Daily Archives: November 22, 2013 @ 6:53 pm (Friday)

household debt

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Just noticed this. The question is whether it was proactive/desired and ongoing or one time/forced due to sequester and FICA hike income reductions.

“Household debt jumped US$127 billion in the third quarter, the biggest increase since the first quarter of 2008. The rise was across the board as Americans went into greater debt to buy everything from houses to cars to schooling. Household debt is now growing faster than both gross domestic product and disposable income, returning to the pattern that drove both economic growth and serial bubbles in the past decade.”

(Thanks Edward Harrison)

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German export growth and household income growth

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German domestic demand better hurry up and improve before there’s no household income growth left to support it. Or export growth.

That said, Germany output and employment has been outperforming the rest of europe, much the way Texas and North Dakota may outperform in the states. When the federal deficit is too small as evidenced at the macro level by unemployment and excess capacity in general, it doesn’t necessarily have the same effect on all members.

German Household Income Y/Y:


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German Exports Y/Y:

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Morgan Stanley on eu

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German IFO, GDP & Eurogroup: After last month’s drop to 107.4, MS Research expects the IFO business climate to decline by further 0.4 points to a reading of 107.0 in November. They would expect both business expectations for the next 6 months and current business conditions to have corrected, with the expectations component losing more. The drop in sentiment underscores the fragile nature of the economic recovery and the rising concerns of business leaders about the economic policies likely to be pursued by the Grand Coalition. The PMIs yesterday confirmed that growth in the euro area has stalled in 2H. That said, a surprise shock to the downside will further strengthen case for further ECB measures. We also have the release of Q3 GDP where MS research expects growth to have decelerated materially, with headline growth declining from 0.7%Q to just 0.3%Q. On the policy front, Eurogroup finance ministers will discuss the European Commissions recommendations on the 2014 draft budgets. Market participants are likely to pay close attention to France, Italy and Spain.

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FOMC’s Bullard coming around to what I posted in 2008?

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“I think the December 2008 FOMC decision unwittingly committed the U.S. to an extremely long period at the zero lower bound similar to the situation in Japan, with unknown consequences for the macroeconomy,” Bullard said. Pointing to the Bank of Japan’s long struggle against deflation and slow growth, Bullard said he has seen “no evidence” that a faster economic recovery results from quickly lowering interest rates to near zero.

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