More Awful Economic Data Announcements

February 19, 2009

As noted earlier in my overnight news summary, markets had been more hopeful in mood, impressed by the barrage of policy support including a multi-billion U.S. plan of support for mortgage holders in danger of getting foreclosed.  But the drumbeat of poor data continued such as news of a 26.5% on-year plunge in Thai exports.  Considerably more information has emerged since that post, underscoring the depth of the recession and how it has seemingly infected every corner of the global economy.

  • Polish industrial production fell 5.8% in January and by 14.9% from a year earlier, much more than forecast.
  • The Philly Fed index tumbled another 17 points in February to -41.3 instead of edging just marginally lower as had been anticipated.
  • The Canadian index of leading economic indicators dropped 0.8% in January, faster than in previous months. Such was the fifth consecutive drop, and the index declined at a 6.2% annualized rate over that period.
  • Consumer confidence in Belgium regressed four points to -24 in February, only a point above December’s 15-year low.
  • U.S. jobless claims averaged 619K during the last four reported weeks, 19.4% greater than in the previous four weeks.  That represents an intensifying increase, and while the unemployment rate lags the business cycle, elements of labor market information like the new jobless claims are forward-, not backward-looking.  Continuing unemployment insurance claims were just below 5 million at a record 4.987 million.  With job hirings down to a trickle, the average duration of layoffs has lengthened sharply, and many workers are settling for much lower-paying positions than they left.  Analysts have revised up the projected peak to over 9.0%.  9.0% was the peak associated with the 1973-75 recession, and 10.8% was hit in the early 1980’s. I look for a peak closer to that figure than to 9.0%.
  • U.S. producer prices only fell 1.0% in the year to January, whereas import prices reported yesterday posted a far sharper plunge of 12.5%.  Core PPI rose 4.2% on year, while non-fuel import prices dropped by 0.6%.  These two sets of data suggest that wholesale price inflation is receding more quickly abroad than in the United States, a trend that flags a possible erosion of cost competitiveness.
  • Swiss export volumes tumbled 11.5% in the year to January.
  • The Canadian Mortgage and Housing Corporation revised its projection for housing starts in 2009 to a drop of 24.1% to 160.25K.

A war continues between U.S. stock market bears and those trying to defend the key 7552.29 technical low on the DOW.  A decisive break below this level could potentially unleash a new tsunami of stop-loss selling, with feedback effects in private consumption.  Even more worrisome would be the immediate impact on key financial and automaker stocks, forcing the Washington’s hands on the issue of nationalization.

The Central Bank of the Republic of Turkey is expected to cut its key lending and borrowing rates later today by at least a half percentage point and probably more later today.  It’s prior reductions on January 15th amounted to 200 basis points and left rates 375 basis points below their cyclical peaks.

Copyright 2009 Larry Greenberg.  All rights reserved.  No secondary distribution without express permission.

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