From Today's Numbers, A Recovery Is Hard to See

Seeking Alpha ^ | 8/14/2009 | Tom Lindmark

[SeekAndFind]

Another day of economic data that doesn’t spell raging recovery.

Industrial Production

Capacity utilization increased slightly from 68.1% in June to 68.5% in July. Industrial production was up 0.5% which is the first increase in that number since December 2007. Manufacturing production was up 1% but that was almost entirely due to auto companies ramping up production after their summer shutdown which was exacerbated by the bankruptcies of GM and Chrysler. Taking autos outo fo the equation, manufacturing was up 0.2%.

Overall, the economy still has enormous excess capacity. Their is nothing in these numbers to suggest that new investment will be needed for a prolonged period of time, which is just one more anchor to drag around. (more: here)

CPI

Consumer prices were flat. They rose 0.1% in July. Given the employment picture and the low utilization of productive assets, any inflation scenarios have to be considered fanciful. This gives the government a lot of leeway to continue pumping out money with little fear of igniting the inflation fuse. (more: here)

Consumer Confidence

Consumer confidence is a number that bounces around a lot and I tend to not take too seriously given its propensity to reverse course. Nevertheless, given the expectation for it to rise this when it actually fell from 66.0 in July to 63.2 this month, it probably deserves to be noted.

Linking it to the dismal retail sales report yesterday, reinforces the argument that the consumer isn’t remotely prepared to lead the economy out of the doldrums. They are scared to death, broke or think they might be soon and aren’t at all ready to come out of their cave. (more: here)

The numbers today don’t point to any incipient disaster but they certainly don’t show any strength that we can expect to build upon. We might well get a recovery of sorts in the third quarter simply because the economy won’t continue to shrink indefinitely. The problem is that there don’t appear to be any fundamentals on which to base long-term robust recovery.

[TexasFreeper2009]

During the great depression the market had several fairly large recoveries... only to shortly tank again taking even worse.

My business did show some improvement in late April and June, but then tanked again and hasn't shown any sign of life since. I am afraid that everyone betting the worst is over is about to get owned.

[HarleyD]

I’m not a financier; just an observer. From my viewpoint, there is nothing I can see that any of this has leveled off. Two weeks ago Obama was reporting unemployment was 240,000 and announcing the Stimulus was working. Today it was 540,000. July was suppose to be a big consumer spending month with car sales, but instead people took money from one place to buy those cars. One indicator may go up but seven other ones goes down. And they keep going down, albeit not as fast.

And even though one indicator has gone up for now, there are certainly signs of more trouble ahead. All those people who bought cars last month are now saddled with a new car payment. Grant it that some of those people may have been going to buy cars anyway-but not all. Don’t be surprise if consumer spending takes a large dive this month. And then there is the Feds monetizing out debt which will increase interest rates, millions of people who are out of work with no hope for finding jobs, more stress on mortgages and credit cards from people who continue to lose their jobs, etc.

I don’t wish to sound so gloomy but I think we are heading into another Depression. I see nothing to suggest otherwise.

[Erik Latranyi]

Let us not forget the coming collapse of commercial real estate due to a bubble of debt that is due this fall.

While I don’t think the impact on the banking system will be as great (due to the liquidity they are sitting upon), it will still send shockwaves through the economy.

[HarleyD]

Fox just reported one of the nation’s largest banks (Colonial-5th largest) just collapse.

[misterrob]

Which will pretty much drain the FDIC

[Erik Latranyi]

Fox just reported one of the nation’s largest banks (Colonial-5th largest) just collapse.

Do you notice how every Friday, we see another bank collapse? You don't think they are trying to manipulate the news, do you?