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The ISM manufacturing index came in a bit weaker than expected (49.6 vs. 50.0), but was essentially unchanged from July. The index is fully consistent with a continuation of the relatively slow growth (about 2%) that we have been seeing for the past few years.
The prices paid index jumped in August, reflecting the rise in commodity prices. If there is any significance to these indices at this point, it is that deflation risk remains very low and the economy is not sliding into a recession.
Construction spending fell in July, but there is no reason to suspect this is anything other than noise. Total construction spending is up a fairly robust 9.3% in the past year; residential is up 17.6%, and nonresidential is up 5.7%. The construction sector is adding to GDP for the first time in six years, and is likely to continue to expand.
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From this blog in March 2013: "Manufacturing PMI came in better than expected at 39.6. This is a sign investors are too negative, and the S&P 500 has bottomed out after slipping under 500 points. In February, 2 houses were built in the US, which is a 100% increase over January."
Automotive News reporting August car sales at 14.53 million SAAR, up from 14.1 in July.
This will pretty much put the final nail in the coffin for ECRI's recession call.
Also bodes well for Friday's jobs report.
And the housing market is gaining traction. Let's watch the employment situation gradually improve as construction spending increases and losses in unemployment compensation provides a stronger incentive to find work.
Big picture, the US economy remains in stagnation, which is what both Democrats and Republicans must want -- the people who pay off the Democrats and Republicans to sustain long-term stagnation have a plan that works for the the one percent crowd -- don't miss the opportunity to get rich -- buy equities now at discount prices with a 30-year plus investment horizon front of mind -- there's no evidence at all that anything will change the US economy from continuing stagnation, as evidenced by the long-term declines in real working wages, homne values, and the employment to population ratio -- clearly, the people who tell the Democrats and Republicans how to behave have a plan to get rich, and we should all get in on that plan with abandon -- long-term economic stagnation is just another money making opportunity for smart investors -- Scott's charts above confirm my views.
Report from Main Street: in our hard-hit recession town, our business is recording a record year. With four months left to go in the year, we've already surpassed our sales numbers during the pre-recession boom.
We're involved in housing.
Perhaps no threat of deflation---but that is hardly reassuring. In a recession, or very slow growth period, the Fed should be willing to court some inflation.
We have a Fed genuflecting to an ossified yet exalted mission statement to keep inflation below 2 percent. The Bank of Japan shot for 0 percent.
Both central banks will be able to accomplish their goals--indeed, both are exceeding their goals, but on the low side.
The question is, what does such sustained low inflation rates mean for the real economy caught in slow growth or recession? Gloom is the empirical record.
Oddly enough, good news may come with a Romney election, but for reasons that right-wingers have no clue about.
John Taylor is a Romney adviser, and has endorsed a book on Market Monetarism. Romney's five-page plan to invigorate the economy (partly authored by Taylor) does not even mention monetary policy. Oh, that.
My guess (perhaps hope) is that we see a "rules-based" monetary policy espoused if Romney is elected, with a lot of stern faces. But the rules will essentially translate into Market Monetarism, and more monetary expansionism (than at present).
But if Romney is serious about tighter money, and installs a tight money regime, then look at Japan and examine if you want to stay invested in the USA. Japan's property markets cratered by 80 percent in last 20 years and are still going down, and their stock market is off 75 percent, and never seems to recover lost ground.
Better investments going forward (in a tight money regime) would be pro-growth areas of the global such as SE Asia, or actual operating businesses, such as well-positioned bars in resorts (frequented by mainland Chinese). Macau possibly, if you can find a way in.
Good luck everybody.
In Japan, it meant perma-gloom. The Fed here is looking for 2 percent, not zero, so we will probably see very slow growth, and some recessions.
in Japan, it meanest asphyxiation.
@Cabodog,
If you're bored and want to kill 42 minutes, check out the video I made of housing developments under construction in my area. It's practically booming around here.
Snohomish County Homes Under Construction 2012
@Unknown, your video is intriguing -- I did a deep dive into Snohomish County's businesses, and see that Boeing and the aerospace business in general is thriving in the area -- I have my eyes on all industries associated with the military-industrial complex -- the defense industry is poised for massive growth as the US prepares for world war under -- I'm planning a trip out to Washington this fall and will be doing a drive through Snohomish County to learn more about investments -- here in Pennsylvania, we are also seeing some rural growth because of the expansion of the Marcellus Shale natural gas extraction projects, which are causing a boom in what were formerly depressed old coal-mining towns -- defense stocks and energy stocks are of great interest to me at this point -- by the way, once world war breaks out and oil barrages begin to be interdicted and destroyed at sea, the US will be forced to become instantly energy independent, which will drive US coal, natural gas, and oil stocks through the roof -- you can buy all of these stocks now at bargain basement prices -- now is the time to convert world-class skills into premium wages that are invested into cheap equities here in the US -- the future looks bright for accredited investors -- gotta wear shades!
@Dr McKibbin. What do you think about BP ?
@William,
Relatively little of the Boeing presence in Snohomish County has anything to do with military stuff. The big plant in Everett makes 747's, 787's and 777's mostly for civilian aircraft companies.
I don't think the war you're expecting is going to arrive, but if you want a tour guide for your trip, would be happy to give one on a weekend when you're here.
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