Financial News

[NorthSideSox72]

Just to add even more oddity to the current economic picture... consumer spending rose .5%, and personal income rose .4%, both unexpectedly.

 

[jasonxctf]

i'll also add, that a large US Bank that I work with, who re-paid their TARP funds, said that they got more applications for new business credit for new pieces of business equipment on December 21st, than they have on any other day in 2009. This business equipment could be anything from computers to forklifts, copiers, medical equipment, etc.

[Cknolls]

Meanwhile NEW home sales went down 11% in the same period, lowest since April.

 

But before anyone panics, two things to note. One, existing homes are a much bigger number. Two, this divergence is, IMO, exactly what the market needs. Increased buying, decreased new supply (as builders continue to downshift). So together, this is a great sign.

 

 

What about all the foreclosed homes the banks have in their inventory? I here the number is 1.7 million. So, not a great sign.

[mr_genius]

I'd really hate to break this news to you, but the rest of the world isn't out of the recession, nor will they be until long after we are.

 

The worst is yet to come for them, which is what makes that statement even funnier. Let's see, with Greece nearing bankruptcy, the Euro has lost value over the last few weeks to the dollar, because investors know Greece is just the first. Many of the foreign countries that "figured it all out", invested billions into 3rd world nations in south america...who have basically told them, erm, sorry, but you're never getting that money back...

 

You know, it continues to baffle me why Americans generally tend to think Europeans and "the rest of the world" have everything figured out...when it's actually the opposite. They often wait until the US sets fiscal policy before setting their own, so they can better equip themselves in case the US were to take any sort of drastic action.

 

Judging from your response, and after reviewing my post, I didn't make my point clear. Many of these developing countries completely rely on the US for their economies, yet you fear 'economic retaliation' from them for US stimulus money going to increase domestic labor. You are arguing against the wrong person here. I'm not an America basher, I don't think every country is better than the US. I tried to keep the post in the scope of government spending (which I'm not really in favor of anyways). I suppose I should have stated, if I was going to veer off into overall jobs strategy, that I think the US needs to get a long term plan put together, as our future/current competitors are.

 

Edited December 24, 2009 by mr_genius

[Balta1701]

The people who were right on the housing bubble seem to be gradually aligning behind a belief in a second-dip hitting in the 2nd half of 2010.

Nobel Prize winning economist Paul Krugman said he thinks there’s a “reasonably high chance” the economy will contract in the second half of next year.

 

On the "This Week" Roundtable, Krugman said he agreed with the assessment of fellow Nobel-winning economist Joseph Stiglitz that there is a significant chance the economy will shrink in 2010.

 

“I would go with Joseph Stiglitz,” Krugman added, “I’m really worried about the second half.”

[jasonxctf]

http://finance.yahoo.com/news/Shoppers-spe...set=&ccode=

 

NEW YORK (AP) -- Holiday shoppers spent a little more this season, according to data released Monday, giving merchants some reason for cheer.

 

The spending bounce means retailers managed to avoid a repeat of last year's disaster even amid tight credit and double-digit unemployment. Profits should be healthier, too, because stores had a year to plan their inventories to match consumer demand and never needed to resort to fire-sale clearances.

Retail sales rose 3.6 percent from Nov. 1 through Dec. 24, compared with a 2.3 percent drop in the year-ago period, according to figures from MasterCard Advisors' SpendingPulse, which track all forms of payment, including cash.

 

Adjusting for an extra shopping day between Thanksgiving and Christmas, the number was closer to a 1 percent gain.

 

Last year, the economy was in "critical condition," said Michael McNamara, vice president at MasterCard Advisors' SpendingPulse. "This year, it's in stable condition."

 

A major winter storm that slammed the Northeast and shut in shoppers on the Saturday before Christmas derailed sales. But consumers appeared to have made up for the loss by shopping in advance of the storm and the days leading up to Christmas.

 

"We had a pretty decent surge," McNamara said.

 

Online sales were a particular hot spot, fueled by a big increase the weekend before Christmas. They rose 15.5 percent on the season, though they make up less than 10 percent of all retail sales.

 

One worrisome sign: Merchants are facing big hurdles to lure shoppers back in January amid lean inventories and what appear to be weak gift card sales. Gift card sales are recorded only when they are redeemed.

 

Stores count on a post-Christmas boost because of the growing importance of January on the retail sales calendar. Last year, the week after Christmas accounted for 15 percent of overall holiday sales, according to ShopperTrak, a research firm.

 

Retail consultant Burt P. Flickinger describes gift cards as "the lifeblood" of the post-Christmas season, because shoppers typically spend more than the value of the cards.

 

"Retailers with a disappointing December are going to need January to survive," Flickinger said. "Inventories are even too low for retailers."

 

Karen MacDonald, a spokeswoman at Taubman Centers Inc., said a survey among its centers this past weekend showed that merchants are on track to generate on average low single-digit sales increases from a year ago, though they still have a week to go.

 

MacDonald noted that the centers had a strong last-minute sales surge, and this past weekend, business has been strong. She added that 85 percent of shoppers are buying, 10 percent are exchanging and about 5 percent are returning items.

 

Gift card redemption rates have been discouraging this weekend, she said. They averaged 10 percent, based on a sampling of malls, she said. In good years, those rates are anywhere from 30 to 40 percent. That confirms that gift card sales were just "lukewarm," she said.

 

"Shoppers are seeing more value in deeply discounted merchandise" than buying gift cards, MacDonald said.

 

Ricki Smith, 30, of Prairie Village, Kan., had no returns and was hunting for bargains Saturday at the local Walmart store.

 

"Today, I bought mostly clearance stuff, stuff that got marked down to half-price, " she said. She added that there were a lot of leftover bath sets, which were mostly what she bought. "The Christmas area, the actual decorations, it was pretty picked over," she said.

 

Among the hottest sectors this shopping season, according to SpendingPulse:

 

-- Consumer electronics, up 5.9 percent, helped by flat-panel TVs, smart phones, cameras and video games.

 

-- Footwear, up 5 percent.

 

-- Jewelry, up 5.6 percent. Last year, jewelry sales fell 30 percent.

 

Weaker area included luxury items, whose 0.8 percent increase came nowhere near making up for last year's 20 percent decline. Apparel sales fell 0.4 percent on top of a 19 percent decline last year.

 

A full picture of how individual retailers did will not be known until Jan. 7, when many report December sales.

[NorthSideSox72]

Without a doubt the best financial news we've seen in a while: Employers to boost hiring in 2010.

 

[Cknolls]

Another 3.5 Billion to GMAC. Yep that is working out real well. Total 16 billion. What a waste.

[Balta1701]

Another one joins the double-dip chorus.

“I’m worried. Everyone’s worried,” said Karl E. Case, the Wellesley College economist who helped design the housing index that provided fresh cause for alarm on Tuesday. “If prices sink 15 percent from here, which is a possibility, and the 2008 and 2009 loans go bad, then we’re back where we were before — in a nightmare.”

 

The figures released Tuesday showed that the Standard & Poor’s/Case-Shiller home price index, a widely watched measure of housing markets in 20 metropolitan areas, rose 0.4 percent in October from the previous month on a seasonally adjusted basis.

 

It was the fifth consecutive month that prices were up, but the rate of increase has dropped sharply from the impressive gains of the summer. Prices in nine of the 20 cities were flat or down.

 

Some analysts see little cause for alarm. Dan Greenhaus of Miller Tabak said that if prices fell “a bit further” it would sop up some of the excess inventory still weighing on the market.

 

But others said that the Case-Shiller index showed an increase only because each report is an average of the preceding three months, meaning the strong August market was still a component of the October report. Another factor supporting the index is the seasonal adjustments, which tend to hide any weakness in the cooler months as the pace of home-buying slows.

 

On an unadjusted basis, the index was flat. A different housing price index, compiled by the research firm LoanPerformance, fell 0.7 percent in October.

 

Mr. Case, who chided himself for his optimism over the summer, said he now believed “the probability is very high of a serious double dip like 1982.”

[Balta1701]

Link

The past decade was the worst for the U.S. economy in modern times, a sharp reversal from a long period of prosperity that is leading economists and policymakers to fundamentally rethink the underpinnings of the nation's growth.

 

It was, according to a wide range of data, a lost decade for American workers. The decade began in a moment of triumphalism -- there was a current of thought among economists in 1999 that recessions were a thing of the past. By the end, there were two, bookends to a debt-driven expansion that was neither robust nor sustainable.

 

There has been zero net job creation since December 1999. No previous decade going back to the 1940s had job growth of less than 20 percent. Economic output rose at its slowest rate of any decade since the 1930s as well.

 

Middle-income households made less in 2008, when adjusted for inflation, than they did in 1999 -- and the number is sure to have declined further during a difficult 2009. The Aughts were the first decade of falling median incomes since figures were first compiled in the 1960s.

 

And the net worth of American households -- the value of their houses, retirement funds and other assets minus debts -- has also declined when adjusted for inflation, compared with sharp gains in every previous decade since data were initially collected in the 1950s.

 

"This was the first business cycle where a working-age household ended up worse at the end of it than the beginning, and this in spite of substantial growth in productivity, which should have been able to improve everyone's well-being," said Lawrence Mishel, president of the Economic Policy Institute, a liberal think tank.

[NorthSideSox72]

http://finance.yahoo.com/news/November-hom...set=&ccode=

 

WASHINGTON (AP) -- Home resales surged last month to the highest level in nearly three years, reflecting an extraordinary level of federal support that has pulled the housing market back from the worst downturn since the Great Depression.

 

Buyers were racing to complete their sales before the original expiration date of a tax credit for first-time buyers that was scheduled to expire Nov. 30. Last month, Congress decided to extend and expand the credit to ensure the housing market could sustain its recovery.

The Realtors estimated that about 2 million homebuyers have taken advantage of the credit so far and forecasts that another 2.4 million will use it by the middle of next year. First-time buyers made up about half of all transactions last month, driving sales up 44 percent above last year's levels, a record jump.

Sales are now up 46 percent from the bottom in January, but down 10 percent from the peak more than four years ago.

 

The median sales price was $172,600, down 4.3 percent from a year earlier, and up 0.2 percent from October.

 

"Things are stabilizing," said Pete Flint, chief executive of real estate Web site Trulia.com. "There is a significant amount of buyer interest out there."

 

November sales rose 7.4 percent to a seasonally adjusted annual rate of 6.54 million, from a downwardly revised pace of 6.09 million in October.

 

Sales had been expected to rise to an annual pace of 6.25 million, according to economists surveyed by Thomson Reuters.

 

The inventory of unsold homes on the market fell about 1 percent to 3.5 million. That's a healthy 6.5 month supply at the current sales pace, the lowest level in three years.

 

Besides the existing tax credit of up to $8,000 for first-time buyers, homeowners who have lived in their current properties for at least five years can now claim a tax credit of up to $6,500 if they relocate. To qualify, buyers must sign a purchase agreement by April 30.

 

Postponing the deadline could mean sales will drop during the winter months and recover in the spring.

 

"Buyers have no sense of urgency now," said Gary DeRosa, an agent with ZipRealty Inc. in Seattle.

 

So, the pending sales reports (indicator of future sales) showed a drop of 16% month-to-month, October to November. As expected, there is likely to be a dip after the spike. What's funny to me though, is that the tone of this article is so gloomy, and fails to take the broader picture into consideration. Sales are up 44% from where they were at their bottom, but they appear to be ready to drop 16%. That means we are still 28% above the bottom we hit about a year ago. So, its a drop, which I think we all expected, but the housing market is still much healthier than it was.

 

The article does mention that there is likely to be another spike in the spring, when approaching the next tax credit deadline (April). Which brings up an important point for discussion: how much do the tax incentives actually help? In other words, do the tax credits ONLY add spikes to what would be a more gradual increase? Or does it actually bring buyers to the market that would not otherwise be? Because I am beginning to think it doesn't bring a whole lot new to the market, and that the money would have been better spent trying to help stabilize existing mortgage markets and holders, than these tax credits. Anyone else agree? Has anyone here seen any data that actually tells us how many of the credit takers may not have bought at all in the next couple years?

 

[NorthSideSox72]

OK, so the CNNFN article is (as would be expected) a little more balanced and circumspect. Some excerpts of use:

 

First-time homebuyers had become an increasingly big slice of the market share. NAR estimated that 51% of the sales closings in November were to first-timers.

 

Despite the steep month-over-month decline in November, contract signings are still up 15.5% compared with a year ago, when the housing market was deep in the doldrums. Yun said that increase underlined his contention that the market has gained considerable momentum.

 

51% to first-timers is a good indicator to me - that makes me feel like the tax credits may have some real use.

 

"We expect another surge in the spring as more home buyers take advantage of affordable housing conditions before the tax credit expires," said Yun.

 

Crowe sees one thing that could push homebuyers off the fence sooner: "The increase in interest rates could add to the urgency," he said.

 

He forecasts a gradual rise from current rates of about 5% for a 30-year fixed-rate mortgage to about 5.5% by late summer. That would add about 5% to the monthly mortgage payment, about $50 dollars on a $200,000 loan.

 

That's another consideration - interest rates are so damn low, and won't stay that way all next year.

 

 

 

[mr_genius]

OK, so the CNNFN article is (as would be expected) a little more balanced and circumspect. Some excerpts of use:

 

 

 

51% to first-timers is a good indicator to me - that makes me feel like the tax credits may have some real use.

 

tax credits are a pretty good mechanism to get a boost in targeted sales.

[NorthSideSox72]

tax credits are a pretty good mechanism to get a boost in targeted sales.

In general I agree, but that doesn't mean they work for everything, regardless of implementation. I wasn't as sure about this one, but the fact that more than half the buyers in that period were new buyers makes me think it probably worked.

 

[NorthSideSox72]

Jobs picture continues its improvement. Job losses in December at 84k (lowest since March 2008), and the November losses were revised down from 169k to 145k. Service sector actually sees net job growth for the first time in almost two years. Analysts saying we're just a couple months from seeing positive job gains overall.

 

Employment is still factor #1 in this recovery, so let's all hope the positive trends in this area continue, or at least don't reverse.

 

[Rex Kickass]

Jobs number from the Gov identical to the previous report NSS cited earlier this week... although November's number was revised upward and November saw a net gain of 6,000 jobs. Which I believe was the first net gain in two years - however small.

[NorthSideSox72]

Something interesting I read yesterday (can't find the link now), is that even after the 2001 recession ended (which was much less severe than this one), it took two years before job gains began. The November job gains are unexpectedly early, from that perspective. The severity of the downturn in this recession was dramatic, but it appears the rebound has been as well, at least thus far.

 

I still think the worries about a double-dip are overblown, and as of now, most economists seem to agree (but not all). The key is still employment. We need to at least keep vaguely steady the first half of the year. We'll need some small job gains to do that, because more people will re-enter the workforce.

 

If I were setting a line, I'd put the chances of a double-dip at 20% or a little less.

 

[Balta1701]

Something interesting I read yesterday (can't find the link now), is that even after the 2001 recession ended (which was much less severe than this one), it took two years before job gains began. The November job gains are unexpectedly early, from that perspective. The severity of the downturn in this recession was dramatic, but it appears the rebound has been as well, at least thus far.

Here is that data expressed graphically, from CR, including today's #'s. This graph also shows well why there is still a strong worry about an unemployment and underemployment driven double-dip; we're in uncharted territory.

 

[Balta1701]

Jobs number from the Gov identical to the previous report NSS cited earlier this week... although November's number was revised upward and November saw a net gain of 6,000 jobs. Which I believe was the first net gain in two years - however small.

But...October was revised downwards by 16000 jobs.

[NorthSideSox72]

Here is that data expressed graphically, from CR, including today's #'s. This graph also shows well why there is still a strong worry about an unemployment and underemployment driven double-dip; we're in uncharted territory.

 

 

So you are saying you think a double-dip is likely purely because the recovery has been so fast (thus far)?

 

[Balta1701]

So you are saying you think a double-dip is likely purely because the recovery has been so fast (thus far)?

I think what is entirely possible is that the stimulus impact will start declining in the 2nd half of 2010, and because the stimulus included so many tax cuts it wasn't really designed to boost job growth as much as GDP growth, so when the stimulus impact starts to decline off, we're going to find ourselves having lost a lot of jobs and having done nothing to set up for future growth. Thus, the tax cuts go away, the government decides to focus on deficit concerns, unemployment benefits dry up for a lot of people, and the bottom drops out again.

 

(Not saying I know for certain this will happen. Just saying, this is how the jobs situation could filter back and cause the 2nd dip)

 

One other point now that I reread your post; by the standard of past recessions other than 1930, the "recovery" hasn't been that fast, it's been very, very slow. It's a combination of the deepest employment hole since 1930 and the new modern slow-job-recovery recession together. That's what we've not seen.

[Balta1701]

One more unemployment numbers comment; November through January is when the heaviest seasonal adjustments kick in, because they need to make up for the typical part-time hiring for Christmas. So even if the numbers in Nov. were flat, I've never been confident that you could really state anything with that much accuracy at that time of year.

[NorthSideSox72]

I think what is entirely possible is that the stimulus impact will start declining in the 2nd half of 2010, and because the stimulus included so many tax cuts it wasn't really designed to boost job growth as much as GDP growth, so when the stimulus impact starts to decline off, we're going to find ourselves having lost a lot of jobs and having done nothing to set up for future growth. Thus, the tax cuts go away, the government decides to focus on deficit concerns, unemployment benefits dry up for a lot of people, and the bottom drops out again.

 

(Not saying I know for certain this will happen. Just saying, this is how the jobs situation could filter back and cause the 2nd dip)

 

One other point now that I reread your post; by the standard of past recessions other than 1930, the "recovery" hasn't been that fast, it's been very, very slow. It's a combination of the deepest employment hole since 1930 and the new modern slow-job-recovery recession together. That's what we've not seen.

Its been a fast recovery on many fronts - but not all. All recessions are not the same, of course.

 

The simulus package, which I've said before was not all that well thought-out, will see its biggest kicks in 2010 and 2011, from what I have read. That, combined with the tendency lately to do targetted tax credit incentives, SHOULD help things a bit (just focusing on the gov't input in this case).

 

[Balta1701]

Its been a fast recovery on many fronts - but not all. All recessions are not the same, of course.

Ok, I have to totally disagree with you on this one. Please cite for me which fronts you're talking about. It has already been 2 years from the employment peak and we've done nothing but go downwards since. We've gone so far down the hole that if you repeated the Clinton expansion in jobs, it still wouldn't get us back to where we were in December 2007. GDP is only being sustained by massive efforts from the government, and even then, those efforts have only been enough to make things level out (at least temporarily) after 18 months, not to start pushing them upwards.

 

Look at that last graph I posted. 18-24 months in, just about every recession had turned around completely and had unemployment back to where it was pre-recession, except for the 2001-2003 event. This one, we're just starting to level off. Even the 2001-2003 event, things were turning around much more rapidly than this.

[NorthSideSox72]

Ok, I have to totally disagree with you on this one. Please cite for me which fronts you're talking about. It has already been 2 years from the employment peak and we've done nothing but go downwards since. We've gone so far down the hole that if you repeated the Clinton expansion in jobs, it still wouldn't get us back to where we were in December 2007. GDP is only being sustained by massive efforts from the government, and even then, those efforts have only been enough to make things level out (at least temporarily) after 18 months, not to start pushing them upwards.

 

Look at that last graph I posted. 18-24 months in, just about every recession had turned around completely and had unemployment back to where it was pre-recession, except for the 2001-2003 event. This one, we're just starting to level off. Even the 2001-2003 event, things were turning around much more rapidly than this.

The very graphs you cited show the recovery has been steeper than, from what I can tell, any other to date since the Depression.

 

I think you are confusing the speed of recovery, with the length of the recession. Two different things. We went DOWN for a lot longer than others, which is of course why it was such a deep recession (chicken and egg there, but whatever). From the point we actually started recovery in the job losses, the curve has been very steep. Its right there in the graphs you provided.