It is getting harder to fight off the permabears and the perpetual doomsayers. Even with the rather large and unexpected drop in the weekly payroll numbers (357,000), the insertion of the permabears’ and doomsayers’ voices into the daily conversation is hard to fight off. It is even harder when the reported headline data supports the case for a global economic slowdown.
Brazil (3.8%), China (7%), and South Korea (3.3%), are all slowing as measured against forecasts for 2012. This is a fact, and it is hard to make the case that Europe has turned anything around economically. Yet, despite the forces arrayed against those of us who think the sky is not falling, I still hold onto the notion that one needs to see past the heavy gloom, as beyond that thick gloom, there is a contradictory reality that speaks to something else besides an inexorable march toward recession, both globally and in the US. One part of that are the positive growth percentages above and another is the data presented below.
The number of people seeking U.S. unemployment benefits plunged last week. But a big reason was that some automakers skipped their traditional summer shutdowns to keep up with demand, leading to fewer temporary layoffs of autoworkers.
The headline number, although refreshing, is not the important point. It is the explanation for the drop that speaks to a contradictory reality. If the US economy is marching toward recession, how is it that Ford and GM are selling more cars month after month? How is it that forward demand is such that these companies avoid their normal summer layoffs just to keep up with the demand?
United Continental Holdings Inc. (UAL) ordered 150 single-aisle jets with a catalog value of $14.7 billion from Boeing Co. (BA) to reduce its fuel bill by replacing older, less efficient planes. The order makes United the last of the four biggest U.S. carriers to announce single-aisle jet purchases in less than a year.
As well, if the US economy is headed toward an imminent recession, how is it that the four biggest US airlines can commit to the huge costs associated with updating their fleets? Logically, one would think these fiscal commitments would at a minimum be put off until the future of the US economy was a bit more certain. And if I am not mistaken, Boeing is a US company that will have to hire folks to build those planes, the same planes that are scheduled to begin rolling off the assembly lines in 2013, which is next year, if I am not mistaken, again.
More than 700,000 homeowners were no longer underwater on their homes during the first quarter. Some 11.4 million, or 23.7%, of mortgage borrowers were underwater on their homes at the end of March. That’s down from the 12.1 million, or 25.2%, of borrowers who were underwater three months earlier.
The above is interesting in that the statistic itself is meaningless, unless those “underwater” homeowners are having problems paying their mortgages. If that is the case, then the data supports my notion that past the gloom an economic brightness awaits. Yet even if true, the more important piece of the above data is this -US real estate prices are rising, which means people are buying up homes. Couple rising home prices with mortgage rates holding near record lows, and then add in the positive real estate perception and …
Trade in the day; Invest in your life …
