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Politics : Stockman Scott's Political Debate Porch -- Ignore unavailable to you. Want to Upgrade?

To: Mannie who wrote (462)	6/14/2002 12:05:06 PM
From: Jim Willie CB	Read Replies (5) \| Respond to of 89467

Eric Fry on the stock market and economy: - The major market averages all slipped more than 1% each yesterday. The Dow fell 114 points to 9,502, while the Nasdaq dropped 22 points to 1,496. - Stocks just can't seem to gather any steam. Day after day, shocking scandals and lousy earnings reports roll through the stock market like so many dreary boxcars. Meanwhile, the economic recovery is starting to sputter. US retail sales slumped 0.9% in May, "three times the decline economists had expected," says Bloomberg News. Perhaps this report signals the beginning of a disappointing retail sales trend. - Interestingly, amidst an otherwise dismal retail sales report, discount chains announced very strong results. Same-store sales increased 6 percent at Costco and 8.7 percent at Kohl's. Could it be that consumers are reacquainting themselves with the ancient practice of thrift? - We have marveled often at the US consumer's stamina. Millions of jobs disappeared, trillions of dollars of stock market wealth evaporated, household savings plummeted, debt soared and STILL...STILL...the US consumer continued to spend...until last month, that is. - "[This retail sales report] takes the wind out of the sails of those who think the economic recovery is progressing normally," one economist tells Bloomberg News. "The entire economic recovery could be in jeopardy if the consumer gets cold feet." The consumer might not have cold feet at all, he might just have an acute case of "empty wallet." - Martha Stewart isn't the only one with a little less cash these days. "The Fed's flow-of-funds data released last week show that US households continue to operate with very low levels of deposits," observes Paul Kasriel, economist with Northern Trust. "In the early 1950s, cash was king for many households." Back then, US households in aggregate held about $1.60 in cash deposits for every $1.00 of debt. Today, they hold a paltry 60 cents for every dollar of debt. And yes, that is the lowest such reading in more than fifty years. - Even so, CLSA's Dr. Jim Walker holds out hope for a recovery. What makes Walker so confident? Just this: within the avalanche of employment data and revisions cascading from the Bureau of Labor Statistics (BLS) last week, Walker believes he found the nugget of nascent recovery - the slight dip in the unemployment rate from 6.0% in April to 5.8% in May. - Walker may be right, but the employment "recovery" is a moving target, at best. On the one hand, the unemployment rate fell from 6% to 5.8%. On the other hand, the BLS reported that 142,000 jobs were lost during the first four months of the year, not the 50,000 it had previously reported...You get the idea... - Within the near-worthless morass of employment data, however, there is one series that tirelessly tells the tale of "no recovery" - continuing claims. - Despite the improving unemployment rate in May, continuing claims for unemployment insurance continue to hover near 19-year highs. About 3.8 million Americans are currently on the dole, nearly double the number of two years ago. For a so-called recovery, ISI notes, "this surge in [continuing] claims is unprecedented." - Stubbornly high continuing unemployment claims and abysmally low household cash levels do not sound like a the ingredients of an economic recovery. Maybe we should ask Martha Stewart how to cook one up. -end-