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  • From: Thomas Beckett <thomas AT tbeckett.com>
  • To: "Internetworkers: http://www.ibiblio.org/internetworkers/" <internetworkers AT lists.ibiblio.org>
  • Subject: Re: [internetworkers] More positive news..
  • Date: Tue, 13 Apr 2004 11:58:43 -0400

Tony Spencer wrote:
The Commerce Department said retail sales rose an unexpectedly sharp 1.8
percent in March to a seasonally adjusted $333.01 billion, the biggest gain
since March 2003. Excluding cars and trucks, sales gained 1.7 percent, that
category's best performance since March 2000.

Is gasoline included in retail sales? I dunno.

Fact is, those retail sales are built on top of a housing bubble that may be about to burst. The "recovery", such as it is, has been supported by consumer spending. Where are consumers getting the cash? By doing cash-out refinances of their homes and rebuilding their credit card debt.

Also, demand for housing, fueled by low interest rates, has grown so much that home prices are increasing dramatically -- arguably above the value of the property. This trend is even more pronounced in certain metropolitan areas.

http://www.washingtonmonthly.com/features/2004/0404.wallace-wells.html

Problem is that interest rates can't really get any lower. The burgeoning federal debt is creating pressure for rates on U.S. Treasury debt to go up. (It is also causing a weak dollar which is increasing the cost of oil to us, but that's for another day.) When the fed rates go up, so will all of those ARMs. It may take a year or two, but people will find themselves with higher interest payments (on higher principal, thanks to the cash-out refi), and no more disposable income with which to support the economy. If the housing bubble bursts, people may find themselves saddled with a mortgage principal higher than what they can sell their home for.

In the business segment of the economy, manufacturers' shipments, inventories and orders increased by a whopping 0.3% That's the field of making stuff and selling stuff (and employing people to do that).

http://www.census.gov/indicator/www/m3/index.htm

Mmm, lots of job growth in our future!

And here's a good one:

"Private wage and salary disbursements increased $21.0 billion in February, compared with an increase of $29.3 billion in January. Goods-producing industries' payrolls increased $3.6 billion, compared with an increase of $7.3 billion; manufacturing payrolls increased $3.2 billion, compared with an increase of $4.0 billion. Services-producing industries' payrolls increased $17.4 billion, compared with $22.0 billion."

http://www.bea.gov/bea/newsrel/pinewsrelease.htm

Whatever increases in wages that people are enjoying from the so-called recovery are declining dramatically. The "recovery" seems to be levelling off.

So again in conclusion, I congratulate George W. Bush, now for controlling inflation by keeping a tight lid on consumer disposable income and manufacturing activity.

TaB




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