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This Week's Business News

In this week's business update we've got snippets about consumer inflation, overall economic growth, retail sales, jobless claims, gold prices, new home construction, enviro-wackos, Citigroup, the stock markets, business law, fringe employee benefits, wine snobs, and the Prez's proposed fiscal stimulus package.

Click the below link if you'd like to read more.

Inflation

Over the past year (Dec. 06-Dec. 07) total consumer prices rose 4.1%.

Perspective check: Back in 1976-1977, the prevailing rate of inflation was 6.7%.

Two other points are worth mentioning:

1. A huge component of the current inflation rate is that of sharply-higher prices for food. That, in turn, largely is related to the massive, global push for increased Ethanol production. Which, in turn, over the long haul, will decrease our reliance on foreign. i.e., Middle-East, sources of fossil fuels. The media for obvious reasons won't ever present the issue along these lines -- at least not while a Republican occupies the White House -- but shouldn't a key national security item be deemed quite worth higher consumer prices?

2. Farm subsidies and farm incentives always have been sore topics with true fiscal conservatives. Given the sharp increases in food prices our current farm policies must be deemed a parody of a sham. We're paying farmers public money for them *not* to produce certain crops. We're paying other farmers public money to give them *incentives* to produce Ethanol. We're doing this in an era in which there's massive global demand for food and Ethanol. That's a SNAFU of a SNAFU.

Economic Growth -- "Beige Book"

The overall economy in late-November and December grew in seven of 12 Federal Reserve Districts. Two Districts were mixed. Three Districts might or might not have contracted.

Here's a link to the official report.

GDP growth unquestionably was at a much lower pace in Q4 of 2007 when compared to Q3 and Q2. But, still, the economy grew.

Retail Sales

Retail sales in December fell 0.4%. That followed a gain of 1.0% in November.

Over the past year retail sales rose 4.1%. That's a pretty solid figure, given the fact the economy has been growing since late-2001, that consumers never stopped spending even during the business-recession of 2000-2001, and the overall rate of inflation has been increasing since 2003.

But, still, as mentioned above, there's no question the economy has slowed down.

Jobless Claims

328,000 - 4-week avg. of initial claims for jobless benefits, Jan. 12, 2008
322,000 - 4-week avg. of initial claims for jobless benefits, Jan. 17, 1998

In other words, roughly the same number of people are being laid off from their jobs today when compared to the same period 10 years ago -- despite the fact total employment today is higher by upwards of 16 million persons.

The chances the media will report anything along those lines nearly are the same as "Gore Wins Florida," or "Kerry Winning Pennsylvania by 20 Points," or "Obama Defeats Hillary in N.H. by 13 Points." If you catch my drift....

Goldeneye

Lately gold has been in the news.

Gold on Monday broke $900 per ounce. The liberal financial media went into self-flagellation mode.

Perspective check: Back in the halcyon daze of Tip O'Neill and the peanut farmer, of Afghanistan (the Soviet edition) and of hyper-inflation, of 444 days of Iranian-held hostages, and of long lines for gasoline, gold fetched around $2,200 in today's dollars. In other words, the price of gold could double from its current level and it still would not nearly be as expensive -- in inflation-adjusted terms -- as it was back in 1980.

There's also an investment angle here that's worth mentioning. The time to have purchased gold was several years ago, back when it still was trading well under $350 per ounce. If now you're wanting to buy gold -- because it's going up -- you're doing the exact opposite of what you should be doing.

New Home Construction

New home starts in December were 1 million (annualized), substantially below expectations and substantially below November's downward-revised figure of 1.17 million. Home building permits -- a gauge of future construction -- in December were 1.07 million (annualized), substantially below expectations and substantially below November's reading of 1.16 million.

The residential real estate markets might not bottom out until 2009. It's a brutal market -- much worse than 1991-1992.

Sun Rises in East

Along similar lines:

Environmentalists Sue Department of Energy,
Leftist groups attempt to block power line corridors

* * *
As they say, read the whole thing.

But pay careful attention to the reference to what the AP writer cryptically refers to as "a 2005 law." That law is the 2005 Energy Policy Act, one of the landmark accomplishments of the former GOP Congresses. Decades from now there will be positive effects in the real world by virtue of that law, e.g., updated power grids, nuclear power, renewable energies, common-sense conservation measures, increased national security, etc.

Citigroup

Citi posted another big loss, slashed its dividend and jettisoned a few thousand additional workers.

Wall St. Lemmings reacted as one would expect.

Citi already is a good long-term purchase. But if it gets too much cheaper it'll become a screaming, obvious must-do-it purchase, the like of which hasn't been seen on the Street since the glory days of Altria (then Philip Morris), circa 1999-2000, being priced at less than the value of its non-cigarette related businesses.

Stock Markets

Speaking of stocks, the major stock market indices fell this week amidst heavy and volatile trading.

Me thinks we're at the point where blue chip stocks in general are cheap enough to start buying in large amounts. Certainly there are individual companies, e.g., Citigroup, whose share prices already are more than cheap enough to purchase. Furthermore it's always better to average down one's purchase costs than to average up.

Pricing Power

Raising Prices Enhances Wines' Appeal

Tasters responded more strongly to pricey wines than to cheap wines, even when given the same varietals and vintages in disguise.

Obviously the testing sample to which that article makes reference is nowhere near statistically significant. But I'd almost be willing to bet real money that if you did a real sample you'd get similar results.

Being a snob about wine is a sine qua non of left-coast condescension and superciliousness. And, yes, thank you, I live in California, but, no, I'm not really a wine snob. I'm more of a coffee snob. Cigars too. Oh, and beer.

Goin' to the Dogs (and Cats)

Pet Insurance Grows as Employee Benefit

* * *
Business Law

5th Circuit Appeals Court Rules in Favor of Lockheed Martin,
Claims arising from co-worker's shooting spree dismissed

A federal appeals court has dismissed a woman's claims of emotional distress in the aftermath of her co-worker and boyfriend's 2003 shooting rampage at the Lockheed-Martin plant in Meridian, Mississippi.

The 5th Circuit U.S. Court of Appeals upheld a trial judge's ruling that Shirley Price's primary claims were best addressed through state workers' compensation. The appeals court also upheld a ruling that dismissed Price's claim she inappropriately was fired from her job in the aftermath of the shooting.

Yet another good decision by the 5th Circuit.

That's one of the most conservative of our Nation's federal appeals courts. Which should not be surprising. The vast majority of its active judges were nominated by our last three Republican presidents.

Proposed Fiscal Stimulus Package

Here's a link to the actual text of the Prez's speech regarding his proposed fiscal stimulus package. For obvious reasons the media is spinning agendas as opposed to reporting facts.

Tax cuts always are a good thing. The problem, of course, is that conservatives in 2006 threw away Congress. So, ergo, it's quite unlikely if not impossible that any form of tax relief enacted this year nearly will be as effective as that 2003 tax relief package.


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Comments (12)

Yes I am capable of learnin... (Below threshold)
nogo war:

Yes I am capable of learning. I read what you said and actually went to your links before posting.

with that out of the way..and following the link of our President's words I came across this

"In recent months, we've taken steps to shore up the housing market, including measures to help struggling homeowners avoid foreclosure and to keep their homes. I've also asked Congress to pass legislation"

Can you or anyone please provide links that demonstrate this? I am curious about the "we" part in action or "steps" that have been taken in regard to foreclosure. What steps have the "we" taken, and when were they put in place?

Given the bureaucracy that has grown in the past 7 years it is very possible that the mentioned steps regarding "foreclosure" are already in the pipeline.

This is not a snark. A neighbor down the street is dealing with foreclosure and if something new is in place..I can pass it on.

One of the problems with th... (Below threshold)

One of the problems with the Q4 slower growth is the public perception. The media has spent the last three years or so convincing the public that the good news wasn't good, and that the economy was on shaky ground - to the point that public confidence in the economy was quite negative despite the strong and steady growth.

Now, when some bad news actually hits, it has to be portrayed as catastrophic. This tends to spread fear, and hurts consumer confidence. Almost a classic "self-fulfilling prophecy."

Ah yes, the bad news we've ... (Below threshold)
COgirl:

Ah yes, the bad news we've all been waiting for.

I think Jim is right in saying that the issue is consumer confidence. The media has scared so many Americans. The mortgage situation certainly started this, but what is so annoying is that the ones who should not have been buying houses are the ones who have caused this. Those of us who have done the right thing will pay the price.

BTW, where are Rangel's plans for increasing taxes? Haven't heard much about that lately. Could it be because it's an election year? A good tax increase ought to really get the economy back on its feet, don't you think?

"That, in turn, largely... (Below threshold)
marc:

"That, in turn, largely is related to the massive, global push for increased Ethanol production."

And the lunacy of turned a food stuff into gas for autos has "in turn" has allowed the EU Commissioner on the Environment to declare the EU's misguided shift to Ethanol has led to "hat some biofuels barely cut emissions at all - and others can lead to rainforest destruction, drive up food prices, or prompt rich firms to drive poor people off their land to convert it to fuel crops."

Oops!

That has also led "in turn" to the shocking (insert Capt. Renault voice here) revelation
""Green" consumers have some of the biggest carbon footprints because they are still hooked on flying abroad or driving their cars while their adherence to the green cause is mostly limited to small gestures."

Shocking I tell ya, just shocking!

Al "The Goracle" Gore, call your office you've been unmasked.

I agree it is about consume... (Below threshold)
nogo war:

I agree it is about consumer confidence.
But to blame it upon the media is a little misplaced.

What are you folks that use heating oil paying this winter as opposed to last?

What are you paying for food this year as opposed to last?

How often are folks eating at restaurants (non-fast food) now as opposed to last year?

If you run a small a business, is now better than last year?

Personal credit card debt is higher this year than last year...

Anyone really believe inflation is the highest in over a decade is the result of media?

Anyone believe the fewest new housing sales in over a decade and all the jobs going with that are a media event?

If our economy is so fine, except for the lying media...why would our President even mention a vague over 100 billion plan?

I assume all you market folks are jumping in now..watch for over 14 Dow by March...

From media shill FOX yesterday
http://www.foxbusiness.com/markets/article/wall-street-sellsoff-fed-speech-dow-drops-150-points_440155_2.html

but today was much better..


Index Value: 12,099.30
Trade Time: 4:03PM ET
Change: Down 59.91 (0.49%)
Prev Close: 12,159.21
Open: 12,159.94
Day's Range: 12022.48 - 12341.54
52wk Range: 11,926.80 - 14,280.00

music to roll in your money in
(especially if you have been selling short)
http://www.youtube.com/watch?v=LML-2mC9rw8

I agree it is abou... (Below threshold)
Steve:
I agree it is about consumer confidence. But to blame it upon the media is a little misplaced.

Which entity has been beating the RECESSION drum for the past 5 years nogo? Ever since 9/11, the media have expected Bush to fail with the economy, yet it has and probably will continue to grow.

People where I work repeat the recession meme for the longest time, yet when pressed, they can't really say thing are bad for themselves. In other words, things aren't as bad as the media would like everyone to believe.

nogo war, if you have not b... (Below threshold)
SPQR:

nogo war, if you have not been following the Bush administration's discussions with mortgage lenders then your sneering is based on your ignorance as usual.

there are numerous studies ... (Below threshold)
its cold in mn:

there are numerous studies showing that ethanol production requires as much or more energy as is produced by the ethanol - I can't believe you haven't read (or have chosen not to read) this information and instead spout the industry's nonsense about ethanol helping us move towards "energy independence" - that is an unmitigated crock of sh-t - so we've significantly raised food prices while gaining nothing(!) in terms of reduced fossil fuel consumption - how can that possibly be a good thing? you are a tool of the ethanol lobby - pathetic!

High heating oil prices con... (Below threshold)
COgirl:

High heating oil prices contributing to inflation. . . Hmmm. . . It can take a decade to develop and bring to market oil from a huge field like ANWR. Which political party has stopped that field from being developed?

The argument has been that we can't develop ANWR because of the caribou or that the oil that would come from there is insignificant. I wonder how insignificant that extra oil might be for those people paying more for heating oil this year. Could it be that just a teensy weensy bit of foreign oil might be displaced by having our own oil?

And as for the caribou, having been in the oil industry I know many people who have lived and worked in Alaska. It turns out the pipelines and development don't stop the caribou. But I bet the enviro wackos and their political affiliates have never been there to see for themselves. But maybe that's what they teach at Harvard so why would reality make any difference.

cold in mn - "here are ... (Below threshold)
marc:

cold in mn - "here are numerous studies showing that ethanol production requires as much or more energy as is produced by the ethanol"

Who the hell are you commenting about, in fact who the hell is "pathetic?"

Which commenter of link leads you to believe there's an advocate for the use of Ethanol?

You have one thing correct... pathetic. That's you for not paying any attention to what this thread is about or what it's ref'd to.

Jayson did include the line... (Below threshold)

Jayson did include the line, "Which, in turn, over the long haul, will decrease our reliance on foreign. i.e., Middle-East, sources of fossil fuels." Technically, that is true, since if we're cutting our gas with 10-15% ethanol, it's that much less oil which must be bought and refined. We're already doing that, though - subsidies or none.

If ethanol were really the solution, why do we take extraordinary steps to avoid allowing foreign-produced sugar-based ethanol into the country? It's cheaper than the corn-based ethanol we are currently subsidizing.

JA - "If ethanol were r... (Below threshold)
marc:

JA - "If ethanol were really the solution, why do we take extraordinary steps to avoid allowing foreign-produced sugar-based ethanol into the country?

Umm... let me guess, er no let me prove it's because three corn belt politicians are pushing this lunacy.




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