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from MacroScope:
Forecasters more accurate on U.S. payrolls: perhaps a good sign
Financial and economic forecasters have long been the punching bag of punters and traders for making spectacularly wrong calls. But a clutch of economists looked exceptionally good on Friday. Nine of them, or about 10 percent of the latest Reuters Polls sample on U.S. non-farm payrolls, got the net number of new jobs created in May exactly right at 175,000. And a whole lot of them came very close.
For a survey of companies conducted by the Bureau of Labor Statistics that itself has a margin of error of plus or minus 100,000 this is no small achievement - or stroke of luck.
But it may also be a good sign that jobs growth is getting more steady, a much more stable target to try and pin down each month. The range of forecasts provided - from 125,000 jobs to 210,000 - was also the narrowest so far this year.
While the growth rate needs to accelerate to create meaningful change in the jobs market, most say this is a good sign for the economy, most specifically for the unemployed who are actively looking for work.
from MuniLand:
America is not growing, it’s contracting
The Guardian’s Heidi Moore wrote an epic screed about the illusion of economic recovery and waded through a river of micro data to prove her point. She highlighted how the housing recovery was driven by banks withholding their foreclosure inventories from markets and how three large banks halted foreclosures, which slowed supply. Unfortunately, she only had anecdotal evidence to support these ideas. She berated consumers for their increasing confidence in the economy and called it unfounded. She blasted the federal government, Congress and corporate CEOs for doing nothing to revive employment and stimulate economic growth. Moore writes:
The reason to maintain skepticism of good times a-coming is that an economic recovery can – and is – used to package a lot of political snake oil. As long as people believe in a recovery, Congress can keep ignoring the unemployment and equality crises and enjoy ginning up imaginary problems like the plague of corporate tax rates.
from The Great Debate:
U.S. power: Down but still unrivaled
This essay is adapted from the author's new book “Balance: The Economics of Great Powers from Ancient Rome to Modern America.”
Hard power. Soft power. Smart Power. Superpower. This is the language of foreign affairs, full of meaning but empty of measurement. Vagueness is, of course, purposeful in the hands of skilled diplomats and politicians, but it can signal shallowness, ignorance or worse. Lacking clear metrics for power, the U.S. national security establishment speculates about possible rivals while being led astray by trendy catchphrases.
from Breakingviews:
Whatever happened to the inflation “Weimarists”?
By Dan Indiviglio
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Whatever happened to predictions the United States would soon experience Weimar Republic-like inflation? When the Federal Reserve kicked off its massive stimulus campaign, critics invoked this dark period of modern German history and its images of wheelbarrows full of valueless cash. Four years later, only the most stubborn hawks still fear such hyperinflation. Consistently low price growth has made Ben Bernanke’s easing look safe - so long as his exit works.
from Breakingviews:
U.S. auto sales put brakes on economy’s detractors
By Agnes T. Crane
The author is a Reuters Breakingviews columnist. The opinions expressed are her own.
U.S. car sales are putting the brakes on the economy’s detractors. Americans are buying more vehicles thanks in part to pent-up demand and cheap loans. But the housing recovery helps, too. That and other economic data suggest consumers are looking beyond slimmer paychecks. Federal spending cuts allowing, that means the U.S. engine may be about to purr.
from Breakingviews:
Surprisingly weak U.S. GDP has silver linings
By Martin Hutchinson
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
The surprisingly weak U.S. economic output in the fourth quarter contains more than a few silver linings. The nation’s GDP declined at an annualized rate of 0.1 percent, defying expectations of at least 1 percent growth, according to economists polled by Thomson Reuters. Lower government spending accounted for a big slug of the contraction while private consumption and income improved. There’s really little cause for alarm.
from The Great Debate UK:
Why meetings matter to the U.S. economy
This infographic, supplied by the Americas Incentive, Business Travel & Meetings Exhibition (AIBTM), aims to show that the travel sector is critical to economic growth in the U.S.
AIBTM’s exhibition director Mike Lyons says of the figures: "Despite recessionary economic periods, businesses recognise the continued importance and value of face-to-face meetings that current research shows accelerate business results and shorten the sales cycle. With every planned meeting, there's a 'cascade effect' into local economies across the nation, feeding jobs, local spending, and fuelling the success of local business.”
from The Great Debate:
Why public debt is not like credit card debt
One big part of the well-financed campaign for economic austerity is the contention that the public debt is like a national credit card. If we keep charging on it, the argument goes, we’ll get overwhelmed with interest costs, suffer a reduced standard of living and, pretty soon, go bankrupt.
As David Walker, a prominent budget hawk and the former head of the billion-dollar Peter G. Peterson Foundation, has contended, “Both Republicans and Democrats in Washington have charged everything to the nation's credit card, including tax cuts and spending increases, without paying for them.”
from The Great Debate UK:
Fiscal cliff deal is depressingly European
--Laurence Copeland is a professor of finance at Cardiff University Business School. The opinions expressed are his own.--
The deal to break the deadlock in the US looks awful, far worse than going over the cliff, which I suspect would have been a lot less damaging than is usually assumed.
from MacroScope:
‘Cliff’ deal is one part relief, one part frustration for Fed
When Federal Reserve Chairman Ben Bernanke was last in New York, he joked about his past research into the effect of uncertainty on investment spending. "I concluded it is not a good thing, and they gave me a PhD for that," he said, drawing laughter from a gathering of hundreds of economists in a packed Times Square conference room.
Laughter probably wasn't echoing through the halls of the U.S. central bank on Wednesday. Late on Tuesday, Congress struck a last-minute deal that only partially and temporarily avoids the so-called fiscal cliff. Bernanke and other Fed policymakers - frustrated that it took politicians so long to address tax and spending levels in the first place - were hoping Washington would agree to a bi-partisan, longer-term plan to narrow the country's massive deficit with only modest near-term fiscal restraint. While no deal on taxes would have been far worse for the economy, the fact that Congress put off decisions on government spending and the debt ceiling for another two months simply prolongs the uncertainty that many feel is holding back investments by businesses and households.
