Maybe because nothing much has been done about the 5,591,000 mortgaged properties that are in arrears.http://www.dsnews.com/articles/mortgage-delinquencies-head-further-south-2012-04-25You like to allude that a bottom is forming in housing. I really don't think so.How can this not drag on the economy for another 5-10 years?
Fantastic reading, Mr Grannis..But please remember, that in the past thirty years how much we have advanced American Social Justice, which as we all know, is much more important than economic values!
What you see as a bottom forming in housing, I see as collusion among the banking cartel to hold REO's off the MLS and clear excess supply.They have to do this, otherwise they are insolvent.We have a long and bumpy road ahead of us.
The postponable purchases componentsof GDP grew at an annualized rate of 9.5% last quarter...no recession
Let's extrapolate from what was said in this OP...Mr Grannis, mentions the impediments caused because of government spending, which I may suggest has become more and more evident in the past thirty or twenty years...If one examines the trend line starting, in 1947, you will see a graduated declining growth in GNP...The same is true, if one uses 1955...It is my contention, that as all forms of governmental units grow, in scope and funding, there must be a general impact on economic growth...It is beyond debate nor are you able to escape, this cruel and unfortunate fate.. The other part of this equation, are the 100's of thousands of regulations which is build into the cost and results again in lost economic opportunities...I suspect as these two factors continue to grow, their causalities will be the health and welfare of the economy..For an example or two, just look over the pond. http://www.tradingeconomics.com/united-states/gdp-growth
" I see as collusion among the banking cartel to hold REO's off the MLS and clear excess supply."That "collusion" if there even is one, comes at a cost of holding and maintaining assets which are still likely to sell for less...
Table 1.5.2."Housing and utilities" subtracted 0.41% from Q4 GDP, and 0.23% from Q1 GDP.If we get a heat wave in the spring and summer, the economy will appear to be booming!
Is it clear that the government has "used corporate profits to fund spending"? Perhaps it is completely the opposite way with "the stand-out engine of corporate pro?ts of late having been the ?scal de?cit". That is the view that James Montier of GMO takes. You can read more here http://pragcap.com/james-montier-the-risk-to-corporate-profitsWhat do your readers think?
The James Montier piece is excellent. Government deficits, mostly in the form of transfer payments, increased household income feeding into corporate income. Actual government spending on goods and services (not transfers) has been declining since 2010.http://research.stlouisfed.org/fred2/graph/?id=GCEC96
So on a "sources and uses of funds" basis, the government has effectively used all corporate profits to fund its spending.Do you have any empirics to support that ridiculous statement? Back out the ARRA stimpack, and federal government expenditures have been historically quite tame since Obama was elected. Total (federal, state and local) government expenditures show a similar pattern.What you really meant to say and what is demonstrable in the empirics is that the corporate share of national income has risen and the labor share has declined.
Milton Friedman, in similar conditions, advised Japan to print a lot of money---yes, money cannot create growth. It can breath life into an economy asphyxiating from lack of same. If you read this, obviously the Reaganauts thought Volcker, and thus monetary policy, was retarding growth---so much so, they wanted to get Fed policy under the control of the White House. They actually wanted to strip away Volcker's powers and put it in the Oval Office: http://news.google.com/newspapers?id=hUBVAAAAIBAJ&sjid=55QDAAAAIBAJ&pg=5524,8412282&hl=enObviously, monetary policy was once perceived by right-wingers as retarding growth. It is now by many conservative economists---but they are hiding from the newly emergent, strident right-wing of the GOP. It would be nice to cut federal, state and local government down to size (the latter two actually often the most antigrowth). Below is list of largest federal agencies, by employees, financed by income and capital gains taxes. Where should we cut? Defense 3,200,000Veterans Affairs 240,000 Homeland Security 200,000Treasury 162,119 Justice 124,870 USDA 100,000 DOT 100,000 Health and Human Services 62,999 Interior 57,232 Commerce 41,711 NASA 19,198 EPA 18,879 State 18,000 Labor 16,818 Energy 14,000 GSA 14,000 Somehow I doubt the GOP will really effect deep cuts in federal employment/
Ben Jamin, seriously what matters most, a department's total budget or it's employment roster?
"So on a "sources and uses of funds" basis, the government has effectively used all corporate profits to fund its spending."I think you need to explain that one.
Hans-Interesting question.Social Security has a small staff, but a huge budget---but mostly it collects money and disburses it. Not a true parasite, just a structural impediment.Department of Defense sucks money into its black hole---eating up employees, resources, taxes. Produces nothing of value, economically.So, I would answer the size of payroll, and resources consumed, will roughly equal the damage any federal agency does to our productive private sector.
Marmico and John-Money is fungible so you are being too cute by half in demanding empirics to question SG's "sources and uses" contention the the government has spend in advance all corporate profits. Nobel economist William Vickery advocated massive deficit spending - even more that we are seeing at the hands of the Lightworker - in order to "recycle savings" of the private sector that can be peskily inaccessible. This is well understood by big deficit-spending pols, and exactly what is going on now. Yes, technically the money is not directly traceable to the corporate sector, but that is the sector with the excess capital these days, so it is accurate to say that the govt's massive spending is an attempt to recycle savings is coming from the corporate sector.
The durable goods component of GDP isas of the 1q 2012 at 8% of GDP. Of the 11 recessions that have occured in the last 65 years all except 1 hadthis number above 9% first...we are still in the early stages of an upswing in the business cycle.
The ratio of postponable purchases to government consumption is .925%...this is ratio is well below the excess point...The GDP report had a good composition of rising postponable purchases with flat government consumption expenditures...this is not a recessionary trajectory
OECD: Composite Leading Indicators Point to Potential Turning Point Organisation for Economic Co-operation and Development ( OECD ) composite leading indicators point to potential turning point in economic activity in the Euro area and regained momentum in other major economies04/10/2012 - Composite leading indicators (CLIs) designed to anticipate turning points in economic activity relative to trend, continue to point to a positive change in momentum in the OECD as a whole but with some divergence between major economies. The CLIs for Japan and the United States continue to show strong signs of regained momentum in economic activity. The CLI for the Euro area indicates a potential turning point but with diverging assessments for the four major European economies. The CLIs for Italy and France point to continued sluggish economic activity. In Germany and the United Kingdom the CLIs continue to show signs of a positive change in momentum but these are weaker than in last month's assessment. The assessment for Brazil, India, Russia and, in particular China, shows stronger positive signals compared to last month's assessment.http://www.oecd.org/document/48/0,3746,en_2649_33715_50091056_1_1_1_1,00.html
Great post Scott, really enjoy all the posts.Over on Mish's blog he concludes last 10yrs GDP growth has been 1.7%. I think your point of the crowding out effect of the Fed. Govt. has caused this. Not to mention the associated increase in compliance costs.To bring it local, we had a little cottage business here in SoCal, and over the years the increase in fees, compliance costs, etc. sucked the profit right out of the business. Likewise to my customers. This is the opposite of a "virtuous cycle". I recall the investment/supply curve, raise the costs of doing business and there are less business opportunities. Then extrapolate this nationally and you have a declining economy. Just this week we see an EPA official that likes to "crucify" companies to get them in-line with EPA guidlines. Who wants to build a power generating plant under those circumstances.
Lipper US Funds Flows DateQ1 Equity Fund Inflows $33.5 Bil; Taxable Bond Fund Inflows $105.2 BilxETFs - Equity Fund Outflows -$2.1 Bil; Taxable Bond Fund Inflows $90.8 BilMarch Equity Fund Inflows $7 Bil; Taxable Bond Fund Inflows $34.7 BilxETFs - Equity Fund Outflows -$2 Bil; Taxable Bond Fund Inflows $31.9 BilWithout including ETF data, there would have been outflows in both periods.Thus far in April, there have been total outflows of $9 Billion
Schaeffer's Investor IntelligenceDate____%Bulls__%Bears04/25....41.9....23.704/18....44.1....23.704/11....48.4....21.504/04....52.7....21.5
Ben Jamin, I realize the point you are making.The effects of salaries as a percent of spending is highest at the paroch ial level... Score 1/2 point for, Sir Ben Jamin.On the Federal level, it is the opposite, accounting for a minority of the department spending budget.Score 1/2 point for me and a declared draw!Hear is my source:http://www.downsizinggovernment.org/
This chart demonstrates ever declining GNP rates since 1950 or 1959 for that matter...The Great War on Free Enterprise:http://dshort.com/charts/GDP-overview.html?GDP-annual-since-1930
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