Another day, another "unexpectedly" bad economic report. Lately
it seems like a lot of what US government statisticians say comes as an
unpleasant surprise for economists. The latter think a recovery is building
momentum, while the former are painting a picture of incipient recession. The
result of this systemic cognitive dissonance is that
"disappointing" has become the new favorite buzzword of headline
writers. See Bloomberg's
Surprise:
U.S. Economic Data Have Been the World's Most Disappointing
The
US economy keeps disappointing
Disappointing
economic data probably won't phase the Fed
But the real surprise is that this is a surprise. The dollar has soared by
a near-record amount in the past six months, making US goods about 25% more
expensive on global markets, while US corporations have borrowed record
amounts to buy back their stock, increasing their leverage without building
appreciable new productive capacity. Families have spent the past couple of
years loading up on the most debilitating kinds of debt, including student
loans and subprime car loans. And interest rates on bank CDs and bond funds,
which provide the bulk of retiree income, continue to fall, threatening to
completely eliminate what used to be a predictable, steady source of spending
on life's necessities.
This leaves relatively few Americans willing and/or able to buy new
houses, cars and such. The predictable (i.e., not surprising) result is
falling sales. From the past week:
Housing
starts plunge in February
Homebuilder
confidence falls to lowest since summer
US
manufacturing output falls for 3rd month, worst since Lehman
The weather gets blamed for some of this, of course, despite the fact that
many parts of the country have actually had nice, warm winters. But beyond
that economists seem to be stumped. Not all economists; just the ones who
work for institutions with a vested interest in keeping the leveraged
speculating party going. Here's a snippet from John Williams of Shadowstats.com, who
doesn't seem surprised at all:
Outlook for First-Quarter GDP Growth Continued to Dim. Economic
reporting of the next month increasingly should move the consensus economic
outlook towards a contracting first-quarter 2015 GDP. With the exception of
increasingly distorted and poor-quality labor data (see Commentary No. 702),
underlying economic detail of the last month or two has turned ever-more
negative. That pattern of deteriorating economic reporting should intensify,
going forward, with the global markets eventually recognizing that the U.S.
economy has fallen into a "new" recession. Such a circumstance has
horrendous implications for the domestic and global financial markets and
systems (see No. 692 Special Commentary: 2015 - A World Out of Balance).
Imagine how disappointed they'll be then.
