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Mish's Global Economic Trend Analysis |
ECRI Calls Recession Based on "Contagion in Forward Indicators"; Just How Timely is the Call? Posted: 30 Sep 2011 04:52 PM PDT A number of people have asked me to comment on the ECRI's recession calls. Link if video does not play: Economist Says U.S. Recession Is `Inescapable' Tom Keen: "Single Sentence, why recession now" ECRI's Lakshman Achuthan: "Contagion in Forward-Looking Indicators" Select Quotes from the Video
Superb Interview I have to give Achuthan credit. I think that was a superb interview. However, I still do not appreciate the half-truths and hype in today's ECRI report U.S. Economy Tipping into Recession Last year, amid the double-dip hysteria, we definitively ruled out an imminent recession based on leading indexes that began to turn up before QE2 was announced. Today, the key is that cyclical weakness is spreading widely from economic indicator to indicator in a telltale recessionary fashion.A Look at ECRI's Recession Predicting Track Record The ECRI does not call recessions in advance. Perhaps they caught this one, but we will have to wait and see. I suspect the NBER will date this recession back to June or July and if so the ECRI will be about a quarter late. More importantly the ECRI totally blew the the recession that began in 2007, as well as the strength of it. As long as the ECRI persists in its false claims, I will persist that people take a look at ECRI's recession predicting track record. Flashback November 2007 ECRI Vol. XII, No. 11: Weakness In Leading Indicators Not Yet Recessionary Please consider the following image snip. Highlighting is mine. ECRI: "The difference this time is that, even though the shocks have arrived, good leading indicators like the USLLI are not showing recessionary weakness ... This is a key reason why the economy is not yet in a recession. .... weakness is not pronounced, pervasive and persistent enough to be recessionary. .... leading indexes are still holding up sufficiently for a recession to be averted." Window of Opportunity Friday, January 25, 2008 ECRI Says There Is A Window of Opportunity for the US Economy The U.S. economy is now in a clear window of vulnerability, given the plunge in ECRI's Weekly Leading Index (WLI) since last spring. Yet there is a brief window of opportunity within that window of vulnerability to avert a recession. That is why ECRI has not yet forecast a recession. .... This is why, having correctly predicted the last two recessions in real time without crying wolf in between, we are not forecasting one yet. ECRI Denial The ECRI laid it on pretty thick, openly mocking the "best advertised [recession] in history" while claiming "This is why, having correctly predicted the last two recessions in real time without crying wolf in between, we are not forecasting one yet." The irony is the recession was about 2 months old at the time. Recession of Choice Friday, March 28, 2008 ECRI Calls it "A Recession of Choice" The U.S. economy is now on a recession track. Yet this is a recession that could have been averted. In January, given the plunge in the Weekly Leading Index, we declared that the economy had entered a clear window of vulnerability. Yet we emphasized the brief window of opportunity within that window of vulnerability for timely policy stimulus to head off a recession. It is a somewhat different story with regard to GDP, because the cyclically volatile manufacturing sector still accounts for 36% of GDP. A mild downturn in that sector should limit the decline in GDP in this recession. Marketing Spin In contrast note the spin from The Great Recession and Recovery. Accompanying that slide the ECRI said "And we issued a clear Recession Warning noting that: "The magnitude of oil and interest rate shocks are near recessionary readings." A month later, as we now know, the recession began. Compare that slide, with the above image snip above. The ECRI was clearly bragging not only about besting the yield curve, but also said "The Difference this time is that, even though the shocks have arrived, good leading indexes like USLLI are not showing recessionary weakness. ... as Chart 1 shows, the level of the USLLI is already a little lower now than it was three months earlier. However, this weakness is not pronounced, pervasive and persistent enough to be recessionary" It's Different This Time! After the fact, the ECRI took one statement out of context, a statement they went to great lengths to refute, then has the blatant gall to claim they issued a "recession warning". Recessions Predicted in Arrears Once again, I think Lakshman Achuthan did an excellent job in the interview. He stated the recession case well. However, the ECRI has a history of waiting until a recession is baked in the cake, then proclaiming it before the NBER and calling it a success. The revisionist history in regards to "no misses" is plain to see. The ECRI totally blew the call in 2007 and early 2008. That is not the galling part. Calls are easy to miss. The galling part is the ECRI's revisionist history related to the blown call. The ECRI's integrity will remain in question as long as it continues to perpetuate the myth of a perfect record. The simple fact of the matter is no one has a perfect track record at calling recessions, interest rates, the stock market or anything else. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. |
Real Disposable Personal Income Drops Second Consecutive Month; Drop is Highly Deflationary Posted: 30 Sep 2011 10:57 AM PDT Inquiring minds are digging into the just released Personal Income and Outlays Report for August 2011. Personal IncomeSome charts will help put these numbers onto perspective. Real Disposable Personal Income Since 1969 Real Disposable Personal Income Since 1989 Real Disposable Personal Income % Change from Year Ago The second chart is the same as the first except the time period is smaller to better show the decline in the last recession. Together the charts show an unprecedented decline in real personal income. The third chart shows percentage change from a year ago. Note how rare it is for this number to cross the zero-line. It is headed there again, following an unprecedented drop in 2008-2009. Unlike the 1970's where consumer prices were soaring this decline comes at a time when the Personal Consumption Expenditures Price Index is tame. Personal Consumption Expenditures (PCE) Price Index The above chart courtesy Personal Consumption Expenditures: Price Index for August by of Doug Short. It's Credit that Matters Inflationists will immediately howl over excluding food and energy from the price index (and they will be right). However, inflationists conveniently ignore the collapse in home prices, instead focusing on the price of a Big Mac. When energy prices send price index lower (which will happen shortly), the inflationists will conveniently ignore that data as well, preferring to scream inflation when commodities are rising while hiding under a rock when commodity prices fall. Moreover, and more importantly, focus on prices is silly in the first place because in a credit-based economy it is expansion and contraction of credit that matters, not modest increases or decreases in prices (totally ignoring the plunge in home prices to boot). Drop in Personal Income Highly Deflationary With real wages falling and jobs exceptionally hard to get (and keep), this drop in personal income will be accompanied with more unwillingness of banks to lend, and therefore must be considered highly deflationary. For further discussion as to a realistic approach to what inflation and deflation are all about, please see
Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. |
Posted: 30 Sep 2011 01:41 AM PDT Shilling Sees Evidence of Deflation in Financial Assets, Tangible Assets, Median Income, Commodities, Currencies Shilling says "Forces of deleveraging and deflation are greater than the Fed can handle." I certainly agree and have been saying the same thing (correctly I might add) for several years. All the Fed has ever managed to do is slow the deflationary outcome and that is in spite of $trillions in both monetary stimulus from the Fed and fiscal stimulus from Congress. Once again, if you mistakenly think inflation and deflation are about consumer prices instead of vastly more important credit, you will come to a different conclusion. For further discussion as to what deflation is all about, please see
Fed Out of Bullets In spite of what the Fed says and wants everyone to believe the Fed is Out of Bullets Let's Twist Again (and Not Much More) as I expectedBernanke Begs Congress for Fiscal Stimulus In a question session following Bernanke's speech Lessons from Emerging Market Economies on the Sources of Sustained Growth (in which Bernanke proves he does not really understand what is really happening in China), Bernanke begged Congress for help and admitted the Fed is out of bullets. Yahoo Finance reports Bernanke: Long-term unemployment a national crisis Federal Reserve Chairman Ben Bernanke said Wednesday that long-term unemployment is a "national crisis" and suggested that Congress should take further action to combat it. He also said lawmakers should provide more help to the battered housing industry.In practical terms, Bernanke was begging Congress for help, and in the Q&A session, Bernanke went even farther. Please consider Everyone Missed It, But Ben Bernanke Peed On The Fed Again Last Night by Joe Weisenthal. We've talked about this before, the fact that Ben Bernanke is growing increasingly vocal about his skepticism that monetary policy can do much to save this economy.That is a close an admission that the "Fed is out of Bullets" that you are ever going to see. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. |
Posted: 30 Sep 2011 12:42 AM PDT Those looking for evidence that Europe is already in recession can find it in this headline: German Retail Sales Decline More Than Forecast German retail sales declined the most in more than four years in August as concerns about the economic impact of Europe's sovereign debt crisis sapped consumers' willingness to spend.I will take the "under" on 3% German GDP in the second half. Moreover, given the slowdown in Europe, the US, Australia, and now China, the ability of the vaunted German export machine to keep humming along is simply not believable. Retail Sales in the Eurozone Fell Fifth Consecutive Month Finfacts reports Rate of decline in Eurozone retail sales slows in September The articles seem at odds with each other since they were both released in the last two days. However, the Bloomberg article was for August, Finfacts was for September. The important points are the European retail sales PMI is negative and Germany is weakening. Mike "Mish" Shedlock http://globaleconomicanalysis.blogspot.com Click Here To Scroll Thru My Recent Post List Mike "Mish" Shedlock is a registered investment advisor representative for SitkaPacific Capital Management. Sitka Pacific is an asset management firm whose goal is strong performance and low volatility, regardless of market direction. Visit http://www.sitkapacific.com/account_management.html to learn more about wealth management and capital preservation strategies of Sitka Pacific. |
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Title Tags - Is 70 Characters the Best Practice? - Whiteboard Friday |
Title Tags - Is 70 Characters the Best Practice? - Whiteboard Friday Posted: 29 Sep 2011 02:06 PM PDT Posted by Aaron Wheeler It's often pretty difficult to make a short title for a webpage that offers a lot of varied or super-specific information. At SEOmoz, we say that the best practice for title tag length is to keep titles under 70 characters. That's pretty pithy considering that the title also includes your site or brand name, spaces, and other nondescript characters. So, does it matter if you go over 70 characters? How important is it to strictly adhere to this best practice? Cyrus Shepard does SEO for us here at SEOmoz, and he'll answer that very question in this week's Whiteboard Friday. Think title tags could or should be longer? Shorter? Let us know in the comments below!
Video TranscriptionHowdy SEOmoz! Welcome to another edition of Whiteboard Friday. My name is Cyrus. I do SEO here at SEOmoz. Today we're talking about title tag length. How long is your title tag? Well, recently people have been doing some experiments to see just how many characters Google will index within a title tag. For years, we thought it was 70s. It's fluctuated. But recent experiments have shown that Google will index anywhere between 150, one person even showed that they will index over 1,000 characters, and I will link to these experiments in the post. But does this mean that you should use all of those characters to your advantage? Can you use them to your advantage? Well, I got really curious about this. So I decided to perform some experiments here on the SEOmoz blog with super long title tags. We're talking extreme title tags, like 200 characters long, 250 characters long, just blew them out of the water just to see what would happen. ExperimentsOn the first experiment, I took 10 posts that did not get a lot of traffic, but they were pretty consistent traffic from week to week. I kept the old title tags and I just extended them with relevant keywords up to about 250 characters long. The results blew me away. In that first experiment, my traffic, over about a 12-week period, rose 136%. You can see, I'll try to include a screen shot in the comments below of the Google Analytics. It exploded. I got really excited. So, I tried a second experiment. (Correction, the experiment took place over a 6 week period, not 12 like I stated in the video.) The second experiment I tried with existing successful pages, pages that were already getting a fairly high volume of traffic, that were getting a consistent level of traffic every week. On that experiment, over about the same 12-week period, traffic rose 8%. Cool, but overall site traffic rose 9%. So it was actually 1% below the site average. Title Tags less than 70 CharactersNow, what are the arguments for short title tags? The best practices that you always hear about, keep it less than 70 characters. There are reasons why this is best practices and why we recommend it time and time again. Now the third reason is kind of new in today's world, and that is the rise of social media. Twitter limits characters to 140 characters. So, if you have a 220 character title tag and you're trying to share it on Twitter through automatic tweets or Facebook or whatever, they look spammy, they're not shareable, people don't want to share them. Shorter title tags, snappy, work really well. Best Practices are Guidelines, Not RulesThe first rule is always experiment. Like I said, if we would have tried something else, if we would have written different title tags in the first place, it could have helped us. What did it cost us to change those title tags? Zero. If your pages aren't performing well, you can always try something different and you should try something different. I still see sites all the time, large eCommerce sites, that on thousands of pages they have their brand name, the first 20 characters of the title tag in places where they shouldn't necessarily do that. SEOmoz did that for a number of years up until a few months ago. So, always experiment, not too much, but always try different things to see what title tags are going to work best for you. Video transcription by Speechpad.com |
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