James Pethokoukis

Unemployment rate in July slips to 9.4 percent; another 247,000 jobs lost. Yuck

August 7, 2009

The bad news arrives. Here is the latest from the Labor Department on the July unemployment rate and the number of jobs lost (bold is mine):

Study: Housing market will be in a recession for decades

August 6, 2009

A University of Utah study predicts that the percentage of U.S. households that own homes — a number which peaked at 70.4 percent in 2004 and 2005 and is now at 67.4 percent — will drop to about 63.5 percent by 2020. That would be the lowest level since 1985. The reasons are a) smaller households, b) tighter credit, c) green desires thatare  pro-renting.

Cash for clunkers is Obamanomics in microcosm

August 3, 2009

Think of “cash for clunkers” as a sort of bizarro twin of that “bucks for banks” program from last autumn. You know, the one where Congress authorized $700 billion to keep financial clunkers on Wall Street up and running.

Higher growth vs. rising unemployment

August 3, 2009

Two fun factoids:

1) During the past two recessions, the unemployment rate kept rising for 15 months (1990-91 downturn) and 19 months (2001 downturn) after the recession officially ended, according to the National Bureau of Economcic Research.  If that happens now, we are looking at rising joblessness right smack into Election Day 2010.

Will GDP pop in the third quarter? If so, will Obama smile?

August 3, 2009

That is the case being made by the always-great Ed Yardeni (bold is mine):

If nothing changes during Q3, real GDP will be up 4.6% during the quarter. This isn’t our forecast. It is arithmetic. If there is no change in final sales to consumers, business, governments, and foreigners, and if nonfarm inventories are unchanged, that’s how much real GDP will increase. This is because nonfarm inventory investment was minus $144.4bn (saar) during Q2. If it is zero during the current quarter, real GDP will surge. The inventory investments component of real GDP has been negative for five consecutive quarters, the longest stretch since Q1-2001 through Q1-2002. … By the way, during the first quarter of the last 10 economic recoveries, real GDP rose 5.8% on average, with a high of 17.2% during Q1-1950 and a low of 1.4% during Q4-2001.

5 quick takes on the 2Q GDP report

July 31, 2009

Here is a smattering of quick opinion on today’s second quarter GDP report from around the Street:

Getting a recovery in the worst way possible

July 30, 2009

It is like opening a present and finding a bomb inside. Gluskin Sheff economist David Rosenberg on the “recovery”:

A durable goods green shoot?

July 29, 2009

This chart of the trend in durable goods orders makes me smile.  Although June orders were down, notes Michael Darda of MKM Partners, “the weakness was concentrated in transportation, communications and defense. Non-defensecapital goods orders excluding aircraft, which is a component of the Conference Board’s Index of Leading Economic Indicators, rose 1.4% m/m after a 4.3% m/m rise in May — the first back-to-back gains in a year.”

Are profits forecasting a V-shaped recovery?

July 28, 2009

David Rosenberg of Gluskin Sheff doesn’t think so:

Much is being made of the fact that over 70% of U.S. companies are beating their low-balled earnings estimates, but the majority are still missing their revenue targets (as per Verizon and Honeywell in yesterday’s reports — top-lines down 6.7% and 22% respectively). Even so, a momentum-driven market will always be driven by just that — momentum; and there’s no doubt that investor risk appetite is being whetted. But after paying for the end of the recession in May, the market is now pricing in 40-50% earnings growth for next year, and while costs have aggressively been taken out of the system, this sort of unprecedented profits revival can only occur in the context of a V-shaped recovery, which we give 1-in-50 odds of occurring.

Are corporate profits about to take off?

July 27, 2009

Jim Paulsen of Wells Capital Mangement points out that companies have cut to the bone in preparation for near-depression. This could result in some spectacular profit numbers ahead (and check out the chart below) — assuming no near-depression: