Posts
Sorry, I could not read the content fromt this page.Sorry, I could not read the content fromt this page.
Monday, July 15, 2013
CBO: The Deficit Has Shrunk Massively Over The Past Year
\ABS\Auto Blog Samurai\data\How Gold Is Mined\themoneygame\PinExt.png "Pin It")
The federal budget deficit has fallen $220 billion in a year-over-year period, according to the latest monthly budget estimate from the Congressional Budget Office released Friday.
According to the CBO, the federal government has run a budget deficit of $627 billion over the first eight months of the fiscal year. That's almost $220 billion less than the same period — May through October — of 2012.
The CBO has not changed its overall deficit forecast, which is still projected to remain at $642 billion this year. That estimate, which came in May, was significantly down from an $845 billion projection in February.
The CBO says that the falling deficits are due to federal revenues rising by 15 percent. Meanwhile, federal spending has seen an increase of less than 1 percent. One of the main drivers of the increase in revenues is a 16 percent hike in individual income and payroll taxes — including a 10 percent increase in payroll taxes, which coincided with the expiration of the payroll tax cut in January.
The report comes at a time when there is renewed debate over fiscal austerity in the United States. The liberal Center for American Progress released a report Thursday calling for a reset to the "entire fiscal debate."
Please follow Politics on Twitter and Facebook.
Follow Brett LoGiurato on Twitter.
Ask Brett A Question » Tags: White House, CBO, Deficit | Get Alerts for these topics »
CHART: How The American Labor Force Grew After The Last 10 Recessions
Sam Ro | Jun. 7, 2013, 11:04 AM | 785 |
Earlier today, we learned that U.S. companies added 175,000 new jobs in May.
However, the unemployment rate ticked up to 7.6% from 7.5% a month ago.
This discrepancy can be explained by an increase in the civilian labor force, which climbed to 155,658 million from 155.238 million a month ago.
You see, when job prospects are improving, more people decide that they want to look for work (i.e. enter the labor force).
Still, the labor force has largely moved sideways since the recession, even as the population has been growing. This is why everyone always freaks out about the falling labor force participation rate.
Credit Suisse's Andrew Garthwaite discussed this in a note to clients earlier this week:
...Typical post-recession recoveries have seen the labour force grow by 1.6% p.a.. However, the labour force has barely risen since the recession ended in mid-2009. One should perhaps not expect a sudden acceleration in the labour force due to the ageing of the baby-boomer population, but we do expect a modest increase. For this reason, our fixed income strategy team believe that a 61/2% unemployment rate would not be reached until mid-2015.
Here's Garthwaite's chart of showing how the labor force climbed following the last 10 recessions:
Credit Suisse
Please follow Money Game on Twitter and Facebook.
Follow Sam Ro on Twitter. Tags: Labor Force | Get Alerts for these topics »
A California Nuclear Plant Is Shutting Down Permanently, And That's Bad News For Energy Prices
Southern California Edison is decommissioning the remaining two units at a nuclear plant that powered as many as 1.4 million homes, Sky News reports,
The San Onofre facility, located just south of Los Angeles, had been shut down for the past year after inspectors discovered a leaking tube inside a steam generator.
But by April costs of the shutdown had soared to $553 million, Sky reports. In a release, SCE said it will have to report a charge of up to $450 million after tax as a result of the move.
Energy analyst Stephen Schork tells us the decision will likely cause chaos in western power markets:
You've lost one of your cheapest sources of baseload nuclear generation. In the northern part of the state, very limited snow-melt is already affecting hydropower, so they're constrained on their two cheapest sources of energy. So the region is going to be susceptible to spikes in natural gas [prices].California may have to go back to importing power from Arizona, he added, and both states are expected to see more record temperatures this summer.
The EIA also expects prices will rise:
Replacing the power from a low-cost source of generation like [San Onofre] already has changed wholesale electricity prices in [California]. Rising natural gas prices are likely to increase that effect in 2013. In its annual report, CAISO noted that 2012 wholesale power prices were higher than prices in the previous three years even when adjusted for the lower 2012 natural gas prices. In addition, the unusually large spread in wholesale electricity prices between the northern and southern portions of the state indicates system congestion.
It's also another setback for the nuclear crowd, Schork said, creating a trifecta of recent bad headlines along with Fukushima and questions over renewing New Jersey's Indian Point plant.
The LA Times says 1,100 workers will now be laid off.
San Onofore's second and third units were completed in 1983 and 1984. Unit 1, which began operating in 1967, was shuttered in 1992.
Gold And Treasuries Getting Roughed Up After The Jobs Report
The May jobs report was just released at 8:30 AM ET, and the numbers came in better than expected. The change in nonfarm payrolls was 175,000, better than the 163,000 expected by market economists. The unemployment rate, on the other hand, edged up to 7.6%, versus expectations for an unchanged reading at 7.5%.
Markets were volatile in the wake of the report. Gold and Treasuries initially plunged when the headlines crossed, but then spiked past pre-release levels.
Now, however, gold is really getting slammed. The shiny yellow metal is trading around $1382 an ounce, down 2.4% on the day.
Meanwhile, stocks are rising. S&P 500 futures are trading around 1633 versus levels around 1626 prior to the release, and are now up 0.6% on the day.
10-year Treasury futures are trading down 0.4%, and the yield on the 10-year Treasury is 6 basis points higher at 2.13%.
And the yen is sliding against the dollar.
Click here for all the details of today's jobs release >
Please follow Money Game on Twitter and Facebook.
Follow Matthew Boesler on Twitter. Tags: Markets, Jobs Report | Get Alerts for these topics »
9 Charts That Show Why The U.S. Doesn't Need Austerity
Public Domain
That's according Michael Linden, the Managing Director for Economic Policy at the liberal Center for American Progress, in his new report calling for an end to fiscal austerity in the United States.
Linden has, until now, been part of Washington's pro-deficit reduction consensus. Just six months ago, CAP put out a report that opened like this: "There are very few things everyone in Washington can agree on these days. But the one notion that will get heads nodding across the political spectrum is that today’s fiscal policies simply are not sustainable." Linden was one of its co-authors.
He's still arguing for deficit reduction in the medium term, but now he's emphasizing that it can come later — now, the key objective is to make sure the government doesn't choke off the recovery.
Please follow Politics on Twitter and Facebook.
Follow Josh Barro on Twitter.
Ask Josh A Question » Tags: Features | Get Alerts for these topics »
The State Of The Four Official Recession Indicators
Doug Short is the vice president of research at Advisor Perspectives. Note from dshort: This commentary has been revised to include the May Nonfarm Employment report.
Official recession calls are the responsibility of the NBER Business Cycle Dating Committee, which is understandably vague about the specific indicators on which they base their decisions. This committee statement is about as close as they get to identifying their method.
There is, however, a general belief that there are four big indicators that the committee weighs heavily in their cycle identification process. They are:
Industrial ProductionReal Personal Income (excluding transfer payments)Nonfarm EmploymentReal Retail Sales (a more timely substitute for Real Manufacturing and Trade Sales)
I've now updated this commentary to include the May Nonfarm Employment data released this morning. This indicator has shown steady (although frustratingly sluggish) improvement from its trough in February 2010. Since the trough, excluding four consecutive month-over-month declines triggered by the 2010 employment blip of temporary census workers, the index has not had a negative MoM in 39 months.
The long-term, multi-decade slowing of US employment is evident in the year-over-year employment chart in the appendix (click here to view). But even with the ongoing technological advances that reduce employment needs, the current YoY growth at 1.58% is higher than at the onset of both 21st century US recessions.
The chart and table below illustrate the performance of the Big Four and simple average of the four since the end of the Great Recession. The data points show the percent cumulative percent change from a zero starting point for June 2009. The latest data point is for the 47th month. In addition to the four indicators, I've included an average of the four, which, as we can see, was influenced by the anomaly of the Personal Income data points, which reflect 2012 year-end income increases, at the expense of early 2013, as a tax management strategy.
The Nonfarm Employment data has taken on special significance because of the Fed's focus on the unemployment rate as a key factor in determining its policy of monetary stimulus through quantitative easing. Today's news of May's 175K increase in Nonfarm Employment came as a relief, since the ADP and TrimTabs data on Wednesday came in a bit light. The Briefing.com consensus had been for 159K new jobs, although other forecasts were for 170K (Investing.com and Briefing.com's own estimate).
The uptick in the unemployment rate from 7.5% to 7.6%, small as it was, was even smaller than the standard representation of the rate. To two decimal places it rose from 7.51% to 7.56%, and that rise can be attributed to a 0.12% increase in the labor force participation rate (driven by a 420K increase labor force participants).
My next update will be on June 14th when the Fed releases its May Industrial Production report.
The charts above don't show us the individual behavior of the Big Four leading up to the 2007 recession. To achieve that goal, I've plotted the same data using a "percent off high" technique. In other words, I show successive new highs as zero and the cumulative percent declines of months that aren't new highs. The advantage of this approach is that it helps us visualize declines more clearly and to compare the depth of declines for each indicator and across time (e.g., the short 2001 recession versus the Great Recession). Here is my own four-pack showing the indicators with this technique.
Now let's examine the behavior of these indicators across time. The first chart below graphs the period from 2000 to the present, thereby showing us the behavior of the four indicators before and after the two most recent recessions. Rather than having four separate charts, I've created an overlay to help us evaluate the relative behavior of the indicators at the cycle peaks and troughs. (See my note below on recession boundaries).
The chart above is an excellent starting point for evaluating the relevance of the four indicators in the context of two very different recessions. In both cases, the bounce in Industrial Production matches the NBER trough while Employment and Personal Incomes lagged in their respective reversals.
As for the start of these two 21st century recessions, the indicator declines are less uniform in their behavior. We can see, however, that Employment and Personal Income were laggards in the declines.
Now let's look at the 1972-1985 period, which included three recessions -- the savage 16-month Oil Embargo recession of 1973-1975 and the double dip of 1980 and 1981-1982 (6-months and 16-months, respectively).
And finally, for sharp-eyed readers who can don't mind squinting at a lot of data, here's a cluttered chart from 1959 to the present. That is the earliest date for which all four indicators are available. The main lesson of this chart is the diverse patterns and volatility across time for these indicators. For example, retail sales and industrial production are far more volatile than employment and income.
History tells us the brief periods of contraction are not uncommon, as we can see in this big picture since 1959, the same chart as the one above, but showing the average of the four rather than the individual indicators.
The chart clearly illustrates the savagery of the last recession. It was much deeper than the closest contender in this timeframe, the 1973-1975 Oil Embargo recession. While we've yet to set new highs, the trend has collectively been upward, although we have that strange anomaly caused by the late 2012 tax-planning strategy that impacted the Personal Income.
Here is a close-up of the average since 2000.
Each of the four major indicators discussed in this article are illustrated below in three different data manipulations:
A log scale plotting of the data series to ensure that distances on the vertical axis reflect true relative growth. This adjustment is particularly important for data series that have changed significantly over time.A year-over-year representation to help, among other things, identify broader trends over the years.A percent-off-high manipulation, which is particularly useful for identifying trend behavior and secular volatility.
The US Industrial Production Index (INDPRO) is the oldest of the four indicators, stretching back to 1919. The log scale of the first chart is particularly useful in showing the correlation between this indicator and early 20th century recessions.
This data series is computed as by taking Personal Income (PI) less Personal Current Transfer Receipts (PCTR) and deflated using the Personal Consumption Expenditure Price Index (PCEPI). I've chained the data to the latest price index value.
The "Tax Planning Strategies" annotation refers to shifting income into the current year to avoid a real or expected tax increase.
There are many ways to plot employment. The one referenced by the Federal Reserve researchers as one of the NBER indicators is Total Nonfarm Employees (PAYEMS).
This indicator is a splicing of the discontinued retail sales series (RETAIL, discontinued in April 2001) spliced with the Retail and Food Services Sales (RSAFS) and deflated by the Consumer Price Index (CPIAUCSL). I used a splice point of January 1995 because that was date mentioned in the FRED notes. My experiments with other splice techniques (e.g., 1992, 2001 or using an average of the overlapping years) didn't make a meaningful difference in the behavior of the indicator in proximity to recessions. I've chained the data to the latest CPI value.
This indicator is a splice of two seasonally adjusted series tracked by the BEA. The 1967-1996 component is SIC (Standard Industrial Classification) based and the 1997-present is NAICS (North American Industry Classification System) based. The data are available from the BEA website. See Section 0 - Real Inventories and Sales and look for Tables 2AU and 2BU. The FRED economists use the Real Retail Sales above for their four-pack. However, ECRI appears to use this series as their key indicator for sales. Note that the Manufacturing and Trade Sales data is updated monthly with the BEA's Personal Consumption and Expenditures release, but the numbers lag by one month from the other PCE data.
Note: I represent recessions as the peak month through the month preceding the trough to highlight the recessions in the charts above. For example, the NBER dates the last cycle peak as December 2007, the trough as June 2009 and the duration as 18 months. The "Peak through the Period preceding the Trough" series is the one FRED uses in its monthly charts, as explained in the FRED FAQs illustrated in this Industrial Production chart.
Subscribe to:
Posts (Atom)