It's Still The Economy, Stupid

Friday, October 03, 2003  

Yes, I've been absent way too long.

Anyway, over on Wampum, I questioned whether we're in danger of a double-dip recession, either real or perceived:

Another disappointing report out this morning:

Factory orders falter: August slide of 0.8% is wider than expected, sparked by downturn in transportation-related items.

October 2, 2003: 10:04 AM EDT

WASHINGTON (Reuters) - New orders for U.S. manufactured goods tumbled in August, the Commerce Department said Thursday in a report that provided another sign America's manufacturing sector is ailing.

Commerce said factory orders dropped a larger-than-expected 0.8 percent in August, led by a 2.3 percent drop in transportation-related orders. Orders for durable goods -- items meant to last three or more years -- were revised to a 1.1 percent decline from the 0.9 percent drop reported last week. Factory orders for July, however, were revised up slightly in Thursday's report, to a 2.0 percent gain.

This news comes on less than glowing reports out this week from consumer and manufacturing watchdog groups. At this point, the only shining star is home sales, sparked by still low, though rising, interest rates. Even GDP, at 3.3% for the 2nd quarter, is below what economists expect for healthy growth (3.5%).

Key economic indicators (source: MSNBC)

• Consumer Confidence: Sept: 76.8 Aug: 81.7
• Retail sales: Aug: 0.6% July: 1.3%
• GDP: Q2: 3.3% Q1: 1.4%
• ISM Index: Sept: 53.7 Aug: 54.7
• Factory Orders: Sept: -0.8% Aug: 2.0%
• Unemployment Rate: Aug: 6.1% July: 6.2%
• Employment situation: Aug: -93,000 July: -49,000
• Consumer inflation: Aug: 1.3% July: 1.5%
• Housing starts: Aug: 1,820,000 July: 1,892,000
• Home sales: Aug: 7,620,000 July: 7,242,000

Tomorrow, new unemployment numbers come out. If they're worse than expected, a slight uptick, then the Administration may be happy for the cover the Plame Affair offers. The ire of an awakening media may be more appealing than that of an angry, unemployed electorate, particularly since the latter influences those "unimportant" poll numbers.

Also, like Teddy, I took a crack at the September employment situation release. I expanded a bit on the impact on IDEA (the Individuals with Disabilities Education Act) in comments over at Atrios, and since Haloscan is known to be tempermental, will include them here as well:

I forgot to mention above that the educational support is also being cut while IDEA (the Individuals with Disabilities Education Act) is being weaken by Republicans in Congress. So there won't be classroom aides for special needs kids, and parents won't have legal recourse to force school districts to follow the kid's IEP (education plans.) More disabled kids will act up without such support, and under the "new, improved" IDEA, teachers will have them pulled from classrooms, and shipped off to special schools, out of the "mainstream". Of course, this allows their school test scores to increase, since under NCLB, even special ed kids have to be tested and show improvement every year.

Of course, sending kids off to institutions is much more expensive for school districts, and tax payers pick up the bill. But Repugs will figure out a way to overturn the "free and appropriate education" decision of the Supreme Court in the early '70s.
(For more info on the effects of reauthorization of IDEA, see this post.)

posted by MB | 9:35 AM |

At least it's in the right direction

The September Employment Situation came in better than expected. The economy created 57,000 new jobs in September and the August data was revised up 34,000. This means Bush's tax cuts have created a whopping 16,000 new jobs. Not the 688,000 he promised they'd create by now, but at least it's a step in the right direction.

The unemployment rate dropped to 6.1% as only 15,000 Americans entered the labor force in the last month. About 550,000 Americans have dropped out of the labor force in the last three months, which has had the effect of reducing the unemployment rate by about 0.5%. A constant labor force participation rate (using the average for the past 10-years) would imply an unemployment rate of 7.1%.

In short, we need a lot more improvement than this. I happened to be watching Bubblevision (aka CNBC) this morning at the time of the release, and there was an audible cheer from the news desk when the number was announced. The market seemed to like it too, because the Dow futures shot up around 50 points and the index is up 123 at this moment. But if this is what some people consider "good news", our perceptions have certainly changed big time. People certainly aren't expecting much, and it's nowhere near enough to either fulfill the Bush administrations promises, or make up for the damage inflicted on us the past three years.

posted by Teddy | 8:02 AM |

Thursday, October 02, 2003  

Just out of curiosity

Is anyone else out there? This was supposed to be a group blog. Do I have bad breath or something? {breathes on hand and inhales}

posted by Teddy | 1:21 PM |

The Monetary Transmission Mechanism

Brad DeLong has a good report on a paper by Christina Romer and David Romer about monetary policy "shocks" - changes in money supply growth not responses to economic developments.

The duo Romers' paper estimates that on average, these shocks begin to impact industrial production in five months and reaches its minimum after 22 months. It's probably not surprising then, that the jump in borrowing rates that occurred in June is now starting to show up in the manufacturing indices, and today in a unexpected drop in factory orders for August.

What is surprising is that transmission mechanism seems to be working even faster than the NBER paper would suggest - their data only goes through 1996.

posted by Teddy | 1:18 PM |

Higher than $550?

My reaction was the same as James Carville, when the latter was questioning Congressman Bob Walker (R-PA) on Crossfire.

CARVILLE: Congressman, you're a fiscal conservative. Will the deficit this year be greater than $550 billion or less than $550 billion?

WALKER: Well, I think it's very likely that it's going to be higher than $550 billion.

CARVILLE: Higher than 550?

WALKER: It very well could be. But until we build some growth into the economy, it's going to be very hard to manage deficits.

Oy vey.

All that money spent and all they have to show for it is another 400,000 new unemployed every week.

posted by Teddy | 1:04 PM |

Tuesday, September 30, 2003  

From soup lines to uninsured lines

The Census Department reported 43.6 million Americans do not have health insurance. The uninsured rate is 15.6%. The average cost of a family health plan is expected to be $10,000 in 2004. At the same time the average annual salary is around $38,000.

This is a crisis. Even physicians, who led the fight to scuttle Bill Clinton's health proposal in 1992, are starting to come around to the idea of universal coverage. The cheapest form of this is a single-payer, socialized system. It's a no-brainer. A few years more of the current system and we'll be selling our bodies to medical research in order to pay the bills. A new system is needed right now.

But what is the Bush plan? Well, here's recent family doublespeak. And the President's initiatives?

The president is committed to getting the economy growing faster so the number of unemployed and uninsured Americans will go down," said White House spokeswoman Claire Buchan.

Meanwhile we're blowing $87 billion, enough to pay the entire medical premiums of over a million people next year, on this sordid mess.

There's no reason this guy and his kleptocrat cronies should be in office next year. None.

posted by Teddy | 8:45 AM |

Monday, September 29, 2003  

Welcome to Bush America

CBS reports we've got food lines and pretty soon there will be "Bushvilles".

And don't forget that "welfare as we knew it" disappeared in 1996.

“We’re doing things that we did before food stamps. Before we had various programs and quite frankly it’s a little bit hard to watch sometimes,” says Bob Garbo, head of the local affiliate of the non-profit group America’s Second Harvest.

posted by Teddy | 7:58 AM |