Tue May 13th, 2008 at 08:19:34 AM EST
(The link is in German, here a free translation of this funny piece)
Productivity growth in the US is 3.2%. The consumer deflator growths only slightly faster than than in the Eurozone, despite the dollar collapse. At the same time car sales and home building starts are lower than 30 years ago. Nobody asks why there is this discrepancy. A mistake.
More surprising than the US econ statistics is only the good faith with which they are taken. Nobody has an interest in questioning the numbers, the least banks and economists. But it begins to be awkward, and it helps nobody. Let's take the most recent GDP numbers, which were interpreted that inventory pile up and net export growth allowed a slight increase of .6%. Rubbish. The growth came from real consumption of service purchases growing for whatsoever reason 3.4%, which contributed 1.43% to the GDP increase (inventory .81%); alone the defense spending has contributed .28% which was more than net export (.22%).
Last week then productivity increase was announced as 3.2% in the first quarter (yoy, ex agrar). In the middle of a downturn that is excellent. But why is the BoL assuming that worked hours were down .6% yoy, while reporting elsewhere the hours of 'simple' workers were up .8 %? Are the bosses not working these days?
The production shall be up 2.6% yoy. That assumes that the consumers in this time consumed .5% (in real terms) more goods, despite they have spend .8% less for the stuff - despite a dollar decline of about 9%. Cumulative is the US consumer goods deflator since 1995 dropped by 22% - meaning it is now only double as high as in the 50s. If you believe that all the increases in quality have given an adequate increase benefit, you may ask an 75 year old about the good old times.
Apart from similar challenges to the investment deflator or the measure of rents, it may explain why in the US currently less cars are sold than 30 years ago - with a population increase from 222 M to 304 M, and a drop in the savings rate from 9.4% to 0. Because if all the hedonistic tricks which reduce the impact of price increases are not accompanied by nominal wage increases, at some point people can't buy that stuff any more. Interesting as well that home building starts are lower than 30 years ago. Despite all the wimping about falling house prices, one needs today 100 weeks gross wage more than 30 years ago to buy a house.
One can ask some other questions. Is the break down of the connection between money growth and inflation not because of money growth defining problems? Isn't the US fiscal deficit accounting a bit strange?
But one more maybe wrong-headed statistic: Calculating the US GDP in DM/Euro, taking the German CPI, the is grown since 1970 only 1.5% per year in average. The extremely bad performance of the US stock market compared with Europe is then not so surprising. And if one thinks US stocks are now cheap, PER is still above 20.
Something harmonic in the end. The Deutsche Bank, as the Commerzbank and Dresdener Bank (all German institutes) denies an earnings forecast, while its boss talks about the end of the credit crisis. The worlds largest insurer AIG (don't know country) doubles its losses to 30 bn $, but points to its operative core business. But the Citigroup takes the biscuit. It want get rid of a fifth of its balance sheet. This problem stuff is not core business. Of course, as for AIG business is only core business as long as it is profitable.