Economics Update

Well, it looks like today was the day for all the stuff you wanted to dump before a 4 day weekend.

First, consumer spending fell 1%, well beyond the prediction of 0.7%.

Remember that these days, the Christmas season starts in October for a lot of people.

This is a crushing figure, and it's not just due to falling energy prices, because people are paying down debt too.

The consumer confidence numbers reinforce this. The index is at 55.3, the lowest number since 1980, though still above the record of 51.7 in May, 1980.

Confidence not any better on the business side of things, with
durable goods orders falling 6.2% in October, and no, that's not an annual rate, that is the shrinkage for the month.


The unemployment stats say that weekly jobless claims fell last week, but I'm taking that with a grain of salt for the following reasons:

• Initial claims for state unemployment insurance benefits were a seasonally adjusted 529,000 in the week ended November 22 from an upwardly revised 543,000 the previous week.....Meaning that you compare lower initial numbers versus the later ones from the previous week, and it's a "drop"....yeah right.
• The 4 week moving average, which smooths out the noise, hit a 25 year high. (click for full size pic)

Just in case you are wondering how bad this will get, note that Fitch just cut its ratings on Toyota's bonds to AA from AAA.

Seriously this is a Stay-Puft Marshmallow Man news.

The credit markets are freezing up, though applications for mortgages are up, largely on insanely low interest....I wonder how many applications are rejected though.

I would also note that new home sales declined to the lowest level since 1982, so its not like there are a sh^%load of buyers out there.

As a result of all this, we are seeing a number of rescue packages world wide, with the European Commission announcing a €200 stimulus plan, ]China's central bank cutting rates.

These are probably what drove the dollar up today, and it also drove oil up

That being said, I think that the most troubling indicator is the fact that the 10-year Treasury yield fell below 3%, a new record, and this indicates that the flight to the relative safety of US Treasuries is continuing unabated.