Paul Davis here, with my first go at guest posting for Yves so you’ll have to excuse me if I’m rusty on the formatting. Another week gone by; a pile of charts for you to consider (a click will mostly give you a larger size).
Krugman made the point with this chart that the Fed is pushing on a string here. The “bond market vigilantes” (remember that term) aren’t nearly as sanguine about the credit or inflation risk as Ben seems to be.
This one is also quite interesting. You can clearly see Mae/Mac taking up the mortgage baton when the S&L’s took a fall, and then the ABS market stepping into the breach when the agencies ran out of ammo. I believe Mae/Mac has moved back up to 80% of the mortgage market. Is mortgage broking going to be declared a strategic industry?
I like to see this type of GDP readout when I read the headline number. The various components have such disparate character it reminds me of the wheels on a slot machine. Depending where they end up any given quarter you can have GDP from -1 to +3… Taking them in turn: consumption had a bit of a bounce from the tax checks but I would expect less next quarter; non-residential is looking very anemic and steadily so, a bad sign; residential is falling less rapidly over time, could probably plot the bottom; inventories are all over the place from quarter to quarter, but it looks like they were just flushed out which could be good as they refill, or an indicator that businesses are genuinely pulling back on production, or it could just be too expensive to finance them; both exports (more) and imports (less) were positive for growth, probably the most encouraging data on the chart. Government is exogenous… no insight from me.
This chart pair shows the marked difference between the current residential-led slump and the 2001 capex drought.
The bigger picture shows that this is still not desperate territory in GDP growth terms, although my “ruler on the screen” technique reveals we are tracking below the trend since 2001.
Good news? The US deficit relative to GDP is also not the worst its ever been. The absolute numbers sound much worse.
But this chart from Ned Davis really scares me.
Unemployment is going up, but still not historically dramatic though DeLong and others argue that a wider indicator (U6) is now more useful.
With all the legal crossfire, perhaps we can expect something of a litigation-led recovery:
I know, oil prices are so last week, but I’ve been tracking this chart and the rollover in US miles driven is impressive. What also amazes me is that in 25 years the distance driven by Americans doubled. Why? The country didn’t change size. Everybody just did more driving. It’s hard for me to believe that that lead to an increase in quality of life (is driving per se a consumption good?) but that is just me. I would love to see this figure for Japan, Europe, China…
More behaviour modification in action. The invisible hand upside the head. Ouch!
Looking at this chart, it’s hard to fault the hot money flooding China.