as a given that the causality involved is that slaughterhouse employment breeds violent criminal tendencies, not the other way around), wouldn't you need to consider whether there's a similar reduction in violent criminal tendencies among the vast majority of the population who are spared direct interaction with meat in its pre-table state?
I don't think you'd have to shake the internets too hard to scare up a bunch of studies arguing that children who are made to hunt by their parents have greater tendencies toward violence. Ignoring the political incongruity of the two suppositions, doesn't it stand to reason that we'd all be a little edgier, a little axe-happier, if we had to go out back and kill something every night before dinner?
If so, then delegating these unpleasantries is probably all the more important (including as a measure of crime prevention). If there is an inefficiency, it's probably not the highly concentrated allocation of the horrors of food service, but rather the level of compensation offered to those who shoulder the ghastly burden. If leaving the butchery (and the resulting emotional distress and criminality) to the few has the side effect of sparing society higher crime levels (and, relatedly, of sparing citizens mania and incarceration), then studies like Dillard's (despite arguing the opposite point) are important, because it'll only be through better cost visibility that the market will equilibrate and slaughterhouse wages will (if I'm right) increase.