Benny’s Testimony on the Economy

“The US economy seems to be recovering from its collapse during the 2008 financial crisis, it has a long way to go, the recovery will move slowly over the coming months”, quipped Benny…which I found quite funny. Fabulous Fed-speak and a lesson on how to paint a bleak picture in an optimistic light, without sounding too crazy.

  1. New home sales plunged to an ‘unexpected low – the lowest level on record – in January. Median sales prices fell 2.5% while inventory of unsold homes increased.
  2. Non-defense capital goods excluding aircraft, a proxy for future business spending, fell ~3%, the biggest drop since April 2009.
  3. Machinery orders fell ~10%, the most in a year.
  4. Michael Panzner has an interesting chart on the ratio of defense orders to total durable goods orders. The chart shows that since the onset of the recession, defense orders have been increasingly taking up a greater share, even as durable goods fell. Where are the businesses?
  5. Consumer confidence index slumped to 46, the lowest since April. This was way below the worst case economist forecast…

Inventory replenishment, government stimulus packages and tax credits seem to have managed to ‘arrest’ the fall so far. But is it a harbinger of a ‘slow, long-term recovery’? I think its a touch too early to brand it that….and consumers, for one, seem to be disagreeing with the ‘smart’ economist lot.



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