Economics Update

Click for full size

---

Capacity Utilization


Industrial Production
H/t Calculated Risk

Retail sales rose, but missed forecasts for July, the comment of an economist quoted in the story, "The numbers are consistent with a sluggish consumer profile," is kind of well duh thing.

Hopefully the indications that the big banks are relaxing their lending standards for small businesses for the first time in 4 years.

This is good news, since banks have increasingly attempted to move small business customers from loans to corporate credit cards, where the fees and interest, and hence bank profits, are higher.

On the consumer side, credit card delinquencies fell to the lowest level this year, which could mean that more people are getting back on their feet (good), or that more consumers are deleveraging (mostly bad, see Thrift, Paradox of).

I'm inclined to believe that it is mostly the latter, particularly since bankruptcy filings hit a 5-year high in the 2^nd quarter.

We are seeing some good news in industrial production and capacity utilization, which continue a relatively robust recovery, though a lot of this gain was increased electricity consumption from a record breaking July, though a fair amount is also autos which is an unambiguously good sign. (See also the chart pr0n)

The New York Fed's economic activity index rose in August, but again, it missed forecasts.

In the land of the blithering idiots inflation hawks, the UK district is reporting that British CPI rose at a 3.1% annual rate, down from June's 3.2% rate, which has the inflation hawk piggies squealing that they are missing the 2% target, but as Krugman would say, we are in a liquidity trap, we need more inflation so that real interests rates (interest - inflation) is low enough to foster growth.

I would go further than Krugman, and say that both the Bank of England and the Fed should have a 6-8% target inflation rate for the next 4 years or so.

And then we have real estate, where the market seems to be deflating like the Hindenberg^* following the expiration of the home buying tax credit.

Housing starts rose, but fell well short of forecasts in July, home prices flattened out in June, and home builder confidence fell in August.

^*I know that the Hindenberg did not deflate, it burnt and crashed. That's my point of this mangled metaphor, OK?