We’ll get to the collapse of durable goods orders in a minute. But before we go there, we need to set some longer-term economic context here so you can see what’s coming, probably Monday, or sometime next week.
As I outlined it for Peoplenomics readers Wednesday, I’ve now got a kind of cheat-sheet in my back pocket for our retirement fund preservation plays for the next six months to year, or so. All that remains is to sit back and see how the pieces fit starting with the timing of the forthcoming war of Israel on Iran.
Looking at this week’s Case-Shiller/S&P Housing Index, which shows housing is back to 2003 levels still, I find myself scratching my head wondering “What would the market be at 2003 levels? And if it is different than now, what would people by into that line of horse pettooty“
So, for giggles and grins I looked up where the Dow was on this date in 2003: Closest thing I could find was September 26th’s close (the 27th was a Saturday in 2003 if you remember?) and the Dow then was 9,313.08.
I’ll grant you such a direct comparison can’t be made since we’ve had X years of inflation since then and it’s too early to do that math. Still, when I put the numbers into the Minneapolis Fed inflation fixer/calculator/whizzy it tells me the inflation-adjusted Dow today would be about 11,762.8-something.
OMG! The Dow is 14% over-valued!
Surely, Ures truly can’t be so far off postulating it’s 2003. So let’s look at how many people held jobs in August of 2003, the most recent month for which a direct comparison with 2012 is possible.
We do this because surely, if things have improved since 2003, we ought to have seen at least some increase in the total number of people working, right? This year, for example, with a population of 314-million and 142.101 million employed, there “employment rate all in” was 45.25%.
Now, back in 2003, the (July 1) population of America was 290.81-million. And, since the employment figures are archived by the Bureau of Labor Statistics, we can look up employment for August of 2003: What it reveals is not very comforting. If you scroll down to the number of people employed, you’ll find it was 137.625 million worker-bees.
What’s so bad about that? Well, by the same measurement process, my “Employment rate, all in” (people working divided by total people) we find that yes, there were more people working (percentage-wise) back then: 47.32% had jobs.
Discomfort can be heard….the loudest noise I can hear at the moment is my air conditioner making some racket and a few readers with soggy Wheaties…there may be something to this comparison.
Oil prices, week of September 21, on the Energy Information Administration website crude oil futures were showing $91.37 a barrel. Week of September 29, 2003? $28.40 per barrel was the crude future price.
Remember – in fairness – we must remember to correct for inflation, so the equivalent price today would be $35.87. Which means crude futures could collapse and lose 60% of current prices and still, just get us back to 2003 levels.
(Ain’t this a fun way to start your morning?)
Worse, using “offishul” (sic) data, we note the EIA historical data shows retail gasoline (all formulations, dollars per gallon) the week of September 29, 2003 to be $1.591. Here, once again, we need to correct for inflation, which using the Minn-Fed calculator falls out at $2.01 per gallon.
Fast forward to the most recent reporting week and what do we have? $3.826 per gallon. So even after backing out inflation, gasoline is 90 percent higher than it was in 2003.
“What’s Ure point?”
Just this: Over the past nine years, America has worked her collective ass off. We get up every morning, put in (if we’re lucky enough to have a job) and put in way more than 8-hours for “the man.” Along the way, we’ve been through plenty of republicorp presidency and plenty of democorp presidency, and near as I can tell the sum-total payoff for all our sacrifice hasn’t been crap.
We have continued to swallow the corporate jobjacks to Asia, unjust wars founded on lies, and the payoff is? We haven’t made any real progress as a nation since 2003….and this is exactly what causes whole civilizations to implode. As Joseph Tainter notes (approximately – though I will keep drilling this into your head) “When the marginal rate of return on additional work falls below zero, people just start to walk away….”
So am I telling you it’s an echo of 2003?
No. It’s actually a bit earlier: 2002 but the numbers are just as bad.
And how do I know that? History has a rhyme to it and in 2002 the International Longshoreman’s and Warehouseman’s Union went on strike and was locked out by the Pacific Maritime Association.
We’ll find out if history has a bitter rhyme to it next Monday when contracts on the West Coast expire. A strike on the East Coast and Gulf of Mexico has been averted, at least for a while, as a federal mediator is making progress there.
As we look at the Baltic Dry index, which has popped about a hundred points in recent weeks to 752 earlier this morning, looks like there’s still trouble ahead on the docks.
But there’s a key difference between 2003 and 2012: Thanks to the jobjacking festival, the West Coast is critical to imports from Asia. And a reasonable person (or even me) could ask “How bad could things get?”
A questions we’ll have answered perhaps before elections. But in the meantime, you better hope and pray that dawn remains quiet and word doesn’t disturb the troop (barrel) of monkeys about how we’ve been led and bled for 9-10 years with nothing but higher prices, sacrificed families, unsustainable debt levels, and fewer jobs to show for it.
Otherwise, the monkey patch could get cantankerous, quickly.
Durable Goods Collapsing
OK, the press release you didn’t want to hear because it means that job layoffs are almost sure to follow:
New orders for manufactured durable goods in August decreased $30.1 billion or 13.2 percent to $198.5 billion, the U.S. Census Bureau announced today. This decrease, down following three consecutive monthly increases, was the largest decrease since January 2009 and followed a 3.3 percent July increase. Excluding transportation, new orders decreased 1.6 percent. Excluding defense, new orders decreased 12.4 percent. Transportation equipment, down following four consecutive monthly increases, had the largest decrease, $27.8 billion or 34.9 percent to $51.9 billion.
Shipments of manufactured durable goods in August, down two of the last three months, decreased $6.8 billion or 3.0 percent to $222.5 billion. This was also the largest decrease since January 2009 and followed a 1.9 percent July increase. Transportation equipment, down two of the last three months, had the largest decrease, $5.5 billion or 7.9 percent to $63.9 billion. This followed a 7.9 percent July increase.
Unfilled orders for manufactured durable goods in August, down following two consecutive monthly increases, decreased $16.9 billion or 1.7 percent to $978.7 billion. This was the largest decrease since December 2009 and followed a 0.7 percent July increase. “
Market futures are still pointing to the upside, which means the PPT (plunge protection team) is likely at work early today and maybe even looking to book some overtime next week. Need another hint as to what’s ahead?
Don’t know if you frequent the Drudge Report very often, but this morning, noted my cmoodity guy JB: Notice how Hillary is winking? How Obama is winking? How Putin in winking and even Michelle is winking?
OK…what does it mean? Damned if I know but something could be in the offing for next Monday or thereabout…
Could this be the PTB messaging (now sure how they’d arrange this) that something is coming in four winks (nights of sleep?). Just a damn interesting line-up says JB. Universe talking?
OK, the UN says the number of people leaving Syria is going up quickly…as violence continues on a soft boil there. Question we have to wonder is how many ill-=intended no-goodnicks are among them and going sleeper?
War to Come
Israel will likely outline its “clear red line” in a UN speech later on today.
Speaking of lines and such: Quality of football should head back up tonight now that a tentative deal has been reached with the better calling NFL referees.
More after this…