The economic event of the week is QE3. A few weeks ago, Republican Presidential Nominee Mitt Romney stated to Bloomberg he would not reappoint Fed Chairman Ben Bernanke if elected:
Republican presidential candidate Mitt Romney said he wouldn't appoint Federal Reserve Chairman Ben S. Bernanke to a third term.
Romney said two of his top economic advisers, Glenn Hubbard of Columbia University and Greg Mankiw of Harvard University, are "excellent" aides when asked today during an interview on Fox Business Network. The former Massachusetts governor said he hasn't considered a "single person" to replace the Fed chief, whose second term ends in January 2014.
"I would want to select someone who was a new member" and "someone who shared my economic views" to the top spot at the U.S. central bank, Romney said. He said he would seek someone to provide "monetary stability that leads to a strong dollar and confidence that America is not going to go down the road that other nations have gone down, to their peril."
I thought at the time - what a stupid statement. He just took Chairman Bernanke from a neutral election observer to a member of Obama's team. Bernanke, if he wants to keep his job, needs to ensure Obama is re-elected.
Even stranger to me is that Bernanke, a President Bush appointee, would even be a subject of political commentary at this point. One has to wonder if QE3 is the best of the bad options if the best options (fiscal reform) are off the table because of political deadlock.
Not that I am a fan of quantitative easing unless the ultimate purpose is the nuke the debt that the USA is never going to pay off. Econintersect contributor Warren Mosler summed up my feelings. Have no fear, the markets will rise at least until the election. There will be the APPEARANCE the economy is again improving.
Score QE3 as Romney shooting himself in the foot.
Also notable this week is Industrial Production's decline. This puts two NBER markers in a recession watch situation.
The Econintersect economic forecast for September 2012 shows moderate growth continuing. Overall, trend lines seem to be stable even with the fireworks in Europe, and poor data from China. An emotional component of my mind cannot help thinking this is the calm before the storm. But a logical component in the same cranium sees there are no recession flags showing in any of the indicators Econintersect follows which have been shown to be economically intuitive.
ECRI is still insisting a recession is here (a 07Sep2012 post on their website). ECRI first stated in September 2011 a recession was coming . The size and depth is unknown. The ECRI WLI growth index value improved this week enjoying its third week in positive territory. The index is indicating the economy six month from today will be slightly better than it is today.
Current ECRI WLI Growth Index/images/z weekly_indexes.PNG
Thursday, Lakshman Achuthan, chief operations officer of the Economic Cycle Research Institute, appeared on Bloomberg TV to reaffirm the recession is here. Lakshman continues to claim the economic elements the NBER uses to call a recession have rolled over, which will only be true if the current data is backwardly revised. Please see Econintersect's economic forecast to see their current situation.
Initial unemployment claims declined from 365,000 (reported last week) to 382,000 this week. Historically, claims exceeding 400,000 per week usually occur when employment gains are less than the workforce growth, resulting in an increasing unemployment rate (background here and here). The real gauge - the 4 week moving average - rose slightly from 371.250 (reported last week) to 375,000. Because of the noise (week-to-week movements from abnormal events AND the backward revisions to previous weeks releases), the 4-week average remains the reliable gauge.
Weekly Initial Unemployment Claims - 4 Week Average - Seasonally Adjusted - 2010 (blue line), 2011 (red line), 2012 (green line)/images/z unemployment.PNG
Data released this week which contained economically intuitive components (forward looking) were
- Rail movements (where the economic intuitive components continue to be indicating a moderately expanding economy).
- The import portion of the trade balance continues to show the USA economy will moderately improve.
- The manufacturing portion of Industrial Production was soft this month, but still expanding. One month is not a trend, and part of the softness is due to the hurricane.
All other data released this week does not have enough historical correlation to the economy to be considered intuitive, or is simply a coincident indicator to the economy.
Weekly Economic Release Scorecard:ECRI's Weekly Leading Indicator w/e 07 September 2012 Continues to Rise
Preliminary September 2012 Michigan Consumer Sentiment Improves Significantly
Business Inventories Are Still High in July 2012
Industrial Production Soft in August 2012, Little Backward Data Revision
August 2012 CPI Up Slightly to 1.7% Annual Inflation Mostly Due to Oil
Retail Sales Improve in August 2012; Little Backward Revision
Stupidity: A Sixth Similarity between Communism and Democracy
Credit Spreads, Commissions and Watch Lists
China is Trading Oil in Non-Dollar Currencies
Where in the World Does Gold Make Money?
Trulia: National Average Owning 45% Cheaper than Renting Home
Corelogic: The Uneven Housing Recovery
Unemployment Claims Drop to Lowest Level Since 2007
Rail Week Ending 08September2012: Continues to Show Economic Expansion
13 September 2012 FOMC Meeting Statement: HELLO QE3!!!!!
08September2012 Unemployment Claims: Initial Claims Grow to 382,000
August 2012 Producer Price Index Jumps to 2.0% for Finished Goods
Facebook: Share Repurchase, Buffett Style
Austerity and Political Reality
Poverty, Median Income and Health Insurance Numbers Announced for 2011
Bond Giants: Inflation Is, Is Not Likely
HAMP Study: Banks Not Competent to Deal with Volumes of Mortgage Mods
CoreLogic: 22.3% of Mortgages Upside Down in 2Q2012
Japan: The World's Biggest Creditor Nation
Book Review: Rothbard's 'Man, Economy, and State' at 50
Wholesale Sales & Inventories Improve in July 2012
Europe Advances Towards a Fiscal and Monetary Union
CEO Turnover Grows In August 2012
Export and Import Price Deflation Continues in August 2012
Social Justice Difficult for Socialist Hollande
Warning: High Risk in Late Stage Bull Markets
Chris Whalen: Mortgage Business Will Change and Citigroup Still in Trouble
The Greek Disaster
The Myth that Japan is Broke
Employee Benefits Average 30% of Private Payroll Compensation in June 2012
July 2012 JOLTS Gives Mixed View of Forward Jobs Growth
July 2012 Trade Data: Exports Show Worst Growth in 2012
War and Bluff: Iran, Israel and the United States
August 2012 Small Business: Index Improves Over Last Month's 2012 Low Water Mark
Average Gasoline Price Rises Only $0.004 Week Ending 10September2012
Weidmann's Fantasy World
Watch Out When Spit, Bailing Wire and QE3 Fall Apart
Super Mario, Bond Vigilante
Sheila Bair Visits Occupy Wall Street
Phishing PAC
Was Heisenberg Too Uncertain?
European Views on Financial Regulation and Other American Evils
Consumer Credit Contracts in July 2012 â Reason = Student Loans
August 2012 Employment Index Says Slow Employment Growth to Continue
U.S. Drought: Worse than Most Realize
August 2012 Rail Movements: Economic Intuitive Elements Improve
Insider Trading 07 September 2012: Sears Insider Buying Drives Market Rally
The Week Ahead: Has the Fed Over-Hyped the Markets?
Afghanistan, One Village at a Time
Trefis: Highlights Week Ending 7 September 2012
Chicken or Egg: Employment Is the Real Economic Driver
Dollar Plummets on Weak Jobs Report
Bankruptcies this Week: Digital Domain Media Group
Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours.