Record-Breaking Data Everywhere!
One of the interesting aspects of this unprecedented housing collapse, credit crisis, economic recession and market crash has been all the new records we keep seeing:
• Over the past year, the S&P 500 index lost ~$1 trillion more
than the entire 2000-2002 bear market, according to Standard &
Poor's. From the October 2007 highs of 1,565, to yesterday's close of
806.58, the S&P 500 market capitalization lost $6.69 trillion.
That's almost $1 trillion more than entire 2000-03 bear market losses
of $5.76 trillion.
Aftcasting Recession . . .
Ecomomists are now admitting that we are in a recession in the US, according to National Association for Business Economics (NABE).
96% of their survey respondents said the U.S. is in recession today. With the S&P down 47%, telling us that the US is in a recession is hardly worthy of a news flash. Especially considering that most of the professional economists, as recently as the late summer, were claiming the US was not in a recession.
A Closer Look at Employment Data
The NYT had a terrific run of charts in the online version:
Change in NFP
Part Time Workers Who Want Full Work
U.S. Jobless Rate Hits 14-Year High
PETER S. GOODMAN
NYT, November 7, 2008
Tomorrow is NFP day, and I am expecting a doozy of a number: a loss of 250-300k jobs, and the Unemployment rate ticking up towards 6.5%.
But even that number does not accurately portray the amount of employment damage that has been done the past few years. Indeed, one of the ways we correctly anticipated the economic falloff was by analyzing the weak employment data beneath the headlines over the past few years.
Does that relatively mild U3 unemployment rate accurately portray the employment circumstances? U3 is the official UE rate, but the BLS also reports a full -- and much uglier measure -- U6. I've long said that the U6 number is more accurate, and more and more people are recognizing that as the case.
Dan Gross of Slate and Newsweek has been in the same camp for quite a while. A column of his from October is worth resurrecting prior to tomorrow's Employment Situation Release. NFP. Dan observes:
"It's hard to overstate the poor numbers coming out of Wall Street in recent months. But could it be that we're overstating the gravity of the situation? As job losses have mounted and consumer confidence has plunged, policymakers, news organizations, econo-pundits, and even some of my Slate colleagues have noted that the unemployment rate, which rose to 6.1 percent in September, seems to be at a nonrecessionary, noncatastrophic, low level. The unemployment rate is still below where it was in 2003; and between September 1982 and May 1983, the last very deep recession, it topped 10 percent.
But maybe the employment data are much worse than they seem. In the past year, the two key measures of employment—the unemployment rate and the payroll jobs figure—have been poor but not awful. The unemployment rate has risen from 4.5 percent a year ago to 6.1 percent. And in the first nine months, 760,000 payroll jobs were lost. This is unwelcome but not catastrophic. So why do things feel so bad? It's not because, as Phil Gramm suggested, we're a nation of whiners. And it's not a matter of columnists and spin doctors shading the numbers to make things look worse.
Rather, these two figures are undermeasuring the weakness in the labor market. By some measures, in fact, the job situation is worse than it has been at any time since 1994.
Wanna know why? Major changes in the BLS methodology since 1994. As Dan writes:
"BLS has been compiling alternative measures of labor underutilization. There are many different varieties of labor underutilization. There are marginally attached workers: "persons who currently are neither working nor looking for work but indicate that they want and are available for a job and have looked for work sometime in the recent past." There are discouraged workers, a subset of the marginally attached crowd, who have "given a job-market related reason for not looking currently for a job." There are people who work part-time because they can't find—or their employer can't provide—full-time work. There are people who have left the work force entirely. Neither the unemployment rate nor the payroll jobs figure captures the plight of many of these folks.
The alt.jobless rate was waring of trouble long before the U3 headline data did. U6, the broadest measure of unemployment, rose to 11% in September. That's the highest level since the data series started in 1994. Dan points out that Its also "significantly higher than it was in the last recession, in 2001. . . The unemployment rate may still be historically low, but the underutilization is historically high."
What does this mean for tomorrow's number? Only that the economy has been far worse, for far longer, than most investors may realize.
Unemployment Reporting: A Modest Proposal (U3 + U6) (June 2008)
Pervasive Pollyannas of Prosperity (July 2008)
Persons “Marginally Attached to the Labor Force” +B/D (July 2008)
The 20-Hour Workweek
The unemployment rate seems low. That's because it's not counting all those underemployed workers.
Slate, Oct. 22, 2008, at 3:59 PM ET
Campaign Finance Map: Monies Raised by Candidates
Fascinating graph of the candidates money raising this campaign cycle. What is so astounding this election cycle is not that John McCain trails Barack Obama in fund raising, but that he also trails Hillary Clinton: Obama $659.7m, Clinton, $249m, McCain $238.1m.
I posted a bunch-o-election related graphs, polls, charts, tables, etc. over in digital media.
There is an interesting debate here amongst those who blame Bush for McCain's campaign woes: Was it the money raising, or was it Bush? I suggest an alternative view: Both. The negative effect of W. hampered the McCain campaign's ability to raise funds.
Regardless, the GOP nominee trailing BOTH the Democrat's nominee, and the 2nd place Democratic candidate in money raising -- that's simply amazing to me.
Map Graphs of all the candidates fund raising are here.
Measuring the 'Internet Election'
One of the things this election will be notable for is how well the Press is using digital media and interactive pages to dissect the issues and polls. I've gathered a slew of them and posted them in the Digital Media Tab.
Official website visits, YouTube, Facebook, Blogs, Polling: This election has had an enormous amount of internet generate content, much of which actually shed some light on the election campaign and issues.
Measuring the 'Internet Election'
Web Data Offer New Slant on Traditional Horse Race
WSJ, OCTOBER 18, 2008
GDP: Negative 0.3%
GDP was negative in Q3 -- worst quarter since Q3 2001 -- and the headline number doesn't even do the extent of the contraction justice:
"Real gross domestic product -- the output of goods and services produced by labor and property located in the United States -- decreased at an annual rate of 0.3 percent in the third quarter of 2008, (that is, from the second quarter to the third quarter), according to advance estimates released by the Bureau of Economic Analysis. In the second quarter, real GDP increased 2.8 percent.
The decrease in real GDP in the third quarter primarily reflected negative contributions from personal consumption expenditures (PCE), residential fixed investment, and equipment and software that were largely offset by positive contributions from federal government spending, exports, private inventory investment, nonresidential structures, and state and local government spending. Imports, which are a subtraction in the calculation of GDP, decreased."
Thank goodness for Federal, State and Local government spending, and for exports:
Real personal consumption expenditures: -3.1%
Durable goods -14.1%
Nondurable goods -6.4%
Services expenditures +0.6%
Bloomberg notes that the 6.4% rate of decline in spending on non-durable goods, like clothing and food, was the biggest since 1950.
chart via Jake at Econompic
"How far back" are we?
This chart is from Dr. Artur Adib, a physicist interested in finance.
He wanted to attempt to see how bad things are in the stock market, so he generated the chart below. It compares current pricews (top) with the Dow price in terms of the number of years since the first occurrence of that price (bottom, red)
I liked the way this puts the current historical price chart into a somewhat different perspective.
Dow Prices, Relative Previous Price
chart via Dr. Artur Adib
New Home Sales Down 33%; Prices Fall 9%
Damn Typepad! I wrote up a new housing post, only to see a system wide typepad crash.
Here's a quick retyped version:
There was some good news in New Home Sales Data, despite those ugly headlines: Inventories continue to slide downwards, as builders slash prices. They fell over 7% for the month alone.
Sales of new one-family houses in September 2008 were at a seasonally adjusted annual rate of 464,000, according to estimates released jointly today by the U.S. Census Bureau and the Department of Housing and Urban Development. This is 2.7 percent (±12.1%)* above the revised August rate of 452,000, but is 33.1 percent (±8.9%) below the September
2007 estimate of 694,000.
The median sales price of new houses sold in September 2008 was $218,400; the average sales price was $275,500. The seasonally adjusted estimate of new houses for sale at the end of September was 394,000. This represents a supply of 10.4 months at the current sales rate.
One other thing to note: Note the monthly 2.7% increase was based in part on last month's being revised downwards, making the differential look bigger (this month is also likely to be revised downwards). Annualized sales for the month was 464k; Actual unadjusted monthly new home sales are about 35-45k, down from 100-120k (before they get annualized).
Chart via Barron's Econoday
Calculated Risk continues to run the best New Home Sales Chart -- the monthly, non seasonally adjusted comparisons with each prior year:
Chart via Calculated Risk
Happy Birthday, Recession!
Floyd Norris asks, "First Birthday for the Recession?"
"The National Bureau of Economic Research has yet to certify there is a recession, but otherwise there is no doubt.
The Conference Board released its index of coincident indicators. That index not only confirmed that a recession is under way, but it provided powerful evidence that it began in 2007, or in January 2008 at the latest.
Here’s why: The overall index of coincident indicators is down 1.2 percent from its record high, set in October 2007. Since 1960, every time the index has fallen by at least 1 percent, the bureau later concluded the economy was in recession . . .
In the seven recessions since 1960 — the only ones during which the index of coincident indicators was calculated — the bureau later concluded that the recession began within two months of the beginning of the decline in the coincident indicators. This time the index began to decline in November 2007. So the possible range is from September to January.
In all likelihood, this recession either has reached its first birthday or will soon do so."
I do not disagree with either Floyd or the coincident indicators.
On a partially related note, thank you to the many birthday wishes I have received from so many of you -- your thoughtful notes and generosity have been greatly appreciated.
First Birthday for the Recession?
Floyd Norris, High and Low Finance, October 20, 2008, 1:49 pm
Recession Fears Sink Europe Stocks
WSJ, OCTOBER 22, 2008, 12:03 P.M. ET