The stock market seems to be the “triumph of hope over experience” once more. Rabid speculation in tech stocks is the theme once more.
- Commercial lending (industrial bank loans and commercial paper) peaked at about $3.3 trillion in August, according the Fed. By mid-November, such credit was down to $3 trillion, a drop of nearly 9 percent. Never (in the Fed’s records) has this credit category fallen so rapidly. Smaller declines preceded three recessions going back to 1975.
- Jobless claims are rising steadily. 352,000 this morning. We get employment next week, should be interesting.
- Durable goods orders yesterday were weak, down 0.4%. Especially weak was computer equipment, down 8%.
- The real estate collapse is spreading to commercial, where real estate deals are coming apart at the fastest pace since September 2001, because banks are tightening standards for loans, said Robert White, president of Real Capital Analytics, a New York-based research firm.
And on and on. The evidence is pretty overwhelming that a recession is either about to begin or has already begun.
For a total joke about the value of some of these economic releases, just look at the newly released new home sales data.
Sales rose 1.7% to a seasonally adjusted annual rate of 728,000 in October from a downwardly revised 716,000 in September, which was a 11-year low. September’s sales pace was originally reported as 770,000. August’s sales were also revised sharply lower to 717,000 from 735,000 estimated a month ago, and 795,000 estimated in the first release. Sales are down 23.5% in the past year. The October sales pace was much weaker than the 740,000 expected by economists surveyed by MarketWatch
For example, August was released at 795,000 and has now fallen after two revisions to 717,000, a roughly 10% reduction. And we’re supposed to believe they only fell another 1,000 in September and rose in October? Either fix the reporting system or delay the releases until you have some actual data, please. I’m getting really, really tired of this “put out a good headline and hope no-one notices the revisions.” I expect the actual number will turn out not to be much over 600,000 for October.
Financial Reality 