It is not difficult to see why new efforts are deemed necessary by “the deciders” who believe they have some basic right to control everything all the time. The Atlanta Fed GDP estimate is at 0.3% for the first quarter even after the economists began to double seasonally adjust the data because they just could not believe economic growth could possibly be so low given all of the monetary and fiscal “stimulus” that has been unleashed. Is triple seasonally adjusting next guys? Last year the pundits were strangely blaming the cold weather in winter for weak growth, yet this year it has been quite mild. Now the New York Fed wants to begin releasing its own GDP estimate, apparently unhappy that the Atlanta version is not “growthy” enough. It is an election year!
No matter how you slice it, consumer spending is terrible even if you just look at the government’s own retail sales figures which showed a flat core number for March. We just do not see how anyone can point to the consumer as a key driver of the economy now unless one is fooled into believing that the ungodly and mandatory sums being spent on the Obamacare tax are really a sign of strength. As for auto sales, used care prices and inventories are now looking troublesome as even that sub-prime lending induced surge is rolling over.
Overall industrial production printed at down 0.6% for March and the manufacturing component fell 0.3%. Manufacturing capacity utilization of 75.1% is running over 3% below its long-term average. It’s no wonder factories aren’t hiring! Rail traffic is down about 7% year to date, yet inventories still remain quite high relative to sales.
The bottom line is that current activity is virtually indistinguishable from a recession and the electorate in the U.S. is seeing through the charade of pleasantly manipulated equity prices based on the “throw the bums out” mentality on display in the polls. In fact, one long-time restaurant analyst blamed the decline in industry sales on the unfolding Presidential campaign drama curbing the desire to eat out, but that looks a bit like a “chicken and egg” argument to us.
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