Despite what the administration is saying, the economy is still very sick.
The U.S. Census Bureau announced today that advance estimates of U.S. retail and food services sales for August, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $351.4 billion, an increase of 2.7 percent (±0.5%) from the previous month, but 5.3 percent (±0.7%) below August 2008. Total sales for the June through August 2009 period were down 7.6 percent (±0.3%) from the same period a year ago. The June to July 2009 percent change was revised from -0.1 percent (±0.5%)* to -0.2 percent (±0.2%)*.
Retail trade sales were up 3.0 percent (±0.7%) from July 2009, but 6.0 percent (±0.7%) below last year. Gasoline stations sales were down 26.7 percent (±1.5%) from August 2008 and building material and garden equipment and supplies dealers were down 13.6 percent (±2.0%) from last year.
The up tick in consumer spending was artificially created by the Cash for Clunkers program. This may ultimately hurt the car companies by pulling forward sales that would have occurred naturally over several months. This created a short term but unsustainable spike which may be followed by a long sales slump. Note that this is a straight spending comparison and that prices are not considered, so if prices go up on essentials the increase in spending will follow out of necessity. Also note that while spending is up slightly it remains significantly down from last year.
New orders for manufactured goods in July, up five of the last six months, increased $4.6 billion or 1.3 percent to $355.5 billion, the U.S. Census Bureau reported today. This followed a 0.9 percent June increase. Excluding transportation, new orders decreased 0.7 percent. Shipments, down eleven of the last twelve months, decreased $0.2 billion to $359.7 billion. This followed a 1.8 percent June increase. Unfilled orders, down ten consecutive months, decreased $0.1 billion to $740.6 billion. This was the longest streak of consecutive monthly decreases since the series was first published on a NAICS basis in 1992. This followed a 0.8 percent June decrease. The unfilled orders-to-shipments ratio was 5.95, down from 6.00 in June. Inventories, down eleven consecutive months, decreased $3.6 billion or 0.7 percent to $503.1 billion. This was the longest streak of consecutive monthly decreases since March 2003-January 2004 and followed a 1.1 percent June decrease. The inventories-to-shipments ratio was 1.40, down from 1.41 in June.
Other areas of concern are the residential real estate market and what appears to be an attempt to re-inflate the housing market.
From The Center for American Progress (this source proves even the left is not buying the fairy tales)
It’s 1930 all over again. While cheerleaders for the real estate industry proclaim the housing markets are ready to turn the corner, with first-time homebuyers ready to jump into the market, the reported 55 percent increase in foreclosure activity over last July should put a damper on the excitement. July marks the third month of accelerating increases in foreclosure activity reported by RealtyTrac and an unbroken streak going back to January 2006 of year-over-year increases in monthly foreclosures. With RealtyTrac reporting in excess of 750,000 bank-owned properties, we estimate that nearly 0.6 percent of all housing units in the United States are now bank-owned. While this may appear to be a small slice of the total housing stock, this is the same ratio of foreclosed properties to housing units in 1930. Foreclosures increased steadily from 1930 until peaking in 1933, at which point 10 percent of all homes had become bank-owned. They did not return to pre-Depression levels until 1938.
Now that Congress has passed and the president has signed housing legislation, there is a danger of complacency in thinking the problem has been addressed. The ball is in the loan servicers’ court to see if they will participate at meaningful rates in the new FHA loan program to refinance at-risk borrowers into sustainable loans. The Hope Now alliance of over 30 major loan services holding vast numbers of home mortgage loans reported modifying 220,000 loans during the second quarter of this year. To put that figure in context, RealtyTrac reported 272,121 foreclosure actions (notices of default, auctions, or repossessions) in July alone. If the mortgage industry doesn’t pick up the pace and more rapidly restructure or refinance existing mortgages headed for default and foreclosure, things will get worse before they get better.
Whether the situation is truly a harbinger of things becoming as dire as they did between 1930 and 1933 is something we will only know after the fact. But foreclosures are mounting, with 1 in 11 American families with a home loan in trouble as of June. If voluntary programs do not begin taking effective advantage of the tools offered by the recent housing bill, we would expect to see calls for still greater government action to avert a 1930s-like economic plunge.
The last line of this article is cause for concern , “we would expect to see calls for still greater government action to avert a 1930s-like economic plunge”.
Excerpts From The Associated Press
It could be another year before the final taxpayer tab for Fannie and Freddie is known, and that outcome will depend on when delinquencies and foreclosures finally crest.
The Obama administration doesn’t expect to announce its plans for the two companies until early next year, but powerful interest groups aren’t waiting until then. The Mortgage Bankers Association on Wednesday offered a detailed plan to replace Fannie and Freddie with several federally regulated private companies.
In the meantime, both Fannie and Freddie have been drafted to implement the Obama administration’s effort to reduce the number of foreclosures.
The early results have been disappointing. For example, while Fannie or Freddie refinanced 2.9 million loans from January through July, only about 60,000 were taking advantage of an Obama administration plan to help “underwater” borrowers who owe more than their homes are worth.
At the same time, nearly 70 percent of U.S. mortgages made in the first half of this year went through Fannie or Freddie, up from 62 percent last year, according to Inside Mortgage Finance, a trade publication.
See full article at:
Again the story is in the last paragraph, if “nearly 70 percent of U.S. mortgages made in the first half of this year went through Fannie or Freddie”, that means that the “government” is still guaranteeing these loans – which really means unfunded taxpayer liabilities continue to grow.
Excerpts From The Associated Press
By CHRISTOPHER S. RUGABER
WASHINGTON – September 18, 2009 — Forty-two states lost jobs last month, up from 29 in July, with the biggest net payroll cuts coming in Texas, Michigan, Georgia and Ohio.
The Labor Department also reported Friday that 27 states saw their unemployment rates increase in August, and 14 states and Washington D.C., reported unemployment rates of 10 percent or above.
The jobless rate nationwide is expected to peak above 10 percent next year, from its current 9.7 percent
The United States lost 216,000 jobs in August, the department said earlier this month, down from 276,000 in July. Employers have eliminated 6.9 million jobs since the recession began in December 2007.
Texas lost 62,200 jobs as its unemployment rate rose to 8 percent in August for the first time in 22 years.
Michigan saw 42,900 jobs disappear, including 25,000 in manufacturing, as the state continued to suffer along with its struggling auto industry. Michigan’s unemployment rate rose to 15.2 percent, the highest in the nation.
Nevada has the second-highest rate at 13.2 percent, followed by Rhode Island at 12.8 percent and California and Oregon at 12.2 percent each.
The jobless rates in California, Nevada and Rhode Island were the highest on records dating to 1976. California and Nevada have been slammed by the housing bust, while Rhode Island has lost thousands of manufacturing and government jobs in the past year.
Georgia and Ohio reported the third and fourth-highest job losses… respectively,
New Jersey added 800 jobs, but its jobless rate jumped to 9.7 percent, the highest in 33 years, from 9.3 percent.
Bottom line: The recovery so far is not creating new jobs in the private sector. The majority of new hires right now are in the government sector which will not result in boosting the GDP. Government does on create earnings, it consumes them.
The facts are this, we have unemployment of 9.7%. The stimulus was supposed to prevent us from going over 8.0%. What happened to those shovel ready projects that were going to put people to work right away? We have lost an additional 2.5 million job since Feb. 2009. We have more people on food stamps than ever before. Since the stimulus money is not creating jobs, maybe we should return all the unspent money to the Treasury. Then we can use it to pay down the debt, fund tax credits for business and capital investment to jump start the economy.
Even more concerning is; if the administration is successful in its’ efforts to put through Tax and Cap, Health Care Reform and tax increases more jobs will be lost.
It is time for a new plan. It is time to start telling your representatives that; we want the unused portion of the stimulus money returned to the Treasury, no more bailouts as well as tax breaks to stimulate business investment and job creation. We need to create jobs! We need to create them immediately. Government can hire people but that does not create revenue or national economic prosperity. No good will come from more government regulation and involvement in the markets. We do not want or need a welfare state. If the government spending does not stop and the free market be allowed to function on its’ own, we will bankrupt America. I for one have no desire to become part of a global nation that takes away my rights, liberties, freedom and the American Dream.
Restore the Republic, Reject the agenda of the Progressive Left!
“But with respect to future debt; would it not be wise and just for that nation to declare in the constitution they are forming that neither the legislature, nor the nation itself can validly contract more debt, than they may pay within their own age, or within the term of 19 years”.….. The principle of spending money to be paid by posterity, under the name of funding, is but swindling futurity on a large scale”. - Thomas Jefferson