Archive for December, 2011

2012 Verve

Friday, December 30th, 2011

Few things are as easy to break as a teenager’s heart or New Year’s resolution but if you want to see real angst, give a ten-year-old a sweater for Christmas.  As we toss the old calendar and pin up the new (yes I know in this digital age people don’t do that anymore but I’m old school), I want to help you keep your resolve to enjoy a healthier lifestyle this year.  Let’s take a hard look at your diet and exercise regimen to see if improvements are in order.

Well, that didn’t take too long, and yes changes are definitely called for.  First, here are suggestions to tone up those pockets of flab.  Get yourself a pair of those new motorized roller skates.  Battery powered, they strap right onto your shoes and hit 10 mph with little effort.  That’s the kind of aerobics I’m talking about!  After that I might strap one of those electric gizmos to my midsection which allows me to do about one thousand sit-ups while cooling down on the couch.  If you use the new sports bottle which is designed to allow for the consumption of your power eggnog without having to hardly tip your head back at all, you will avoid neck strains and other such dangerous contusions.

For diets, resolve to consume more fruit and nuts.  I’m told blueberries are really good for you and almonds are swell also.  I get dried blueberries and almonds from Trader Joe’s where both are found covered in dark chocolate in handy plastic tubs.  As I’m sure you are aware, the benefits of dark chocolate are themselves legendary.  It’s a win-win as far as I’m concerned.

With so many looking for a job in these troubled times, I turn to Hollywood for my final suggestion.  Hire a body double for yourself.  They can perform the more dangerous stunts.  I let mine touch my toes.  No danger of a painful pull or over-exertion there.  He or she also can help out around the house with other routine tasks.  Mine is currently driving over to Trader Joe’s to buy some more of those chocolates and a carton of profiteroles for me.  The latter isn’t officially part of the diet but I think it’s important to reward myself for being so disciplined.

November’s Leading Indicators

Thursday, December 29th, 2011

November’s Leading Economic Indicators (LEI) index rose 0.5% according to the Conference Board.  This jump was above general expectations and adds to the 0.9% rise we saw in October.

An analysis of the LEI’s components shows positive trends for both the labor market and housing.  Gains were also registered in manufacturing and consumer spending.  All of this is good news of course, providing some evidence that fears we may slip back into recession can be set aside for a while yet.

One common way many economists interpret the LEI is as an indicator for the short-term direction of our economy in general, just looking out over the next three to six months.  Unfortunately, a couple of flies remain in the ointment.  Europe’s problems do not seem all that close to resolution and could skip across the pond and onto our shores sometime in the future.  Secondly, despite many components showing some strength, the Fed’s influence on our yield curve remains a primary driver of the positive trend.  If they suddenly reverse course and begin raising rates, things could turn down in a hurry.  That said, things are rarely close to perfect.  We will take the good news as it comes and hope for more.

November Consumer Sentiment

Wednesday, December 28th, 2011

Consumer confidence in November hit 69.9 according to a measure from the University of Michigan.  This exceeded forecasts and marks a solid increase from the 64.1 reading set at November’s end.  It now resides at a six-month high and bodes well for a merrier Christmas than many economists had originally expected.

The recent decline in America’s unemployment rate coupled with generally lower gasoline prices may get much of the credit for this increase.   By adding to pocketbooks in the aggregate they also combine to boost hopes for consumer spending, perhaps the most important piece in the puzzle called recovery.  Still, we remain far from those levels which coincide with a vibrant economy.  While now posting above the average 64.2 level seen during the recent 18-month recession, we are well below the 89 average which proved the norm for the five years prior to that downturn.

We can take heart that the gains here and in some of our other indicators are happening in the face of unsettling geopolitical events such as the Euro’s turmoil.  The improvements are even occurring despite Washington’s gridlock.  Perhaps I should say because of Washington’s gridlock.  Having long felt we were safest when Congress was not in session, I now wonder if the second best alternative is when they can’t actually do anything.

Final Third Quarter GDP

Tuesday, December 27th, 2011

America’s third-quarter GDP rose 1.8%, which was below consensus expectation, according to the Commerce Department’s final revision.  The drop was due to changes in the mix of components which comprise GDP and present a somewhat strange picture.  For instance, part of the decline was a drop in personal consumption.   We would normally agree any drop in sales is unfortunate but in this case the decline was registered by less spent on hospital services.  That’s statistics for you; seeing fewer people getting sick is apparently bad for the economy!

Our nation’s gross domestic product (GDP) is reported on a quarterly basis three different times.  Every month following the end of a calendar quarter, as more information comes available, a new guesstimate is published.  This report represents the final revision to the third quarter which in the preliminary report was initially seen as fairly upbeat, rising at a 2.5% rate.  The revised version which came out a month later pared that down substantially to show a 2.0% rise.  This final revision adds to that disappointment despite the odd way in which it was derived.

Year-over-year our economy has advanced just 1.5%, an amount which will do little to offset the stagnant state of affairs in which we currently find ourselves.  This report also pegs inflation at 2.6% which is worrisome.  It’s not good to see prices moving up faster than production.  With some of our indicators currently showing an improving picture in employment and housing, we would hope retail sales will keep pace.  Unfortunately, with wages adjusted for inflation actually declining of late that could be hard to accomplish.  All of this will surely result in lowered expectations for the fourth quarter GDP report which we will see toward the end of January.

Good Eatin’

Friday, December 23rd, 2011

When it comes to “good eating,” I’m a big fan.  Give me a fried shrimp po’boy from down south, a pork tenderloin ex-Iowa, or virtually anything produced by a well-schooled Saucier and I am in hog heaven.  Neither the government nor medical establishment is yet ready to endorse my affinity for items cooked using lard however.  They don’t know what they’re missing I say.

According to the LA Times, the LA Unified School District has chosen to ignore my preferences in favor of a healthier menu endorsed by such groups as the USDA and the Physicians Committee for Responsible Medicine.  The changes, as with so many things engineered by government agencies to protect us from such dangerous trends as (in this case) childhood obesity, led to unintended consequences.

The Times reports spending on fresh produce jumped ten-fold from $2 to $20 million over a four year period.  Student participation in the lunch program has declined measurably.  School principals say uneaten entrees are being dumped, resulting in massive waste.  Black markets providing candy, chips, even instant noodles, have sprung up on some campuses, occasionally abetted by staff.

I would never pan healthy food, although adding (really!) items like black bean burgers and quinoa salad may not be my first choice.  What I enjoy about this is the fabulous demonstration, yet once again, that technocratic governments will never be able to foresee the needs of its individual citizens.  The end result is often unexpected, sometimes destructive, and at times even revolutionary.

Zoom out to a wide-frame picture and look at the efforts by our government over past decades to engineer a social agenda with tax incentives, hikes, cuts, fees, legislation, incarceration, and so forth.  A fine mess they got us in, eh Ollie?  I don’t really want to blame them though, they meant well, and most of us no doubt support the initiatives to some degree.  Now we are at an inflection point where the wisdom of having a large, care-taker government is being questioned.   Unfortunately, as always, the devil is in the details.  What specifically would you be willing to give up?  Remember this slightly paraphrased but still sage advice from a Scotsman (no, not Bobby) some 250 years ago, “A democracy can only exist until voters discover they can vote themselves money from the public treasure.”

November Retail Sales

Thursday, December 22nd, 2011

According to the Census Bureau, retail sales managed to improve in November, although they were not as strong as many were hoping for.  The good news in this month’s reports came from revisions of the October and September readings as each of the prior two months were stronger than originally counted.  As time goes on the Census Bureau is able to collect more information from surveys turned in late, so the possibility of higher revision for November will count as a tarnished silver lining for now.

The headline figure grew 0.2 percent from the previous month and 6.7 percent year-over-year.  Motor vehicles and auto-related products make up a considerable amount of retail sales but can be volatile month to month.  Therefore, retail sales excluding the automotive component might reveal something the headline number masks.  Unfortunately for November, the headline was not hiding any positive secrets.  The growth rate was identical to the headline number.  Consumers did buy more electronics (‘tis the season) and spent more at food & beverage stores but less at restaurants.   Since they stayed home to eat, Americans were able to spend less on gas as well.  The change in weather may have prompted the additional clothing purchases, but for it being the flu season, Americans managed to spend at health and personal care stores.

The economy continues to grow as illustrated by the retail sales figures. The pace is not white hot as the country needs, but as our slow recovery gets long in the tooth, Atlas will not look this gift horse in the mouth.  The figure was positive, so we are begrudgingly positive too.  It’s just worth mentioning that when the economy grows at a glacial pace, it is more susceptible to catching a cold, and there is not a health and personal care store with remedies to cure that type of illness.   (by Christopher Cox)

November Consumer Sentiment

Wednesday, December 21st, 2011

Consumers’ attitudes continued to improve in November according the Reuters/University of Michigan’s most recent reading of consumer sentiment.  The reading of 64.1 compares favorably to October’s 60.9 end of month tally.  The trend for the year has been down after a peak reading in February and is down 10.5 percent year-over-year, but the indicator has been improving since putting in a 30 year low in the middle of August.

With the improvement coming off of such a low base, the details of the survey still leave many things to be desired.  Personal finances continue to stagnate.  For the 48th consecutive month, more households reported that their finances worsened rather than improved, and only 22 percent expect their situation to improve in the next twelve months.  The nation is not happy with the leadership of the country either.  The majority gave unfavorable ratings of the Obama administration for the 4th month in a row; and for the second consecutive month, the Federal Reserve received demerits from the majority.

The financial crisis of 2008-09 did a number on consumers’ outlook.  The slow recovery kept the attitudes suppressed.  Now it is the leadership crisis that has Americans worried.   The survey’s 30 year low in August came during the congressional debate on the debt ceiling which was ultimately pushed to a super-committee, and they came up short on solutions.  All of this is against a backdrop of economic and political uncertainty around the rest of the world.  It is hard to imagine the outlook materially improving in the near future, but that is just one consumer’s sentiment.  (by Christopher Cox)