Evidence Mounts That The US Economy Is Entering A New Leg Down
After a brief upswing in consumer spending in the first two months of this year, retail sales have resumed their downward trajectory since, even dropping by about a half a percent, month-on-month (SA), during the Easter holiday month of April. (See graph below)
Meanwhile, world trade continues to tank at rates never before seen outside of the Great Depression. In the most recent reporting month, March, US exports sank another 2.4%, while imports slid another 1%, continuing a string of double digit year-over-year declines for both (See graph below)
In addition to retail sales rolling back over, and world trade remaining stuck in reverse, the problems of the auto industry are now feeding back into worse jobs reports after what many had hoped was the absolute peak in Initial Unemployment Claims (See related stories & links below).
Data that has come out since the first estimate of Q1 GDP suggests that the decline in the first quarter may have been even sharper than original estimated (-6.1%), but it is not yet known if any revision to Q1 might be as drastic as the revision to Q42008 (originally reported at -3.8%, but which was later revised down to a -6.3% decline during its final estimate).
Given that the current quarter will likely also come in with negative GDP, it would appear that the renewed downturn in the national economy will postpone NBER's recession end date to the third quarter of this year, at the earliest.
Bloomberg:
U.S. Economy: Jobless Claims Increase on Impact From Chrysler
More Americans than forecast filed unemployment-insurance claims last week because of the Chrysler LLC bankruptcy that is likely to reverberate through the economy for months.
Initial jobless claims rose by 32,000 to 637,000 [consensus was for a rise to 610k] in the week ended May 9, the Labor Department said today in Washington. A good part of the jump was from states reporting an increase in auto-related claims, a Labor official said without providing a more precise estimate...
The bankruptcy filing by Chrysler, and the potential for a similar step by General Motors Corp., is likely to cause further job losses as suppliers and communities are affected. The industry’s woes threaten to delay the economy’s recovery from the deepest recession in half a century and send the unemployment rate up from what’s already a 25-year high...
The total number of people collecting unemployment insurance surged in the prior week to 6.56 million, setting a record for the 15th straight week and indicating companies are still not hiring. The lack of jobs may restrain consumer spending, the biggest part of the economy, and put off a return to growth that economists project for later this year...
Wall Street Journal:
Chrysler Notifies 789 Dealers of Closure
Chrysler LLC is seeking to drop 789 dealers, or about one in every four, from its retail network, according to documents filed Thursday with the U.S. Bankruptcy Court in Manhattan.
The company has requested a June 3 court hearing to approve the planned streamlining, though some dealers said they would oppose being shut down...
Chrysler's dealers began receiving letters Thursday notifying them about the fate of their dealerships. According to one dealer who received a letter, the auto maker intends to wind down those dealerships over 30 to 60 days...
General Motors Corp., attempting to avoid bankruptcy protection, is also planning to cut dealers. About 1,000 GM dealers will receive letters Friday notifying them of their status. GM is planning to cut about 2,600 of its 6,246 dealerships.
Meanwhile, world trade continues to tank at rates never before seen outside of the Great Depression. In the most recent reporting month, March, US exports sank another 2.4%, while imports slid another 1%, continuing a string of double digit year-over-year declines for both (See graph below)
In addition to retail sales rolling back over, and world trade remaining stuck in reverse, the problems of the auto industry are now feeding back into worse jobs reports after what many had hoped was the absolute peak in Initial Unemployment Claims (See related stories & links below).
Data that has come out since the first estimate of Q1 GDP suggests that the decline in the first quarter may have been even sharper than original estimated (-6.1%), but it is not yet known if any revision to Q1 might be as drastic as the revision to Q42008 (originally reported at -3.8%, but which was later revised down to a -6.3% decline during its final estimate).
Given that the current quarter will likely also come in with negative GDP, it would appear that the renewed downturn in the national economy will postpone NBER's recession end date to the third quarter of this year, at the earliest.
Bloomberg:
U.S. Economy: Jobless Claims Increase on Impact From Chrysler
More Americans than forecast filed unemployment-insurance claims last week because of the Chrysler LLC bankruptcy that is likely to reverberate through the economy for months.
Initial jobless claims rose by 32,000 to 637,000 [consensus was for a rise to 610k] in the week ended May 9, the Labor Department said today in Washington. A good part of the jump was from states reporting an increase in auto-related claims, a Labor official said without providing a more precise estimate...
The bankruptcy filing by Chrysler, and the potential for a similar step by General Motors Corp., is likely to cause further job losses as suppliers and communities are affected. The industry’s woes threaten to delay the economy’s recovery from the deepest recession in half a century and send the unemployment rate up from what’s already a 25-year high...
The total number of people collecting unemployment insurance surged in the prior week to 6.56 million, setting a record for the 15th straight week and indicating companies are still not hiring. The lack of jobs may restrain consumer spending, the biggest part of the economy, and put off a return to growth that economists project for later this year...
Wall Street Journal:
Chrysler Notifies 789 Dealers of Closure
Chrysler LLC is seeking to drop 789 dealers, or about one in every four, from its retail network, according to documents filed Thursday with the U.S. Bankruptcy Court in Manhattan.
The company has requested a June 3 court hearing to approve the planned streamlining, though some dealers said they would oppose being shut down...
Chrysler's dealers began receiving letters Thursday notifying them about the fate of their dealerships. According to one dealer who received a letter, the auto maker intends to wind down those dealerships over 30 to 60 days...
General Motors Corp., attempting to avoid bankruptcy protection, is also planning to cut dealers. About 1,000 GM dealers will receive letters Friday notifying them of their status. GM is planning to cut about 2,600 of its 6,246 dealerships.