May 28, 2004
— Ace Nothing here you can't get off Yahoo Finance, but since I read this stuff, I might as well digest it and blog it.
OPEC considers quota suspension. Trouble is, most oil-producers, except Saudi Arabia, are already pumping at capacity. However:
Suspending output quotas temporarily would make little difference to actual output but could provide the psychological impact on prices that OPEC's President Purnomo Yusgiantoro spoke of in Jakarta on Thursday.
It would also give official cartel blessing for Saudi to pump more without blatantly ignoring any new, higher quota.
This might not have a major impact on oil prices, but it couldn't help but have a sanguine affect.
Once again, Midwest factory activity surprises. "Midwest factory activity surprises" = "a bad surprise for John Kerry," since he's counting on a lingering manufacturing recession to deliver him Ohio.
And Michigan. And Wisconsin. And Pennsylvania. And Minnesota. And etc.:
Strength in the Chicago Purchasing Management index of business activity backed up that argument. The index jumped to 68.0 in May, when economists had looked for a modest pullback to 61.0 after April's already robust 63.9. The employment index also firmed, pointing to some improvement in the labor market.
"This is a very stunning report. The Chicago PMI is a volatile series and I thought you'd get some retracement and you didn't," said an impressed Joseph LaVorgna, senior U.S. economist at Deutsche Bank Securities.
The University of Michigan's final survey of consumer confidence for May showed its index falling to 90.2 from April's final reading of 94.2.
"What's affecting consumer sentiment is the geopolitical news, which is quite negative coming out of Iraq. But also the rise in oil prices is of concern to consumers as it affects their pocketbooks directly and that surely had an impact," said Kevin Logan, senior economist at Dresdner Kleinwort Wasserstein.
On the other hand, personal spending rose with expectations, personal incomes jumped, and yet inflation remained tame:
Personal spending rose 0.3 percent in April, the smallest gain in six months, the Commerce Department said. The figure was in line with forecasts.
More importantly for the economic outlook, incomes rose by a solid 0.6 percent, the biggest gain since last November as the job market improved. The rise showed households will have the wherewithal to keep on spending in the months ahead even if gasoline prices stay high.
A key indicator of inflation in the report -- and the Fed's favored measure of prices -- came in weaker than expected with a 0.1 percent increase, easing worries in the bond market that the Fed would need to make a series of aggressive rate hikes. The annual increase in the core personal consumption expenditures index was a moderate 1.4 percent.
"This eases fears that the Fed was behind the curve," said JP Morgan senior economist Jim Glassman.
"It allows the Fed to go at a measured pace without causing people to worry they are falling behind. The inflation scares are going to be dying down," he said.
Net effect? Well, the markets are slightly down.
Runaway inflation and interest rates, the liberals' latest economic bugaboos -- now that their unemployment bugaboo has been thoroughly rubbished by events -- would seem to be a phantasmal threat at this point.
We have just had a higher increase in manufacturing in May then we EVER had under Clinton economic boom years.
Since the mainstream media is constantly assuring us that the pre-Clinton era was the economic dark ages, you know...forced child labor camps, single mothers having to sell their children for medical experimentation, orphans used as yard markers on golf ranges, etc....I am really having a hard time coming to grasp with this. After all the liberal economic "experts" have stated point blank that W's tax cuts would hurt the economy and NOT help it. So how can this horrible economic policy by the present administration possible produce economic output greater than that of the glory years under Clinton.
I'm going to go lay down for a moment...all this cowbell is making my head hurt.
Posted by: WindyCity at May 28, 2004 10:13 AM (AvjIr)
I blame media brain control. I have the cure.
Posted by: lauraw at May 28, 2004 11:17 AM (AYE1g)
Here I was....scrolling down...looking for some cowbell....*sigh*. Don't blame me for wandering to greener pastures for cowbell.
Posted by: Rusty Shackleford at May 28, 2004 02:11 PM (JQjhA)
Bush's tax cuts may be helping the machine to hum smoothly (finally), but your children and grandchildren will have one hell of a hole to dig themselves out of.
Posted by: Jeremy Brendan at May 30, 2004 11:48 PM (Iprcs)
Thanks for providing the other great liberal scare tactic...the deficit is going to destroy the world that we give to our children. The funny thing is that economic growth has a way of making deficits go "poof". If I can take you back to the 90's I can show you that the reason the deficit shrank so much back then had very little to do with government restraining its spending habits and a great deal to do with economic growth (people and companies make more money, which means the government collects more in taxes).
Similarly, long term economic growth can make any deficity disappear faster than a whiskey and coke in Ted Kennedy's hand.
Finally, how big does a deficit need to get before it has a chance of causing a financial crisis similar to what's happened in Korea or Brazil? As a percentage of GDP, the US deficit is a tiny fraction of what it was to those countries and the amount of additional spending for the War is an even smaller fraction of the total economic throughput of the US. Amazingly liberals refuse to factor in these things.
But take heart Jeremy, you can still go on scaring old people about medicare and telling the college kids that the FBI is looking at their library records.
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