AP: Economy Ends Tough 2011 on a Surprising Upswing

AP economics writer reports what EPJ readers understood months ago was coming:

The economy is ending 2011 on a roll.

The job market is healthier. Americans are spending lustily on holiday gifts. A long-awaited turnaround for the depressed housing industry may be under way.....Factories are busier. Stocks are higher.

Not bad for an economy faced with a debt crisis in Europe and, as recently as this summer, scattered predictions of a second recession at home. Instead, the economy has grown faster each quarter this year, and the last three months should be the best.

Here's what AP reports Krugman-like Keynesian economists were saying as recently as August:

When The Associated Press surveyed 43 economists in August, they pegged the likelihood of another recession at roughly one in four. The Dow Jones industrial average was lurching up or down by 400 points or more some days.

There was plenty of reason for gloom. A political standoff over the federal borrowing limit brought the United States to the brink of default and cost the nation its top-drawer credit rating.

This is I wrote on August 11:

Underneath the surface, though, the Fed is aggressively pumping money, which will create a new manipulated boom. The developing manipulated boom is what the insiders are seeing. Money is flowing and will work its way into the stock market.

I doubled-down in October. This is what I wrote on October 7:

Bottom line: Keynesians are clueless. The private sector continues to improve because of Bernanke money printing and the shrinkage is now pretty much at the local government level, as a result of declining tax revenues (which will also reverse itself in coming months). There is no double dip. The stock market and economy will soon go into a Fed manipulated boom, that will have Keynesians scratching their heads even more.

Unemployment Aid Applications Drop to 9-Month Low

Keynesian forecasters crushed again.

The number of Americans applying for unemployment benefits fell last week to the lowest level in nine months. Keynesian economists, like Paul Krugman, in very short order are going to look absurd calling for, only weeks ago,even higher levels of government spending.

The Labor Department reported today that weekly applications dropped by 23,000 to a seasonally adjusted 381,000. That’s the lowest number of applications since late February.

The four-week average, a less volatile measure, fell for the ninth time in 11 weeks to 393,250. That’s the lowest average since early April.

Keyensians will be finally turning bullish in the coming weeks, since Keynesian econometricians tend to believe that applications that drop below 375,000 — consistently — tend to correlate with a steady decline in the unemployment rate.

Rasmussen Employment Index

More confusion for the Keynesians, who have no understanding of the business cycle and thus no early clue as to when it is turning upward.

The Rasmussen Employment Index, which measures workers’ perceptions of the labor market each month, gained five points in November to reach 76.8. Says Rasmussen, generally speaking, an increase in the Rasmussen Employment Index suggests the upcoming government reports on job creation will be better than the prior month.

The index has been climbing for a few months now:

November 2011
76.8

October 2011
71.7

September 2011
73.4

August 2011
69.3

July 2011
70.1

Keynesian Forecasts Obliterated by Soaring Pending Home Sales

The index of pending home sales increased 10.4 percent, the biggest gain since November 2010, reports the National Association of Realtors. Keynesian economists forecast a 2.0 percent increase, according to the median estimate in a Bloomberg News survey.

Estimates for pending home sales ranged from a drop of 2 percent to an increase of 5.6 percent, according to the median of 37 forecasts in the Bloomberg survey.

Pending home sales are a volatile tricky number, however, it is instructive that the Keynesians all had forecasts way below where the index number came in, some even forecasting a decline in sales!

Bullish ADP Numbers Blow Away Keynesians

The private sector created 206,000 jobs in November, according to ADP and Macroeconomic Advisors. This is far more than expected by Keynesian economists, who have no understanding of the business cycle. The median forecast of Keynesian economists surveyed by Bloomberg called for an advance of only 130,000.

Also, the estimated gain in employment from September to October was revised up to 130,000 from the initially reported 110,000.

"This month's jobs figures show positive growth in all major sectors of the economy and are in line with the recent drop in the national unemployment rate and weekly jobless claims," said Carlos Rodriguez, President and CEO of ADP. "Despite fiscal uncertainties here and abroad, owners of small- and medium-sized businesses found ways to grow and hire in November. As in previous months, service providers led the way in job creation." According to Joel Prakken, Chairman of Macroeconomic Advisers, LLC, "November's advance was the largest monthly gain since last December and nearly twice the average monthly gain since May when employment decelerated sharply. Today's report, notably above the consensus forecast, suggests that employment, which decelerated during the spring, accelerated in November. A firming of employment was evident in the major sectors of the economy tracked in The ADP National Employment Report, and across payrolls of most sizes."

Bottom line, the recession is over. Bernanke's money printing is creating a major new manipulated boom. Keynesian economists have failed to understand the power of Fed money printing in manipulating the economy. They are all waiting for a change in "animal spirits". Meanwhile they have been missing the turn since September, as the Citigroup Economic Surprise Index clearly demonstrates:

Another Blow for Keynesian Forecasters: Credit Card Delinquency Rate Falls to 16-Year Low

Keynesians, such as Paul Krugman, who have been calling for even more Fed printing to "battle" the downturn caused by previous Fed money manipulations, are going to be scratching their heads again. Although they think there hasn't been enough new government spending or Fed printing, even though the Fed is printing near 15% plus, the economy is improving (in manipulated fashion). The latest data that Keynesian forecasting are clueless isconsumer credit delinquencies.

Mark Perry writes:

The Federal Reserve recently released data on delinquency and charge-off rates at U.S. commercial banks for the third quarter of 2011. For consumer credit cards, the delinquency rate fell for the 9th consecutive quarter to 3.47% during the July-September period this year, dropping to the lowest level since a 3.46% reading in the first quarter of 1995, more than 16 years ago (see blue line in chart). Compared to the 4.35% quarterly average since 1992, the delinquency rate on credit cards is now about a full percentage point below the long-run average.

For all consumer loans, the third quarter delinquency dropped to 3.15%, the lowest rate since the 2.99% rate in the second quarter of 2007 before the recession started (see red line in chart). The second quarter delinquency rate is also below the 3.34% historical quarterly average since 1992.

The recession is over except in the minds of Keynesian interventionists like Krugman, who call for more government intervention every chance they get.