Hiring slowed last month. According to Automatic Data Processing, the private sector added 91,000 jobs in August, fewer than the 109,000 added in July. The payroll firm’s figures don’t reflect the effects of the Verizon strike, which Friday’s employment report from the Labor Department likely will.
via Vital Signs: Private Hiring Slows – Real Time Economics – WSJ.
The number is 0.2%. It is the average annualized growth of US consumer spending over the past 14 quarters – calculated in inflation-adjusted terms from the first quarter of 2008 to the second quarter of 2011. Never before in the post-World War II era have American consumers been so weak for so long. This one number encapsulates much of what is wrong today in the US – and in the global economy.
……With retrenchment and balance-sheet repair only in its early stages, the zombie-like behavior of American consumers should persist. The 2.1% consumption growth trend realized during the anemic recovery of the past two years could well be indicative of what lies ahead for years to come.
via One Number Says it All – Stephen S. Roach – Project Syndicate.
…The only practical way to shorten the coming period of painful deleveraging and slow growth would be a sustained burst of moderate inflation, say, 4-6% for several years. Of course, inflation is an unfair and arbitrary transfer of income from savers to debtors. But, at the end of the day, such a transfer is the most direct approach to faster recovery. Eventually, it will take place one way or another, anyway, as Europe is painfully learning.
Some observers regard any suggestion of even modestly elevated inflation as a form of heresy. But Great Contractions, as opposed to recessions, are very infrequent events, occurring perhaps once every 70 or 80 years. These are times when central banks need to spend some of the credibility that they accumulate in normal times.
via The Second Great Contraction – Kenneth Rogoff – Project Syndicate.
Many ask whether high-income countries are at risk of a “double dip” recession. My answer is: no, because the first one did not end. The question is, rather, how much deeper and longer this recession or “contraction” might become.
…… the dire consequences of soaring risk aversion, against the background of such economic fragility. In the long journey to becoming ever more like Japan, the yields on 10-year US and German government bonds are now down to where Japan’s had fallen in October 1997, at close to 2 per cent. Does deflation lie ahead in these countries, too? One big recession could surely bring about just that. That seems to me to be a more plausible danger than the hyperinflation that those fixated on fiscal deficits and central bank balance sheet find so terrifying.
via Martin Wolf|Struggling with a great contraction – FT.com.
With only one week to go before President Obama details his plan to revitalize the stalling economy, Labor Secretary Hilda Solis vigorously defended the administration’s efforts to crank up hiring during a speech on Tuesday at the National Press Club. She stressed that Obama’s plan will include a payroll tax cut extension, an unemployment benefits extension, and the creation of a national infrastructure bank to rebuild roads and railroads with a mix of private and public funds.
Economic Cycle Research Institute co-founder Lakshman Achuthan: “There’s nothing they’re going to be able to do about that near-term direction in the unemployment rate, especially if we slip into a recession because every time you have a recession by definition the unemployment rate will be spiking.”
… Achuthan says the time to act was in the spring when the economic indicators started to weaken. “We were above 200,000 [monthly payrolls] and we’re not going back there anytime soon,” he says. “We’re going to continue to weaken at least through the end of this year,” which is (more) grim news for the millions of Americans in need of work.
via It’s Too Late For Obama To Create Jobs, Says ECRI’s Achuthan.
Let’s be blunt here, the only thing that will cause QE 3 to come out will be:
- Another market Crash (S&P 500 sub-100); or
- A major bank collapsing.
That’s it. QE 3 is not going to be some “let’s push stocks higher” move. It’s going to be a “desperately trying to hold the system together” move.
via QE 3 Ain’t Coming Unless One of These Two Items Happen | ZeroHedge.
It’s hard for a president to win reelection with a high unemployment rate. It looks like there is no way in the world, between now and the election, that unemployment will drop substantially. That does not bode well for Obama’s reelection.
via Walter Williams On The 2012 Election And Sound Money | ZeroHedge.
The assets held in mutual funds fell $219.2 billion in July – before the announcement that Standard & Poor’s had cut its rating of U.S. debt for the first time ever.
What is just as important is that ….. the YoY change in real GDP, which is now at 1.5%, is a slam dunk indicator of recession: “Since 1948, every time the four-quarter change has fallen below 2 percent, the economy has entered a recession. It’s hard to argue against an indicator with such a long history of accuracy.”
