patrick.net

um, if things were still the same as a year+ ago, we'd be living in a Road Warrior sequel by now.

http://finance.yahoo.com/q/bc?s=%5EGSPC&t=5y&l=off&z=l&q=l&c=

If the Senate can't get EUC extensions passed for the ~5 million people dropping off this month, hello Mad Max.

Well, yea. So did the stimulus work?

Whatever 'work' means

If you pull the rug out from under this state manipulated economic recovery and it falls flat on its face

Personally, I'm much more concerned with how this plays out in the next 5-10-20+ years then the noise of the last couple months

What will the future implications be of all this stimulus?

Here's wells Fargo July 2010 California economic outlook, FWIW. For people that don't know, Wells Fargo is based in San Francisco and heavily rely on the CA market.

http://blogs.sacbee.com/real_estate/California_Jul2010.pdf

"the pace of growth is expected to moderate"

"Still, the gradually improving trend is easily visible when one looks at the income gains by industry sector. Higher earnings were recorded by 17 of 24 industry sectors during the first quarter."

"Housing affordability is the best it has been in California in decades"

"That is not to say there will be no negative effects; indeed, we expect California existing home sales to be somewhat weaker this year on average than last year, as sales decline into the end of 2010. The good news is that this temporary weakening of sales will not be enough to send statewide home prices reeling back to their financial crisis lows. Current market conditions appear much too balanced for a repeat performance of steep California housing price declines. We reach this conclusion even as we expect a rising supply of distressed home selling to reemerge over the near term."

Does WFC have it in their models 200,000 state employees getting paid minimum wage until the budget is passed?

Federal EUC benefits for the unemployed class of 2009 ending in June instead of November or December?

"California has added an average of 19,200 jobs a month to date, yet private sector employment growth was 45 percent less than that, at 10,500 per month. Temporary help services and Census hiring are responsible for the bulk of the hiring so far this year, 78,300 jobs to date. The balance of the job growth in the rest of the economy totaled only 17,600 jobs. The biggest job gains last month, 30,000 jobs, came from government. Federal government positions increased by 32,900 jobs as the Census Bureau ramped up hiring"

and:

"Higher earnings were recorded by 17 of 24 industry sectors during the first quarter. Gains were lead by forestry, fishing and related sectors, up 16.2 percent over the quarter. Strong gains were also reported in administrative and waste services, private education, federal military and mining."

Christ. Forestry is now our prime economic mover? What century is this again?

We just can't cut $19B of state spending and leave it as "State and local budget cuts are expected to be a major source of economic weakness over the forecast horizon"

$19 billion is 300,000 jobs at $60K per, and the lost velocity of money will take out another 300,000 or more jobs AFAICT.

This bust is in its 3rd inning still AFAICT.

We've put 5 million+ people on the dole since mid-2008 but the funemployment is quickly coming to an end.

The state has a ~$20B funding gap still. If we cut spending or raise taxes to close that gap, that's going to be massive pain to the economy, pain greater than any recovery the state has seen since last year.

You can't just rattle off what normally has happened in recessions. This is not a typical recession, it is 3X deeper than the 2001 tech recession, and the only way we got out of that was the housing sector BS, which itself has only dropped one shoe so far.

http://calculatedriskimages.blogspot.com/2010/07/employment-recessions-aligned-bottom.html

Interest rates are in ZIRP territory. Federal deficit spending was $1.5T over the TTM. Can we continue this rate of "stimulus"?

Unemployment never got as bad as it did in 1982 and it’s leveling off now

http://research.stlouisfed.org/fred2/series/CAUR says otherwise -- it's "levelled off" greater than the worst of the 1980s recession period.

This was before SSI and Medicare

SSI isn't going to help most people this decade. The peak baby boomer is turning 55 this year.

Medicare, of course, is being gutted and is tens of trillions of unfunded future liabilities. The House couldn't even pass the $30B Medicaid bailout to the states this year. Another $2B or so lost to the state's economy.

This is a balance sheet recession. Recovery is only going to come in fits and starts, if at all. Things have a great probability of getting a lot worse before it gets any better. The 2003-2007 economy was a dream that is not coming back.

Speaking of SSI, it's going to be drawing cash from the Treasury this year, $50B worth or so. It may never be in the black again, unless Obama's commission does what Bush's couldn't.

http://research.stlouisfed.org/fred2/series/CC4WSA?cid=32240

http://research.stlouisfed.org/fred2/graph/?chart_type=line&s[1][id]=USPRIV&s[1][range]=5yrs

Unemployment: A sizable chunk of the unemployed are simply being erased from the unemployment rosters, making the official numbers appear better than they are. In fact, they dropped one million Americans off the list in the last two months. According to the BLS, these people are not actively seeking employment, so they don't count. Pretty cool.

Recovery: Highly interesting and informative item from Dr. John P Hussman yesterday, who is anything but a bear. Very much worth reading:

http://www.hussmanfunds.com/wmc/wmc100712.htm

"From our perspective, we continue to observe pointed recession risks. I'll emphasize again that our Recession Warning Composite (see the June 28 comment Recession Warning) is based on the observation of multiple conditions simultaneously, and is not driven by any single indicator. Given that I've made two, and only two, recession calls over the past decade (October 2000 and November 2007) based on this Composite, and we've always and only observed such signals during or immediately preceding other post-war recessions, I don't take the present indications lightly, and I don't like the odds.

The consensus of economists has never correctly anticipated a recession, nor have Ben Bernanke or Alan Greenspan, nor to my knowledge did any of the analysts currently assuaging investors that further economic weakness is unlikely. With regard to the ECRI Weekly Leading Index, I'll emphasize again that it nicely leads the ISM Purchasing Managers Index with a lead time of about 13 weeks. As a result, its inclusion in the composite produces more timely signals than the ISM. The WLI growth rate dropped again last week, to -8.3%, from -7.6% the prior week, which is consistent with a decline in the Purchasing Managers Index to about 44 over the next few months."

lol "Yet the GDP continues to grow although slowly." wow thats funne, its not really growth as much as it is a bubble driven by govt spending and inventory restocking and now we are overstocked again and factory orders are plummeting AGAIN, and looks like congratards have rallied around shutting off spending.. weeeeeee

surfingerman says

factory orders are plummeting AGAIN,

What do you define as a plunge? Last report I saw showed a small decline after a year of increases. And here's what the ISM said about the manufacturing sector:

"ISM warned against looking too much into the numbers because the manufacturing sector's recovery remains firm and ongoing" Their reading of 56.2 in June is down from May, but still above 50 which signals growth in the sector.

“ISM warned against looking too much into the numbers because the manufacturing sector’s recovery remains firm and ongoing” Their reading of 56.2 in June is down from May, but still above 50 which signals growth in the sector.
Germany's seasonally adjusted factory orders fell in May for the first time in five months, data released by the Federal Ministry of Economics and Technology showed Wednesday.
The 1.4 percent decrease in factory bookings was the biggest since March 2009 and followed a revised 1 percent gain in April,
inventories are also sky high, the fact that factory orders are falling as stimulus ends workers are cut and inventory is overstocked means factory orders are declining guaranteed. Even if the released numbers haven't shown it yet the analyst forecasts all point to it

surfingerman says

inventories are also sky high

Seriously--do you just make this stuff up? There are certainly enough troubling signs out there that I wouldn't think you'd have to...

Here is the latest report on inventories:

http://www.briefing.com/Investor/Public/Calendars/EconomicReleases/whlsls.htm

Not sure how you can read that graph and say inventories are sky high...

Just out today, another inventory report.

"Separately, the Commerce Department said that business inventories rose 0.1 percent in May"

Not exactly sky high and overstuffed, are they?