"Economists are pessimists: they've predicted 8 of the last 3 depressions."
--Barry Asmus

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Thursday, January 13, 2011

What's Happening At Home?

The short answer is:  we're unemployed, business costs are up, and we're running a significant (but mildly improved) trade deficit.  Hooray?
First off, the US International Trade Balance.  In October, we had a revised trade deficit of $38.4 billion.  There is no real optimism on the Street that this will improve - the consensus is that the trade gap will grow to $41.0 billion.  And the results?  According to the US Bureau of Economic Analysis the trade deficit actually shrank to only $38.3 billion, a $100 million improvement that also beats expectations by a substantial amount[1].  Drilling down a little, we see that:
  • The goods deficit increased $100 million
  • The services surplus increased $200 million
  • The not-SA advanced technology deficit was $11.2 billion,(a $1.6 billion increase)
  • We have a trade surplus with Hong Kong, Australia, Singapore, and Egypt.
  • We have a trade deficit with China, the EU, OPEC, Japan, Mexico, Germany, Ireland, Canada, Nigeria, Venezuela, Korea, and Taiwan.
Moving on to the Producer Price Increase, there is little optimism there either.  The Street is looking for a 10 bps increase for December (to a 0.9% increase), with "core"[2] PPI decreasing 10 bps to a level of 0.2%.  The Bureau of Labor Statistics has covered for this one, reporting that the PPI actually increased 30 bps to 1.1% (ouch), with "core" CPI decreasing to the expected 0.2%.  Here's the highlights;
  • Food production costs increased 0.8% for the month.
  • Energy production costs increased 3.7% for the month.
  • For the year, the cost to produce finished goods increased 4.0%
  • Production costs for intermediate goods and components increased 1.0%.
  • Production costs for crude goods and raw materials increased 4.0% for the month.[3]
And then, just when you thought things couldn't get any worse, we have the First Time Jobless Claims report.  If you recall, the week ending 1/1 had surprisingly good news - only 409,000 people (SA) filed for unemployment.  The Street is feeling optimistic on that news, and is calling for a further decline to only 405,000 new first time claims.  Unfortunately, the US Department of Labor is a dash of cold water to the face of that optimism.  We've got a seasonally adjusted 445,000[4] first time claims for the week ending 1/8, up 35,000 from the revised 1/1 figure of 410k first time claims.  And the details?
  • Not seasonally adjusted, 9,193,838 people were receiving unemployment insurance benefits as of the week ending 12/25/2010, up 422,523 from the previous week.[5]
  • Only two states saw UI claims decrease by more than 1000, while 14 saw UI claims increase by more than 1000.
[1]  $2.7 billion, to be precise.  A hit!  A palpable hit!
[2]  Just... just don't get me started.
[3]  Expect to see January and/or February PPI increase on that bit of news.
[4]  The number of actual claims filed was 770,413.  So both the trend and the actual situation are terrible.
[5]  I guess they got to keep Christmas by losing their situations?

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