Lance Roberts's Contributions

The good news this morning is that the 2nd estimate of the third quarter (3Q) GDP was revised up from 2.0% initially to 2.7%. This is up sharply from the 2Q print of 1.3%. As usual we will dig down into the numbers and look at the changes in the data...

This past Tuesday all eyes were on Bernanke as he gave his speech at the Economic Club in New York. Initially the markets sold off as no mention of further easing programs were mentioned but rebounded on his closing remarks. Out of the entire speech the media, and the markets, grabbed onto Bernanke's optimism about economic growth in 2013 as shown below.

The release of the retail sales report for October missed estimates coming in at -0.3% versus last month's upwardly revised 1.3% bump. Immediately, the media went to blaming Hurricane Sandy for the impact.

The people have spoken and President Obama will serve another four years presiding over the United States. Furthermore, there is very little change to the makeup of the House and the Senate, which leaves the Administration in the same battle for control as it was prior to the election.

The conservative media, and blogosphere, has been awash in claims that the latest employment data has been manipulated to support the election efforts of the current Administration.

What is really causing the economic malaise that the U.S. faces today? Most economists believe that it is the lack of aggregate demand that is causing the problem which can be rectified by continued deficit spending.

The Bureau Of Economic Analysis reported that Personal Incomes in September advanced 0.4 percent from August which had increased by only 0.1 percent. More importantly, wages & salaries gained 0.3 percent tacking onto the 0.1 percent increase in August.

While the media continues to push the idea that the housing market is on the mend the data really doesn't yet support such optimism. The current percentage of the total number of housing units available that are currently occupied remains at very depressed levels.

hile it was once again the multifamily component which jumped 25.1%, the single-family component also improved, gaining 11.0%. Housing permits also jumped 11.6% in September to an annualized pace of 894,000 which was up 45.1% from a year-ago.

Recently I wrote "Why The Real Unemployment Rate Is 16.9%" which sparked quite a few e-mails revolving around the issue of the way the Bureau of Labor Statistics measures unemployment. In that article we discussed the differences between the U-3 and the U-6 rates and showed what unemployment would look like if you included those that had been out of work longer than 52 weeks. In reality the problem is far worse...

In order for QE programs to be effective the liquidity produced by the bond buying program must be moved through the economic system. The chart of excess reserves below clearly shows that the transmission mechanism is broken.

This morning Lakshman Achuthan, chief operations officer of the Economic Cycle Research Institute, visited with Tom Keene on Bloomberg TV to discuss his ongoing recession call for the U.S. Achuthan has taken much grief for his call about the U.S. recession since last year.

The National Federation of Independent Business issued their monthly small business survey for August showing an increase from 91.2 last month to 92.9 in August.

The Romney campaign is asking, "Are you better off?" while the Obama campaign is asking to trust them to finish the job. But while the candidates can give speeches, shake hands and kiss babies all day long, there are three economic factors that will decide who will be the next president.

As of late any bad economic news has been the "siren's song" for a "crack addicted" market begging the "dealer" for another hit of liquidity injected euphoria. After all, the worse the economy gets for mainstream America the better off Wall Street is.

When Ben Bernanke launched QE 2 in 2010 he outlined a third mandate for the Federal Reserve - the boosting of consumer confidence. He stated that the goal of QE 2 was to boost asset prices in order to spur consumer confidence through the "wealth effect" which should translate into economic growth.

There have been a few calls as of late (Hussman, ECRI, Shilling) stating that we are currently in the next recession. Then there is everyone else. While the "optimistic" outlook is always more enjoyable to listen to - the problem is that the current "no recession" view is primarily predicated on current quarter growth rates looked at in isolation.

There is a consensus as of late that the Fed will launch another round of stimulative action in the form of a balance sheet expansion program (Quantitative Easing) by the next FOMC meeting in September.

The National Federation of Independent Business released their monthly small business survey this morning showing a 4th consecutive decline to 91.2 in July from last month's reading of 91.4. Overall, sentiment is deteriorating with the notes from the press release reading like an obituary for the economy...

The markets have been rising recently on "hopes" that Central Bankers around the world will unite into one big giant "funding-palooza" and resolve the Eurozone crisis conclusively. While the reality is that world wide bailouts will not resolve what ails the Eurozone - the markets are salivating at the prospect of another liquidity driven push higher in asset prices.