Central Perk: 29 sept. 2015

marți, 29 septembrie 2015

Mish's Global Economic Trend Analysis

Food Stamp Growth Outpaces Illinois Job Creation 5-4 During Recovery
Spain's Secessionist Party Leaders to be Charged with "Act of Disobedience"
Striking Weakness in Home Prices

Food Stamp Growth Outpaces Illinois Job Creation 5-4 During Recovery

Posted: 29 Sep 2015 07:17 PM PDT

Congratulations (of sorts) once again go to Illinois, the only state in the Midwest where SNAP (food stamp) growth outpaced job creation during the recovery. SNAP stands for Supplemental Nutrition Assistance Program, renamed from "food stamps" so as to not sound so derogatory.

What follows is a guest post from Michael Lucci, Vice President of Policy for the Illinois Policy Institute.

Illinois' dismal business climate continues to inhibit jobs growth, especially in manufacturing, as the state put 25 people on food stamps for every factory job created during the recovery from the Great Recession. Illinois is the only state in the Midwest to have added more people to food-stamp rolls than to employment rolls during the recovery from the Great Recession. Job losses from the Great Recession occurred from January 2008 to January 2010, and since then, states have had five-and-a-half years of recovery.

During the recovery from the Great Recession, the Land of Lincoln, alone in the Midwest, had more people enter the food-stamps program than start jobs. Food-stamps growth in Illinois has outpaced jobs creation by a 5-4 margin.

In every other Midwestern state, jobs growth has dramatically outpaced food-stamps growth during the recovery. In fact, in every other state in the region, jobs growth dwarfs food-stamps growth. But during the recovery, Illinois put more people on food stamps than every other Midwestern state combined.

Manufacturing has borne the brunt of Illinois' policy failures. From the state's broken workers' compensation system, to the highest property taxes in the region, to the lack of a Right-to-Work law while surrounding states enact Right to Work, Illinois has the worst policy environment in the Midwest for manufacturers.

The result for Illinois factory workers? The Land of Lincoln has put 25 people on food stamps for every manufacturing job created during the recession recovery.

And the recovery that Illinois' manufacturers have experienced has been especially anemic. After losing 117,000 manufacturing jobs during the recession, Illinois has only regained 17,400 of those factory jobs since January 2010. Meanwhile, the other Great Lakes states have pulled far ahead of Illinois during the recovery. Michigan has added 135,600 manufacturing jobs, Indiana has added 80,400, Ohio has added 74,500 and Wisconsin has added 48,700.

Illinois' lack of jobs growth, especially in blue-collar industries, has driven more and more Illinoisans to dependency on government, while residents of the other Great Lakes states join the ranks of the employed and leave the food-stamps program. Michigan surpassed Illinois in 2014 for manufacturing jobs created, while Illinois has surpassed Michigan for the percentage of residents on food stamps. Illinoisans depend on food stamps more than do the residents of any other state in the region.

Illinois' slow jobs growth and increased government dependency – particularly when contrasted with the success of its neighbors – demonstrate the importance of Gov. Bruce Rauner's Turnaround Agenda, which addresses Illinois' top economic reform needs. Those include:

Reforms for the costliest workers' compensation system in the Midwest
A tax freeze and reforms for the highest property taxes in the Midwest
Lawsuit reform for the worst-ranked litigation climate in the Midwest

Illinois needs reform in many areas, including government-worker pensions, fair election maps and term limits for politicians. But Illinois must start with turning around the state's economy to facilitate more opportunities for jobless Illinoisans, and more tax revenues from increased growth. Rauner's Turnaround Agenda would put Illinois on the path toward responsible budgets, improved jobs growth and decreasing government dependency.

Michael Lucci, Vice President, Illinois Policy Institute

Mish Comment: Mayor Rahm Emanuel's "progressive" answer is to seek the biggest tax hike in history. Emanuel plans to leave no stone unturned when looking for revenue.

For details, please see Chicago Tax Collector Hath Arrived With Massive Tax Hike: Emanuel Says "No Stone Unturned ... Not Done Yet"

Mike "Mish" Shedlock

Spain's Secessionist Party Leaders to be Charged with "Act of Disobedience"

Posted: 29 Sep 2015 11:54 AM PDT

In the wake of a parliament-majority win by independence parties in last Sunday's Catalonia region election, the strike-down of dissent by Madrid continues.

The Financial Times reports Secessionist Party Leaders to Appear in Court Over Role in Breakaway Vote.

Catalan president Artur Mas will have to appear as a formal suspect in court next month over his role in organising a non-binding independence vote last year that was fiercely opposed by Spain.

Tuesday's announcement comes just two days after a closely watched election in the Spanish region that saw Mr Mas and other pro-independence leaders win a majority of seats in the Catalan parliament.

The two secessionist parties, Mr Mas's Junts pel Si and the far-left CUP, argue the result gives them the mandate to break Catalonia out of Spain in the next 18 months.

The judicial move against the Catalan president is likely to further inflame tensions between the Spanish government and the regional government — and was immediately denounced by Catalan leaders as a political stunt.

Mr Mas and his colleagues are under investigation for committing an act of disobedience, which under Spanish law carries a sentence of up to 12 months in jail.

The news sparked sharp criticism from political leaders in Catalonia, many of whom accused the Spanish government of using the judicial system for political purposes.

Apart from the Catalan president, Irene Rigau, a regional minister, and Joana Ortega, the former vice-president of Catalonia, will also appear in court. All three have been declared formal suspects, a status that means they are just short of being formally charged.

Contamination

Spain's justice minister Rafael Catalá said that the decision to declare Mr. Mas a formal suspect had been taken after, not before, Sunday's regional election, in an effort not to "contaminate" the democratic process.

If "contaminate" means "to not provide an even bigger majority for the secessionists", I can accept the justice minister's statement.

Big independence battles are just around the bend. Catalonia has about 16 per cent of the Spanish population and about 20 percent of the national economy.

Mike "Mish" Shedlock

Striking Weakness in Home Prices

Posted: 29 Sep 2015 09:33 AM PDT

For the third month in a row, the Case-Shiller 20-city seasonally adjusted home price index declined. Last month was revised lower. Economists were surprised.

The Bloomberg Econoday Consensus was for a month-over-month rise of 0.1%, instead prices declined by -0.2%.

Case-Shiller is reporting what is becoming striking weakness in home prices, at -0.2 percent in July for the adjusted 20-city index which, after a downward revision to June, is the third straight 2 tenths decline. Twelve of 20 cities show contraction in the month with the deepest for a third straight month in a row coming from Chicago at minus 1.2 percent. Year-on-year readings are all still positive led by San Francisco at plus 10.4 percent with Washington DC at the bottom at 1.7 percent.

Year-on-year, the 20-city index, whether adjusted or unadjusted, is at plus 5.0 percent vs 4.9 percent in July. The unadjusted month-to-month index, reflecting summer strength in home sales, was up 0.6 percent in August for however the weakest reading since the winter weather of February.

This report is very closely watched and offsets last week's gain for FHFA prices which are trending slightly higher than Case-Shiller. Home sales have been mixed this year with existing homes showing strength through most of the year but weakness in the latest report and vice versa for new homes which had been weak but have since popped higher. Lack of home-price appreciation is a negative for household wealth and spending and may be another symptom of general price weakness.

Case Shiller 20-City Index

Year-over-year comparisons have held stable at 5% in spite of month-over-month declining prices because of easy comparisons. Year-over-year comparisons will be increasingly difficult in the upcoming months.

Mike "Mish" Shedlock

Seth's Blog : For less than it's worth

For less than it's worth

The only things we spend time and money on are things that we believe are worth more than they cost.

The key words of this obvious sentence are often miscalculated:

Believe, worth and cost.

Believe as in the story we tell ourselves. Believe as in the eye of the beholder. Believe as in emotion.

Worth as in what we'll trade. Worth as in our perception of its worth right now, not later. Worth as in how we remember this decision tomorrow or next year.

and Cost, as in our expectation of how much it will hurt to get it, not merely the price tag.

If people aren't buying your product, it's not because the price is too high. It's because we don't believe you enough, don't love it enough, don't care enough.