Economics Update

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H/t Calculated Risk


It appears that inventories are now in line with sales.
Downward trend is the result of increased efficiencies
H/t Calculated Risk

In the good news/bad news dichotomy, we see that retail sales rose ½% in January but consumer confidence fell:

January sales at U.S. retailers climbed more than anticipated, while consumer confidence unexpectedly fell this month from a two-year high, showing a recovery in household spending may be gradual.

Retail purchases increased 0.5 percent, the third gain in the past four months, Commerce Department figures showed today in Washington. The Reuters/University of Michigan’s consumer sentiment gauge dropped to 73.7 from 74.4 the prior month.

Not sure what this all means, to tell the truth.

Sometimes teasing meaning out of the data is like drinking from a fire hose.

On the other hand, the data from Europe, where disappointing GDP numbers from Italy and Germany have unexpectedly fallen in the 4^th quarter, is pretty easy to understand, as is the fact that Bloomberg's Professional Global Confidence Index, fell on concerns that deficit problems among some nations in the Euro zone will hinder recovery.

By some countries, I mean, of course, the PIIGS (Portugal, Italy, Ireland, Greece and Spain), who are largely hamstrung in their ability to deal with the crisis because of deficit requirements of, and the fixed exchange rate from, being in the Euro zone.

BTW, here's a story that we may here more of in the next few months: there has been a surprising outflow of funds from "junk bond mutual funds:

High-yield, high-risk bond mutual funds last week had their biggest outflows since 2008, adding to signs that the junk debt market may be set for a “reversal.”

Investors withdrew $1.13 billion from mutual funds invested in high-yield debt, including exchange-traded funds, in the week ended Feb. 5, according to research firm EPFR Global. That’s the most since early in the third quarter of 2008 and reverses a $335.6 million inflow from the previous week, according to Cambridge, Massachusetts-based EPFR.

I do not know what is up (or more accurately down) here but someone out there knows something and is acting on it.

In any case, the problems in Europe, along with new Chinese actions to reign in lending by increasing bank reserve requirements, have raised concerns about the economy which driven crude oil down, and led to a flight to safety which has driven the dollar up.