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U.S. Economy Added 162,000 Jobs in March, Most in 3 Years

Today, CNBC reported, "U.S. consumer confidence rose in April to the highest level since the collapse of Lehman Brothers in September 2008, driven by growing optimism about the labor market, according to a private sector report released Tuesday."

To keep things in context, one should look at the details. The Conference Board's press release summarizing the details can be found at: Consumer Confidence Index - The Conference Board
 
This afternoon, the Federal Reserve released its latest monetary policy statement. In opening paragraph, which contains the Fed's latest macroeconomic discussion, the Fed's language noted some recent improvements in the labor market, household spending, and residential housing market since its March 16 statement. This somewhat more upbeat assessment reflects the growing body of evidence highlighting a moderate-paced economic recovery and the employment situation's possibly nearing or having moved into the early stages of net job growth.

Key differences: April 28 vs. March 16:
• “The labor market is beginning to improve” vs. “the labor market is stabilizing.”
• “Growth in household spending has picked up recently…” vs. “Household spending is expanding at a moderate rate…”
• “Housing starts have edged up…” vs. “housing starts have been flat…”

A comparison of the macroeconomic description provided in the FOMC’s monetary policy statement follows:

March 16, 2010:
Information received since the Federal Open Market Committee met in January suggests that economic activity has continued to strengthen and that the labor market is stabilizing. Household spending is expanding at a moderate rate but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly. However, investment in nonresidential structures is declining, housing starts have been flat at a depressed level, and employers remain reluctant to add to payrolls. While bank lending continues to contract, financial market conditions remain supportive of economic growth.

April 28, 2010:
Information received since the Federal Open Market Committee met in March suggests that economic activity has continued to strengthen and that the labor market is beginning to improve. Growth in household spending has picked up recently but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly; however, investment in nonresidential structures is declining and employers remain reluctant to add to payrolls. Housing starts have edged up but remain at a depressed level. While bank lending continues to contract, financial market conditions remain supportive of economic growth.
 
This afternoon, the Federal Reserve released its latest monetary policy statement. In opening paragraph, which contains the Fed's latest macroeconomic discussion, the Fed's language noted some recent improvements in the labor market, household spending, and residential housing market since its March 16 statement. This somewhat more upbeat assessment reflects the growing body of evidence highlighting a moderate-paced economic recovery and the employment situation's possibly nearing or having moved into the early stages of net job growth.

Key differences: April 28 vs. March 16:
• “The labor market is beginning to improve” vs. “the labor market is stabilizing.”
• “Growth in household spending has picked up recently…” vs. “Household spending is expanding at a moderate rate…”
• “Housing starts have edged up…” vs. “housing starts have been flat…”

A comparison of the macroeconomic description provided in the FOMC’s monetary policy statement follows:

March 16, 2010:
Information received since the Federal Open Market Committee met in January suggests that economic activity has continued to strengthen and that the labor market is stabilizing. Household spending is expanding at a moderate rate but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly. However, investment in nonresidential structures is declining, housing starts have been flat at a depressed level, and employers remain reluctant to add to payrolls. While bank lending continues to contract, financial market conditions remain supportive of economic growth.

April 28, 2010:
Information received since the Federal Open Market Committee met in March suggests that economic activity has continued to strengthen and that the labor market is beginning to improve. Growth in household spending has picked up recently but remains constrained by high unemployment, modest income growth, lower housing wealth, and tight credit. Business spending on equipment and software has risen significantly; however, investment in nonresidential structures is declining and employers remain reluctant to add to payrolls. Housing starts have edged up but remain at a depressed level. While bank lending continues to contract, financial market conditions remain supportive of economic growth.

I think you missed another key point.

Business spending on equipment and software has risen significantly.

So the key question for the Fed is if it has enough independent thinking/ actions to avoid another bubble and perhaps horrible inflation.
 
I think you missed another key point.

Business spending on equipment and software has risen significantly.

So the key question for the Fed is if it has enough independent thinking/ actions to avoid another bubble and perhaps horrible inflation.

Washunut,

That is an important point. However, I didn't mention it, only because that encouraging situation remained the same since the March 16 FOMC statement. I was only highlighting improvements since March 16.

FWIW, the March 16 statement's discussion of business spending on equipment and software showed improvement from the January 27 FOMC statement, which noted, "Business spending on equipment and software appears to be picking up..."

I believe it is increasingly clear to objective observers that the economy is in the midst of a recovery. The 2010 Q1 GDP report, which will be released on Friday, should show another quarter of growth. I suspect that Q1 had annualized real GDP growth in the vicinity of 3.5% +/- a few tenths of a percent. It is not completely out of the question that a 4.0% figure might be reported, as an upward suprise is probably more likely than a downward one.
 
Washunut,

That is an important point. However, I didn't mention it, only because that encouraging situation remained the same since the March 16 FOMC statement. I was only highlighting improvements since March 16.

FWIW, the March 16 statement's discussion of business spending on equipment and software showed improvement from the January 27 FOMC statement, which noted, "Business spending on equipment and software appears to be picking up..."

I believe it is increasingly clear to objective observers that the economy is in the midst of a recovery. The 2010 Q1 GDP report, which will be released on Friday, should show another quarter of growth. I suspect that Q1 had annualized real GDP growth in the vicinity of 3.5% +/- a few tenths of a percent. It is not completely out of the question that a 4.0% figure might be reported, as an upward suprise is probably more likely than a downward one.

I am totally in line with your thinking. I do have a concern that the Fed is continuing the easy money policy for to long. Amazing to me, since so much of the root cause of the mess we are just getting out of was easy money and the quest for returns.

I think we should be especially concerned with the Fed's balance sheet. With so many mortgage loans they will have a hard time pivoting quickly when needed. Conservative ( fiscally) folks like myself think they are already late in starting their balance sheet clean up.
 
I am totally in line with your thinking. I do have a concern that the Fed is continuing the easy money policy for to long.

I believe the Fed will need to be careful not to prolong the period of extraordinarily low interest rates. It was encouraging to note that the Fed will be closing down the rest of its Term Asset-Backed Securities Loan Facility on June 30.

I would like to see the Fed begin to pare its mortgage-related securities holdings on or very shortly after that date.
 
I believe the Fed will need to be careful not to prolong the period of extraordinarily low interest rates. It was encouraging to note that the Fed will be closing down the rest of its Term Asset-Backed Securities Loan Facility on June 30.

I would like to see the Fed begin to pare its mortgage-related securities holdings on or very shortly after that date.

The last part you wrote is the tricky part. If the Fed stops buying mortgages they can only control short term rates. People are questioning whether they will show independence and do the right thing as interest rates rise and the rates for new mortgages rise. Or will they give in to political pressure and risk putting the economy on steroids for too long.
 
The last part you wrote is the tricky part. If the Fed stops buying mortgages they can only control short term rates. People are questioning whether they will show independence and do the right thing as interest rates rise and the rates for new mortgages rise. Or will they give in to political pressure and risk putting the economy on steroids for too long.

I agree. IMO, the Fed will need to proceed carefully in reducing its mortgage-related securities holdings. In doing so, it will need to be careful to avoid destabilizing the housing sector.

For a rough guide, it could use, among other indicators, the annualized change in quarterly home prices, as one measure for how fast to proceed e.g., it should shoot for relative stability in home prices during its balance sheet reduction efforts. If home prices begin to fall, it would need to slow its pace. If home prices are rising at more than a modest pace consistent with price stability (usually defined as > 2% per year), it would have room to accelerate its unloading of such securities. Keep in mind, that's just one example of a possible indicator. It would be prudent for the Fed to employ multiple indicators to reduce the risk of error.

In any case, I suspect that the process will need to be a gradual one, starting very slowly and then proceeding faster in future years. It will probably take at least 3-5 years at the earliest before the Fed has sold off such securities. The process could take considerably longer. Caution not speed should define the Fed's balance sheet reduction efforts.
 
hrmph

in 3 to 5 years, servicing debt, mere interest alone, will approach ONE TRIL PER YEAR

News Headlines

just like greece, way too little way too late
 
I agree. IMO, the Fed will need to proceed carefully in reducing its mortgage-related securities holdings. In doing so, it will need to be careful to avoid destabilizing the housing sector.

For a rough guide, it could use, among other indicators, the annualized change in quarterly home prices, as one measure for how fast to proceed e.g., it should shoot for relative stability in home prices during its balance sheet reduction efforts. If home prices begin to fall, it would need to slow its pace. If home prices are rising at more than a modest pace consistent with price stability (usually defined as > 2% per year), it would have room to accelerate its unloading of such securities. Keep in mind, that's just one example of a possible indicator. It would be prudent for the Fed to employ multiple indicators to reduce the risk of error.

In any case, I suspect that the process will need to be a gradual one, starting very slowly and then proceeding faster in future years. It will probably take at least 3-5 years at the earliest before the Fed has sold off such securities. The process could take considerably longer. Caution not speed should define the Fed's balance sheet reduction efforts.

I heard an interesting solution today. Have the Fed swap the mortgages with Fannie and take back treasuries. This way they can manage inflation without distorting the housing market. Seemed to make sense.
 
too clever by half a trillion

cbo says f&f will ultimately cost taxpayers THREE HUNDRED AND EIGHTY BILLION

Why Fannie Mae, Freddie Mac Continue To Cost US Taxpayers Billions

politically repulsive are the FORTY TWO MILLION dollars in BONUSES ceded to the incompetent and corrupt crew who got us all here

the f's are exempt, by the way, from dead dodd's bill, as you know

why, just last christmas eve, tax cheat in chief geithner's treas ok'd a ROOFLESS RECONSTRUCTION of the fulsomely favored f's

U.S. to Lose $400 Billion on Fannie, Freddie, Wallison Says - Bloomberg.com

too many syllables, no way out

ask papandreau
 
oh, please

FT.com / Emerging Markets - Jitters over China?s waning taste for T-bills

what about the 400B lost to f&f?

coupled with the roofless reconstruction of the deadbeat lenders?

what about the tril per year in interest payments just around the corner?

what about the 4.5 million homes expected to be foreclosed upon in 2010?

what about the half of those hamped who've already re-defaulted?

while obama continues to do just more of the same?

what about the extra tril at&t and the others have to book just to cover obamacare?

what about the almost ubiquitous, universal uncertainty confronting employers, investors, consumers, presented by health care, cap and trade, reg reform...?

what about consumer confidence still near an all time low?

what about the CONTAGION, the EXISTENTIAL THREAT, emanating from greece, portugal, spain, spreading soon to ireland, italy, which has so perturbed our poor perplexed president?

what about our states bleeding, near bellying up?

did you hear about harrisburg, yesterday?

Harrisburg, Pennsylvania, Council Told to Consider Bankruptcy - Bloomberg.com

what about public pensions popping?

what's that do to confidence?

personal income is down 3.2%

86% of americans describe their economy as in crisis

they don't seem to be understanding what you are tyring so hard to tell them

maybe you should use smaller words

y'know, talk to em directly
 
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Q1 GDP Report Reaffirms Ongoing Economic Recovery...

This morning, the Bureau of Economic Analysis reported that GDP grew at a 3.239% annualized rate during the first quarter of 2010. That marks the third consecutive quarter of growth. Since the bottom of 2009 Q2, real GDP has expanded 2.7%. At the same time, real personal consumption expenditures grew at a 3.6% annualized rate, its strongest growth since 2007 Q1 (+3.7%).

Select Measures:

Real GDP Change:
2009 Q3 +2.2%
2009 Q3 +5.6%
2010 Q1 +3.2%

Real PCE Change:
2009 Q3 +2.8%
2009 Q3 +1.6%
2010 Q1 +3.6%

All in all, the advance Q1 GDP report adds to the growing evidence that the U.S. economy is in the midst of a moderate-paced recovery. It also indicates that consumer confidence is beginning to increase, as consumers increased their spending to a much more robust rate in Q1.

The full report can be found at: http://www.bea.gov/newsreleases/national/gdp/2010/pdf/gdp1q10_adv.pdf
 
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1. despite all the hi flown verbage, we still seem to be talking past each other---LOL!

2. there's more to an economy than gdp

3. growth is natural and expected, the population is growing

4. that's why we need to create some 150,000 jobs a month just to KEEP EVEN

5. 3.2%, coming out of what we're coming out of, is not good news

6. that's why the figure was lower than expected

7. consumer confidence up a few points from an all time low leads us to...

8. 57.9

9. when you're at an all time low, what do you expect from your statistics

10. housing, which started all this, contracted TEN POINT NINE PERCENT in q1

11. that's terrifying

12. on top of the FOUR POINT FIVE MILLION FORECLOSURES expected in 2010

13. on top of the hundred thousand or so we've already hamped who've already re-defaulted

14. bottom line (as all know)---we're gonna have to do an AWFUL LOT BETTER THAN THIS to grow our way out of what's coming---A TRILLION DOLLARS PER YEAR IN INTEREST ALONE in about 5 years
 
when's obama gonna get hu to negotiate the yuan

bernanke called out currency as a major contributor

y'see, despite the syllables, despite the stats, the FIXES just are NOT in place

sorry
 
look at housing, the particular pointy pin that popped the balloon

foreclosures are forecast to INCREASE by SIXTY PERCENT in twenty ten, THIS YEAR

that's UP over terrible, terrifying 2009

so what's the white house do?

it BRAGS how it's gonna HAMP more

even tho half those we've "assisted" have already re-defaulted

y'see? no FIXES
 
and the biggie---DEBT

the 2009 and 2010 budgets BORROW an astonishing THREE TRILLION dollars, some 14% of gdp

that's not SUSTAINABLE

the NEW YORK TIMES, the president's pet press partner (did you read politico's piece on the topic this week?), forecasts service on our debts, MERE INTEREST ALONE, will approach A TRIL PER YEAR by 2016, 2017

the grey lady laments leadership's reliance on PHONY NUMBERS to project ITS estimation of some EIGHT HUNDRED BILLION service costs by decade's end

the white house (like all white houses) depends on unrealistically rosey GROWTH numbers AS WELL AS fantastically friendly INTEREST RATES

when the lady adjusted those two fundamentals underlying service costs to reality, well, that's how SHE arrived at A TRIL PER YEAR in interest somewhere around mid decade

very worrisome, don't you think?
 
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