[Loki]

U.S. stocks on Tuesday closed 2013 at records, with the S&P 500 posting its largest annual jump in 16 years and the Dow its biggest gain in 18

Yes, yes, we've already established your 5% recovery hypothesis.

As for the other 95% of Americans....







Many Americans feel economy isn't improving

Despite a recent string of positive economic news, Americans say they aren't feeling the improvements.
A new CNN/ORC poll released Friday showed people were pessimistic that the economy was improving. Nearly 70% said the economy is generally in poor shape, and only 32% rated it good.

Comparative Indicators for the Recovery


Household Incomes Remain Flat Despite Improving Economy

WASHINGTON — Despite the addition of more than two million jobs last year, soaring corporate profits and continuing economic growth, income for the typical American household did not rise in 2012 and poverty failed to fall, new data from the Census Bureau show.

The poverty and income numbers are a metaphor for the entire economy,” said Ron Haskins of the Brookings Institution. “Everything’s on hold, but at a bad level.”

Over a longer perspective, the figures reveal that the income of the median American household today, adjusted for inflation, is no higher than it was for the equivalent household in the late 1980s.

[AirlinePilot]

Geeze, interest rates are not high yet. Patience Grasshopper!

[copious.abundance]

I think Loki's just frustrated his guitar skills aren't as good as mine.

[Loki]

I think Loki's just frustrated his guitar skills aren't as good as mine.

True dat.

[copious.abundance]

The real solution is to jettison the bubble structure, and transition to a natural and robust manufacturing / mining / agriculture economy, where REAL productive assets are wielded to generate REAL growth ... not bubble fluff.

... meaningful mfgr growth that happens with natural interest rates (GERMANY) ...

Now that I've established beyond any reasonable doubt that the US's manufacturing is more "natural" than even Germany's due to our higher interest rates, let's see if certain doomers come by and tell us, "Gee, this is good news, I'm glad to see this happening and thank you for posting the article."



U.S. Markit PMI in December at 11-month high

A gauge of U.S. manufacturing hit an 11-month high in December, up from a preliminary monthly estimate, signaling a pick up in activity, Markit reported Thursday . December's reading for the manufacturing purchasing managers' index hit 55, up from a prior estimate of 54.4 and November's level of 54.7. Readings above 50 indicate expansion, with higher readings signaling faster expansions. "Most encouraging is the fact that growth is being led by rising demand for investment goods such as plant and machinery. This tells us that business spending is picking up on the back of rising confidence, which adds to the sense that the recovery is being more self-sustaining," said Chris Williamson, Markit's chief economist. Output and employment expanded at a faster rate in December than in November, according to Markit.

[TheAntiDoomer]

What the heck happened to Dan Plain?

[copious.abundance]

He supposedly had some big projects at work he needed to finish through the end of the year. So I would expect to see him popping in back soon. Maybe.

Anyway, the manufacturing ISM inched down in December but is still at a very good level. And the all-important new orders subindex is at a 2.5-year high.

The real solution is to jettison the bubble structure, and transition to a natural and robust manufacturing / mining / agriculture economy, where REAL productive assets are wielded to generate REAL growth ... not bubble fluff.

... meaningful mfgr growth that happens with natural interest rates (GERMANY) ...

Now that I've established beyond any reasonable doubt that the US's manufacturing is more "natural" than even Germany's due to our higher interest rates, let's see if certain doomers come by and tell us, "Gee, this is good news, I'm glad to see this happening and thank you for posting the article."



ISM report signals continued manufacturing resurgence

American manufacturing companies ended 2013 with the biggest increase in new orders in more than 2 1/2 years, underscoring the economy’s momentum heading into 2014 according to a closely followed survey.

The Institute for Supply Management’s manufacturing index registered 57.0% in December, down slightly from a 2 1/2-year high of 57.3% in November. Any number over 50% signals that the manufacturing economy is expanding instead of contracting.

A string of strong ISM readings in the last six months of 2013 is shoring up hopes that the U.S. economy can post its best year of growth since the recession ended in mid-2009.

[...]

Thirteen of the 18 sectors tracked by the ISM said that business expanded in the final month of 2013, led by furniture makers, plastic and rubber producers and textile mills.

The goods produced by those industries usually rise as the broader economy strengthens. Furniture sales, for example, surge when home sales increase and buyers need to purchase beds, couches and dining tables.

The increase in demand was evident in the new-orders index. The gauge climbed to 64.2% from 63.6% to mark the highest level since April 2010.

[...]

[copious.abundance]

U.S. construction spending highest in nearly five years

U.S. construction spending rose to its highest level in nearly five years in November as a surge in private construction projects offset a drop in public outlays.

Construction spending increased 1 percent to an annual rate of $934.4 billion, the highest level since March 2009, the Commerce Department said on Thursday. It was the eighth straight month that construction spending increased.

Economists polled by Reuters had expected a gain of 0.6 percent in November. Construction spending in October was revised to show a 0.9 percent rise instead of the previously reported 0.8 percent increase.

The report added to data ranging from employment to consumer spending that have suggested resilience in the economy even as growth is expected to step down from the third-quarter's brisk 4.1 percent annual rate.

Construction spending in November was lifted by a jump in private construction projects to their highest level since December 2008. Private construction spending rose 2.2 percent after being flat in October.

The increase reflected strong gains in spending on both residential and nonresidential projects. Private residential spending hit its highest level since June 2008 and outlays on nonresidential structures, which include factories and gas pipelines, touched an 11-month high.

[...]

[copious.abundance]

This is about as Corny an article as they come.



Corn Caps Biggest Drop Since 1960 as Harvest Rises to Record

Corn fell, capping the biggest annual drop since at least 1960, and wheat tumbled the most in five years as grain production climbs to records worldwide and outpaces demand for food, livestock feed and use in biofuels.

Corn plunged 40 percent in 2013, the most among 24 commodities in the Standard & Poor’s GSCI Spot Index, as the U.S. harvest rose to a record, recovering from the prior season when crops were hurt by the worst drought since the 1930s. Farmers worldwide are producing record amounts of everything from soybeans to wheat, leaving food costs tracked by the United Nations 13 percent below an all-time high reached in 2011 and spurring banks including Goldman Sachs Group Inc. to predict further declines in crop prices in 2014.

“We’ve moved from a deficit environment to a surplus environment with big crops in the U.S.,” Chris Gadd, an analyst at Macquarie Group Ltd. in London, said by telephone today. “Rather than trying to ration demand, the function of price now is to try and find demand.”

[...]

[AirlinePilot]

http://www.telegraph.co.uk/finance/fina ... -high.html


I think they are under estimating the problem by quite a bit. Of course you can choose to IGNORE the historic aspect of all that debt...then everything looks just fine!

[TheAntiDoomer]

John Cochrane on why the Fed's QE program has 'no effect'
http://www.cnbc.com/id/101306602

In my opinion, QE has essentially no effect. Interest rates are zero, so short-term bonds are a perfect substitute for reserves. QE creates a minor change to the maturity structure of government debt — and doubly minor because the Fed's effort to shorten maturity is essentially matched by the Treasury's new sales of long-term bonds. We've had much larger changes in the quantity and maturity structure of debt in the past with no big effect on the level of interest rates. You have to buy some new theory of very long-lasting flow effects, but I think coming up with new theories to justify policies ex post is a particularly dangerous kind of economics.

So I don't think the theory suggests QE can have a big effect. What about the evidence? Most of it comes from announcement effects. Even there, it's pretty weak: a 15-or-so basis point change in interest rates in return for a pledge to buy trillions in Treasuries. But interpreting announcements is tricky, and tells you a lot less about QE's effectiveness than you might think.

[copious.abundance]

The real solution is to jettison the bubble structure, and transition to a natural and robust manufacturing / mining / agriculture economy, where REAL productive assets are wielded to generate REAL growth ... not bubble fluff.

... meaningful mfgr growth that happens with natural interest rates (GERMANY) ...

Now that I've established beyond any reasonable doubt that the US's manufacturing is more "natural" than even Germany's due to our higher interest rates, let's see if certain doomers come by and tell us, "Gee, this is good news, I'm glad to see this happening and thank you for posting the article."

US Factory Orders Jump $8.8bn as Economy Strengthens

New orders for US factory goods increased by $8.8bn in November, showing the world's largest economy's manufacturing sector has strengthened.

The Commerce Department revealed manufactured orders in the month increased to $497.9bn - representing a 1.8% hike on October.

The research body said the new orders were this at the highest level since the series was first published on a North American Industry Classification System basis in 1992.

The strong result followed a 0.5% slumped in October and the Commerce Department said, excluding transportation, new orders increased by 0.6%.

The body also found that unfilled orders increased $10.4bn to $1,058bn - a 1% rise.

This measure was also at the highest level since the series was first published on a NAICS bases and followed a 0.6% increase in October.

In particular, the unfilled order-to-shipments ratio was 6.42 in November, up from 6.39 the month before.

The positive data is further evidence that US economy is recovering from recession and the financial crisis of 2008.

[copious.abundance]

The real solution is to jettison the bubble structure, and transition to a natural and robust manufacturing / mining / agriculture economy, where REAL productive assets are wielded to generate REAL growth ... not bubble fluff.

... meaningful mfgr growth that happens with natural interest rates (GERMANY) ...

Now that I've established beyond any reasonable doubt that the US's manufacturing is more "natural" than even Germany's due to our higher interest rates, let's see if certain doomers come by and tell us, "Gee, this is good news, I'm glad to see this happening and thank you for posting the article."

-----------------------------------------------

Here's an interesting sub-category from the factory orders report today. Let's see if certain doomers, such as the one above, come by expressing joy and happiness at the explosion of new orders at US factories for consumer durable goods.


LINKY

[Loki]

US manufacturing does appear to be bouncing back up, but it's unlikely to have a significant effect on employment and median household income, ya know, the stuff that really matters to the 95%. Here's why:


This is a chart showing goods-producing employment divided by service-providing employment.

Here's a close-up:


From the excellent blog Illusion of Prosperity.

I'd venture to guess automation has permanently eliminated most of the remaining US manufacturing jobs, which may help explain why the recovery has yet to trickle down.

[copious.abundance]

Your first chart shows that jobs in the manufacturing sector have been shrinking relative to the service sector since at least the end of WWII. So how, exactly, is that news?

Maybe I should whip out a chart showing the decline in farm employment over the past ~150 years and start telling everyone the sky's falling.

I'd venture to guess automation has permanently eliminated most of the remaining US manufacturing jobs, which may help explain why the recovery has yet to trickle down.

The first half of that sentence made no logical sense. Think about it.

At any rate, along with what seems to be the majority of doomers these days, you presume that, 1) the only worthwhile jobs are manufacturing jobs, 2) most people these days want a manufacturing job (lol on that one!), and that, 3) somehow ... for some explicable reason ... the economy has only "tricked down" when everybody is working in some sort of manufacturing job.

But then ... I dunno. Maybe you're like DP and you regard factories such as this Chinese sweathouse to be a wondrous asset to society.



Maybe you should move to Forth Worth, Loki, and work in that Motorola cellphone factory I linked last week! C'mon! Lemme see you do it!

[Loki]

At any rate, along with what seems to be the majority of doomers these days, you presume that, 1) the only worthwhile jobs are manufacturing jobs, 2) most people these days want a manufacturing job (lol on that one!), and that, 3) somehow ... for some explicable reason ... the economy has only "tricked down" when everybody is working in some sort of manufacturing job.

I never said anything about manufacturing jobs being desirable. Please exercise your reading comprehension skills.

The second chart shows a significant decline in manufacturing jobs relative to service jobs, strangely coincident with the Great Recession. Or should I call it the Great Recovery? Recessions exacerbate trends. Get it?

The ratio has not recovered, nor will it. Crow all you want about manufacturing and how DP was wrong about the manufacturing recovery being “natural” or whatever (who gives a shit, dude, get a life). Fact is, robot wages don't trickle down.

As for Ft. Worth, I've been there, more than once. To call it a shit hole would be an insult to anuses.

[copious.abundance]

I never said anything about manufacturing jobs being desirable.

Neither did I. So then, if, like me, you know manufacturing jobs aren't necessarily desirable, why did you post a chart showing the long-term decline of manufacturing jobs relative to service jobs, and act as if that was a bad thing?

Crow all you want about manufacturing and how DP was wrong about the manufacturing recovery being “natural” or whatever (who gives a shit, dude, get a life).

It appears you missed the context of the DP passages I keep posting.

[Loki]

The decline of manufacturing employment is not an insignificant metric when it comes to evaluating your recovery hypothesis, as suggested by this:


And this:


These are not unrelated phenomena.

By your own admission the recovery of manufacturing has little impact on employment and associated metrics like household income. Ya know, the stuff that actually matters to us 95 percenters....

Your first chart shows that jobs in the manufacturing sector have been shrinking relative to the service sector since at least the end of WWII. So how, exactly, is that news?

Maybe I should whip out a chart showing the decline in farm employment over the past ~150 years and start telling everyone the sky's falling.

So why crow about the recovery in manufacturing? You've already established your 5% recovery hypothesis beyond a reasonable doubt. I concede. You win. The robots and their owners are flush with cash. Yay.

The question I keep asking is when your 5% recovery will trickle down to the rest of us? Should I hold my breath?

[copious.abundance]

This:

The decline of manufacturing employment is not an insignificant metric when it comes to evaluating your recovery hypothesis, as suggested by this:

And this:

By your own admission the recovery of manufacturing has little impact on employment and associated metrics like household income.

Are completely in contradiction with one another. Someday I might actually get someone debating me here who knows what they're talking about and doesn't tend to contradict themselves.

[copious.abundance]

In other news ...



U.S. Trade Gap Narrows as Energy Boom Upends Consumption Dynamics

A booming domestic energy industry and rising overseas demand narrowed the U.S. trade gap in November, boosting estimates for economic growth in the final months of 2013.

U.S. exports rose to a seasonally adjusted $194.86 billion, their highest level on record, the Commerce Department said Tuesday. Imports fell, leading to the smallest trade gap since late 2009 when the aftermath of the recession hit demand for many products.

“Improving economies abroad are strengthening demand for U.S.-made goods and helping to boost the U.S. manufacturing base along the way,” Lindsey Piegza, chief economist at Sterne Agee, said in a note to clients.

The narrower trade deficit led many economists to sharply raise their forecasts for fourth-quarter growth. Barclays Capital, citing trade as well as recent consumer spending reports, now expects gross domestic product to advance at a 3% annual rate in the fourth quarter, up from its earlier 1.5% estimate. Morgan Stanley economists raised their estimate to 3.3% from an earlier forecast of 2.4%. Fourth-quarter growth at that healthy pace would follow a strong 4.1% annualized increase in the third quarter, according to the Commerce Department’s latest estimate.

Weakness in Europe, Japan and some emerging markets had held back U.S. exporters during much of the recovery. But the global economy has shown signs of stabilizing in recent months, leading to more orders for American petroleum, industrial supplies, capital goods and autos.

U.S. exports are up 5.2% from a year earlier, led by rising sales to China, Mexico and Canada. U.S. exports to China from January through November rose 8.7% compared with the same period a year earlier. Exports to Canada, the nation’s largest trading partner, were up 2.5% in the same period.

Underscoring slow growth in Europe much of this year, exports to the European Union were down 1.0% in the January to November period.

But other recent European gauges suggest that the region’s economy, which returned to growth in the third quarter, continues to advance. The euro zone’s manufacturing sector expanded for a third straight month in December, according to Markit.

While rising exports are part of the equation, the falling U.S. trade deficit in large part reflects rising domestic energy production. Petroleum exports, not adjusted for inflation, rose to the highest level on record in November while imports fell to the lowest level since November 2010.

[...]