Recession Watch: the party isn't over yet!!

[Godwynn]

The Economist

 

[Merkinball]

I wonder what effect cash-for-clunkers had in that number. - Integral

Everything I read about it indicated that it was a .3-.4% "boost."

It's gonna be real interesting to see what happens next quarter with no cash for clunkers, the potential end of the housing stimulus, and the continued lack of credit lending over the holiday season.

 

[Integral]

Everything I read about it indicated that it was a .3-.4% "boost."

It appears that my own sources are saying similar things; that cash-for-clunkers contributed 'most' or 'a substantial fraction of' the increase in consumer demand.

It's gonna be real interesting to see what happens next quarter with no cash for clunkers, the potential end of the housing stimulus, and the continued lack of credit lending over the holiday season.

True. While direct government spending is not necessarily driving the recovery, it could be argued (successfully) that overall changes in government policy - the housing tax credit, cash-for-clunkers, etc - are underlying the bump in 2009 Q3.

--

A few graphs for the visually inclined -

2009Q3:

The increase in consumption is substantial and visible. Most of the labels are obvious; I'm assuming that 'E&S' refers to 'Equipment and Software', which is a component of private nonresidential investment.

2009Q2:

Note the changes from Q2 to Q3, particularly in imports, consumption and investment.

Graph source: Donald Marron.

 

[Merkinball]

It's amazing how reduced imports, a sign of our consumption, our expendable income, somehow becomes a net positive to our domestic production.

 

[Godwynn]

CNN

(CNN) -- Japan's unemployment rate fell to 5.3 percent in September, the government reported on Friday.

Unemployment in Japan had hit 5.7 percent in July, the highest on record since World War II. The announcement this morning was better than expectations -- analysts anticipated unemployment would be 5.6 percent.

Joblessness in the world's second largest economy had been rising steadily this year, from 4.8 percent in March.

The data was good news for the young government of Yukio Hatoyama, whose Democratic Party of Japan rode into office after a string of bad economic news helped loosen the Liberal Democratic Party's nearly 50-year grip in Japanese politics.

Japan's core consumer price index fell 2.3 percent, continuing its steady decline this year.

Japan, with its export-driven economy, has been among the hardest hit by the global recession. Japan's GDP grew 3.7 percent on an annual basis in April to June, reversing the worst recession for Japan since the World War II.

We've heard from the first and second biggest economies in the world, how is Europe doing?

 

[Integral]

Jobs jobs jobs.

Stimulus jobs.

Stimulus jobs overstated by thousands

Oct 29, 6:35 AM (ET)

By BRETT J. BLACKLEDGE and MATT APUZZO

WASHINGTON (AP) - An early progress report on President Barack Obama's economic recovery plan overstates by thousands the number of jobs created or saved through the stimulus program, a mistake that White House officials promise will be corrected in future reports.

The government's first accounting of jobs tied to the $787 billion stimulus program claimed more than 30,000 positions paid for with recovery money. But that figure is overstated by least 5,000 jobs, according to an Associated Press review of a sample of stimulus contracts.

The AP review found some counts were more than 10 times as high as the actual number of jobs; some jobs credited to the stimulus program were counted two and sometimes more than four times; and other jobs were credited to stimulus spending when none was produced.

For example:

- A company working with the Federal Communications Commission reported that stimulus money paid for 4,231 jobs, when about 1,000 were produced.

- A Georgia community college reported creating 280 jobs with recovery money, but none was created from stimulus spending.

- A Florida child care center said its stimulus money saved 129 jobs but used the money on raises for existing employees.

There's no evidence the White House sought to inflate job numbers in the report. But administration officials seized on the 30,000 figure as evidence that the stimulus program was on its way toward fulfilling the president's promise of creating or saving 3.5 million jobs by the end of next year.

The reporting problem could be magnified Friday when a much larger round of reports is expected to show hundreds of thousands of jobs repairing public housing, building schools, repaving highways and keeping teachers on local payrolls.

The White House says it is aware there are problems. In an interview, Ed DeSeve, an Obama adviser helping to oversee the stimulus program, said agencies have been working with businesses that received the money to correct mistakes. Other errors discovered by the public also will be corrected, he said.

"If there's an error that was made, let's get it fixed," DeSeve said.

The White House released a statement early Thursday that it said laid out the "real facts" about how jobs were counted in the stimulus data distributed two weeks ago. It said that had been a test run of a small subset of data that had been subjected only to three days of reviews, that it had already corrected "virtually all" the mistakes identified by the AP and that the discovery of mistakes "does not provide a statistically significant indication of the quality of the full reporting that will come on Friday."

The data partially reviewed by the AP for errors included all the data presently available, representing all known federal contracts awarded to businesses under the stimulus program. The figures being released Friday include different categories of stimulus spending by state governments, housing authorities, nonprofit groups and other organizations.

As of early Thursday, on its recovery.org Web site, the government was still citing 30,383 as the actual number of jobs linked so far to stimulus spending, despite the mistakes the White House has now acknowledged and said were being corrected.

It's not clear just how far off the 30,000 claim was. The AP's review was not an exhaustive accounting of all 9,000 contracts, but homed in on the most obvious cases where there were indications of duplications or misinterpretations.

While the thousands of overstated jobs represent a tiny sliver of the overall economy, they represent a significant percentage of the initial employment count credited to the stimulus program.

 

[kronic]

It's amazing how reduced imports, a sign of our consumption, our expendable income, somehow becomes a net positive to our domestic production.

Indeed. Same thing over here. Most of the recovery is driven by statistics not by anything real. Imports just happen(ed) to decline faster than exports. Obviously, nobody is better off because of that.

 

[innonimatu]

It appears that my own sources are saying similar things; that cash-for-clunkers contributed 'most' or 'a substantial fraction of' the increase in consumer demand.

True. While direct government spending is not necessarily driving the recovery, it could be argued (successfully) that overall changes in government policy - the housing tax credit, cash-for-clunkers, etc - are underlying the bump in 2009 Q3.

In other words, the continuation of the accumulation of debt, except that now it's the government accumulating it.

The depression will end when personal income rises on causes other than unfunded government subsidies. So far this seems to me just what I expected: governments tweaking statistics do deceive the public.
And I'd like to know how Japan calculates its unemployment rate.