Tuesday, January 26, 2010

Some glimmers of hope

A pile of data hit the wires today and much of it could be view as slightly positive to neutral at worst.

* Case-Shiller Home Price Indices data through November 2009 reveal the annual rates of decline of the 10-City and 20-City Composites are improving. This was the 10 month of improved readings — less bad price declines — in the annual statistics. It was also the third consecutive month of “only” single digit drops.

Government intervention into the housing market has slowed the rate of declines in housing prices, but as the Fed stops suppressing mortgage rates (their mortgage security buying program is almost complete) and the first time homebuyer tax credit nears it's second expiration (will it get another stay?) I think housing will face significant headwinds for the balance of the year.

* The truck tonnage reported a 2.1% increase it shipped tons in December. This is seasonally adjusted but it's a positive number. However, the trucking association's economist said trucking benefited from the inventory correction, however he believes that is nearing completion.

Again, it's will be interesting to see how this trend develops in the Spring after inventory has been restocked.

* Consumer Confidence was 55.9, 2.4 pts above forecasts and up from 53.6 in Dec. It’s at the highest since Sept ‘08.

This data tends to be influenced a bit by the stock market and lags stock market moves, but this data is a positive surprise.

* President Obama will call in his State of the Union address for a three-year freeze on spending.

Sounds good, but let's look at the details. "The freeze covers non-security discretionary spending, which amounted to about $447 billion this year out of a $3.5 trillion federal budget. Spending on programs such as Medicare, Medicaid and Social Security, along with interest on the national debt, are set by law and make up the biggest portion of the budget." So the freeze targets 12.8% of the total Federal Budget. This is largely a symbolic gesture to appease the deficit hawks. Unfortunately, the "fixed" portion of our budget is so large - Medicare, Medicaid, SS, interest and Defense that we can't make any real dent in our deficit without tackling these issues.

This statistic has been out for over a month, but I just stumbled across it today. It's a scary stat.

"A recent McKinsey Global Institute report found that 71 percent of U.S. workers hold jobs for which there is decreasing demand, increasing supply, or both."



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