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Robert Brusca

 
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  • Has China Passed Its Peak? [View article]
    The problem as I see it, and as La Marque seems to grasp, is that as China shifts from export-led growth to stimulating domestic demand, it will have to make domestic demand effective. That implies people having enough money (income/wealth) to spend. That in turn requires higher wages and probably better working conditions. China's labor exploitation thing will prove to be a passing phase and when it does what is China's competitiveness angle then?
    Jan 28 11:27 AM | 3 Likes Like |Link to Comment
  • Are We Backsliding To A Double Dip? [View article]
    Your comment is flawed. we are not interested in any in a time series of preliminary data. Historic data are revised for any number of reasons one of them being a new approach to measuring GDP. We want a definition consistent set of GDP data. Of course you use the most recent data to assess things. Revisions are simply an occupational hazard. There is nothing flawed about it; it's just reality. You don;t really think because our current GDP will be further revised that we should look at history using flawed GDP metrics, do you? Moreover we have no idea the direction of the next GDP revision. Dumbing down history in the name of consistency is a nonstarter.

    As for 'stop calling it a double dip'.. since this recovery began some have been forecasting a second recession. And while we are far enough along this 'recovery' that some might think that the next recession is 'independent,' the very awkward and incomplete nature of this recovery, the fact that we have not made anything like a complete recovery, and the height of the unemployment now ensure that these two recessions (were one to occur 'soon') would be forever linked as a double dip regardless of your assertion to the contrary.

    Whether a set of recessions is double dip or not has to do with more than just the passage of time..

    Beyond that the logic of the article is fine. Your dog analogy is a dog and its barking.
    Jun 7 07:26 AM | 2 Likes Like |Link to Comment
  • Recent Recession Call: ECRI Got It Wrong [View article]
    All this is proof that forecasting, no matter how expertly done, is a humbling business.

    Will Rogers once said that an economist's opinion is liable to be as good as anyone else's.

    How sad,

    Robert Brusca,
    economist
    Feb 5 10:06 AM | 2 Likes Like |Link to Comment
  • Jobs Report Is A Sucker-Punch To Pessimists [View article]
    Ah yes....

    As I read these comments I am reminded of the story of the blind men feeling the elephant and describing the part of him they each could fell feel, it's like a wall, like a huge leaf, like a tree trunk, like a snake..etc. .

    That comparison is not meant as an insult.

    Personal experience is just that. It is personal it is local. Economic data are broad, but of course they lack your human observations.

    Those of you reminding me are correct in saying that the economy is still 'bad' and that unemployment is still 'high' and that the applicant to job ratios are huge. How could it be otherwise? No single month can change these things! But this month's results changing minds about the OUTLOOK!

    Do do not deny that we made strides in January when nearly a quarter of one million jobs were created in one-month.

    The BLS is simply too big, has too many non-political (or diversely political) appointees for any conspiracy to play out. Take the BLS numbers at face value, realizing the flaws in any data. Understand that the household survey has been even stronger recently (so do not dwell on the birth-death model). The ADP survey, a private effort to replicate what the BLS does, also has been stronger. Jobless claims have fallen a lot.The Improvement is real. It is actual. it is widespread in short IT IS UNDENIABLE so stop trying to deny it!

    If it isn't real... that is one whale of a conspiracy!

    So please let's keep our discussion to things that are real and not things imagined. No, we did not count unicorns and Leprechauns as employed.

    I am also reminded of conspiracy theorists thinking Bush senior was cooking the data as GDP began to improve just ahead of the November elections when he ran. The Clinton folk were in a rage! After the election it became clear that the economy WAS accelerating and, in fact, the GDP data leading up to the election period were revised up to be even stronger.

    Don't go tilting at windmills. there is no conspiracy.

    The economy has been dead in the water for so long I felt the Fed was not enlightened in its outlook that assumed this weakness would go on and on.

    The economy is improving. It may have a long way to go but that is not to deny progress.

    For those of you who tend to see everything through the eye of politics, yes an improved economy will help the President. But is the critical ingredient in explaining election behavior GDP (GDP-per-capita) or is is unemployment? We have had a growing discrepancy in early recoveries between jobs and output that makes this an important distinction. Historically it did not matter so much. But now, when the economy can grow but with joblessness lingering I wonder.

    Will Ray Fair's model hold up?

    It's a bit hard for me to take Fair's January critique (see link below)...

    http://nyti.ms/ziPq7x


    ...at face value.

    But the economy is not just the President's problem; it was not a recession created mostly by Republicans. A lot of chefs stirred that pot even though Democrats blame Republicans and Republicans blame Democrats.. The President will get MOST of the blame/credit but this time the situation is clearly more complicated.

    A manipulated and corrupted political system interacted with bad regulatory environment and greedy/stupid financial institutions as well. The participation of unknowledgeable foreign investors and new not road worthy investment vehicles added the final touches to the debacle to help crate our financial crisis..

    Blame the politicians but don;t stop there. Blame the banks but don;t stop there. Blame regulators and ratings agencies but don't stop there. If you point a finger be sure to stand in front of a mirror. Include the small folk who were both duped and willingly-duped as they bought homes they knew were well over their heads. Or, folk who were so stupid in thinking they could rolling financing of ever large balances forever that their actions called out for economic Darwinism to take hold and put a stop to it.

    Who was dumber? The banker who made the loan (or the investor who bought it from the bank) or the person who took it down?

    Given this view I'm not sure how this year's election will unfold. But the economy and its performance will be in the middle of it. I expect this election cycle to make some new history as it is the most fractious I have ever experienced in my lifetime which spans much of the post-war period

    I can understand Democrat and Republican anger. But lets not jump the tracks with it.

    RAB
    Feb 4 02:46 PM | 2 Likes Like |Link to Comment
  • New Home Sales Show A Very Weak Side - Is It Winter At Work Or The Economy? [View article]
    maybe so...I don't know where you are getting your home affordability notions but they are not the ones that I know.

    Housing affordability as of November 2011 ranks as the second most affordable cost of housing 'ever'- that is according to a monthly index that goes back to January 1971. That index covers 491 months of data and that is a very impressive statement.

    So you may be right. The second most affordable housing market of all time is still not attractive to buyers.

    But why is that? How does that make sense? Note that I am not dissing you here I am merely reciting a very strange fact. it is a fact worth thinking about as you form an opinion on housing.

    Affordability is a function of three things: median income, median home prices and mortgage rates. I think that you, like many, do not really appreciate how much impact a low mortgage rate makes on house prices- they put 'so much more house 'in reach.

    My own first home purchase carried a mortgage rate of 13%. I could not afford much house at that rate. Go to a web site that does personal finance stuff and home affordability calculations and plug in a fixed income and fixed house price and see how much things change as mortgage rates drop -it is really amazing. As the rate goes down you will be able to boost the price of the house you can afford quite dramatically The ratio of home prices to income is not stable when mortgage rates persistently change in one direction. .

    The problem right now is that there are not many transactions. Homes are very affordable but banks are rationing credit by demanding the very best credit scores to get a loan and to qualify for the super low rate on a mortgage. This is why we have the conundrum of affordability being near a record high and transactions at or near record lows..

    The housing market is regional and byzantine. It will recover in pockets around the country as local supply/demand issues are resolved, the same way that there are pockets that 'may never recover.' Banks will have to see some safety in lending first. That means that the price of loan 'collateral' will have stop falling (home prices). It also means that the economy will have to seem safer (stronger GDP and lower unemployment). Mortgage rates will probably have to rise a bit too (that will lower affordability).

    Housing has complex and interrelated dynamics. Most people latch onto one factor like high foreclosures or the large stock of unsold homes as evidence that the sector cannot recover.

    But it can. It will. It always does. There are some macroeconomic pieces that have to be put in place first. It is always hard to tell which is the chicken and which is the egg, but there is evidence of sub-regions in which housing is doing better. Follow the stocks of the various home builders. The stock price movement will tell you a lot about what sort of recovery we have.
    Jan 28 12:16 PM | 2 Likes Like |Link to Comment
  • Has China Passed Its Peak? [View article]
    I'm an economist not a historian. Still, I don't suppose that one needs a PhD in history to know that when we consider 5,000 years of history we do not find many governments anywhere that ever gave a good fig about their people. Such notions are modern. Even at that modern leaders are usually seen as pursuing their own interests subject to the need for approval of their 'people' in order to get elected.

    Is PM Wen really that different. Is he a true man of the people?

    If you think he is, maybe you have read the NYT expose articles on Apple in China and you can explain why he lets his work force become so badly exploited? Or perhaps you can explain why local corruption is so bad?

    I do not have nor do I need a historian's credential to understand China. What is going on there seems perfectly obvious to me. There is always an official cover story. I doubt that many surveyed in China about their love of the government would want to trust the canvasser enough to register a true opinion. But then PM Wen loves them so much.
    Jan 26 08:40 PM | 2 Likes Like |Link to Comment
  • Has China Passed Its Peak? [View article]
    We are getting to a point where China's flaws are going to start to show.

    Up to now it has been able to play the underdeveloped currency card, the new guy card, the 'we are poor' card.

    But now, enough of China is developed that it can't do that. It remains underdeveloped party by choice, since it holds so much of its wealth as unproductive currency reserves instead of using it to develop.

    It has twisted the WTO rules and evaded being called a currency manipulator by the US - something which it clearly is.

    China is NOT politically stable. It is playing game of 'chicken' with US. China thinks it can develop and become strong enough to do what it wants. The US thinks as China develops it will develop a middle class that will make it harder for a communist leadership to control.

    Both arguments have some validity. But China is clearly feeling the constraints and the need to keep the growth machine going. But China is being forced to change its growth tactics and it is not clear that it can shift gears and keep growth up. If it can't, there will be political unrest.

    I can't see calling China's political situation 'stable.'

    Jan 26 12:15 AM | 2 Likes Like |Link to Comment
  • Has China Passed Its Peak? [View article]
    Mr Clark is right on.

    I tried to keep to 1,000 words and there is so much more to say.

    You add - quite rightly - to a long list of things China must face up to including its banking sector problems.

    I wrote this mainly as a counter point to all the China-cheerleaders especially those whoso often say things like, 'China knows what it is doing'.

    This always rankles me because it's as though they are say 'we do not know, that is why we have recessions and China does not'. China is fast growing - so fast that a slowdown that is sharp enough would essentially cause 'a recession' there. It does not need a decline in output to do that.

    As for the notion that it 'knows what it is doing'...It's data are poor, it has been good and lucky but I get the sense that a number of things are starting to stack the deck against China's next attempt to draw to an inside straight.

    And China is riskier for the global economy now because it is bigger and its problems will have a magnified impact abroad.
    Jan 25 12:12 PM | 2 Likes Like |Link to Comment
  • Has China Passed Its Peak? [View article]
    Ok Ricard. I get it. But do you?

    This is about not about any person's most sour forecast but about generalized expectations. My point is that China's 'primrose path' is about to hit some rough cobble stone that could derail it's trip.

    Your literal reading of my 'subject assessment in search of an objective analysis' is noted. I do not think I used strained rhetoric nor do I think that my point is unclear.

    I am left with no idea whether you agree or disagree with my main point. It's as though you decided to be my English composition tutor instead of one to comment on my thesis.

    Do you have a point of view?
    Jan 25 12:01 PM | 2 Likes Like |Link to Comment
  • Are We Backsliding To A Double Dip? [View article]
    Re-double dip'.. since this recovery began some have been forecasting a second recession. And while we are far enough along this 'recovery' that some might think that the next recession is 'independent,' the very awkward and incomplete nature of this recovery, the fact that we have not made anything like a complete recovery, and the height of the unemployment rate now ensure that these two recessions (were one to occur 'soon') would be forever linked as a double dip.

    Whether a set of recessions is double dip or not has to do with more than just the passage of time..

    It is not even recovering to the previous cycle peak.

    I doubt that if we went into recession with the unemployment rate at around 8% there would be any sense of this next recession being 'independent. It would be the result of not getting sufficient recovery and being pulled back by the very same forces that activated the first one. it would give credibility to those who look at the current recovery and say its not a real recovery, we are still in recession. Indeed this recovery looks like no other post WWII recovery.

    At some point we may have to come to grips with he last THREE recoveries in which the 'economy' went into recovery but the labor market did not...(until much later).


    There is no formal definition of double dip, so everyone can have their own standard. I can't say yours is 'wrong' in any technical sense but I want to explain where my thinking comes from. There is grounds for disagreement here lacking any formal definition. I can respect your choice, but still disagree with it.

    Jun 8 08:55 AM | 1 Like Like |Link to Comment
  • Are We Backsliding To A Double Dip? [View article]
    Of course GDP is weaker! Potential GDP growth is weaker. That is the point.

    We have no historic reference for current GDP growth metrics in raw form since we have not seen our growth potential this low. That is why I use the metric of GDP growth relative to potential instead of the unadjusted growth rate. Try this: read the article to see why that is important.

    I guess you don't want to read the article just diss it.

    Ok with me.

    But why not READ IT and learn something instead of picking at points I have not made or making the same mistakes I warn against making?

    ANd..after all you bluster about using recent pre-lim data you are doing it yourself with other GDP components. Good Show! I guess even you were not convinced by your own argument.

    By the way the NBER method is not at all convoluted. It talks of recessions as having three metrics: depth, breadth and length. When economic contraction is deep enough, long enough and widespread enough its a recession. No one has some up with any formula to reduce these three metrics a scalar or a binary signal. I continue to ponder the possibilities.
    Jun 8 08:43 AM | 1 Like Like |Link to Comment
  • Are We Backsliding To A Double Dip? [View article]
    Yes. we have lost all all attachment to reality.

    While data may be flawed it is still our only way to 'know' what is going on. I don't the like the 'make it up as you go along' method.

    I really don't want someone with partisan views telling me what really IS going on. I'll take the 'flawed government numbers any day.

    I wrote this price because some have been arguing that GDP growth below 2% is a recession signal. The point was to de-bunk that.
    Jun 8 08:32 AM | 1 Like Like |Link to Comment
  • Are We Backsliding To A Double Dip? [View article]
    I agree. The problem ow is on the supply side as much as on the demand side. Higher rates might help.
    Jun 7 10:13 AM | 1 Like Like |Link to Comment
  • Are We Backsliding To A Double Dip? [View article]
    You use what you have. You don't use what you do not have.

    I don't see what you want. THIS IS REALITY. Are you opposed to reality?
    Jun 7 10:12 AM | 1 Like Like |Link to Comment
  • U.S. Trade Trends Step Back Into The Hot-Tub Time Machine With All Its Risks [View article]
    Be Gee:(1) NSA data (2) Chinese new year all bets off (3) look to months ahead
    Mar 12 03:25 PM | 1 Like Like |Link to Comment
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