Thursday, July 8, 2010

Monthly Overall Economy Report

Unemployment: "Total nonfarm payroll employment declined by 125,000 in June, and the unemployment rate edged down to 9.5 percent, the U.S. Bureau of Labor Statistics reported today. The decline in payroll employment reflected a decrease (-225,000) in the number of temporary employees working on Census 2010. Private-sector payroll employment edged up by 83,000". This is still an overall loss of 125,000 jobs, but the private sector numbers were a mite encouraging. The total percentage of working age adults who work fell again to 58.5%, which is down from 63% three years ago. The only reason the unemployment rate went down was because of the huge increase in the number of people who simply gave up looking.. termed "discouraged workers". Also, many of those who are still employed are making less than they did before.

Railroad Traffic: "Carloads in June 2010 were up 15.8% from June 2009 but down 11.8% from June 2008. Weekly average of 278,312 was down from last month (288,419) and from April (294,758)" This is not the direction they want this to be going. I include this because it's a non-government statistic (and thus more reliable) and is a pretty good indicator of how the real economy is doing. The weekly average was at about 325,000 in Sept 2008 and 343,000 in July 2006, but up from a Lehman-era low in May 2009 of 248,000.

Credit Markets: "The latest consumer credit number continues the decline we have seen in recent months, plunging from $2424.4 billion in April to $2415.3 billion in May, a $9.1 billion decline, or 4.5% annualized, on consensus of $2.3 billion. Yet the biggest stunner was the April revision which was whacked from +$1 billion to a revised -$14.9 billion! In other words, there has been a $24 billion decline in consumer credit in the past two months. The biggest hit was, as usual, experienced by revolving credit accounts, which fell by a 10.5 annualized rate to $830.8 billion" Then we come to the M3 "money supply" numbers.. and here we must say that the Gov't stopped printing these numbers a few years ago, but several sites use the same forumlas to keep up the numbers. The Gov't publishes what's known as the M2 money supply numbers, which tell a completely different story. The M3 numbers are showing deflation, which is to say a slow but sure decline in the money supply: "On 7/2 money supply was $13.353 tillion. On 6/25 money supply was $13.546 trillion. On 6/18 money supply was $13.660 trillion" While these are not drastic falls in money supply, it's quite obviously going in the wrong direction: The M2 numbers are as follows: "May: $8.580 trillion. April: $8.498 trillion. March: $8.526 trillion. Feb: $8.550 trillion" June's numbers have yet to come out, but overall the M2 numbers have been around $8.4 and $8.6 trillion pretty consistently since May 2009:

Retail Sales: "The US Census Bureau today announced advanced estimates of US food and retail sales for May were $362.5 billion, down 1.2% from the previous month, but 6.9% higher than May of 2009" Again going in the wrong direction. June's numbers will come out in a few days. Remember that retail sales represent about 2/3rds of the US economy, and so this is a vital statistic. Next time I do this monthly report I'll wait until this number comes out because of it's importance.

Overall: We're doing better than in early 2009 on nearly all counts, but not nearly as well as 2008. These last reports seem to indicate that deflation is gaining momentum and the economic recovery has stalled. June's retail report will be of vital importance; my guess is that it will be down from May's numbers.

Update 8am: Putting in an order to "sell" one Euro at $1.2650. It seems that the rally has stalled, and I'm still of the belief that parity with the USD is only a matter of time.

Update 6pm: "Sold" one Euro at $1.2650. This is added to the two copper positions I maintain.. "short" one contract from $3.07 and "short" one more from $3.02.

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