[Premium] Daily commentary: Does the US recovery have legs?

This daily commentary is a bronze-level post. A lot of the data coming through in recent weeks shows the US recovery will continue for a bit. I caught two or three data points in the links today about this so I wanted to flag it for the daily commentary

Brief Note on Big Surge in US Consumer Credit

Late yesterday the US reported the biggest jump in consumer credit in a decade. It reinforces the signal of the gradual healing of the labor market and the resilience of the US consumer. The report increases the risk that the November personal consumption expenditures are revised higher from the initial 0.1% estimate

Heavy revision to personal income data in US shows debt stress

What does it mean that disposable income was revised down all three years, yet the savings rate was revised down in 2009 and 2010? I think it means that people were under debt stress trying to maintain lifestyles once the technical recovery formed. This was what I said in the last post on HSBC that I expect to occur going forward

We are back in a technical recovery

The latest batch of GDP numbers saw some heavy downward revisions to prior numbers, especially during the recession of 2008-2009. In fact, the GDP revisions were so extensive, they put us back in the ‘technical recovery’ phase i.e. where we are still below 2007 Q4 peak Real

The Big Interview with Barton Biggs

In this week’s Big Interview, Barton Biggs has a lot to say. What stands out and what the WSJ has stressed is his support for public works programs

Chart of the day: Job level relative to prior peak

Since the recession in 1990-91, the recovery of employment in the US has had a U-shape that is nothing like the previous post-World War II employment recoveries. This one will be the worst

On How The US Job Market Is Shifting

Lakshman Achuthan of the Economic Cycle Research Institute (ECRI) explains his view to Anthony Mason of CBS that the problem in the US jobs market is not jut cyclical in nature

QE3 will only become a reality after the economy deteriorates

As Jon Hilsenrath pointed out in Thursday’s Wall Street Journal Bernanke has already indicated that the hurdle to more quantitative easing is very high. This is not to say that QE3 is off the table forever. But QE3 will only become a reality after the economy deteriorates to a point where deflation again becomes a clear threat and most opposition to the program fades away. The problem is that, by that time, most portfolio managers will have thrown in the towel and the market will be far lower

The Employment Situation Summary in Graphs, February 2011

The US Department of Labor released the Employment Situation Summary for February 2011 this morning at 830ET. The data showed an increase of 192,000 jobs from non-farms payrolls with the headline rate of unemployment declining to 8.9% from 9.0% the previous month. I am still in the process of parsing the data, but I can say that the headline numbers are largely in line with market expectations. The numbers are indicative of a slowly improving labour market, but one which is still sluggish.

Another conversation with Bridgewater Associates’ Ray Dalio

The last time Ray Dalio conducted a major interview, the global economy seemed to be headed toward a major depression. This was in February 2009 when Barron’s had a conversation with Bridgewater Associates’ Ray Dalio. For his part, Dalio saw the episode as part of a necessary restructuring process. He called it the D-Process. The

Geithner: Don’t shrink financial services!

Noam Scheiber’s recent article on Tim Geithner is a good piece for understanding Geithner’s thinking. He wants American banks to penetrate emerging markets and get even bigger. How this benefits the U.S. economy is unclear, however. It reminds me of the Slate piece from December 2009 when Geithner said the Obama Administration needed to override the popular sentiment against banks and bail them out in order to beat back the economic downturn.

Bailouts are seductive to policy makers because they can work even if the underlying economic fundamentals are suspect. If policy makers are able to kick the can far enough down the road and put enough time between the bailout and its inevitable consequences, they may escape blame for the inevitable crisis. The Savings and Loan crisis is a perfect example of this kind of thinking.

However, I would argue that crisis will return to the U.S. as well when the next downturn hits because of debt in the state, local and household levels as well as hidden losses in the financial sector. But that is a ways off yet. For now, the narrative that has gained momentum is one of stock market boom and sustainable recovery. If this narrative holds through 2012, Barack Obama will benefit.

Unemployment rate drops to 9.0 as employment population data skew US jobs numbers

The U.S. jobs data this month is a bit screwy. I wanted to flag something I saw because I think it is significant.  First, here is the headline. The U.S. Bureau of Labor Statistics reported an addition to non-farm payrolls of 36,000 in January and a reduction in the unemployment rate to 9.0%. These seasonally-adjusted