Has anyone else noticed that the economy is doing great right now?

It seems that Iraq is overshadowing the economy.

Latest (March 6) Cenus Bureau Monthly US Manufacturers' Report

New orders for manufactured durable goods: Down 9.9%

New orders for manufactured nondurabable goods: Down 2.2%

Unfilled orders: Down 0.7%

Shipments of durable goods: Down 1.3%

Shipments of nondurable goods: Up 2.2%

 

As for housing, which was 55% of our growth last year, the lastest (March 16) Census Bureau/HUD Residental Contruction Report:

Building permits: Down 1.1%

Housing starts: Down 7.9%

Housing completions: Down 1.7%

 

 

Now, the stock market made some gains this week, in fact the best in two months. When you look at who was investing, it wasn't just the instituions playing the tinies on trade. It was the poor sheep clients listening to their the non-related degreed brokers for investments. They talked their clients out of the bonds (where they were sitting on very decent yields) into the stocks. While already locked in on their yields, they were told to sell off as future yields were not looking so good as the economy was slowing down. The sheep sold off and bought stocks high. It made for a few great days for day trading - it was 1999 all over again.

 

The rest of the world is hitting its saturation point with the US$. We can't even cover our current accounts, and foreign investment is the dollar is falling short of our needs. Congress is considering adding huge (27%) tariffs on all Chinese imports unless China raises the value of the yuan. First off, this does nothing to put our house in order, just make imports more expensive. If we manufactured the types of goods here that we import, the tariffs might help - but that is not the case. It's just inflationary, without helping US manufacturing or employment. Meanwhile, at the central bankers conference last week, the rest of the world just simply p!ssed off at us - rightfully so. Bernake handled it poorly, burned bridges, and the rest of the world told us to lay off China as the problem is our currency is 40% overvalued, which is the problem rather than yuan being undervalued.

 

Bernake is faced with raising interest rates while the economy is slowing down and the rates should either hold or even retreat. He has to do this to support of the US$ in order to re-attract foreign investment, which is now showing serious signs of drying up. With the CPI slowing down, manufacturing falling off, and unemployment taking another tick up to 4.8%, leading economic indicators falling, and consumer confidence declining, rates should, at most, hold. If anyone paid attention to the preceding indicators for January, there was no reason for the Fed hike at that time (other than to support the US$ in order pay for the deficit). A 4.75% rate is built into the markets for the upcoming Fed meeting. An eventual rate of 5% is build in for time frames from May to September. The stock market will not accept anything much above 5.0%, and the high rates are throttling growth and employment.

 

As the dollar declines, we should ideally be able to cut into the deficit not only by importing less, but also exporting more (read: jobs). In major sectors, other than energy (which is not exactly a big export item), manufacturing is not looking very healthy. It's going to take some time, probably at least a couple years, for the falling US$ to result in decent jobs so that we do have something to export. We should be able to tool up pretty quick with wheat, which died as an export as the US$ made Chinese, Austrailian, and Russian wheat less expensive for other countries to import. Unfortunately, that will not provide jobs to the broader, non-farm market. Still, watch for Bernanke to try to keep the dollar from falling in order to cover the deficit, and further hurt US jobs.

 

The stock market is not the economy. Most of the manufacturing for the companies traded on the stock market occurs off our shores. Wal-Mart does wonderful things for Chinese employment.

 

"Great" is not the word to describe the US economy.

Our economic problems are much more complex than a simple trade deficit. America b/c of our laws cannot and will not (whether you agree that we should or shouldnt) manufacture products at a profit to the degree that people in other nations can. The U.S. needs to continue its push for a more globalized market, even if it is a submarket similar to the original free trade agreements that sparked the creation of the EU. We need to accept the fact that a free movement of labor and products needs to exist for our economy to go on strong in this new globalized world. The whole negative publicity that the US media gives to 'outsourcing' (of course completley negating 'insourcing') has created a hazardous economic situation for the U.S. Americans should be able to travel abroad to work without it being burdensome and difficult, and people with other talents should be able to move in freely and do the same.

The stock market is an indicator of capital growth. We do live in a capitalistic society. Growth in capital drives an expansion of business increasing employment and wages increasing sales and...oh forget it. People who don't want to admit the economy is doing well will cherry-pick whatever indicators they can find regardless of any basis in reality or big picture view of the health of the economy. Go pick up a copy of the Economist week-to-week, and you'll notice despite all the alarmist rhetoric the US economy continues to chug along. To listen to the doomsayers you'd think we're all standing in breadlines with imminent collapse a foregone conclusion. The constant harping of critics about this or that minor indicator grow tiresome when it's obvious the economy is doing well.

From what I've seen, the NYSE is not a good indicator of the economy.

 

Our biggest problem would be the devaluation of the U.S. dollar, as the Euro strengthens.

Stocks are an indicator not the only one, but you won't see the economy surging if stocks aren't involved. Again, they indicate capital movement which drives growth. Currency devaluation is not always a bad thing. It could be that the Euro is overvalued. I find it interesting that all anyone posts is negative economic data and not things like this where wholesale inflation fell even further than analysts thought it would.

ABCNews.com - Wholesale inflation falls