dailyreckoning.com / By Douglas French / 03/01/13
The Philly Fed manufacturers survey for February plunged from negative 5.8 to negative 12.5, the worst reading in eight months. A big miss from the +1 reading that was expected. Ouch!
Our friends at ZeroHedge point out that hope springs eternal:
“Oddly enough survey participants have been hoping for a brighter future for 4 years now. Expect the sellside penguins to say that this number too should be ignored, just like the initial claims earlier, and the new housing starts yesterday. After all one should ignore all data that does not fit the goalseeked script of a centrally-mandated ‘recovery.’”
Evidently consumers haven’t received the recovery memo from Washington either. “Well, we just had one of those weeks here at Wal-Mart U.S. Where are all the customers? And where’s their money?” February was the retail giant’s worst month in 7 years. Wal-Mart may not be the entire economy, but what goes on (or doesn’t go on) in those big blue boxes, tells us a lot about the economy.
America’s economy just can’t get going despite trillions in stimulus from the Federal Reserve and Washington D.C. President Obama said in his State of the Union address, “After years of grueling recession, our businesses have created over 6 million new jobs.” Of course fact checkers have torn this assertion to shreds. The number is really, maybe 1.2 million.
But let’s take the President at his word. Four years of zero interest and a $2.1 trillion increase in the Fed’s balance sheet hasn’t provided much bang for the buck. That $2.1 trillion divided by 6 million jobs is $350,000 per job. The federal government has run deficits of $1.4 trillion, $1.3 trillion, $1.3 trillion, and $1.1 trillion the last four years. The total of the deficits — $5.1 trillion — divided by the 6 million jobs is $850,000 per job. All this stimulus hasn’t been so stimulating.
Surely Ben Bernanke is scratching his head. However, a couple of “smaller fries” in the Fed food chain put their fingers on part of the problem a decade ago, in a paper published in, of all places, the Cato Journal. It’s important to remember that along with all that liquidity came government bailouts, guarantees, and finance support.