I find it strange but US is three week away from Presidential election and all the economic data are suddenly turning out too positive and very hard to believe in this slow economy. On Sept 27th, US real GDP showed 1.3% growth dropping from 1.7% which means growth slowed down. Also, Factory order showed a decline of -5.2%, International trade showed deficit jumping from -42.5 Billion to -44.2 Billion. Personal income showed a drop from 0.3% to 0.1% and the report said, "Consumer sector is at risk of slowing further due to lack of income growth which is heavily tied to employment gain."
Released On 9/28/2012 8:30:00 AM For Aug, 2012
| Prior | Consensus | Consensus Range | Actual |
| Personal Income - M/M change | 0.3 % | 0.2 % | 0.1 % to 0.3 % | 0.1 % |
| Consumer Spending - M/M change | 0.4 % | 0.5 % | 0.3 % to 0.8 % | 0.5 % |
| PCE Price Index -- M/M change | 0.0 % | 0.5 % | 0.1 % to 0.6 % | 0.4 % |
| Core PCE price index - M/M change | 0.0 % | 0.1 % | 0.1 % to 0.2 % | 0.1 % |
| Personal Income - Yr/Yr change | 3.6 % | | | 3.5 % |
| Consumer Spending - Yr/Yr change | 3.3 % | | | 3.6 % |
| PCE Price Index -- Y/Y change | 1.3 % | | | 1.5 % |
| Core PCE price index - Yr/Yr change | 1.6 % | | | 1.6 % |
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But, Since the beginning of October most of the economic data have turned positive. The first data that I have doubt is ISM manufacturing. After 3 month of contraction from June - August, ISM manufacturing jumped from 49.6 to 51.5 for the September. Non farm payroll showed sudden drop in unemployment rate from 8.1% to 7.8%. Jobless claim fell to 339k which is the best reading in 4 year. Consumer sentiment rose to all time high to 83.1 This reading doesn't match with the real GDP, factory order or International trade. To get such low jobless claim, and unemployment rate US GDP has to be above 3% - 3.5% to justify such low number.
| Released On 10/5/2012 8:30:00 AM For Sep, 2012 |
| Prior | Consensus | Consensus Range | Actual |
| Nonfarm Payrolls - M/M change | 96,000 | 113,000 | 75,000 to 162,000 | 114,000 |
| Unemployment Rate - Level | 8.1 % | 8.1 % | 8.0 % to 8.3 % | 7.8 % |
| Average Hourly Earnings - M/M change | 0.0 % | 0.2 % | 0.1 % to 0.3 % | 0.3 % |
| Av Workweek - All Employees | 34.4 hrs | 34.4 hrs | 34.4 hrs to 34.5 hrs | 34.5 hrs |
| Private Payrolls - M/M change | 103,000 | 130,000 | 100,000 to 165,000 | 104,000 |
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| Over confident Consumer sentiment at 83.1 best reading for the recovery |
It seems the data are shown to justify Obama administration spending which topped over $1 trillion dollar annual budget deficit for the fourth year and first time in US history. US debt is now at 16.170 trillion and the debt limit is 16.395 trillion and its approaching fast to hit debt ceiling again. Inspite of spending so much the real economy on the main street is different from Wall street and the fact is that Global economy is slowing down. US will hit recession again in 2013 officially, eventhough I never felt recession was over which began in 2007.
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| US budget deficit tops $1 trillion for the Fourth year. |
Back to topic, If the data's are to be believed then Fed should stop their QE infinity program and stop expanding their balance sheet as the economy is on the right track based on Jobless claim, unemployment rate and consumer sentiment.
Sometime I even have doubt whether BLS work or really do any survey. Did anyone got any call from such BLS survey ever ? Please let me know if so. |
