Economics

Expectations Management = Set Low Standards, Then Fail to Meet Them

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How far down the crapper has the recent "recession is over" expulsion been flushed? Mish's Global Economic Analysis takes a hard look at some recent numbers from the Institute for Supply Management – a good indicator of what consumers are actually buying—and it turns out nobody's buying much of anything except $4,500 used cars:

[Eight] out of 10 Non-Manufacturing components are worse this month than last month. Only deliveries are in the green while inventories are contracting at a slower rate.

By contrast, 7 out of 10 Manufacturing components are in the green and the other three are contracting at a slower pace…

Regardless, the NBER is unlikely to declare the end of the recession on numbers like these. Put away your party hats and horns for at least another month…

The Global GDP Rebound Is Underway, But Who's The Buyer? The answer of course is government, not the consumer, except for inventory rebuilding and "free money" programs like "cash for clunkers".

Meanwhile, in another you-call-it-corn moment, the same Labor Department statistics that Americans for Tax Reform describes as showing 2.2 million lost jobs since the start of the stimulus package are being defined by the White House as proof that 485,000 job have been saved or created or both. Meanwhile, pro-stimulationists are stretching the truism that unemployment is a lagging recovery indicator into something like an argument that continuing job losses prove the recovery is underway. And it helps if you can fix the numbers so that an increase in the number of job losses looks like lower unemployment. As one commenter notes here, it's a near certainty that today's unemployment numbers will get an "unexpected" upward revision in the next few weeks.

With his usual laser-like focus on the problem at hand, Treasury Secretary Tim Geithner is reacting to continued destimulation by cursing at subordinates who aren't moving fast enough to create a super-regulatory supergroup. Tough guy! Maybe Geithner's been watching the Patton DVD in that house he can't sell for more than he paid in 2004. (At this point he probably has to make do with The Last Days of Patton on VHS.)

Finally, longtime economic doomsayer Nouriel Roubini is predicting the onset of double-dip recession. (I'm agnostic on the double-dip because the first dip isn't even over yet. I'm holding out for the Klink Dipsy-Doodle – the most brilliant maneuver in the history of war, but one that gets surprisingly little attention.)

All of which means the war of definitions isn't just between the the White House and the Republicans but within the White House itself. President Obama, so sobersided he brings Joe Biden along for a beer, continues to plumb the depths of his sobersidedness by downplaying recovery talk. Last week Newsweek set up the perfect alley-oop with its goofball "Recession Is Over" cover, and here's how the president responded:

I bet you found that a little startling. I know I did. [Polite laughter] Now, it's true that we've stopped the free-fall. The market is up and the financial system is no longer on the verge of collapse. We're losing jobs at nearly half the rate we were when I took office six months ago.

The "free fall" imagery works even if it does raise the inevitable question: "Whadday mean 'we,' Kemo Sabe?" But today lovable lug Joe Robert Gibbs completely screws up the metaphor by bringing in an image out of Brian's Song:

The patient has stabilized. Will the patient see good days and bad days? Will the fever come back and maybe spike again? Absolutely. We're assuming that that's going to happen.

So which is it? Patient? Skydiver? Out of control aircraft? I propose a combination:

The critically ill patient has been shot from the top of Earth's gravity well; the fiery friction of atmospheric re-entry has canceled a small part of the incoming velocity, though it remains unclear whether the rate of descent can be reduced to a comfortable 32 feet per second before explosive impact with the surface of the Earth causes another Tunguska event.

You can use that, Mr. President. No need to credit me!

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  1. That reminds me of the Tuskagee syphilis study.

    Racist.

  2. The Generalisimo Franco’s condition remains stable in a Spanish cemetary.

  3. Contrast all this spining by the Dems that bad economic statistics are really proof that their “stimulus” is working with their constant attempt to talk the economy down during the pre-recession Bush years when the stock market was going up and unmeployment was down.

    Back then the theme was that none of the reflected what was going on with “real people” and that the “real economy” was stagnant.

  4. Mmm, that’s some tasty rant there, Tim.

  5. And it helps if you can fix the numbers so that an increase in the number of job losses looks like lower unemployment.

    Can anyone explain to me how we can lose 250,000 jobs and have the unemployment rate go down?

  6. Time to take your ADD meds Tim. That was all over the place

  7. “Can anyone explain to me how we can lose 250,000 jobs and have the unemployment rate go down?”

    The UE rate only counts people who do not have a job and are actively looking for work. It does not count those who drop out of the labor force. So when someone loses their job and goes back to school or back to Mexico or decides to stay home with their kids and live on their husband’s salary, they are not counted as unemployed. Thus, you lose jobs but still have the UE rate go down as more people drop out of the labor force. The UE rate is more meaningful when looked at in connection with the labor force participation rate. The LPR tells you how much slack there is in the labor supply.

  8. You “Drop out of the labor force” when your UE benefits expire. Aka long-term unemployment is good for the UE numbers. Welcome to government.

  9. Can anyone explain to me how we can lose 250,000 jobs and have the unemployment rate go down?

    Doesn’t the phrase “create or save” mean *anything* to you?

  10. I love U3. Name a more bullshit political pseudo-statistic.

    And on that note, it’s time to go deadlift.

  11. Also consider that a ton of illegal immigrants have left the country in the last year. They left because they lost their jobs. They are not counted in the UE figures and a lot of their jobs were under the table so are not counted in the jobs lost figures. The numbers, as bad as they are, do not tell the whole story.

  12. The critically ill patient is probably not going to survive the impact with the earth at almost 22mph.

  13. Meanwhile, in another you-call-it-corn moment…

    (Just in case, reference explained here.)

  14. Anyone know of a good “all in one” resource for PPE property usage/non-usage or sales/lease information? Specifically manufacturing property.

  15. Whatever happens, we know this for certain: if it’s good news, the President will claim the credit; if it’s not-so-good news, the President will remind us of the horrific mess he *inherited*.

  16. You “Drop out of the labor force” when your UE benefits expire.

    Claiming unemployment insurance doesn’t equal unemployment. If you disagree, the most recent insured unemployment rate was 4.7%, seasonally adjusted. Recent declines in this number may be attributable to expired benefits, but this isn’t the “national unemployment rate” (9.4%, seasonally adjusted).

    Long-term unemployment does discourage job-seekers, and those surveyed as no longer actively looking for work do drop out of the labor force, lowering the unemployment rate.

    Can anyone explain to me how we can lose 250,000 jobs and have the unemployment rate go down?

    First off, the jobs number isn’t the one used in calculating unemployment. The jobs number comes from a a different survey.

    In the survey used to calculate unemployment, employment declined by 155,000, seasonally adjusted. However, there were 267,000 fewer unemployed, seasonally adjusted.

    So, while the level of unemployment decreased by 1.8% (-155,000 / 14,462,000), the labor force as a whole only decreased by 0.3% (-422,000 / 154,504,000). When the numerator of a fraction decreases proportionally more than the denominator decreases, the fraction decreases as a whole.

    Finally, the unemployment rate didn’t change enough to be statistically significantly different from the prior month (90% confidence interval, I think), that’s why the government release says:

    the unemployment rate was little changed at 9.4 percent

  17. They haven’t been counting people who no longer are looking. Not unheard of in reporting unemployment, but a significant variable when the numbers of unemployed start to rise since the number of those that give up or take part time work well below their needs (a liberal argument) rises with unemployment and tends to grow at a greater rate with time as the unemployment rate as measured grows.

  18. So, while the level of unemployment decreased by 1.8% (-155,000 / 14,462,000), the labor force as a whole only decreased by 0.3% (-422,000 / 154,504,000). When the numerator of a fraction decreases proportionally more than the denominator decreases, the fraction decreases as a whole.

    Translation: Billy Mays, Michael Jackson and several other thousand non famous people died along with some immigrants that went home, decreasing employee numbers. Hot summers are a bitch.

  19. There is going to be a correction that has not happened yet, with interest rates as well as exchange rates. So 9.4% unemployment should be considered freaking paradise right now. People are going to hurt in the next few years.

  20. By the way I just found out there’s a nifty chart waiting for you if you google “unemployment rate”.

  21. LOL, is anyone not surprised by this??

    TY
    http://www.anonymize.us.tc

  22. But today lovable lug Joe Gibbs completely screws up the metaphor by bringing in an image out of Brian’s Song:

    Didn’t he leave DC even before the election?

  23. D’oh. Football season must be coming. Thanks for the correction.

  24. I am waiting for time when they try to explain that the stimulus was a smashing success, even though the unemployment rate is double digits, which the administration still believes wil happen.

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