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My son-in-law, a lawyer specializing in bankruptcies, points me to some rather surprising information: bankruptcy filings in California's Central District (So. California less San Diego county), home to some 19 million people, were down by over 30% in the 12 months ended June 2012. You can see the data in the chart above. Looks to me like things have improved rather decisively in the past year. Well, they've "improved" in the sense that the news is a lot less bad. But that's still welcome progress.
32 comments:
Scott,
I had some fun and went back to read your posts in 2008 and early 2009. Although you were a bit too optimistic when the crisis was just starting, I think it's pretty amazing how your predictions eventually turned out to be pretty accurate. I do worry that if we re-elect Obama the markets may just give up any hope of returning to a normal economy.
I worry about that too. But even if he does win—and I believe he won't—I don't see how he will gain support from Congress for more of the types of policies that have crippled the economy in recent years. Keynesian "stimulus" policies and Keynesian economics in general have suffered tremendous blows in the past 3-4 years. They just don't work, and they have most likely contributed to slow the economy's progress. The great experiment in trillion-dollar stimulus proved to be a very expensive lesson in what works and what doesn't, and this has changed the nature of the debate decisively.
Moreover, I think the people are going to rebel if Congress attempts to push tax rates higher.
Can you name any blogger whose forecasting record on inflation and bond yields is worse?
Anyone who took the under on his 3%+ GDP perpetual growth rate has cleaned his clock.
Perhaps on that forecast yes, but for all the folks who were certain that living on an island with a stash of gold, rations and a glock for the next 5 years was the only rational path to take, I do think he "cleaned their clock."
Too bad foreclosure rates in California jumped 18% in June. Now worst in the nation.
http://www.marketwatch.com/story/1-million-us-properties-with-foreclosure-filings-in-first-half-of-2012-according-to-realtytrac-foreclosure-report-2012-07-12
Looks like the banks decided to start to ramping up REO's again after purposely taking the last 6-9 months off.
Depending on what today's (Friday's) number turns out to be (coming out on Monday), it looks like there's a huge surge in withholding taxes for the period covering the July jobs report. A conservative number for today would put the y-o-y growth rate at 7%-8%, compared to a paltry 0.13% growth rate for the June jobs report. Thursday's initial claims number may not have been an anomaly.
That said, I got a huge increase in withholding tax receipt growth for the April jobs report, and we nonetheless got a disappointing jobs number.
Watch July auto sales and initial claims the next few weeks. If I'm right, July auto sales should be at least ~14.4 million SAAR and initial claims could stay below 370K.
Bill,
Your standard is pretty low. Compared to lunatics, most mediocre economists look less embarrassing.
I guess that looks good but since 2008 about 470,000 bankruptcies have been filed. If there are 19,000,000 people in this area and the avg family is 2.5 people then 6.2% of the population is living under a financial cloud. And considering the unemployment rate in CA they have had very little chance of improving their condition.
NormanB: that's a very good observation. But from an economist's perspective that is all ancient history—water under the bridge. We've known for a long time that the California economy is in bad shape and unemployment is high and foreclosures have been rampant. What's important is the change on the margin. The tide of bankruptcies is now receding, which means the economy is getting "less bad" every day. About a year ago we passed an important inflection point, when bankruptcies stopped increasing and started falling. That is one good reason to be optimistic that things will continue to improve, albeit very slowly.
Marmico -
"Anyone who took the under cleaned his clock"
That's not really true or fair. There were plenty that bet on financial recession, depression, deflation, or armageddon. You could say they took the under, but so far, their calls are farther off mark than a call of 3% growth. We'll just have to wait for the end of the story to know which theme prevails.
Nice to see bankruptcies going down, although I sense everyone who could go bankrupt has. Also, this may reflect a decrease in new start-ups since the recession, and start-ups go bankrupt a lot.
On Obama vs. Romney: Really, some people think there will be an actual difference in macroeconomic policy? (BTW, Fed policy is also crucial).
Was it Clinton who ran surpluses?
While Bush jr, ran deficits (in a growth economy), brought us Medicare Part B (more expensive than Social Security), two fantastically expensive overseas military occupations-nation building (flops largely, cost $4 trillion), and a huge boom in federally socialized, subsidized renewable green fuels (called ethanol)?
(BTW, the size and scale of the ethanol program dwarfs all of Obama's green efforts--something GOP'ers never, ever talk about).
I hope Romney is what good economists like Grannis want. I voted for Bush jr, the first time, and he struck me as a moderate, pro-business guy. The problem is the GOP loves spending in GOP districts and states and military expeditions, no matter how ill-conceived or expensive.
Sadly, I suspect Romney (who seems to have indecipherable positions on ethanol, immigration, Social Security and military outlays) will just be another Bush jr---whose administration was a train wreck into a sewage treatment plant.
Is Obama any better? Man, I don't know. He has (like Clinton) avoided expensive foreign entanglements.
To those criticizing Grannis' forecasting record: Man, you try it. The economy and markets will trick all of us sooner or later. We are lucky to have Grannis' blog. I disagree wholeheartedly with Grannis on monetary policy, but so what? I hope he will come around to Market Monetarism, and it is difficult to know what is really the best policy.
I suspect if Romney wins, the entire right-wing will become Market Monetarists--many, such as Milton Friedman, Ben Bernanke, John Taylor and Allan Meltzer have already advocated as much for Japan.
Welcome aboard, I say!
Where is California going to find the money to close its current fiscal year deficit (?) -- the state is already behind about $9 billion -- I have to wonder if California might already be getting some kind of "secret bailout" from either the Fed or the Treasury -- I would like to see California cut spending dramatically -- letting California "hit the wall" is essential for the future credibility of austerity in America...
Federal outlays lead to jobs?
Not if you read Grannis, and I agree.
The GOP, hoever, believes federal outlays o lead to job creation. If the outlays are military in nature.
Romney wants even more military outlays.
By BRUCE BARTLETT
Bruce Bartlett held senior policy roles in the Reagan and George H.W. Bush administrations and served on the staffs of Representatives Jack Kemp and Ron Paul. He is the author of “The Benefit and the Burden: Tax Reform — Why We Need It and What It Will Take.”
Last Thursday, the National Association of Manufacturers published a report claiming that the Department of Defense budget sequestration scheduled for January will cost one million jobs in the private economy by 2014. The national unemployment rate, it said, will rise by 0.7 percent and growth of the gross domestic product will fall by 1 percent. A study released March 7 by the Aerospace Industries Association came to similar conclusions.
Without further Congressional action by the end of this year, the Budget Control Act of 2011 directs that federal spending will be cut automatically by $1.2 trillion between 2013 and 2021, with cuts divided equally between military and domestic programs.
Republicans have been warning about the loss of jobs from cuts in military spending for some time. At a hearing last October, the House Armed Services Committee chairman, Howard P. McKeon, a California Republican, said, “Defense cuts are certainly a path to job loss.” The committee’s blog often highlights the loss of jobs from military spending cuts."
So, federal outlays sap the economy unless spent on guys on bases in green uniforms (in GOP districts), in which case it spurs the economy. Got that?
Hi Benjamin, I agree with you that the GOP is not likely to approve new Federal spending assuming Romney is elected -- however, new Federal spending is equally unlikely to be approved by Congress even if Obama is reelected -- of course, we have some BIG potential outlays coming in the form of state bailouts, which I fear Congress might support for fear of causing the nation to fall into depression -- the state I have in mind is California, which is way behind in revenue for this fiscal year already -- by the way, how California goes is probably how the rest of the US will go with regard to bailouts for states -- all eyes should be on California to learn more about the future of America...
That's not really true or fair
Huh. In the 11 quarters since the Great Recession ended, GDP was 3%+ 4 times. That's cleaning someone's clock. It will be 4 of 12 when the BEA prints Q2 2012 later this month. And revisions may make it 3 of 12.
Grannis was calling for 5-6% growth when the ISM manufacturing index was printing 60.
His forecasting record sucks.
And how's your forecasting record, marmico??? Apparently incredibly pristine.
Benjamin:
You are exactly right. Boost defense spending and cut taxes to juice the economy. Worry about paying for it later. That's the way The Gipper did it.
The fight between Rs & Ds isn't so much about more or less spending, it's about who gets the keys to the Treasury.
Re: ISM forecast. I believe ISM forecast GDP growth at 5-6% when it was at 60. Also, I recall Marmico forecasting negative GDP as well a couple of years ago. And don't forget our friend Roubini who has been forecasting the end of the world since 2006. I remember back in 2009 he said that the stock market would crash so bad it would be shut down for a week. Perhaps all economist suck at forecasting over a long enough time period but like broken clocks they will be right twice a day.
Rejecting the bastardized Keynesian concept that all that matters is aggregate demand, federal spending on life style is least effective.
Military spending is valuable because it protects ‘our’ oil in the Middle East. It keeps seas lanes open. It also promotes the U.S. overseas and leads the way for U.S. corporations to move into new markets.
The quickest way to reduce military spending is for the U.S. to become independent of oil imports. Then let China police the sea lanes and deal with the Middle East. Sorry greenies, pure battery electric vehicles will take a long time to impact oil imports.
There is a lot of excess even foolish even corrupt military spending and should be scoured from the system.
Squire:
There is a lot of foolish federal agency spending, domestic and military.
The reality is, when it comes to agency spending, once you get past Defense, Homeland Security and the VA, the rest is relative pennies.
I appreciate your non-partisan candor.
I concur (sadly) with Jon's comments: Often, the fight between D and Rs is who gets to control the Treasury, not what is best for the country.
BTW, if any of you want to be simply astonished, read this:
Don Reagn (Reagan Treasury Secy) wants to move Fed powers into the Treasury as Volcker is too tight.
Inflation was 4-5 percent.
http://news.google.com/newspapers?id=hUBVAAAAIBAJ&sjid=55QDAAAAIBAJ&pg=5524,8412282&hl=en
California is the next "too big to fail" challenge for America -- as far as I am concerned, I vote for "let California fail..." Said another way, not a penny in Federal funds (or stealth funds) should go toward a bailout of California...
Thank you very much for half the funding for our high speed rail between Madera and Clovis.
Downward Revisions: Q2 GDP Tracking around 1.1%
"From Merrill Lynch:
Today’s weak retail sales report leaves Q2 GDP tracking a meager 1.1%. We expect the economy to remain weak through the rest of the year with growth of only 1.3% in Q3 and 1.0% in Q4. This translates to GDP growth of only 1.3% Q4/Q4, significantly below the Fed’s forecast of 1.9-2.4%.
Macro advisers: Q2 GDP tracking 1%
Nouriel Roubini: US Q2 GDP growth looks like 1.2% at best ... Q3 growth could be well below 1% given June sales report and unintended inventory build up. US at stall speed
Goldman has lowered their forecast to 1.1% for Q2.
http://www.calculatedriskblog.com/
Françoise Hollande has a novel approach to unemployment. Maximize company costs by not letting them layoff anyone. Who needs to be competitive anyway.
@Squire, you bring up a good point -- Federal funding for the California high speed rail is an example of a "stealth" bailout for California -- Obama is probably California's biggest fan -- so once again, how is California going to settle its budget deficit for this year -- deep cuts or devastating tax increases...?
With Friday's number now in, the y-o-y growth rate of withholding tax receipts for the July jobs report period is 7.83%. This is easily the best number of the year, beating even April's 6.23%.
Unknown said...
"With Friday's number now in, the y-o-y growth rate of withholding tax receipts for the July jobs report period is 7.83%. This is easily the best number of the year, beating even April's 6.23%."
But April's job numbers were not as great as you might expect. Do you have any idea why?
Thank you,,,William
That's a good question William, one I was perplexed at. The only thing I can think of is, March is the month banks pay their annual bonsuses (and remember, the period for each jobs report is from the middle of one month to the next, so April's jobs report included the latter half of March). Perhaps bonuses were larger this year than last year, resulting in an increase in withholding taxes without an increase in payrolls.
AFAIK there are no "special circumstances" for the month of July, so keep your fingers crossed.
When the ADP report came out, I found it interesting that the guy from Macroeconomic Advisers (the firm that co-sponsors the ADP report) said that the reason they had such an unexpectedly big number for June was not because of their other inputs to their model (such as initial claims) but simply because ADP had a big increase in the number of checks they cut.
I don’t think the BLS jobs report can be trusted. Nobody can figure out why there is so much discrepancy.
Calpers (Calif. Public Employee Pension Plan) got a 1% annual return when their objective is set at 7.5%. This is a several hundred billion dollar bill for the taxpayer. François Hollande won on a platform that the rest of Europe should share in France’s deficit. Soon, as Dr. McK fears, California’s deficit will be federally mutualized.
Gross Says U.S. Nearing Recession as Goldman Sachs Cuts Forecast
"Pacific Investment Management Co.'s Bill Gross said the U.S. is approaching a recession as economists at Goldman Sachs Group Inc. (GS) and Deutsche Bank AG lowered their forecasts for growth."
http://finance.yahoo.com/news/gross-says-u-nearing-recession-023735254.html
I am NOT positioned for a recession! Sell this rally??
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