Global: Spinning Its Wheels - S. Roach
hxxp://www.morganstanley.com/GEFdata/digests/latest-digest.html
Auszug:
As the US economy now enters the 34th month of the current expansion, debate over sustainability remains as intense as ever. In a recent congressional appearance, Federal Reserve Chairman Alan Greenspan stated, “the expansion has regained some traction” after having gone through an energy-price-induced soft patch last spring. With all due respect to Mr. Greenspan, at this point in time, such a claim is largely an assertion based on a very creative interpretation of ever-volatile hard data. In my view, the case for traction in the US economy remains a weak one.
..................
The issue of traction is key to the current debate because this recovery has yet to stand on its own. Since the last recession ended in late 2001, the US economy has drawn unusual support from several artificial factors -- namely, massive policy stimulus (monetary and fiscal), saving depletion, the levering of assets, and the costless funding of domestic growth by foreign central banks. Hooked on the high-powered “steroids” of such extraordinary life-support measures, America hasn’t had to rely on the internal fuel of accelerating wage income generation that normally facilitates a transition from recovery to expansion. And that’s for good reason -- there has been an extraordinary and enduring shortfall in wage income generation since the inception of the current recovery. Based on data over the first 32 months of this upturn, real wage and salary disbursements have recorded a cumulative increase of just 2.2%. By contrast, by this same juncture in the previous six business cycles, real wage income had recorded a 10.6% average increase. Had wage income generation during this expansion matched the composite profile of past cycles, American consumers would have had an additional $339 billion of discretionary purchasing power at their disposal. That’s the equivalent of 4.3% of total real disposable personal income -- hardly a trivial sum by any standards.
.....................
On the job front, private nonfarm payrolls are now up only 0.3% over the first 33 months of this expansion. By contrast, at similar junctures of the past six cycles, the increase averaged 7.8%.
..................
The gap between the hiring trajectory of this expansion and the composite profile of these earlier recoveries works out to an employment shortfall of 8.2 million workers in the private economy. A similar pattern shows up in real wages -- comparisons in the current cycle are running an astonishing 0.3% below year-earlier levels (as measured by CPI-deflated average hourly earnings).
..................
Once again, Fed Chairman Greenspan has led the optimistic charge. And once again, I find myself on the other side of this positive spin. Yes, consumer demand rebounded in July, but that came after a terrible June; the average change in real consumption expenditures over the two months was only +0.2% -- actually a shade below an already subdued pace in the first five months of 2004.
.................
Meanwhile there are signs of mounting inventory backups -- a classic warning sign of production adjustments to come. Unfortunately, the inventory data lag other statistics, but it now looks as if total business stocks rose by at least 0.9% in July following a 1.0% increase in June -- marking the sharpest back-to-back monthly gains since before the last recession
.................
Detroit has already announced significant production cutbacks in 4Q04 that will probably knock at least 0.5 percentage point off annualized real GDP growth.
.......................
But the most fascinating insight of all into business attitudes may be the $38.7 billion spike in corporate stock buyback announcements that occurred in July -- the strongest such surge in 20 years and fully four times the average monthly pace of the past year
.................
For America, that will be the ultimate moment of truth -- when the economy then comes face-to-face with the lingering imbalances of subpar income generation, sharply reduced saving, an ever-widening current-account imbalances, and a record overhang of household indebtedness.
Notwithstanding this looming reality check, financial markets have deep conviction that a reacceleration of economic growth is imminent. If that were not the case, why else would fixed income markets still be pricing in another 50 bp of Fed tightening by year end and another 100 bp of rate hikes over the four quarters of next year? Why would equity markets still be looking for sustained corporate earnings growth? Or why would the dollar continue to defy the gravity of a looming current-account adjustment? Make no mistake, the traction bet is on -- by policy makers, financial markets, and incumbent Republican politicians. Yet this could well be a losing bet. For an income-short American consumer, traction remains as elusive as ever. A structurally-impaired US economy might only be spinning its wheels.
Stephen Roach ist in seinem Element - seinem Erfahrungsschatz zufolge, er hat immerhin bei der Fed Reserve in den 70ern gearbeitet - gibt ihm einen entscheidenden Einblick über den Chairman von der Fed, A. Greenspan, und über sein Verständnis von der US-Wirtschaft.
Der unbekümmerte Chairman von der Fed hatte spekuliert und hat verloren. Anstatt seine Verluste zu begrenzen und auf zu geben - beharrt er hartknäckig auf der gleichen Spur von Illusion und verwaltet Markterwartungen.
Diese Strategie hat miserabel in den letzten 4 Jahren versagt und mit einem Ölpreis der bereit ist weiter nach oben in die $50er und die $60er zu steigen, während die US-Wahlen näher rücken - werden die Schafe von dem breiten US-Aktienmarkt hat erkennen müssen, das der Abgrund erreicht ist.
hxxp://www.morganstanley.com/GEFdata/digests/latest-digest.html
Auszug:
As the US economy now enters the 34th month of the current expansion, debate over sustainability remains as intense as ever. In a recent congressional appearance, Federal Reserve Chairman Alan Greenspan stated, “the expansion has regained some traction” after having gone through an energy-price-induced soft patch last spring. With all due respect to Mr. Greenspan, at this point in time, such a claim is largely an assertion based on a very creative interpretation of ever-volatile hard data. In my view, the case for traction in the US economy remains a weak one.
..................
The issue of traction is key to the current debate because this recovery has yet to stand on its own. Since the last recession ended in late 2001, the US economy has drawn unusual support from several artificial factors -- namely, massive policy stimulus (monetary and fiscal), saving depletion, the levering of assets, and the costless funding of domestic growth by foreign central banks. Hooked on the high-powered “steroids” of such extraordinary life-support measures, America hasn’t had to rely on the internal fuel of accelerating wage income generation that normally facilitates a transition from recovery to expansion. And that’s for good reason -- there has been an extraordinary and enduring shortfall in wage income generation since the inception of the current recovery. Based on data over the first 32 months of this upturn, real wage and salary disbursements have recorded a cumulative increase of just 2.2%. By contrast, by this same juncture in the previous six business cycles, real wage income had recorded a 10.6% average increase. Had wage income generation during this expansion matched the composite profile of past cycles, American consumers would have had an additional $339 billion of discretionary purchasing power at their disposal. That’s the equivalent of 4.3% of total real disposable personal income -- hardly a trivial sum by any standards.
.....................
On the job front, private nonfarm payrolls are now up only 0.3% over the first 33 months of this expansion. By contrast, at similar junctures of the past six cycles, the increase averaged 7.8%.
..................
The gap between the hiring trajectory of this expansion and the composite profile of these earlier recoveries works out to an employment shortfall of 8.2 million workers in the private economy. A similar pattern shows up in real wages -- comparisons in the current cycle are running an astonishing 0.3% below year-earlier levels (as measured by CPI-deflated average hourly earnings).
..................
Once again, Fed Chairman Greenspan has led the optimistic charge. And once again, I find myself on the other side of this positive spin. Yes, consumer demand rebounded in July, but that came after a terrible June; the average change in real consumption expenditures over the two months was only +0.2% -- actually a shade below an already subdued pace in the first five months of 2004.
.................
Meanwhile there are signs of mounting inventory backups -- a classic warning sign of production adjustments to come. Unfortunately, the inventory data lag other statistics, but it now looks as if total business stocks rose by at least 0.9% in July following a 1.0% increase in June -- marking the sharpest back-to-back monthly gains since before the last recession
.................
Detroit has already announced significant production cutbacks in 4Q04 that will probably knock at least 0.5 percentage point off annualized real GDP growth.
.......................
But the most fascinating insight of all into business attitudes may be the $38.7 billion spike in corporate stock buyback announcements that occurred in July -- the strongest such surge in 20 years and fully four times the average monthly pace of the past year
.................
For America, that will be the ultimate moment of truth -- when the economy then comes face-to-face with the lingering imbalances of subpar income generation, sharply reduced saving, an ever-widening current-account imbalances, and a record overhang of household indebtedness.
Notwithstanding this looming reality check, financial markets have deep conviction that a reacceleration of economic growth is imminent. If that were not the case, why else would fixed income markets still be pricing in another 50 bp of Fed tightening by year end and another 100 bp of rate hikes over the four quarters of next year? Why would equity markets still be looking for sustained corporate earnings growth? Or why would the dollar continue to defy the gravity of a looming current-account adjustment? Make no mistake, the traction bet is on -- by policy makers, financial markets, and incumbent Republican politicians. Yet this could well be a losing bet. For an income-short American consumer, traction remains as elusive as ever. A structurally-impaired US economy might only be spinning its wheels.
Stephen Roach ist in seinem Element - seinem Erfahrungsschatz zufolge, er hat immerhin bei der Fed Reserve in den 70ern gearbeitet - gibt ihm einen entscheidenden Einblick über den Chairman von der Fed, A. Greenspan, und über sein Verständnis von der US-Wirtschaft.
Der unbekümmerte Chairman von der Fed hatte spekuliert und hat verloren. Anstatt seine Verluste zu begrenzen und auf zu geben - beharrt er hartknäckig auf der gleichen Spur von Illusion und verwaltet Markterwartungen.
Diese Strategie hat miserabel in den letzten 4 Jahren versagt und mit einem Ölpreis der bereit ist weiter nach oben in die $50er und die $60er zu steigen, während die US-Wahlen näher rücken - werden die Schafe von dem breiten US-Aktienmarkt hat erkennen müssen, das der Abgrund erreicht ist.
