by Calculated Risk on 6/07/2010 03:00:00 PM

The Federal Reserve reports:

Consumer credit increased at an annual rate of 1/2 percent in April 2010. Revolving credit decreased at an annual rate of 12 percent, and nonrevolving credit increased at an annual rate of 7 percent.

Click on graph for larger image in new window.

This graph shows the year-over-year (YoY) change in consumer credit. Consumer credit is off 3.2% over the last 12 months.

Note: The Fed reports a simple annual rate (multiplies change in month by 12) as opposed to a compounded annual rate. Consumer credit does not include real estate debt.

Usually there is a fairly sharp increase in consumer credit during a robust recovery - but that isn't happening this time because household balance sheets are still a mess. Just another reminder that the recovery will be sluggish and choppy ...

by Calculated Risk on 6/07/2010 12:00:00 PM

Last week I posted the Impact of Census 2010 on Payroll Report

My estimate was that the 2010 Census would add 417,000 payroll jobs in May; the actual was 411,000 payroll jobs.

My preliminary estimate is the Census will subtract 200,000 payroll jobs in June - and most of the remaining temporary Census jobs (564,000 total in May) will be unwound by September.

I've been puzzling over how much (if any) these temporary jobs lowered the unemployment rate in May. I think these workers come from three groups:
1) already employed workers taking a part time job,
2) people not in the workforce picking up a little temporary income (like retirees or students who would otherwise not be in the workforce), and
3) the unemployed taking a part time job.

Sure enough there was an increase in people working multiple jobs in May. The number of multiple jobholders jumped by 210,000 in May (seasonally adjusted). There can be other reasons for this increase, but if we assume these are mostly Census workers, then about half the 411,000 additional Census workers already have other jobs - so for these workers, the temporary Census jobs has no impact on the unemployment rate.

The other half are probably otherwise unemployed workers, or people not in the workforce (although the participation rate declined in May). If we assume that this is mostly unemployed workers, these temporary hires lowered the unemployment rate by around 0.1% (from 9.8% to 9.7%).

by Calculated Risk on 6/07/2010 08:35:00 AM

Professor Duy is not happy: A Good Crisis, Wasted

It is official. The rest of the world assumes the economy can pick up were we left off in 2006, with the US as the driver of global demand. And it is apparent there is little US policymakers can or will do to counter the trend. Once again, crisis - and along with it the opportunity to rebalance global growth - is wasted.
...
Don Geithner [is] tilting at windmills. His battles are futile. Financial markets know it, sensing that the global growth cannot be sustained on the back of the US alone. Of course, this was always the case; demand in the US alone was never sufficient to recreate the fabled "V" recovery of the 1980s. Market participants also know that US policymakers have their finger in the dam of a tidal wave of competitive devaluations. The Dollar, for all its warts, remains the big dog of reserve currencies, and Geithner fears the global pandemonium that would result from an actual US response to the currency manipulation of others. Thus the postponed report on currency manipulators becomes another case of "extend and pretend."

In the end, why continue to hold the Euro on what is increasingly the myth of global rebalancing? It is clear European policymakers want a weaker Euro, and US policymakers are powerless to prevent a stronger dollar. At least we are getting cheaper oil as a result.

When it all shakes out, the US will actually be asked to do more, not less.
...
Where does this all leave us? The rest of the world is intent on pursuing a begger thy neighbor strategy, with the US being the neighbor. I suspect US policymakers will eventually relent; it will be the only choice left. All we can do now is sit back and wait for the inevitable explosion in the US trade deficit, waiting idly by for the next crisis and the "chance" to bring some sanity to the global financial architecture.

Not only are we headed back to the pre-crisis imbalances, this suggests that unemployment in the U.S. will stay elevated for some time.

by Calculated Risk on 6/06/2010 10:55:00 PM

Note: Here is the weekly summary and a look ahead (with plenty of interesting graphs).

The Asian markets are red tonight with the Nikkei off 4%.

From CNBC: Pre-Market Data shows the S&P 500 off about 8 or less than 1%. Dow futures are off about 70 points.

The Euro is down against at 1.19 dollars

Best to all.

by Calculated Risk on 6/06/2010 06:20:00 PM

Here is the weekly summary and look ahead.

The furious backpedaling continues ...

From the WSJ: Hungary Seeks to Reassure Lenders and Investors

Hungary's new cabinet huddled in an emergency session over the weekend to devise an economic plan aimed at restoring confidence in the nation's creditworthiness, as the government backtracked on officials' earlier comments that the country could default on its debts.

From Reuters: Analysis: Hungary faces struggle to regain trust of markets

Hungary is likely to take months to regain the trust of financial markets after politicians in its new government made controversial comments ...

The euro is down to 1.1956 dollars.

This makes me think of Gilda Radner: "Never mind".