The Good News Economist

U.S. Job Growth Likely by December

Thanks Larry,

Yes indeed I do tend to err on the side of being a bit too optimistic, rather than the pessimism that I see everywhere else... it is one of the basic principals of the blog.

It has again fascinated me to see the psychology of this recession as compared to that of the early phases of recovery cycles in 70s and 80s... and I would agree that several times the picture back then seemed worse. It is amazing to me that today those times and similar experiences are long forgotten by most and replaced with an almost egotistically assertion that this time the cycle is somehow much different and much worse.

James Grant on WealthTrack: Surprisingly Strong Recovery Ahead

James Grant is right on again, particularly with the concept of the "errors of pessimism and optimism"... much of his analysis is based on studying emotion and its effects on markets... many who completely rely on "fundamentals", data, and charts, are completely baffled when emotions take control.

Q4 Growth Likely to Be Stronger than Q3

William,

Thanks for the comment.

One of the stalwart measures for me is the ISM manufacturing index... I've continued to point to that Index as a superb indicator of what is really occurring in the overall US economy grow-wise - not just manufacturing. In addition to reporting the manufacturing sector conditions, the ISM's PMI index has a very impressive track record in GDP growth correlation. A PMI in excess of 41.2 percent, over a period of time, generally indicates an expansion of the overall economy. Back on September 2 when their September report was released, I was able to headline that growth was likely already at 3.7% annually... very much in line with the government estimate published this Thursday for Q3. Looking at the latest ISM index the PMI for September (52.6 percent) it corresponds to a 3.6 percent increase in real GDP annually. November's report (for October) will give us a concrete early indication of what is in store for Q4. If the latest NY Empire index is any guide, the PMI will be up sharply in Oct.

Additionally US businesses and industries are nowhere close to burning through the 700B of stimulus dollar put in place. They are just now figuring out how to apply it to their particular processes and procedures. With clunkermania representing only a small $3B of that -- we have a long way to go before all industries including autos make their way through that.

In addition to Amazon -- Intel, Alcoa, JPM, and many others painted very strong business condition pictures in their investor calls. No doubt the homebuyer credit will also be extended well into 2010... And if history is any guide, the strongest economic rebounds have usually been preceded by the deepest lows...

I'll write about more evidence next week...

And thanks for your article today as well!

GNE

Who thinks this Recession is Over?

Steve,

Certainly you've heard the famous Bill Clinton quote: "Well now, that just depends upon what the meaning of the word 'is' IS."
www.youtube.com/watch?...

Are your set of definitions mind numbing or those that the Econ 101 teachers teach? What is your definition of "Real-World people"?
(Some of us entrepreneurs have taken Econ 101 *and* worked blue and white collar jobs for past 30 years)

If we can't agree on the definitions, then anyone can make the data say anything they want it to say. That's why we have CPAs, GAAPs, supreme court justices, umpires, certified auto inspection mechanics, and the NBER.

Everyone knows that following a recession there is negative fall-out. After a great recession there is significant debris and pain. That doesn't change the fact (and collective judgement) that the recession just past is indeed over.

GNE
goodnewseconomist.com

Bad News Bears Battle Break Neck Bounce

David,

I agree with your comment that nobody knows the future. However, good analysis does not always equate to mere opinion. In my observation specific analysts (and weather forecasters), get the forecast right much of the time, while others fail almost always.

And if you've read my stuff long enough you've heard me say time and time again, when you take economic analysts as a group, "the majority is always wrong." (Galbraith)....

mast-economy.blogspot....

Looking back over the past year, Galbraith was right again.

Roubini: Don't Expect a V-Shaped Recovery

Nouriel,

The V is technically already well formed. Please, please have a seat already...
seekingalpha.com/artic...

GNE

Newton's Third Law: DJIA Poised for Epic Rise?

I do like Hooke's Law as it applies to the chart... probably more than Sir Isaac's.

I am not sure that see the poker analogy. I agree that 70-80% of poker is skill, but I am not sure I agree with that market-wise.

I am more a believer that much of the market direction is based on feelings and emotions... something that good poker players best guard against...

My inspiration for the post originated in the observation of the chart.. not necessarily any physical law...

If one assumes that significant negative emotion led to the 777 point drop in the dow, it cannot be much of a stretch that a equal and opposite upbeat emotion will lead to a 777 point rise.

GNE
goodnewseconomist.com

Employment Index Makes Monster Jump

Sorry Recusant, but in case you have not noticed, that is what we do. If you want the bad news you can read it elsewhere. The mainstream media by its own admission publish the "bad news" slant. It is what sells. The bad news is usually what is most "newsworthy."

The Good News Economist blog is all about a perspective that is also slanted by its own admission. If it is bad news, it is *not* newsworthy at our blog. "When all you read is gloom, turn here for a much different perspective." That's our by-line.

Don't expect it to change anytime soon.

Adjusted Jobless Claims Suggest the Recession Ended

Mark,

Thanks again for a great post.

For those of us who have lived through this past recession, lost jobs in the last five and are still living the dream, it is entertaining to see the flood of commentary that continues to paint this past recession as so much different from the rest. Is it really? No...
mast-economy.blogspot....

Seems like I've heard all that banter before? Yes, like at least 5 times. ;-)

GNE
goodnewseconomist.com

Second Half Growth: Coming on Strong

Recusant,

1. The point is that most economists had forecast a downward revision. Again they were wrong. Q2 numbers were better than expected. As recovery began, many touted a lackluster Q3 and Q4. But a much stronger Q3 and Q4 now appears highly likely.

2. The good news at Dell are not only better margins from cost cutting, but a forecast for a strong second half sales. That is likely a barometer for increased corporate spending. Hundreds of new jobs are now available at Dell and posted on their corporate jobs board.

3. 10% is in the rear-view mirror with respect to unemployment. Much more corporate hiring is now occurring vs. layoffs.

4. There is much more going on in the housing market than first time home buyers. Investors are also swarming in with cash... returns on rental business is at an all time high. Like all housing rebounds we are now seeing price increases moving up market.

5. Have a look at our historical watch of the ISM manufacturing index since the beginning of the year. Also watch it closely on Tuesday to see a manufacturing sector that is now growing again. It has been since June with or without Clunkermania.

Nice repartee, but I'm not moved by your rebuttal.

Clunkermania: Top Good News Economic Story of the Year

Steve,

I don't have access to the CEA raw data, but the 42,000 number released by them is referenced in multiple stories including the bloomberg story here:
www.bloomberg.com/apps...

Another Dozen Housing Markets Improve

Good point. In fact, I've stated many times here that when it comes to markets and economics: the majority is always wrong. -- Galbraith, John Kenneth... So the question that I ask is whether or not these sources continue to be the minority or are they now in the majority... I leave that as an exercise for the student.

Taxpayers Earn 23% Return on Goldman TARP Investment

@SivBum,

I like your idea... however when looking at equity valuation over the term of the loan the returns aren't that hefty. If you pick your starting point anytime in 2008, your S&P measure doesn't hold. Further, based on warrant auction estimates it's likely that what Goldman paid was right in line with what other market bids were likely to be.

GNE

Initial Unemployment Claims Filings Fall to Six-Month Low

Dave,

No -- a falling 4-week moving average for initial claims is good news. There is no bad in that graph, sorry...

Thanks for the chart Mark.

GNE

Conference Board Indicators: Recession Likely Over, Recovery Has Begun

@Jordan,

Have a closer look at Ben's words: "...monetary policy remains focused on fostering economic recovery." He did *not* say "halting contraction."

Indeed growth has resumed.

He continued, "We will be looking to see more evidence of a sustained recovery that will begin to close the output gap, (and) begin to improve labor markets."

That appropriate policy stance will lead to a quite healthy uptick in Q3/Q4.

Bernanke is proud of the work done so far. And he should be.

GNE