The US Economy: A Set Of Snapshots

“data bugs!”

On occasion, we secure and post economic data from the St. Louis Federal Reserve Bank (FRED) , YCharts, and Yahoo Finance. It seems we haven’t been as diligent in posting the economic data based on numerous request to develop and post data for February 2014. 

Here you go, “data bugs!” Despite frequent proclamation of a “disastrous” US economy, data doesn’t agree. While, Manufacturing and Auto Sales slowed during the month, other indicators stayed on the path to improvement. Regardless of reason for the 6.6% unemployment rate, when coupled with Fed managed inflation the Misery Index shows well and continues a snail’s pace downward with some level as we move through early 2014.

There is a story here and it is certainly not that of a “disastrous” US economy!  The story is available for those who seek information.

FRED (The St. Louis Federal Reserve Bank) Industrial Production Index (INDPRO) 2014-01: 101.0251 Index 2007=100   Last 5 Observations Monthly, Seasonally Adjusted, Updated: 2014-02-14 10:41 AM CST Notes: The Industrial Production Index (INDPRO) is an economic indicator that measures real output for all facilities located in the United States manufacturing, mining, and electric, and gas utilities (excluding those in U.S. territories).(1)  The index is compiled on a monthly basis to bring attention to short- term changes in industrial production,. It measures movements in production output and highlights structural developments in the economy. (1) Growth in the production index from month to month is an indicator of growth in the industry.  Real Gross Domestic Product (GDPC1) 2013:Q4: 15,932.9 Billions of Chained 2009 Dollars   Last 5 Observations Quarterly, Seasonally Adjusted Annual Rate, Updated: 2014-02-28 7:46 AM CST Notes: Real gross domestic product is the inflation adjusted value of the goods and services produced by labor and property located in the United States.  Civilian Unemployment Rate (UNRATE) 2014-01: 6.6 Percent  Monthly, Seasonally Adjusted, Updated: 2014-02-01   (We performed  REVIEW EDIT FORM 01.01.07 ( the Great Recession started in December 2007) Notes: The unemployment rate represents the number of unemployed as a percentage of the labor force. Labor force data are restricted to people 16 years of age and older, who currently reside in 1 of the 50 states or the District of Columbia, who do not reside in institutions (e.g., penal and mental facilities, homes for the aged), and who are not on active duty in the Armed Forces. This rate is also defined as the U-3 measure of labor underutilization. See More after the break below All Employees: Total nonfarm (PAYEMS) 2014-01: 137,499 Thousands of Persons    Monthly, Seasonally Adjusted, Updated: 2014-02-07 8:16 AM CST Notes: All Employees: Total Nonfarm, commonly known as Total Nonfarm Payroll, is a measure of the number of U.S. workers in the economy that excludes proprietors, private household employees, unpaid volunteers, farm employees, and the unincorporated self-employed.(1) This measure accounts for approximately 80 percent of the workers who contribute to Gross Domestic Product (GDP). This measure provides useful insights into the current economic situation because it can represent the number of jobs added or lost in an economy. Increases in employment might indicate that businesses are hiring which might also suggest that businesses are growing. Additionally, those who are newly employed have increased their personal incomes, which means (all else constant) their disposable incomes have also increased, thus fostering further economic expansion. Generally, the U.S. labor force and levels of employment and unemployment are subject to fluctuations due to seasonal changes in weather, major holidays, and the opening and closing of schools. The Bureau of Labor Statistics (BLS) adjusts the data to offset the seasonal effects to show non-seasonal changes: for example, women’s participation in the labor force; or a general decline in the number of employees, a possible indication of a downturn in the economy. To closely examine seasonal and non-seasonal changes, the BLS releases two monthly statistical measures: the seasonally adjusted All Employees: Total Nonfarm (PAYEMS) and All Employees: Total Nonfarm (PAYNSA), which is not seasonally adjusted. (1) Bureau of Labor Statistics. “Employment, Hours, and Earnings from the Establishment Survey.” BLS Handbook of Methods; last date modified July 10, 2013; http://www.bls.gov/opub/hom/.  4-Week Moving Average of Initial Claims (IC4WSA) 2014-02-22: 338,250 Number   Last 5 Observations Weekly, Ending Saturday, Seasonally Adjusted, Updated: 2014-02-22  YCharts (Manufacturing and Auto sales) ISM Manufacturing Production Index: ISM Manufacturing Production Index is at a current level of 54.80, down from 61.70 last month and up from 53.80 one year ago. This is a change of -11.18%from last month and 1.86% from one year ago .54.80 for Jan 2014 ISM Manufacturing Production Index data by YCharts US Auto Sales: 15.54M for Jan 2014 US Auto Sales is at a current level of 15.54M, down from 15.68M last month and up from 15.51M one year ago. This is a change of -0.89% from last month and 0.17% from one year ago. US Auto Sales data by YCharts Yahoo Finance (major market Indices) Dow Jones Industrial Average (^DJI)  –DJI  16,368.43  95.78(0.59%) 2:32PM EST Dow Jones Industrial Average (^DJI) –DJI Prev Close: 16,272.65 Open: 16,273.23 Day’s Range: 16,258.33 – 16,398.95 52wk Range: 13,937.60 – 16,588.2 NASDAQ Composite (^IXIC)  –Nasdaq GIDS  4,315.96  2.97(0.07%) 2:36PM ESTo NASDAQ Composite (^IXIC) –Nasdaq GIDS Prev Close: 4,318.93 Open: 4,323.52 Day’s Range: 4,315.96 – 4,342.59 52wk Range: 3,129.40 – 4,342.59 (Another S & P Record clsoe on 2.27.2014) S&P 500 (^GSPC)  –SNP  1,862.08  7.79(0.42%) 2:41PM EST S&P 500 (^GSPC) –SNP Prev Close: 1,854.29 Open: 1,855.12 Day’s Range: 1,854.60 – 1,867.92 52wk Range: 1,501.48 – 1,867.92 US Misery Index Chart US Misery Index data by YCharts Misery Index (8.2) equals Unemployment rate (6.7) plus Inflation rate (1.5) The misery index was initiated by economist Arthur Okun, an adviser to President Lyndon Johnson in the 1960’s. It is simply the unemployment rate added to the inflation rate. It is assumed that both a higher rate of unemployment and a worsening of inflation both create economic and social costs for a country. A combination of rising inflation and more people out of work implies a deterioration in economic performance and a rise in the misery index.    High: 21.98 June 1980 Current: 8.2 December 2013 Low: 2.97 July 1953

Let’s close with Steven Benen, Rachel Maddow Blog, look at the US Deficit.

The incredible shrinking deficit

02/28/14 08:00 AM—UPDATED 02/28/14 09:16 AM

By Steve Benen

There are still quite a few politicians who claim, just a matter of course, that in the Obama era, the United States runs “a trillion-dollar deficit every year.” It’s clearly time for them to update their talking points. 

Closing the books on a fiscal year in which the federal budget deficit fell more sharply than in any year since the end of World War II, the Treasury Department reported on Thursday that the deficit for 2013 dropped to $680 billion, from about $1.1 trillion the previous year.

 

In nominal terms, that is the smallest deficit since 2008, and signals the end of a five-year stretch beginning with the onset of the recession when the country’s fiscal gap came in at more than $1 trillion each year. As a share of the nation’s economy, the budget deficit fell to about 4.1 percent, from a high of more than 10 percent during the depths of the Great Recession. 

Note, this points to the deficit for the 2013 fiscal year. We won’t know the deficit for 2014 until October, but it’s projected to be even smaller.

Read more

Coming Out Of Financial Crisis Despite Obstruction

Does it actually continue or are we seeing improvement?

Yesterday we published a piece regarding the recent Pew Research poll showing President Obama’s approval ratings have lowered. The headline for the study, by most media, states immigration and the economy. Immigration is an absolute no brainer as the survey respondents obviously hold the president accountable for GOP Obstruction. Perceptions of the economy as indicated by the poll results speaks to a basic lack of information, misinformation and the hard reality of people out of work. we also suspect the government shutdown has also led to a poll hit when the shutdown was without question a desired state for the GOP and their conservative money-brokers. 

We are backing a previous piece related to the Pew poll results with a re-post from the White House Dot Gov website.

Advance Estimate of GDP for the Third Quarter of 2013

Jason Furman

November 07, 2013

09:30 AM EST 

During the third quarter, the economy grew at its fastest pace in a year, an indication that the recovery was continuing to gain traction in the months before the government shutdown. GDP growth was boosted by a positive contribution from consumer durables purchases, the continued recovery in the housing sector, and net exports. We now have an opportunity to build on this progress by increasing certainty for businesses and investing in jobs and growth, while avoiding the types of self-inflicted wounds that restrained the economy in the early part of the fourth quarter. 

FIVE KEY POINTS IN TODAY’S REPORT FROM THE BUREAU OF ECONOMIC ANALYSIS 

1. Real gross domestic product rose at a solid 2.8 percent annual pace in the third quarter, the fastest quarterly pace in the last year, and the 10^th consecutive quarter of growth. The rate of growth picked up slightly from the also-solid 2.5 percent rate observed in the second quarter. The economy has made substantial progress since the end of the recession, with real GDP now 5.3 percent higher than it was at its peak prior to the recession. Nevertheless, more work must be done to increase economic growth and boost job creation. 

2. In the fourth quarter, GDP growth will be slowed by the government shutdown that lasted from October 1 to October 16 and the brinksmanship over the debt limit that occurred during that period.  

During the shutdown, hundreds of thousands of Federal workers went temporarily unpaid, families were unable to travel to national parks, oil and gas drilling permits were delayed, Small Business Administration loans were put on hold, and licenses to export high-tech products could not be granted, to name just a few effects. Several forecasting groups have estimated that the shutdown will reduce annualized real GDP growth in the fourth quarter by between 0.2 and 0.6 percentage point. Early indicators of economic activity in October also show that the shutdown weighed on the economy and on consumer sentiment. An index of weekly economic indicators developed by the Council of Economic Advisers dropped sharply in the first half of October, consistent with a 0.25 percentage point reduction in the fourth quarter GDP growth rate. The advance estimate of GDP growth in the fourth quarter will not be available until early 2014.

3. The private components of real GDP grew at an annual rate of 3.5 percent in the third quarter, accounting for almost the entirety of overall growth.  

In contrast, federal government spending declined at an annual rate of 1.7 percent, subtracting from growth for the 10^th time in the last 12 quarters. But over the past two quarters, the drag from the federal government has moderated considerably. Real State and local government expenditures had also been in decline for much of the past three years, but this category is starting to show signs of turning the corner, posting its first back-to-back quarterly gain since 2009. On net, the government sectors had little impact on GDP growth in the third quarter.

4. Exports have picked up as growth has returned in the Eurozone and strengthened elsewhere. 

Exports rose at an annual rate of 4.5 percent in the third quarter, while imports rose at a more modest 1.9 percent. As a result, net exports accounted for 0.3 percentage point of the quarterly growth rate. Over the course of the recovery, the rate of export growth has varied, reflecting a considerable degree of volatility in the global economy. The crisis in the euro area intensified in the second half of 2011 and continued to impact the global economy into 2012, when China’s growth also began to slow more markedly. During this period, reduced foreign demand weighed on U.S. exports, which slowed to just 2.5 percent annualized growth. U.S. exports have risen at a faster 6.2 percent annual rate in the last two quarters, coinciding with the return of economic expansion in the Eurozone. Continued efforts to promote American exports would further contribute to growth and recovery.

5. Residential investment has posted double-digit annualized gains for five consecutive quarters.  

Housing investment plummeted during the financial crisis and remained weak early in the recovery, but has been growing strongly since the end of 2011. Despite the increase in mortgage rates this year, there is a significant upside potential in this sector, as housing investment remains well below its historic average as a share of the economy, while the pace of new housing starts, at about 900,000 homes annually, remains well below the pace implied by demographics.

As the Administration stresses every quarter, GDP figures can be volatile and are subject to substantial revision. Therefore, it is important not to read too much into any one single report and it is informative to consider each report in the context of other data that are becoming available.

Jason Furman is Chairman of the Council of Economic Advisers. 

End Whitehouse Dot Gov.

We realize GDP growth does not supplant concerns about the economy. We must, however, recognize the depth of the Great Recession and the obstruction laid upon the nation by the GOP.