Prague Twin

Monday, April 16, 2007

Economy Surging

Good news for investors as March retail sales increased more than expected. Retail sales increased by .7% in March even though most had predicted a more moderate .2 or .3% increase. This increase in sales was led by gasoline, building materials, apparel, and bars/food service. Also worth noting is that Feburary's increase was revised upwards from .1% to .5%.

At the same time as this data was released, the New York Empire State Manufacturing index showed very slow growth, notching up 3.8 points when most had been predicting a more healthy 10.1 reading.

So although manufacturing continues to suffer, American consumers are showing no signs of fatigue. The equity markets have taken their cue and are up sharply just after the open. In fact, the Dow has just crested 12,700 and is now less than 100 points from a new record high. About 10 days ago I mentioned that the Dow was at a key level. Now that that level has been passed, there is little resistance in the way of a new high.

However, tomorrow we get Consumer Inflation, Housing Starts, Building Permits, Industrial Production and other data that could put a damper on this rally.

One final side note, much less money flowed into the United States than expected in March, but because of the inherent volitility of the "TICS" data, and the shrinking trade deficit, it is of little concern.



6 Comments:

  • "So although manufacturing continues to suffer, American consumers are showing no signs of fatigue." We don't make anything in the US anymore. We have no product left to sell, but consumers keep finding money to spend. I believe we will soon see the consequences of millions of Americans using plastic to indulge in instant gratification. Subprime loans has also helped to further degrade the middle class and foreclosures are on the rise. The DOW can't stay afloat forever on this kind of economy.

    By Anonymous rockync, at 10:51 PM  

  • The DOW can't stay afloat forever on this kind of economy.

    I have been saying that for over 18 months now. I was convinced the other shoe was going to drop in Q1 of 2006. I was sure of it. Now we are in Q2 of 2007.

    Manufacturing still represents 15% of all jobs in the U.S and it is still a base that the rest of the economy relies on. It may not seem like much, but a couple of trillion dollars a year is nothing to overlook.

    By Blogger Praguetwin, at 11:31 PM  

  • I still believe you're right, the other shoe will drop. I think there are props in place to hold up the sagging economy. Sooner or later it will fall apart.

    By Anonymous rockync, at 2:36 AM  

  • We shall see. Lets hope we are wrong.

    By Blogger Praguetwin, at 9:09 AM  

  • Off topic, but this goes back to the gun control post you wrote a while back.

    On Sunday, the NY Times noted that Philadelphia is struggling with a huge increase in gun violence compared to other large cities around the nation. Part of the problem is that Pennsylvania has made it illegal for cities in the state to pass gun control laws. So guns are easily available in Philly and as a result of that (+ the poverty rate, + the gang culture), Philly is one murderous town.

    Here's the link:

    http://www.nytimes.com/2007/04/15/us/15philadelphia.html?_r=1&oref=slogin

    In today's NY Daily News, columnist Michael Daly notes that NY cops say Virginia's state motto ought to be "Virginia is for gun lovers" because the state refuses to put any clamps on access to guns. NY police say that at one point 47% of guns they recovered in crimes came from Virginia.

    Here's the link:

    http://www.nydailynews.com/news/crime_file/2007/04/17/2007-04-17_yes_virginia_guns_kill_innocents-2.html

    I'm not calling for national gun control laws cuz' I know that'll never fly and I know given the power of the gun lobby, it's political suicide. But I wonder how we can legislate so that municipalities that want to control access to guns (like Philly or NY) can do so.

    Now I dunno if yesterday's tragedy was done with legal or illegal guns. But after I had seen the Philly story on Sunday I wanted to re-engage with you on this issue, pt, and yesterday's massacre in Virginia really brought it home for me.

    What do you think?

    Peace.

    By Blogger reality-based educator, at 1:35 PM  

  • Well, I've been mulling over this story with my post in the back of my mind.

    Thanks for the information and inspiration. I will post on it tonight or tomorrow.

    By Blogger Praguetwin, at 3:19 PM  

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