Economic Events on August 5, 2010

The monthly Chain Store Sales report will be released today.  This report on sales in chain stores gives a look at the health of stores that make up about 10% of all retail sales.

The Monster Employment Index for June was released today, and the index moved down 3 points to a value of 138, but was an increase of 21% from last July.

At 8:30 AM EDT, the U.S. government will release its weekly Jobless Claims report.  The consensus is that there were 455,000 new jobless claims last week, which would would be an slight decrease in claims from last week’s number.

At 10:30 AM EDT, the weekly Energy Information Administration Natural Gas Report will be released, giving an update on natural gas inventories in the United States.

At 12:00 PM EDT, Treasury Secretary Tim Geithner will hold a press briefing on the Social Security and Medicare Trust Fund.

At 4:30 PM EDT, the Federal Reserve will release its Money Supply report, showing the amount of liquidity available in the U.S. economy.

Also at 4:30 PM EDT, the Federal Reserve will release its Balance Sheet report, showing the amount of liquidity the Fed has injected into the economy by adding or removing reserves.

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Geithner: “Unpopular 2009 Actions Were The Right Thing To Do”

Treasury Secretary Timothy F. Geithner said credit availability is improving and companies are building up unprecedented cash reserves, signs that the U.S. economy continues on a path of increased growth.

Further the Secretary claimed on Tuesday that the government’s management of the $700 billion Troubled Asset Relief Program has yield the desire results while costing much less than originally estimated. The unpopular program he claims “played a critical role” in loosening access to credit and putting the economy back on a solid footing.

“Credit conditions overall, which dragged our economy into a deep recession in 2007, no longer pose an obstacle to growth,” Geithner said in his testimony to the Congressional Oversight Panel. Geithner pointed to U.S. firms that are now raising money in capital markets “and have built up record cash reserves, which will eventually be reinvested and fuel growth.”

The TARP program was criticized by both Democratic and Republican lawmakers as favoring Wall Street over small businesses. Many thought the government would likely lose all of the $700 billion lawmakers had allocated to rescue large banks as well as several U.S. automakers and housing loan backers.

Surprisingly, the cost to taxpayers has now plummeted to $105 billion at last estimate, down from an estimate of $341 billion in August. And it seems now that the benefits have thus far continued to outweigh the cost of the program.

Congress authorized TARP in October 2008 to prevent a collapse of the U.S. financial system. Against the predictions of many, companies like Goldman Sachs Group Inc. and Bank of America Corp. that borrowed funds have since repaid the government with interest. Additionally because of the return to more palatable market conditions, Geithner said the Treasury plans to sell the remainder of its stake in Citigroup Inc. in an “orderly fashion” by year end, further reducing the overall cost of the rescue program.

In additional good news, prospects for the government’s investments in the auto industry have improved, and the Treasury plans to begin to recover its stake in General Motors Co. after the company has an initial public offering later this year or in 2011.

Losses from government investments in GMAC Inc. “will be less than forecast last year,” the Secretary said.

Geithner said the Obama administration doesn’t plan to extend TARP past its Oct. 3 expiration and called Tuesday’s hearing “a eulogy” for the program.

The TARP loans “did what they were supposed to do,” Geithner continued. The economy wouldn’t have started to rebound “without the dramatic actions we took, however unpopular, to bring down the cost of credit and stabilize the system.”

Economic Events on May 6, 2010

The monthly Chain Store Sales report will be released today.  This report on sales in chain stores gives a look at the health of stores that make up about 10% of all retail sales.

The Monster Employment Index for April was released today, and the index moved up 8 points to a value of 133, which was the biggest jump in the last 3 years, and is yet another sign that the job market is improving.

At 8:30 AM EDT, the U.S. government will release its weekly Jobless Claims report.  The consensus is that there were 445,000 new jobless claims last week, which would be slightly less than the number reported last week, and would continue the trend of slightly improving employment statistics.

Also at 8:30 AM EDT, the Productivity and Costs report for the first quarter of 2010 will be released.  The consensus is that non-farm productivity increased 2.6% in the last quarter, after an increase of 6.9% in the last quarter of 2009, and labor unit costs declined 1.0%, following a decrease of 5.9% in the previous quarter.

At 9:00 AM EDT, Treasury Secretary Timothy Geithner will testify before the Financial Crisis Inquiry Commission on the shadow banking system.

At 9:30 AM EDT, Federal Reserve Chairman Ben Bernanke will speak to the Chicago Federal Reserve Bank 46th Annual Conference on Bank Structure.

At 10:00 AM EDT, the weekly Energy Information Administration Natural Gas Report will be released, giving an update on natural gas inventories in the United States.

At 4:30 PM EDT, the Federal Reserve will release its Money Supply report, showing the amount of liquidity available in the U.S. economy.

Also at 4:30 PM EDT, the Federal Reserve will release its Balance Sheet report, showing the amount of liquidity the Fed has injected into the economy by adding or removing reserves.

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Economic Events on April 29, 2010

At 8:30 AM EDT, the U.S. government will release its weekly Jobless Claims report.  The consensus is that there were 447,000 new jobless claims last week, which would be slightly less than the higher than expected number reported last week, and would continue the trend of slightly improving employment statistics.

At 10:00 AM EDT, the weekly Energy Information Administration Natural Gas Report will be released, giving an update on natural gas inventories in the United States.

At 2:30 PM EDT, Treasury Secretary Timothy Geithner will testify before the Senate Appropriations Financial Services subcommittee about the Treasury budget for 2010.

At 4:30 PM EDT, the Federal Reserve will release its Money Supply report, showing the amount of liquidity available in the U.S. economy.

Also at 4:30 PM EDT, the Federal Reserve will release its Balance Sheet report, showing the amount of liquidity the Fed has injected into the economy by adding or removing reserves.

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Economic Events on April 20, 2010

At 7:45 AM EDT, the weekly ICSC-Goldman Store Sales report will be released, giving an update on the health of the consumer through this analysis of retail sales.

At 8:55 AM EDT, the weekly Redbook report will be released, giving us more information about consumer spending.

At 11:00 AM EDT, Federal Reserve Chairman Ben Bernanke and Treasury Secretary Tim Geithner will testify before the House Financial Services Committee about the Lehman Brothers bankruptcy.

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Today’s Economic Events

An updates on new jobless claims will be released at 8:30 AM EDT.   These claims have been slowly decreasing over the last few weeks, and the consensus forecast is that there will be 450,000 new jobless claims, compared to 457,000 in the last period.

Ben Bernanke speaks to the House Committee on Financial Services about the Federal Reserve’s strategy for exiting the financial markets at 10:00 AM EDT.

Tim Geithner will testify to the House Appropriations Committee’s State and Foreign Operations Subcommittee regarding the Treasury Department’s international programs at 1:30 PM EDT.

A report on the money supply will be released at 4:30 PM EDT.

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Less Than AAA Rating? Never!

Treasury Secretary Timothy Geithner said the country’s debt rating is not at risk because of the trillions of dollars of government spending to shore up the economy.

Asked on ABC’s “This Week” Sunday whether the government would lose its triple AAA sovereign debt rating, Geithner said: “Absolutely not and that will never happen to this country.”

Geithner said there was less risk now that the economy would slip back into recession, a pattern known as a “double-dip” recession.

“We have much, much lower risk of that today than at any time over the last 12 months,” Geithner said.

The labor market which was under significant strain last year at this time is now on the cusp of creating a substantial number of new jobs. The unemployment rate is already beginning to reflect that turn falling from 10% in Dec to 9.7% in Jan.

“We had a huge shock to the American economy and we’re still living with the aftershocks,” Geithner said. “You’re seeing the first signs now of business starting to take some risks again.”

Geither went on to dismiss earlier comments by Sen. Scott Brown (R-Mass.) — calling his assessment of the $787 billion stimulus package — “Flat wrong!”

After winning the Massachusetts election, Brown was quoted as saying that the stimulus did not create or save any jobs.

“I don’t think there is any basis for that judgment,” Geithner said.

The White House and independent economists (including our job charts here) have illustrated that the stimulus package has saved at least several million jobs and is on the verge of creating several million more by later this year.

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Timothy Geithner’s Famous Last Words?

From Bloomberg:

Treasury Secretary Timothy F. Geithner said the U.S. is in no danger of losing its Aaa debt rating even though the Obama administration has predicted a $1.6 trillion budget deficit in 2010.

“Absolutely not,” Geithner said, when asked in an ABC News interview broadcast today whether a downgrade is a concern. “That will never happen to this country.”

The U.S. plans to rein in the deficit once the labor market recovers, Geithner said. In the short run, that means focusing on ways to “make sure that this economy is growing again,” he said. The administration says the deficit will shrink over the next four years as more Americans find jobs and the economy accelerates.

“This is within our capacity to do,” Geithner said.

Where to begin?  First off, I have long believed that Tim Geithner is in fact the fall guy for the economy in the Obama administration.  He has been involved with the bailouts from day one including perhaps a criminal one with AIG, come off as smarmy and weaselly in testimony and been perceived as less competent and well-liked than Bernanke in the court of public opinion.  If I had to guess, when it becomes clear that we are stuck in the economic doldrums (probably closer to the 2010 elections), Barack Obama will fire Geithner and trudge out a man with more panache and credibility, likely Paul Volcker.

On the substance of Geithner’s comments, that anyone in this administration can actually believe that the economy is going to accelerate and the deficit will shrink over the next four years is laughable.  Even if you had breakneck economic growth, and there are absolutely no signs of that on the horizon, the deficit is still growing at an exponential rate, and Congress has shown no signs that it is going to take the steps to deal with the most bloated line items — namely entitlements.  The most expensive parts of our budget are considered sacred, and for a politician to touch them would be considered a sin.

How could Geithner be right that we will never lose our rating?  Well, the ratings agencies are US companies, granted an oligopoly by the state, so it is possible that government could threaten them were they to consider downgrading us.  In this scenario we could have a de facto downgrade however if yields spike up in the bond markets on US debt with Treasuries trading effectively as if we have been downgraded.  Another scenario is that the government builds false demand (or an artificial “bid” in trader lingo) to keep the yields on our debt low by either pressuring the primary dealers to continue to gobble up our bonds (and then at times selling them back to the Fed shortly thereafter), threatening foreign nations to prop us up or creating some kind of incentive to get Americans to invest in Treasuries.  Otherwise, I don’t see how America can be considered fiscally Aaa, but then again the ratings agencies rate a lot of junk Aaa.  They can in fact put lipstick on a pig.