FICTION: You can count on the mainstream financial media for unbiased information.
FACT: They're lying to you.
Freedom is never more than one generation away from extinction. We didn't pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same. - Ronald Reagan
Yesterday, for instance, the Fed's national industrial index was positively reported on as having continued to improve. By 0.1%. That's an improvement of .001, or roughly the width of a whisker on a gnat. And even that vaporous improvement came on numbers that are still deep in the post-crash dumps.
But even if we use the Fed's own numbers, we see that the month-over-month rate of improvements are losing steam, not gaining traction. This is an economy we can believe in?
That's not to say that there aren't some improvements in the economy. There clearly are. But I contend these improvements are largely selective.
For instance, the mining sector is doing quite well - and is now running at a capacity utilization rate of 90%, versus the broader manufacturing sector, which is bumping along at just 70%. Crude oil production is also running hot, at a capacity utilization of 87.4% in March, versus finished goods at an anemic 71.8%.
In other words, the stuff that the world actually needs to chug along is still in strong demand - but the rest of the economy is just limping along.
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Anecdotally, I have had conversations with managers/owners in three different industries over the last week.
A developer of low-income housing said that while things were slightly better compared to this time last year, they were still a disaster and there was no real recovery in sight.
The manager of a high-end boat/RV retailer, whose lot is chock-a-block full of expensive motor homes and boats, was trying to be optimistic going into his traditional big sales season, and he had clearly boosted inventory. But as the sales season is still not quite underway, his guarded optimism is based on nothing more than hope at this point. When I asked him about the availability of credit, he said that people with very good credit can get financing, but everyone else can forget about it. Oops, there goes the majority of his potential buyers.
Then yesterday, I had a beer - er... I mean an off-site management meeting -- with fellow Casey Researchers Olivier Garret and Alex Daley down at a local pub/restaurant/hotel. The owner popped around to say hi, and I asked him if he was seeing an improvement in the economy. His reply, "Oh, there's an economy? Could of fooled me!" While he made the comment as something of a joke, the establishment remained largely empty well into the traditional cocktail hour when we left.
As an aside on the topic of restaurants, I have noted that the better-run restaurants - the ones that provide value for money - are doing reasonably well in the New England resort town that hosts the headquarters of Casey Research.
Rather than confirming a broadly improving economy, however, I suspect this is not unlike the phenomenon where, for a brief period, chickens are able to run around without the benefit of their heads. Which is to say, dining out seems to be a reflexive action taken by people who still have jobs and who may have seen some improvement in their stock portfolios.
We humans really don't like change and typically resist embracing it. Thus, those not forced by personal circumstances to hunker down - i.e., those still receiving paychecks - are following the boom-year custom of regularly dining out, and to a lesser degree, using their still active credit cards to buy stuff they really could do without.
My grandfather, a young man during the Great Depression, was a lifelong skinflint as a result of his experience. One of his favorite sayings when resisting one of the grandkids trying to put the touch on him for one toy or another was, "Money doesn't grow on trees."
By the time this is over, people will be saying, "Money doesn't sprout from credit cards."
Back on the topic of the financial media... I don't watch the financial cable shows. For one thing, I don't have cable. But even if I did, I wouldn't, because almost to a person these people missed the crash. So, why should I listen to them today?
Most of the pundits are talking their own book. And all of the financial news programs know that the stock houses and funds that buy the ads will bolt if their programs take a steadily dim view on the outlook for the economy and stock market.
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