(an email exchange)
>
> the sum of state payrolls just came out for April showing -151k jobs, vs
> the actual prelim rleease earlier this mth of -20k. hints at a potentially
> large downward revision to April payrolls when the May data is released.
>
Thanks!
Plenty of export driven banana republics out there with high unemployment, low wages, falling currencies, high inflation, and high interest rates. Looking like we’re next…
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Only the rising euro has kept the ecb from hiking, so far.
Highlights
| ECB’s Trichet Sees ‘Less Flattering’ Growth in Second Quarter |
| ECB concern over liquidity scheme |
| Trichet Says No Room to Relax in Inflation Fight |
| ECB’s Mersch Says Current Rates Will Help Curb Inflation |
| French First-Quarter Payrolls Grow at Slowest Pace Since 2006 |
| Germany’s DIW Raises Second-Quarter Growth Forecast |
| ECB’s Constancio Sees Slowing European Growth in Second Quarter |
| Volkswagen, BMW Lead 9.6% Advance in European April Car Sales |
| Almunia Says `External Shocks’ Put `Upside’ Pressure on Prices |
| European Notes Head for Weekly Decline on Outlook for ECB Rates |
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| Survey | 370K |
| Actual | 371K |
| Prior | 365K |
| Revised | n/a |
Looks like it’s past the peak.
| Survey | 3035K |
| Actual | 3060K |
| Prior | 3020K |
| Revised | 3032K |
Looks like it’s not past the peak.
| Survey | 0.0 |
| Actual | -3.2 |
| Prior | 0.6 |
| Revised | n/a |
Still off the bottom, needs another month to see where it’s going.
| Survey | $62.5B |
| Actual | $80.4B |
| Prior | $72.5B |
| Revised | $64.9B |
| Survey | $67.5B |
| Actual | -$48.2B |
| Prior | $64.1B |
| Revised | $48.9B |
In general I expect these types of numbers to follow the trade gap down.
| Survey | -0.3% |
| Actual | -0.7% |
| Prior | 0.3% |
| Revised | 0.2% |
Still weak. Been weak for 50 years.
| Survey | 80.1% |
| Actual | 79.7% |
| Prior | 80.5% |
| Revised | 80.4% |
Weak, but not recession levels yet.
| Survey | -19.0 |
| Actual | -15.6 |
| Prior | -24.9 |
| Revised | n/a |
Perking up from low levels,
prices high and moving higher
| Survey | 20 |
| Actual | 19 |
| Prior | 20 |
| Revised | n/a |
Still off the lows and looking like a bottom to me.
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Germany leans towards tax cut
by Bertrand Benoit
(FT) Michael Glos said the government’s budget pledge “should not stand in isolation above all other [goals]”. The minister said he “fully supported” a plan by his Christian Social Union to cut income tax by €28bn ($43bn, £22bn) until 2012 without an equivalent cut in spending. The government last week slashed its tax revenue estimate by more than €5bn for this year and next, yet advocates of fiscal rectitude are becoming a minority as the CSU, the CDU – its sister party headed by Chancellor Angela Merkel – and the Social Democratic party, its partner in the ruling alliance, seek to please voters ahead of next year’s election.
While this would increase employment and output, it would also add nominal aggregate demand as well as add to the ‘funding pressure’ of the national government. In the current environment, this would add support to nominal prices as well as undermine the credit quality of the government.
What’s happening is much of the mainstream believes inflation is a function of monetary policy and not fiscal policy, so they see this as a way to support the economy without inflation.
Same happened in the US with Bernanke pushing Congress for the fiscal package that’s now kicking in and adding to price pressures. In general, the FOMC holds the mainstream belief that ‘true inflation’ is a function of only monetary policy.
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There have been a lot of Fed speakers; so, I’ve selected a few comments on Yellen’s speech, as she has been deemed the most dovish Fed bank president.
Note the shift in rhetoric from ‘market functioning’ to inflation.
Of course, the FOMC’s idea of getting tough and fighting inflation has been to only cut 25 basis points.
Data dependent, this seems to be changing.
It could be the signs of passthrough from headline to core CPI or signs inflation expectations are elevating (as per their recent comments).
They also seem to have lost confidence in their inflation forecasts and may not be giving their future inflation indicators the same weight as in the past 6 months.
Fed’s Yellen: Funds rate been cut enough for now
by Ros Krasny
(Reuters) – San Francisco Federal Reserve Bank President Janet Yellen said on Wednesday that the federal funds rate has been lowered far enough for now after months of aggressive central bank rate cuts.
The Fed’s key monetary policy tool ‘has come way down,’ Yellen said while critiquing presentations on the economy at a symposium for college students organized by the San Francisco Fed and the Pacific Northwest Regional Economic Conference.
Yellen said the Fed continues to grapple with difficult policy choices but restated that high inflation was a worry. ‘The 1970s were a horrible period. If there’s one thing that has to be very high priority, we don’t want to go back to a period that is anything like that,’ she said.
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| Survey | n/a |
| Actual | 378.5 |
| Prior | 381.3 |
| Revised | n/a |
Not bad. Still supports the notion that housing bottomed in Q4.
| Survey | n/a |
| Actual | 2422.1 |
| Prior | 2273.8 |
| Revised | n/a |
Refi market alive and well.
| Survey | n/a |
| Actual | 22.73 |
| Prior | 14.54 |
| Revised | n/a |
Speaks for itself.
| Survey | 0.3% |
| Actual | 0.2% |
| Prior | 0.3% |
| Revised | n/a |
| Survey | 0.2% |
| Actual | 0.1% |
| Prior | 0.2% |
| Revised | n/a |
| Survey | 4.0% |
| Actual | 3.9% |
| Prior | 4.0% |
| Revised | n/a |
| Survey | 2.4% |
| Actual | 2.3% |
| Prior | 2.4% |
| Revised | n/a |
| Survey | n/a |
| Actual | 214.398 |
| Prior | 214.176 |
| Revised | n/a |
| Survey | 214.715 |
| Actual | 214.823 |
| Prior | 214.528 |
| Revised | n/a |
It’s all being said on CNBC – seasonals that subtract this month add later in the year.
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| Survey | 1.6% |
| Actual | 1.8% |
| Prior | 2.8% |
| Revised | 2.9% |
Alarming to the Fed.
| Survey | 15.0% |
| Actual | 15.4% |
| Prior | 14.8% |
| Revised | 14.9% |
Alarming to the Fed.
| Survey | -0.2% |
| Actual | -0.2% |
| Prior | 0.2% |
| Revised | n/a |
As expected, but composition surprised on the upside.
| Survey | 0.2% |
| Actual | 0.5% |
| Prior | 0.1% |
| Revised | 0.4% |
Way better than expected, and prior revised higher as well. Consumer alive and well.
| Survey | 0.4% |
| Actual | 0.1% |
| Prior | 0.6% |
| Revised | 0.5% |
Another pleasant surprise that means Q1 GDP gets revised up a bit more.
| Survey | – |
| Actual | – |
| Prior | -46 |
| Revised | – |
[comments]
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| Survey | $160.0B |
| Actual | $159.3B |
| Prior | $177.7B |
| Revised | n/a |
As expected.
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Preliminary data for Jan – Mar quarter shows sales tax at -0.1% YY, first decline since 2002 Q1. 21 states out of 36 reporting so far saw declines. Inflation adjusted sales tax declined in at least 27 states. Income tax was +4.7% YY thus no notable deterioration yet.
Here are the sales tax data from largest states:
Califonia -0.9 Texas +6.7 NY +4.2 Florida -6.0 Illinois +0.1 Penn -1.0 Ohio +0.5 Michigan -0.7 Georgia -3.0 North Carolina -7.6 Separately, Tennessee says sales tax dropped 5.5% in April.
The key to aggregate demand is net state spending.
If taxes fall but spending is sustained, that’s a demand add, for example.
Gross spending/taxing also has a multiplier greater than 1.
This includes states ‘borrowing to spend’ for ‘investment’ accounts.
GDP tables showed that states have cut back, reducing the size of their add to aggregate demand.
But Federal government has more than made up for it.
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