In the news, the trade deficit (we import more than we export) jumped 18%, led by the greatest surge in imports in 16 years. Imports were led by automobiles and energy (oil), which are normally a signs of recovering demand amongst consumers. So this ugly number may actually be a good thing. On the other hand, these orders could be seen to replenish the (minimum) inventories needed, on the heals of the “cash for clunkers” program ended in August. Oil too can be distorted by hedging volume increases (speculation), set about by fears of a further falling dollar. It seems to me a bit early to declare the corner has been turned. But let’s hope so!
My concern here is that direct government stimulus in the economy over the last year is in excess of ($2.8T) 20% of our annual GDP (at $14T/yr). So should we be surprised that our growth last quarter was finally up 3.5%. Our should we feel short changed that it only amounted to a 9.7% turn around from 1 year ago levels. Call me crazy, but if I spend $20 to get a $10 benefit, I usually get a bit crabby. So we still need to see what the economy does when stimulus is withdrawn—whenever that may be. The unspent (collective) stimulus funds left are in excess of $8T. So if the dollar is already down 12% since March, what will it look like if they spend the rest of this, one wonders? The next few quarters will obviously be a critical test of this Keynesian spending theory, as the infrastructure projects and other shovel ready programs begin in earnest.
In other news, there are still over 300,000 foreclosure notices going out each month nationwide. Estimates are that fully half of those will become additional inventories eventually. However, banks are currently actively delaying the marketing of those homes, in order to help support prices. Experts believe Denver metro should avoid any second dip in value, since our inventory levels are declining, and we never had the kind of over speculation seen in harder hit areas of the country. Let’s hope.
Have a great weekend!
