Is there a correction coming?
By Daniel at 24 January, 2010, 1:12 pm
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I sent this out at the end of the year, my take on the economy - the REAL hard numbers economy - long, but a good read:
Here is my “end of the year “ recap of things that have gone on economically, and how they all tie together and give us a better picture of where the USA is economically than the current activity on Wall Street. I apologize for it’s length, but I want to convey various areas of the economy.
>>>>>>PETROLEUM DISTILLATES
We begin with Petroleum Distillates distribution, which most of you know I have been watching for years. This measure looks at the change in demand of the distillates, the lifeblood of the economy, from previous peak time periods. The analysis is done WEEKLY on data from the previous week, and it does not take much time as they are simple keys of the supply data fields into two spreadsheets I have maintained for years. This time of the year requires the creation of a new year of data, but as those of you who are familiar with Excel know, this is not that big a deal. The data comes from the US Government, from this on line file:
http://www.eia.doe.gov/oil_gas/petroleum/data_publications/weekly_petroleum_status_report/wpsr.html
I choose table 10 in Excel and simply key in the latest supply data for gasoline and petroleum distillates as a whole in my spreadsheets. The last 2 years data is as follows, please note that the Sep-Nov ’08 time period was negatively impacted by hurricanes in the SE, and the numbers those months would normally have been in the mid to high -6% range:
Off Peak Demand
08 Jan….2.83%
08 Feb…-5.30%
08 Mar…-3.30%
08 Apr…-0.96%
08 May…-2.79%
08 Jun…-2.47%
08 Jul…-4.00%
08 Aug…-4.57%
08 Sep…-7.94% - Hurricane in SE affects demand - should be 5.5%
08 Oct…-11.00% - Ibid - maybe 6.0% real
08 Nov…-8.17% - Ibid - maybe 6.0% real
08 Dec…-6.09%
09 Jan…-6.68%
09 Feb…-9.21%
09 Mar…-10.06%
09 Apr…-11.76%
09 May…-13.48% - Auto industry shuts down
09 Jun…-11.58%
09 Jul…-10.73%
09 Aug…-9.21% - Cash for Clunkers, some pickup
09 Sep…-8.03% - Ibid
09 Oct…-11.68%
09 Nov…-11.87%
09 Dec…-10.07%
The following data looks at the past 17 years of demands and shows how the USA is currently progressing against the historical peaks. Note that 0.8% growth and above is a healthy economy, anything below that can be considered recessionary:
Historic Annual Levels
1993…2.99%
1994…1.87%
1995…0.35%
1996…2.22%
1997…2.71%
1998…0.98%
1999…2.44%
2000…2.17%
2001…-0.10% - Last acknowledged recession - only -0.10%
2002…-0.09% - Ibid
2003…2.04%
2004…1.91%
2005…1.60%
2006…0.61% - Economy already starting to struggle
2007…0.54% - Ibid, little growth
2008…-4.16% - Bottom falls out
2009…-10.41% - deeper into the abyss
Note that the last acknowledged recession, 2001/2002 the distillates only dipped 0.1% or so off the peaks, not the 10.41% drop with which we are now dealing. This is a much deeper and prolonged drop, unparalleled in my lifetime. I guess the best way of putting this drop in demand is by saying simply that in 2007 the USA used 20,000,000 barrels of petroleum a day, that number is now down to 18,000,000. Additionally, although gasoline makes up 48% of petroleum usage, the demand there has dropped only 3.41%, while the overall demand has dropped 10.41%. This means that industrial/transportation/residential usage has declined by 16.85% in the same time period. As we know this past year has been cooler in the USA, the use of heating distillates has increased, meaning the overall industrial/transportation drop is probably closer to 20%, a figure that keeps appearing in the economic analysis.
>>>>>>UNEMPLOYMENT
The next table we will look at is the unemployment numbers – FILINGS this past year in the USA. Here it is important to compare the data to previous years, not just this past year which was already recessionary. The numbers for the past five years are as follows:
2005 17,186,384
2006 16,165,755
2007 16,901,467
2008 21,622,776
2009 29,332,216
The initial filings comes out on the Thursday after the previous week, and can be found at http://www.dol.gov/opa/media/press/eta/ui/current.htm Make sure you look for the UNADJUSTED data, as I feel the recession has held true so long that the adjustments now skew the data rather than moderate it.
As you can see, the number is growing quite large – this is for INITIAL filings only. The total COVERED unemployment since last year has grown as follows, from the state supplied numbers, not the monthly federal published “survey”:
Unemployed – 5,090,652, up from 4,572,637
Federal programs – extended, 367,498, up from 1,671
Federal EUC 2008 – the bailout extension, 4,448,914, up from 1,567,930
As you can see, the total COVERED unemployed is now up around 9,905,000 vs. 6,600,000 last year at this time – already well into recession.
The breadth and depth of unemployment is increasing, and the total unemployed is now around 14,500,000, up from 10,015,000 at the same time last year according to the “survey”, with underemployed now up around 9,200,000, up from 7,300,000 and those disaffected looking for a job now at 2,300,000, up from 1,900,000. Additionally, there are 5,618,000 not in the work force that would now like a job, up from 5,077,000. This equates to 31,618,000 people that do not have the job they need, compared with 24,292,000 last year, an increase of 7,326,000 people. The survey can be found at http://www.bls.gov/news.release/empsit.nr0.htm on the first Friday after the end of the previous month.
Break point, more to follow.
- irishscot2
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