Industrial production posted a slight loss in May, the Federal Reserve reports. That’s one more reason to worry about the business cycle in the wake of slower job growth and a deepening euro crisis in Europe. Nonetheless, today’s industrial production update falls well short of a fatal blow for thinking positively. Although industrial production declined last month, the retreat was marginal. In fact, one could argue that economic activity has held up surprisingly well so far in the face of so much bad news coming out of Europe.
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Jobless Claims Rise Last Week. A Warning Sign Of Things To Come?
Today’s update on initial jobless claims doesn’t look good, but it isn’t a death blow either. In “normal” times, one might dismiss the latest numbers as noise. But in the current climate, with the potential for a deepening of the euro crisis, it’s hard to overlook even small bits of deterioration in economic news.
Strategic Briefing | 6.14.12 | Falling Oil Prices & The Economy
Economy’s Mixed Blessing: Commodity Prices Fall
The New York Times | June 13
“The world economy is in risk of a recession and on that possibility, commodity prices weaken,” said Allen L. Sinai, chief global economist for Decision Economics, a consulting firm. “Lower inflation comes with weakening economies.”
Oil is among the commodities that have fallen in price the fastest despite continuing tensions in the Middle East and the tightening sanctions on Iran. OPEC production has been soaring in recent months because of mushrooming crude exports from Iraq, an almost total resumption of exports from Libya since the fall of the Qaddafi dictatorship, and a concerted drive by Saudi Arabia to push up production. At a meeting in Vienna on Thursday, OPEC is expected to decide to keep production steady despite weakening prices.
Retail Sales Slump In May, Mostly Because Of Falling Gasoline Sales
U.S. retail sales slipped 0.2% in May. That’s the biggest monthly fall in two years, although quite a bit of the drop last month was due to a sharp decline in gasoline sales. Nonetheless, the revised data tell us that retail sales have fallen for two months in a row—the first back-to-back monthly declines since 2010. Looking at retail sales on a year-over-year basis is more encouraging, but the trend is still slipping on this front too.
Searching For Macro Clues On Google
Will Internet search trends offer early signals about the timing of the next recession? No one really knows, but the possibilities are intriguing. Several researchers in recent years have considered the idea that tracking Internet activity offers a window into the future.
A Year Later, Core Inflation Doesn’t Look So Rotten
Remember the attack on core inflation? Right about this time a year ago there was a wave of criticism aimed at the idea that core inflation—headline inflation less food and energy prices—is a useful predictor of overall pricing pressures. But a funny thing happened on the way to the lynching of core: the much-maligned concept for looking ahead turned out to be reliable… again.
Book Bits | 6.9.2012
● The Price of Inequality: How Today’s Divided Society Endangers Our Future
By Joseph Stiglitz
Review via NPR
In his latest book, The Price of Inequality, Stiglitz argues that widely unequal societies don’t function effectively or have stable economies and that even the rich will pay a steep price if economic inequalities continue to worsen. In the current system, top income earners who make their money through capital gains and stock dividends pay lower effective tax rates than the average person. Those capital gains tax rates were first lowered during the Clinton administration, when Stiglitz led the Council of Economic Advisers.
Can The U.S. Economy Continue To Fend Off Euro Risk?
The U.S. economy is struggling on a number of fronts, but it’s also encouraging (and surprising?) that the economic turmoil in Europe hasn’t taken a deeper bite out of America’s moderate growth path of late. That could change, of course, but for now there’s still optimism that we’ll sidestep a new recession.
Jobless Claims Data (Still) Suggest Modest Job Growth Ahead
Today’s weekly jobless claims report seems to be telling us that the labor market isn’t fatally wounded. New filings for unemployment benefits fell 12,000 last week to a seasonally adjusted 377,000. That’s not far from the post-recession low of 361,000 in mid-February, when optimism was considerably stronger about the economy’s prospects. One good report in the weeks ahead could take us to a new low and revive expectations that the future looks okay after all. Analysts are inclined to think otherwise, however, courtesy of the disappointing employment report for May. But today’s claims update suggests that maybe, just maybe, it’s too soon to write the obituary for economic growth.
The New Abnormal Returns…
Actually, it never left. A month ago I wondered: “Is The Recent Fall In Inflation Expectations A New Warning Sign?” The answer, we now know, is “yes.”