Recent comments

  • PCE goods look good once adjusted for inflation, but PCE services doesn't get a similar boost...i think they were unchanged in November, mostly on lower utility usage, which i expect will be even worse in December when over 30 states saw all time high temperatures...the utility index in industrial production is a good proxy for what will happen to the household services in December PCE...

    so GDP looks like weak PCE vs slumping inventories, with weakness elsewhere else nearly a wash...i think JP Morgan Chase now sees 4th quarter growth at 0.1%

    Reply to: CPI Drops -0.1% for December   3 years 8 months ago
    EPer:
  • I haven't been calculating any GDP component but it seems inventories have been contracting, especially in manufacturing so I am not expecting a good number, although PCE should be about the same as Q3, but this is with my thumb in the air estimate.

    Reply to: CPI Drops -0.1% for December   3 years 8 months ago
    EPer:
  • with this release, we are now able to estimate the economic impact of last week's December retail sales report...for the most accurate estimate, and the way the BEA will figure 4th quarter GDP next week, we would have to take each type of retail sales and adjust it with the appropriate change in price to determine real sales; for instance, December's clothing sales, which fell by 0.9%, should be adjusted with the price index for apparel, which was down by 0.2%, to show us that real retail sales of clothing were down just 0.7% in December...then, to get GDP relevant changes, we'd have to compare those real clothing sales in the months of October, November and December to real sales in the 3rd quarter months of July, August and September, and then repeat that for each other type of retailer, obviously quite a tedious chore...the short cut we usually use for a ballpark estimate is to apply the composite price index of all commodities less food and energy commodities, which was down 0.1%, to retail sales less grocery, gas station, and restaurant sales, which account for nearly 70% of aggregate retail sales....those sales were almost down 0.1% in December, and since their price index was also down 0.1%, real retail sales ex food and energy were up but statistically unchanged...in the food and energy components, grocery stores sales were down 0.1% while prices for food at home were down 0.5%, meaning real food sales rose by 0.4% in December...next, sales at bars and restaurants were up 0.8% in dollars, but those dollars bought 0.2% less, so real sales of food away from home was up 0.6%...and while gas station sales were down 1.1%, gasoline prices were down 3.9%, suggesting a solid real increase in gasoline sold as well...weighing the food and energy components at one third of total retail sales suggests that real retail sales were up on the order of 0.2% in December, following a an increase of 0.5% in real sales in November and a 0.2% increase in October...together, these increases suggest a decent contribution from personal consumption of goods, which accounts for 23% of GDP,  when the advance 4th quarter GDP report is released on January 29th...

    Reply to: CPI Drops -0.1% for December   3 years 8 months ago
    EPer:
  • The question of whether to tax capital gains for Social Security and Medicare "as regular wages" is a no-brainer, as is the question whether to cut benefits, raise taxes, or a combination of both to "save them." But that is a false choice. There are certainly other, more desirable, options. For example, means testing, wherein people with high retirement income who do not need Social Security lose eligibility.
    Another, and much more comprehensive solution would be to simply close two gaping LOOPHOLES that enable very wealthy people to avoid paying most or all of both Social Security and Medicare taxation: the $118,500 cap on taxable Social Security earned income and the total exemption of unearned income (income from profits, interest, rents, etc.) on both. Why should people living well, without having to work, on often inherited income, be exempt from paying those taxes on it while the struggling poor and minimum wage earners do?
    In 1968 LBJ conflated the general US budget with that for Social Security to conceal the cost of the Vietnam War. The SS trust fund has $2.9 trillion dollars. If just the capital gains exemption was eliminated it would bring in an additional $62 billion (at 12.4% of the $500 billion cited above) while Medicare would gain another $12.4 billion (at 2.9%).
    This would not only solve any and all imagined future problems, but would raise sufficient additional funds to fully fund a single payer national health care system for all Americans (especially if combined with reasonable controls over drug and medical care overcharging). Doing so would also eliminate the crippling retirement and health care problem burdens so many unions, public bodies and companies face as more and more people retire. In fact, if well-implemented it would enable the overall Social Security and Medicare tax rates to actually be reduced! It is telling that the Western European countries spend an average of about half of what is spent in the US yet have better overall outcomes.
    Finally, it is cruel to people hoping to retire at 65 to keep raising the bar to save money. Why not just raise the retirement age to 85 and be done with it!?

    Reply to: Should Billionaires be Taxed for Social Security?   3 years 8 months ago
    EPer:
  • Good God, you could stay in a house for a long time rent free with these statistics. Gives new meaning to strategic default.

    Reply to: Mortgage Delinquencies Rise in November; Mean Time in Foreclosure at Record 1061 Days   3 years 9 months ago
    EPer:
  • Or, is Trump simply another tool of the power elite, giving us the illusion he is anti-establishment?

    Reply to: A Strategic Case for Donald Trump   3 years 9 months ago
    EPer:
  • PCE

    November PCE was decent enough, up 0.3% with almost no inflation adjustment...but October was a gooseegg with a 0.1% deflator...if December could duplicate November, the 4th quarter is out of the woods, but if December PCE is weak, 4th quarter GDP is at risk from weakness in investment and net exports...

    Reply to: December Unemployment Report Belies Other Economic Metrics   3 years 9 months ago
    EPer:
  • I haven't spent the time needed to calculate out monthly reports to give a guesstimate but inventories contracting everywhere is not a good sign. As I recall PCE seems to be around the same pace as Q3 so far.

    Reply to: December Unemployment Report Belies Other Economic Metrics   3 years 9 months ago
    EPer:
  • Americans in general aren't so good with those number thingies. Lotteries for example are simply a tax on the mathematically illiterate.

    Reply to: November Construction Spending Down 0.4% After Significant Errors Found in Prior Data   3 years 9 months ago
    EPer:
  • not often you see GDP fading with such good jobs numbers, but every report i reviewed this week appears to subtract from 4th quarter GDP...ive posted my estimates on construction and the trade deficit here already; both wholesale and factory inventories came in 0.3% lower despite just a 0.1% drop to finished goods prices...a drop in growth of inventories could take a 100 basis points off of GDP growth which already looks to have a fairly weak PCE component...the Atlanta Fed puts the 4th quarter growth at an 0.8% rate; this is the first time i've ever thought they might be too high..

    Reply to: December Unemployment Report Belies Other Economic Metrics   3 years 9 months ago
    EPer:
  • Shire PLC. is a New Jersey-registered Irish-headquartered global specialty biopharmaceutical company that originated in the United Kingdom with a large operational base in the United States. Recently Shire PLC. announced an agreement to acquire U.S.-based biopharmaceutical company Baxalta Inc. for about $32.0 billion.

    Thermo Fisher Scientific, an American multinational biotechnology product development company, recently announced an agreement to acquire cellular and genetic analysis product provider Affymetrix Inc. for about $1.3 billion.

    Reply to: The War on Big Pharma   3 years 9 months ago
    EPer:
  • Kind of an amazing error, but I feel few pay attention to these reports in the first place. Most cannot even grasp the basics of statistics no matter how much one pounds into their heads fundamentals.

    Reply to: November Construction Spending Down 0.4% After Significant Errors Found in Prior Data   3 years 9 months ago
    EPer:
  • Something I've thought about, and while I realize it isn't likely to happen I would be interested to hear other views about is this:

    What if we treated pharmaceutical companies as public utilities? That means in exchange for allowing them to own the rights to, and sell, medicines to the US population, they would have to accept a specific rate of return on their investment in research, production, etc. This would be a bit tricky to implement, but it would encourage research into new drugs, as the return would be guaranteed. At the same time, prices would be effectively moderated. Obviously there are some logistical issues, and it would require oversight of the research end of the business, but I think it could be made to work. The price for any drug would be the production cost, plus an amount that covers the development costs the company has for their entire portfolio of drugs.

    just a random thought. I don't think I understand enough about the pharmaceutical industry to understand the implications.

    Reply to: The War on Big Pharma   3 years 9 months ago
    EPer:
  • for the middle class, working America and economic reform, let's hope he pulls out Iowa and New Hampshire.

    Reply to: Bernie Sanders is no friend of Gordon Gekko   3 years 9 months ago
    EPer:
  • USA Today: "Sen. Elizabeth Warren appears to be feeling the Bern today, even though she’s not endorsing anyone yet for the Democratic presidential nomination. The Massachusetts Democrat and progressive darling heaped praise on Sen. Bernie Sanders following a fiery speech he gave Tuesday on the need for Wall Street reform."
    http://www.usatoday.com/story/news/politics/onpolitics/2016/01/06/bernie...

    It should also be noted that, yes, shadow banking is part of the problem, and Bernie acknowledges this. But Hillary's plan for JUST the shadow banking industry isn't the "end-all" solution. Bernie addresses many different levels, and offers a multiple-faceted approach to financial reform. Dodd-Frank isn't enough. There are already some Democrats who want to repeal portions that deal with derivatives (credit default swaps known as CDS)
    https://www.washingtonpost.com/business/economy/warren-leads-liberal-dem...

    Reply to: Bernie Sanders is no friend of Gordon Gekko   3 years 9 months ago
    EPer:
  • My sloppy chart. Pairs recessions with a graph of the fed funds rate. Americans are just too dumb to realize that when the Fed talks about "inflation", they really mean "wage inflation". They have been deliberately keeping wages down for generations. Add in outsourcing, insourcing, cheap illegal labor. It doesn't take a rocket scientist.

    http://www.charthub.com/charts/2016/01/01/fed_rates_vs_recessions

    Reply to: November Personal Income up 0.3%; 2 Months PCE Adds 108 Basis Points to Q4 GDP   3 years 9 months ago
    EPer:
  • The Boskin Commission removed inflation from the CPI calculations. This was done to cheat working Americans and retired Americans from what was due them by the Government and/or their employers. It's actually quite simple if you work or have worked you lose.

    Reply to: November Personal Income up 0.3%; 2 Months PCE Adds 108 Basis Points to Q4 GDP   3 years 9 months ago
    EPer:
  • the October indices compare prices of houses sold in August, September and October to those sold in July, August, and September, and hence the change in the month over month indexes are arithmetically equal to 1/3rd the difference between July home prices and October home prices, ie, not really a useful monthly change at all

    this is also the case with any three month average, which we can represent by (a + b + c) / 3, with a being the current month, b being last month, and c being the month before that...another way of writing that same expression is "a/3 + b/3 + c/3 " when one compares that to the prior month, represented by (b + c + d) / 3, where d is the month before the month before last, we end up comparing (a/3 + b/3 + c/3) to (b/3 + c/3 + d/3), and since two of our elements in that comparison are identical, the comparison simply becomes a/3 to d/3, or one-third the difference between a and d... the trouble is, 3 month averages are used by economists everywhere as if they're providing some special insight...even the Chicago Fed elevates its three month average of the National Activity Index to the version that should be followed to remove volatility..so in the Chicago Fed National Activity Index (CFNAI) for November they end up comparing their August index to November, which is complete nonsense..

    Reply to: Case-Shiller Shows Housing Price Gains Continue   3 years 9 months ago
    EPer:
  • rent has been the primary driver of CPI inflation, and why PCE inflation, where housing has a smaller influence, is less than CPI...CPI less shelter is down 0.8% year-over-year...

    Reply to: November Personal Income up 0.3%; 2 Months PCE Adds 108 Basis Points to Q4 GDP   3 years 9 months ago
    EPer:
  • Inflation metrics have their own controversy. Anyone who runs a household plus knows statistics knows there is no way inflation is just 2% per year in reality. Rents, case in point are very geographically dependent and those on the West coast are getting 50% increases since 2008.

    Reply to: November Personal Income up 0.3%; 2 Months PCE Adds 108 Basis Points to Q4 GDP   3 years 9 months ago
    EPer:

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