A Roundup Of Economic Data
Courtesy of Tom Lindmark at But Then What?
A fair amount of economic data today that shows absolutely no clear picture of where the economy might be going. Let’s rip through it quickly.
- Retail sales were up 0.5% in May over April. Most of the increase is attributable to rising gasoline prices. Lots of stimulus money in the form of lower withholding started hitting in April and May. The consumer seems compelled to save not spend. (Census Bureau, WSJ Analysis)
- Initial jobless claims fell 24,000 to 601,000 last week. The four-week moving average dropped 10,500 to 621,750. (MarketWatch)
- The World Bank expects the global economy to shrink by 3% this year. Previously they had forecast a decline of 1.75%. (Reuters)
- Foreclosure filings in May dropped 6% from April but they were still 18% above the level of May 2008. There is simply no improvement in this sector of the economy. Despite a perceived rebound in sales and some very hot markets in lower priced homes, the inventory is most likely not going to be brought down in any appreciable amount once the new wave of foreclosures works its way through the pipeline. (Reuters)
Paul Volcker, Chairman of U.S. President Barack Obama’s Economic Recovery Advisory Board, said Thursday it is reasonable to expect that economic growth will resume in the U.S. late this year, but warned that a strong recovery is unlikely.
Addressing a financial forum in Beijing, the former Chairman of the U.S. Federal Reserve said that the U.S. faces “a long slog, with continuing high levels of unemployment.”
Volcker, known for successfully bringing inflation under control during his term at the Federal Reserve, said that the current economic situation “is not an environment in which inflationary pressures are at all likely for some time to come.”
In his prepared remarks, Volcker said that, although there will be no alternative to the U.S. dollar in the foreseeable future, “the ultimate logic of a globalized financial system is a world currency.”
“The theoretical premise that a system of floating exchange rates would promote swift and efficient adjustment has not been borne out in practice,” he said.
In the absence of a global currency, the dollar has provided a “workable, pragmatic approach,” he said.
Maintaining the purchasing power of the U.S. dollar is “the central responsibility of the United States,” Volcker said, adding that it is in the country’s own interests to do so.
As I was writing this, I had a strange thought. What if this is about as good as it’s going to get for some time? Are we in for a protracted period of just bouncing along this bottom? I’ve been something of an optimist about growth later this year but I am beginning to wonder. I just don’t see the consumer ready to get back into a spending mode anytime soon and without that we aren’t going anywhere.
