Tag: economy

Clothing and cotton sales plummet 50% due to Wuhan panic

9:06 pm

The beatings will continue until morale improves: According to the U.S. Census Bureau, the clothing and cotton industry has seen a 50% plunge in sales in the past month due to Wuhan panic.

The result?

As countries worldwide take measures to slow the spread of coronavirus by quarantining people and closing nonessential businesses, sales of cotton — and the clothing and textiles made from it — have declined sharply.

Demand for cotton is so low that even though prices hit their lowest levels in more than a decade, retailers and manufacturing facilities around the world are cancelling orders. “Every stage of the supply chain is getting hit,” said Jon Devine, senior economist for Cotton Incorporated, a nonprofit industry organization based in North Carolina. “Retailers are suffering,” he said. “In between, you’ve got all the manufacturers that are trying to get their orders cancelled. And then you get all the way back to the field. Farmers are entering their planting time. They have some difficult decisions to make.”

In other words, even if we get the country reopened in May (something that right now looks unlikely because of the desire of politicians to crush the economy and cancel the Bill of Rights in order to hurt Trump), this crash now is going to spiral into next year.

I should note that the stories on the crashing economy that I am posting are very easy to find. More to come. Sadly, I have had to widen my searches to more business related sources to find them. In more sane times, a business crash like this would be front page news on every news outlet in the country. Not now. We have gone insane.

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Economy crashes in March due to Wuhan lockdowns

9:46 am

Never let a crisis go to waste: Retail sales in March dropped a record 8.7%, almost entirely due to the nationwide lock downs and business closures imposed by the government on what government officials have arbitrarily determined are “nonessential” businesses.

The Census Bureau said though “many businesses are operating on a limited capacity or have ceased operations completely,” it had “determined estimates in this release meet publication standards.”

Last month’s decrease in retail sales reflected depressed receipts at car dealerships, with light vehicle sales crashing in March. With millions at home and crude oil prices collapsing amid worries of a deep global recession, gasoline prices have dropped, which weighed on sales at service stations in March.

In addition, the closure of non-essential retailers knocked sales at clothing, sporting goods and furniture stores.

There were also steep declines in receipts at restaurants and bars, which stopped in-person service and moved to take-out and delivery service. Though some businesses, including restaurants, have shifted to online sales, the volumes were insufficient to close the gap from social distancing measures. [emphasis mine]

I wonder if the families that run these “non-essential retailers” consider their livelihoods to be “non-essential.” Somehow I don’t think so.

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The ships of Hanjin six months after it went bankrupt

1:44 pm

Real news: Six months ago the shipping company Hanjin went bankrupt, stranding its 96 container ships worldwide. This article takes a detailed look not only on what happened to those ships since, but also at the state of the entire shipping industry.

There was a time when Hanjin’s collapse in August and this follow-up story would have been major news stories, covered by all the leading mainstream press outlets. No more. Even though it indicates significant financial and economic trends that should concern anyone who is serious about being an educated citizen, the press doesn’t cover it, and the public today really doesn’t care.

Just another indicator that a new dark age is looming.

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Russia in perspective

10:49 am

The coming dark age: This column today attempts to put the present economic shape of Russia into context with the rest of the world. Russia does not come off well.

According to the International Monetary Fund’s most recent data, the Russian economy is approximately the same size as Australia and slightly smaller than South Korea. As an exporter, it is now less important than Belgium, Mexico, and Singapore. And it is poor. The World Bank ranks Russia’s GDP per capita below Lithuania, Equatorial Guinea, and Kazakhstan. A larger proportion of its population lives below the poverty rate than in Indonesia, India, or Sri Lanka. It is ranked 67th in the world in the Global Competitive Index and 66th in the UN’s Human Development Index.

I find this news very disturbing and worrisome. As much as I might consider Russia a competitor to the U.S., I also want it as a nation to thrive, because otherwise it can only be a threat to the rest of the world. If Russia can’t figure out how to be a successful, competitive, and vigorous first world capitalist nation, it can only become something none of us will like. These are the same circumstances that made the rise of Hitler and Mussolini possible.

Unfortunately, I am not optimistic about Russia’s ability to turn things around. When they had the chance after the fall of the Soviet Union, instead of encouraging free competition, the people who remained in power divided the country and its industries up like Prohibition-era gangsters, and stamped out anyone who tried to move in on their territories with new ideas. Those people remain in power, and have acted to further consolidate their power by recreating the Soviet model of centralized control from the top-down.

Posted from Los Angeles Airport, a place where a tiny pre-made sandwich costs almost $15, probably because of high California taxes and regulations.

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A new report from the Congressional Budget Office has found that Obamacare will increase the deficit and slow the economy far more than originally predicted.

9:56 am

Finding out what’s in it: A new report from the Congressional Budget Office has found that Obamacare will increase the deficit and slow the economy far more than originally predicted.

The non-partisan agency’s report found that the healthcare law’s negative effects on the economy will be “substantially larger” than what it had previously anticipated. The CBO is now estimating that the law will reduce labor force compensation by 1 percent from 2017 to 2024, twice the reduction it previously had projected. This will decrease the number of full-time equivalent jobs in 2021 by 2.3 million, CBO said. It had previously estimated the decrease would be 800,000.

Aren’t you glad the Democrats shut the government down in October to prevent any delay or changes to their law?

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A survey of 400 chief financial officers finds that nearly half plan to cut back on employment because of Obamacare.

11:00 pm

A survey of 400 chief financial officers finds that nearly half plan to cut back on employment because of Obamacare.

And there’s also this:

Besides altering the makeup of their workforces, companies said they also plan to change the health benefit packages offered to employees. “Two-thirds of companies will change health benefits in response to ACA,” reads the Fuqua/CFO Magazine report summary. Forty-four percent of CFOs said they are considering reducing health benefits for employees. Thirty-eight percent said that employees and retirees may be forced to contribute more to their health plans.

“The inadequacies of the ACA website have grabbed a lot of attention, even though many of those issues have been or can be fixed,” said John Graham, Duke Fuqua School of Business finance professor and director of the survey, in a press release. “Our survey points to a more detrimental and potentially long-lasting problem. An unintended consequence of the Affordable Care Act will be a reduction in full-time employment growth in the United States,” the study says. [emphasis mine]

So, tell me again why the Republicans in Congress should not challenge the Democrats over Obamacare?

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Another wave of mortgage loan defaults is about to hit.

9:09 am

The day of reckoning looms: Another wave of mortgage loan defaults is about to hit.

The loans are a problem now because an increasing number are hitting their 10-year anniversary, at which point borrowers usually must start paying down the principal on the loans as well as the interest they had been paying all along. More than $221 billion of these loans at the largest banks will hit this mark over the next four years, about 40 percent of the home equity lines of credit now outstanding.

For a typical consumer, that shift can translate to their monthly payment more than tripling, a particular burden for the subprime borrowers that often took out these loans. And payments will rise further when the Federal Reserve starts to hike rates, because the loans usually carry floating interest rates.

Read the whole article. The possibilities, especially for some large banks like Wells Fargo and Bank of America, are not good.

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Another dismal jobs report.

9:47 am

Another dismal jobs report.

Job growth amounted to a disappointing 80,000, below analyst expectations of 90-100K, while the jobless rate remained the same at 8.2%:

Read the whole article. There’s a lot more, all of its depressing and trending downward.

While no President should be blamed entirely for the unemployment numbers, the policies of any President do have a direct influence on those numbers, and should bear some responsibility, especially in this era where we have ceded so much power to the federal government. Consider this graph (below the fold), which shows the “total unemployed, plus all persons marginally attached to the labor force, plus total employed part time for economic reasons, as a percent of the civilian labor force plus all persons marginally attached to the labor force.” The steep upward swing, beginning in 2008, sadly corresponds too closely with the beginnings of the Obama administration. And it is with this administration that we have seen the worst deficits, the most regulation, and the biggest increase in the power of government in our lifetimes. It is thus no surprise the economy has crumbled.
» Read more

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The Dodd-Frank downgrade.

10:11 am

The Dodd-Frank downgrade.

What comes through in the Moody’s assessment [the credit-rating downgrade of 15 banks] and in any review of their returns on equity is that banks have lost significant ability to generate earnings to offset the inevitable losses. The lost earnings power is surely due in part to reduced leverage, which helps protects taxpayers.

But 2,300 pages of Dodd-Frank and countless other federal efforts to put sand in the financial gears are also taking their toll. The Obama tax and regulatory frenzy, of which Dodd-Frank is a part, weighs on economic growth. Those are our words, not Moody’s, but the rating agency does note that the abysmal economic environment is a drag on ratings for everyone.

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An economy built to stall

8:48 pm

“An economy built to stall.”

In his first two years in office, Democrats gave Mr. Obama everything he wanted, save for cap and trade and union card-check, which would have done even more harm to job creation. They passed stimulus, ObamaCare, multiple housing bailouts, Dodd-Frank and more.

Even after Republicans took the House, they gave Mr. Obama the payroll tax holiday he demanded first for 2011 and again for 2012. Far from some new fiscal “austerity,” overall federal spending hasn’t declined. Meanwhile, the Federal Reserve has delivered monetary stimulus after stimulus—QE I, QE II, Operation Twist, and 42 months of near-zero interest rates with the promise of 30 months more.

Mr. Obama has had the freest run of policy of any President since LBJ. So maybe the problem is the policies.

Maybe Milton Friedman was right that “temporary, targeted” tax cuts don’t change the incentives to invest or hire because people aren’t stupid. Maybe each $1 of new federal spending doesn’t produce a “multiplier” of 1.5 times that in added output. Maybe the historic burst of regulation of the last three years has harmed business confidence and job creation. And maybe the uncertainty that comes from helter-skelter fiscal and monetary policy has dampened the animal spirits needed for a durable expansion.

As I said yesterday, though no president or Congress is entirely to blame for the state of the economy, they both can do great harm if they make decisions that interfere with the freedom of the market. And sadly, having the government interfere with the freedom of the market has been Obama’s mantra since the day he took office.

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Not good: The Labor Department announced today that the U.S. economy only added 69 thousand jobs in May, the fewest in a year.

10:39 am

Not good: The Labor Department announced today that the U.S. economy only added 69,000 jobs in May, the fewest in a year.

The unemployment rate went up slightly as well, Labor also adjusted downward the number of jobs created in the past two months to terribly comparable numbers.

While no president is ever entirely responsible for the state of the economy, Barack Obama’s policies have certainly done significant harm. High regulation, Obamacare, and a clear hostility to private enterprise in all fields except space exploration has helped produce what appears to be the longest period with a floundering economy in my lifetime.

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