[Loki]

$this->bbcode_second_pass_quote('copious.abundance', '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

[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]

$this->bbcode_second_pass_quote('copious.abundance', 'I') think Loki's just frustrated his guitar skills aren't as good as mine.

$this->bbcode_second_pass_quote('Daniel_Plainview', 'T')he 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.

[TheAntiDoomer]

What the heck happened to Dan Plain?

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.

$this->bbcode_second_pass_quote('Daniel_Plainview', 'T')he 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.

[copious.abundance]

U.S. construction spending highest in nearly five years
$this->bbcode_second_pass_quote('', '[')b]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
$this->bbcode_second_pass_quote('', '[')b]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

$this->bbcode_second_pass_quote('', 'I')n 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.

$this->bbcode_second_pass_quote('Daniel_Plainview', 'T')he 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.

$this->bbcode_second_pass_quote('Daniel_Plainview', 'T')he 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.

[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.

$this->bbcode_second_pass_quote('Loki', '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.

[Loki]

$this->bbcode_second_pass_quote('', 'A')t 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.

$this->bbcode_second_pass_quote('Loki', 'I') never said anything about manufacturing jobs being desirable.

[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....

$this->bbcode_second_pass_quote('copious.abundance » Tue Jan 07, 2014 2:06 pm', 'Y')our 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.

This:
$this->bbcode_second_pass_quote('Loki', 'T')he decline of manufacturing employment is not an insignificant metric when it comes to evaluating your recovery hypothesis, as suggested by this:

[copious.abundance]

In other news ...



U.S. Trade Gap Narrows as Energy Boom Upends Consumption Dynamics
$this->bbcode_second_pass_quote('', '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.

[...]