Leading (ECON) Indicators Slip in September After Four Monthly Rises

[papau]

http://ap.tbo.com/ap/breaking/MGAM5RIS0MD.html

Leading Indicators Slip in September After Four Monthly Rises
By Adam Geller The Associated Press

NEW YORK (AP) - The nation's economy continued to rebound in September, but appeared to slow after rapid growth earlier in the year, according to a closely watched gauge of future business activity.

The Conference Board reported Monday that its Index of Leading Economic Indicators declined by 0.2 percent in September to 113.0, slightly below analysts' expectations. The dip in the September reading marked the first decline in the index since March, and followed a 0.4 percent rise in August.

Analysts said the decline largely reflects the volatility of some components of the index, and that the overall dip points to an economy that is still expanding but not as rapidly.

"The story these leading indicators are telling us is this - that probably the sizzling economic growth that we experienced in the third quarter cannot continue and that it probably has already begun to downshift," said Sung Won Sohn, chief economist with Wells Fargo & Co. in Minneapolis. <snip>

(Seems I blinked and missed the surge in the economy!!! :-) )

Four of the 10 components of the leading index rose in September, including average weekly manufacturing hours, stock prices, manufacturers' new orders for consumer goods, and orders for non-defense capital goods. But those increases were offset by declines in other components, most noticeably a large drop in the real money supply. <snip>

[ewagner]

1. Drop in the "real money supply?"

:wtf:

Where's all that tax cut money? <sarcasm>

[Beetwasher]

3. I believe it's because of the deficits

The gov't is borrowing all the money, which leads to a drop in supply. This in turn could very well lead to an increase in interest rates. If that starts happening, all bets off and welcome to the Banana Republic of the US. Someone w/ more economic expertise, please correct me if I'm wrong, which I very well might be...:shrug:

[RainDog]

5. on Eschaton today

I read that Snow was talking about his hopes that the fed would raise interest rates...which is, apparently, not something which is supposed to be done, so it was followed by a spin cycle... oh, he didn't mean to say that was administration policy wishes...

:eyes:

So what can we average Americans do to help ourselves survive Bushonomics?

Obviously, you want a fixed rate mortage if you are fortunate enough to own a home.

And you want to pay down any adjustable rate credit cards, and otherwise eliminate further buying on credit.

So, should you try to sock away some savings? Should you try to buy some other currency and just hold on to it? (I'm talking about middle class bootstrap here...not some sort of mutual fund issue.

There have been other times of recession and inflation, right? wasn't the last one also caused by oil?

[punpirate]

9. Not just the government borrowing money--

--it's everyone. People are still getting into relatively expensive houses, consumer credit debt is at an all-time high (and has been for a while), and corporations are borrowing in order to buy back stock to keep stock prices up. Add in relatively low productivity in the last couple of years, a lot more offshore investment money being pulled out in the last year and a lot more government borrowing, and the real money supply would have to shrink.

It's gettin' kinda weird out there....

Cheers.

[RainDog]

10. so if you don't have any debt

and you have relatively low expenses, you may weather out the storm if you can find a job which pays a living wage?

of course, the cost of everything can be expected to rise? groceries, gas, newspapers, lattes?

what happened to people in Brazil who faced huge inflation rates?

seems like that also ushers in strong-arm govt in South America, when so many start to really hurt?

[punpirate]

11. I think the inflation rates elsewhere are due to factors...

... not entirely the same here. The Fed's refusal to raise interest rates is symptomatic of deflation, not inflation, where the cost of goods declines because demand is not high enough. That doesn't generate enough money to hire people, so unemployment grows, demand drops further, hence, what is called a deflationary spiral. We would probably be in one now were it not for deficit spending going to one significant sector of the economy (defense) and the continuing extension of consumer credit.

If banks were to begin tightening up to protect their own positions, in the short term, one would see deflation--unless there are continuing big drops in the real money supply. Then we start printing money and inflation occurs. That might happen if there were suddenly two or three quarters in a row with negative productivity. As long as productivity limps along on the positive side, I doubt inflation will be a significant problem with interest rates as low as they are now.

Much of the inflation of places such as Argentina and Brazil has occurred because of government policies imposed as a condition of IMF and World Bank loans when the economies were not productive enough to accommodate those policies--and one of the biggest, thorniest demands made on those two countries was that they tie their currencies to the dollar, a policy which was intended to protect US investors, but had the effect of creating runaway inflation. Combine that with graft, corruption and forced privatization, and you've created a problem. It's likely why Lula is in office now, in Brazil, because Brazilians expect him to be a lot less influenced by US demands for US-mandated economic change. They're still going to have a hell of a time meeting the cumulative debt payments, which effectively reduces their real money supply when productivity is low, and that means they'll have to continue printing money. Jamaica's an excellent example of that after almost 30 years of money leaving the island because of IMF/World Bank lending terms.

Cheers.

[diplomats]

2. Has third-quarter growth been announced yet?

[itaintoveryet]

4. timely post

i believe that media is now trying their best to prop-up the administration. yesterday the Huntsville Times boasted the following headline "Bush Rebound Predicted"; this article painted a rosy picture of an economy performing above expectations and that a whole 57,000 jobs were created in September. the tune of the article was that with the improvement in economy Bush would be guaranteed to be re-elected - this i can't dispute.

right next to this headline was a local article with a picture of 1,100 Dunlop employees being laid off - LOL.

[ixion]

6. sizzling economic growth?

did I miss someting? :eyes:

[nadinbrzezinski]

7. Translation

We are still in a jobless recovery... and have not left that
oh boy... bring out the champagne happy days are NOT here YET.

[Unknown Known]

8. Are they gonna fire Snow now like they did with O'Neil

When someone in this misministration says "the emperor has no clothes", they're given the axe.

http://story.news.yahoo.com/news?tmpl=story&cid=568&ncid=749&e=5&u=/nm/20031020/bs_nm/economy_rates_whitehouse_dc

This late Spring I watched Clinton speak at that class (on CSPAN) given at UofAR and he said be prepared for interests rates to rise and once they do, they won't go down again.

I immediately got my house refinanced and paid off my debt. Now I'm thinking about changing dollars for euros and moving out of country after hearing Krugman this weekend:evilgrin: