Monthly Archives: October 2012

Food Stamps As Of September 28, 2012

This post is an update to previous posts concerning food stamps.  The program is officially called “Supplemental Nutrition Assistance Program,” or SNAP.  As stated on the SNAP website, “As of Oct. 1, 2008, Supplemental Nutrition Assistance Program (SNAP) is the new name for the federal Food Stamp Program.”

The data was last updated September 28, 2012, reflecting July 2012 levels.

Here is a table showing various monthly statistics with regard to national participation and costs going back to FY2009.  As seen in this table, the number of people participating as of July 2012 is 46,681,833 up 2.94% from year-ago (July 2011) levels.  As a reference point, the figure as of June 2009 (the official end of the recession as defined by the NBER) was 34,882,031.  Longer-term annual data is also available.

As I wrote in the April 12, 2010 post, “Of course, what is particularly disconcerting is not only the extent of participation in these programs, but the fact that this is yet another notable statistic that is getting worse well after the purported end of the recession.”

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1455.20 as this post is written

The S&P500 Vs. The Shanghai Stock Exchange Composite Index – October 17, 2012

Starting on May 3, 2010 I have written posts concerning the notable divergence that has occurred between the S&P500 and Chinese (Shanghai Composite) stock markets.

The chart below illustrates this divergence; it shows the S&P500 vs. the Shanghai Composite on a daily basis, since 2006:

(click on chart to enlarge image)(chart courtesy of StockCharts.com; chart creation and annotation by the author)

It is notable that the Shanghai Composite led the SPX (S&P500) significantly in late ’08 – early ’09, yet it has been (gradually) declining since that time.

I continue to find this divergence between the S&P500 and  Shanghai Composite to be notable and disconcerting, on an “all things considered” basis.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1460.91 as this post is written

The October 2012 Wall Street Journal Economic Forecast Survey

The October Wall Street Journal Economic Forecast Survey was published on October 12, 2012.  The headline is “Sluggish Growth Seen Into Next Year.”

An excerpt:

On average, the 48 respondents, not all of whom answer every question, expect the jobless rate will still be at 7.8% in June of next year—matching the September figure released last week. The reason for the stagnation in the job market is expectations for lackluster economic growth during the rest of 2012 and into 2013. Through the first half of next year, the average forecast is for growth in gross domestic product below 2% at a seasonally adjusted annual rate.

also:

To be sure, the economists don’t see the U.S. falling into recession. They put just a 22% chance of another downturn hitting in the next 12 months. In fact, they put better odds—a 28% chance—that the economy will grow above 3% in 2013. But neither of those scenarios is seen as likely, and about two-thirds of the respondents say the risks remain more to the downside than upside.

The current average forecasts among economists polled include the following:

GDP:

full-year 2012:  1.7%

full-year 2013:  2.3%

full-year 2014:  2.9%

Unemployment Rate:

December 2012: 7.9%

December 2013: 7.6%

December 2014:  7.1%

10-Year Treasury Yield:

December 2012: 1.83%

December 2013: 2.46%

December 2014:  3.15%

CPI:

December 2012:  2.0%

December 2013:  2.1%

December 2014:  2.4%

Crude Oil  ($ per bbl):

for 12/31/2012: $91.31

for 12/31/2013: $93.84

(note: I highlight this WSJ Economic Forecast survey each month; commentary on past surveys can be found under the “Economic Forecasts” category)

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I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with many of the consensus estimates and much of the commentary in these forecast surveys.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1428.59 as this post is written

Long-Term Charts Of The ECRI WLI & ECRI WLI, Gr. – October 12, 2012 Update

As I stated in my July 12, 2010 post (“ECRI WLI Growth History“):

For a variety of reasons, I am not as enamored with ECRI’s WLI and WLI Growth measures as many are.

However, I do think the measures are important and deserve close monitoring and scrutiny.

The movement of the ECRI WLI and WLI, Gr. is particularly notable at this time, as ECRI publicly announced on September 30, 2011 that the U.S. was “tipping into recession,” and ECRI has reaffirmed that view since, most recently in a September 13 release titled “The 2012 Recession:  Are We There Yet?” and September 13 Bloomberg video titled “Recession Update.”

Other past notable 2012 reaffirmations of the September 30, 2011 recession call by ECRI were seen (in chronological order)  on March 15 (“Why Our Recession Call Stands”) as well as various interviews and statements the week of May 6, including:

Also, subsequent to May 2012:

Below are three long-term charts, from Doug Short’s blog post of October 12 titled “ECRI Weekly Leading Indicators:  Time to Recant the Recession Call?”  These charts are on a weekly basis through the October 12 release, indicating data through October 5, 2012.

Here is the ECRI WLI (defined at ECRI’s glossary):

(click on charts to enlarge images)

This next chart depicts, on a long-term basis, the Year-over-Year change in the 4-week moving average of the WLI:

This last chart depicts, on a long-term basis, the WLI, Gr.:

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I post various economic indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1427.77 as this post is written

St. Louis Financial Stress Index – October 11, 2012 Update

On March 28, 2011 I wrote a post (“The STLFSI“) about the  STLFSI (St. Louis Fed’s Financial Stress Index) which is supposed to measure stress in the financial system.  For reference purposes, the most recent chart is seen below.  This chart was last updated on October 11, incorporating data from December 31,1993 to October 5, 2012 on a weekly basis.  The October 5, 2012 value is -.172 :

(click on chart to enlarge image)

_________

I post various indicators and indices because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with what they depict or imply.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1432.84 as this post is written

Building Financial Danger – October 11, 2012 Update

On October 17, 2011 I wrote a post titled “Danger Signs In The Stock Market, Financial System And Economy.”  This post is a brief 17th update to that post.

My overall analysis indicates a continuing elevated and growing level of danger which contains  many worldwide and U.S.-specific “stresses” of a very complex nature. I have written numerous posts in this blog of some of what I consider both ongoing and recent “negative developments.”  These developments, as well as other highly problematic conditions, have presented a highly perilous economic environment that endangers the overall financial system.

My analysis continues to indicate that there are many reasons for tremendous concern, as seen in almost innumerable fundamental economic, financial-market, and proprietary measures.  While the vast majority would refute this view – as seen in a variety of recent economic and market forecasts that continue to indicate ongoing slow economic growth and low probabilities of any type of serious economic adversity – my analyses indicate this optimism is misplaced, unfortunately.

One aspect of concern is the existence of various immensely large asset bubbles, a subject of which I have extensively written.  While all of these asset bubbles are wildly pernicious and will have profound adverse future implications, hazards presented by the bond market bubble are especially notable.

Predicting the timing and extent of a stock market crash is always difficult, and the immense complexity of today’s economic situation makes such a prediction even more challenging. With that being said, my analyses indicate that the danger inherent in the financial system has reached a level at which a stock market crash – that would also involve (as seen in 2008) various other markets as well – continues to be at a level at which a near-term crash is of tremendous concern.

(note: the “next crash” has outsized significance and implications, as discussed in the post of January 6, “The Next Crash And Its Significance“)

As reference, below is a one-year daily chart of the S&P500, indicating both the 50dma and 200dma as well as price labels.  The current price is 1441.24:

(click on chart to enlarge image)(chart courtesy of StockCharts.com; chart creation and annotation by the author)

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1441.24 as this post is written

NFIB Small Business Optimism – September 2012

The September NFIB Small Business Optimism report was released today, October 9.  The headline of the Press Release is “Hiring Plans Plunge:  Small Business Optimism Drops .1, Expectations for the Future Remain Low.”

The Index of Small Business Optimism fell by .1 point in September to 92.8.

Here are some excerpts from the Press Release that I find particularly notable:

Only eight percent complained that they didn’t get all the credit they wanted. Two percent say credit is their top business problem compared to 21 percent each citing taxes, regulations and red tape, and poor sales. Sales and profit trends were negative with little sign of improvement in the third quarter.

also:

Weak sales continue to be an albatross for the small-business community. The net percent of all owners (seasonally adjusted) reporting higher nominal sales over the past three months was unchanged at a negative 13 percent, cementing the 17 point decline since April and affirming weak GDP growth for the second quarter. Twenty-one (21) percent still cite weak sales as their top business problem—historically high, but down from the record 34 percent reached in March 2010.

Another page regarding September’s NFIB findings has a chart titled “Single Most Important Business Problem – Sept. 2012” in which the top three concerns were Taxes, Gov. Reqs. & Red Tape, and Poor Sales, each with a 21 Percent reading.

Also on this page was a chart of the NFIB Small Business Optimism Index chart, as seen below:

(click on chart to enlarge image)

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1446.34 as this post is written

CEO Confidence Surveys 3Q 2012 – Notable Excerpts

On October 4, The Conference Board released its 3rd Quarter CEO Confidence Survey.   The overall measure of CEO Confidence was at 42, down from 47 in the second quarter.

Notable excerpts from this October 4 Press Release include:

Says Lynn Franco, Director of Economic Indicators at The Conference Board: “This latest report reflects ongoing concern about the strength of the economy. CEOs’ assessment of current conditions remains weak and they have grown increasingly pessimistic about the short-term outlook. Sluggish growth and a persistent cloud of uncertainty have played a role in CEOs curtailing spending plans this year.”

also:

CEOs’ optimism about the short-term outlook has also declined. Currently, less than 12 percent of business leaders expect economic conditions to improve over the next six months, down from 20 percent last quarter. Expectations for their own industries are also more pessimistic, with just 15 percent of CEOs anticipating an improvement in conditions in the months ahead, down from 25 percent in the second quarter.

The Business Roundtable also recently released its CEO Economic Outlook Survey for the 3rd Quarter of 2012.   Notable excerpts from the September 26 release, titled “America’s CEOs Sharply Reduce Expectations for U.S. Economy” include the following:

The results of Business Roundtable’s (BRT) third quarter CEO Economic Outlook Survey for 2012 show a further downturn in CEOs’ expectations for sales, capital spending and hiring for the next six months. The Business Roundtable CEO Economic Outlook Survey Index decreased to 66.0 in the third quarter of 2012 from 89.1 in the second quarter of 2012, the lowest reading since the third quarter of 2009 and the third largest single quarter drop in the survey’s history.

also:

In terms of the overall U.S. economy, Business Roundtable members estimate real GDP will grow by 1.9 percent in 2012, down from last quarter’s estimate of 2.1 percent.

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I post various economic forecasts because I believe they should be carefully monitored.  However, as those familiar with this blog are aware, I do not necessarily agree with many of the consensus estimates and much of the commentary in these forecast surveys.

_____

The Special Note summarizes my overall thoughts about our economic situation

SPX at 1456.04 as this post is written

U-3 And U-6 Unemployment Rate Long-Term Reference Charts As Of October 5, 2012

Shortly after each monthly employment report I have been posting a continual series titled “3 Critical Unemployment Charts.”

Of course, there are many other employment charts that can be displayed as well.

For reference purposes, below are the U-3 and U-6 Unemployment Rate charts from a long-term historical perspective.  Both charts are from the St. Louis Fed site.  The U-3 measure is what is commonly referred to as the official unemployment rate; whereas the U-6 rate is officially (per Bureau of Labor Statistics) defined as:

Total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force

Of note, many economic observers use the U-6 rate as a (closer) proxy of the actual unemployment rate rather than that depicted by the U-3 measure.

Here is the U-3 chart, currently showing a 7.8% unemployment rate:

(click on charts to enlarge images)(charts updated as of 10-5-12)

Here is the U-6 chart, currently showing a 14.7% unemployment rate:

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1460.93 as this post is written

3 Critical Unemployment Charts – October 2012

As I have commented previously, as in the October 6, 2009 post (“A Note About Unemployment Statistics”), in my opinion the official methodologies used to measure the various job loss and unemployment statistics do not provide an accurate depiction; they serve to understate the severity of unemployment.

However, even if one chooses to look at the official statistics, the following charts provide an interesting (and disconcerting) long-term perspective of certain aspects of the officially-stated unemployment situation.

The first two charts are from the St. Louis Fed site.  Here is the Median Duration of Unemployment (current value = 18.5 weeks) :

(click on charts to enlarge images)(charts updated as of 10-5-12)

Here is the chart for Unemployed 27 Weeks and Over (current value =  4.844 million) :

Lastly, a chart from the CalculatedRisk.com site, from the October 5 post titled “September Employment Report: 114,000 Jobs, 7.8% Unemployment Rate.”  This shows the employment situation vs. that of previous recessions, as shown:

As depicted by these charts, our unemployment problem is severe.  Unfortunately, there do not appear to be any “easy” solutions.

On April 24 I wrote a five-part blog post titled “The Unemployment Situation Facing The United States”, which discusses various problematical issues concerning the present and future employment situation.

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The Special Note summarizes my overall thoughts about our economic situation

SPX at 1460.93 as this post is written