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“The truth is the truth regardless of how the government “frames” it by manipulating numbers and viewpoints.”

quote – Cricket Diane C “Sparky” Phillips, 10-20-08

I intended to understand the numbers a little better. So, I made a search on google using the terms “leading economic indicators” which yielded lots of interesting information. It also makes it clear that the way these are constructed doesn’t even qualify as a scientific wild ass guess – or “SWAG” statistic.

Take a look – along with a few other resources, it appears there are references being used that bear little on the reality most people in the United States are facing.

** Note **

I hear a lot of experts now saying that because the news is so negative about the economy and that people don’t understand what it all really means to them – that they are fear-filled and anxious, maybe making bad decisions for their futures in the investments they have and hoarding money, resources and not spending.

It occurred to me earlier today that these experts saying this seem to all be Wall Street experts, investment advisers, traders and brokers that have more to gain by people continuing to invest or move investments than by any other actions. I’m not sure that such experts are capable of telling the truth, even if they know what the truth might be. In fact, if they had ever been telling the truth in the first place, we wouldn’t be in the mess that we have now.

Anyway, here is how the national numbers for the GDP and leading economic indicators are created. Its a real sleight of hand.

leading economic indicators

What exactly? A composite index (1992 = 100) of ten economic indicators designed to predict economic activity six to nine months in future. These indicators include:

1.

The average manufacturing-worker workweek (from the employment report)
2. Initial jobless claims
3. Manufacturers’ new orders for consumer goods and materials (from the factory orders report)
4. Vendor performance (from the Purchasing Managers’ Index report)
5. Manufacturers’ new orders for nondefense capital goods (from the factory orders report)
6. Building permits (from the housing starts report)
7. The level of the S&P 500
8. The inflation-adjusted measure of the M2 money supply
9. The interest-rate spread between the 10-year Treasury note and the fed funds rate
10. The expectations portion of the University of Michigan’s Consumer Sentiment Index

Source: The Conference Board

Frequency: Monthly

Released when? Around the end of the month at 10 a.m. Eastern. Data for prior month.

Market importance: None. Never moves market owing to fact that most components have already been reported separately by the time the index is released.

Other notes: Until 1995 the Commerce Department compiled the leading index.

http://www.thestreet.com/tsc/basics/tscglossary/leadingeconomicindicators.html

consumer sentiment index

What exactly? A consumer confidence index (1966 = 100).

Source: The University of Michigan

Frequency: Monthly

Released when? First around the 15th of the month (a preliminary reading) and then around the last business day of the month (a final reading) at 10 a.m. Eastern. Data for current month.

Market importance: Little. Sometimes moves markets. Used in conjunction with other confidence measures to gauge consumer moods.
Other notes: (a) The Michigan index is released only to subscribers and gets publicized through leaks. (b) The consumer expectations portion of the Michigan survey is a component of the leading economic indicators index.

http://www.thestreet.com/tsc/basics/tscglossary/consumersentimentindex.html

money supply

Money supply is measured in a variety of ways, but the most widely cited measurements are M1, M2 and M3 — the  monetary aggregates.  M1 is chiefly currency in circulation and bank checking accounts. M2 is M1 plus savings accounts, CDs under $100,000, retail money-market fund shares and overnight repurchase agreements. M3 is M2 plus CDs over $100,000, institutional money-market funds and term repurchase agreements.

The Fed sets target ranges for the growth rates of M2 and M3. The 1999 ranges are the same as 1998’s: 1% to 5% for M2, and 2% to 6% for M3. In 1998, M2 grew 8.5%, while M3 grew 10.9%. In 1999, M2 is growing at a 3.4% pace, while M3 is growing at a 3.7% pace.

Money-supply growth depends on interest rates, specifically the fed funds rate. Raising the fed funds rate curbs money supply growth, while cutting the rate accelerates it.

From 1979 to 1982, monetary policy focused on achieving a certain rate of M1 money supply growth. Changes in demand for money (loan demand) were allowed to influence the fed funds rate. For example, if money supply growth outpaced the target rate, the Fed would raise the fed funds rate to curb it. This reflected the monetarist tenet that the money supply is the main determinant of economic activity.

The Fed stopped targeting money supply growth and started targeting the fed funds rate because, it explains,  the combination of interest rate deregulation and financial innovation disrupted the historical relationships between M1 and the objectives of monetary policy.  In other words, the development of new types of financial products complicated measurement of the money supply.

http://www.thestreet.com/tsc/basics/tscglossary/moneysupply.html

housing starts

Official name: Housing Starts and Building Permits

What exactly? Measures privately-owned housing units started (commonly known as just housing starts). Also measures privately-owned housing units authorized by building permits (commonly known as just building permits). Geographical breakdown provided for both starts and permits.

Source: Census Bureau
Frequency: Monthly

Released when? Around the 18th of the month at 8:30 a.m. Eastern. Data for prior month.

Market importance: Some. Sometimes moves markets. Considered good leading indicators of home sales and spending in general. Starts used to predict the residential investment portion of gross domestic product.

Other notes:(a) Permits typically translate into starts in roughly three to four months — they are also a component of the leading economic indicators index. (b) Single-family starts typically account for roughly 74% of all starts. Multi-family units account for the rest.

http://www.thestreet.com/tsc/basics/tscglossary/housingstarts.html

factory orders

Official name: Preliminary Report on Manufacturers’ Shipments, Inventories, and Orders.

What exactly? A measure of shipments (sales), inventories and orders at the manufacturing level.

Source: Census Bureau

Frequency: Monthly

Released when? During the first week of the month at 8:30 a.m. Eastern. Data for two months prior.

Market importance:Little. Hardly ever moves markets. Not timely. Considered old news. Total factory orders break down into 57% durable and 43% nondurable — and durable goods orders are reported on an advance basis a week earlier.

Other notes:The manufacturing inventory numbers in this report are used — along with inventories at the wholesale and the retail levels — to calculate aggregate business inventories.

http://www.thestreet.com/tsc/basics/tscglossary/factoryorders.html

Manufacturing ISM Report On Business

Official name: ISM Index: Manufacturing

What exactly? A national manufacturing index based on a survey of purchasing executives at roughly 300 industrial companies. Signals expansion when the PMI is above 50 and contraction when below.

Source: Institute for Supply Management
Frequency: Monthly

Released when? First business day of the month at 10 a.m. Eastern. Data for prior month.

Market importance: High. Nearly always moves markets. Extremely timely — and this is the king of all manufacturing indices. Considered the single best snapshot of the condition of the factory sector.

Other notes:The ISM Index calculates nine different sub-indices. These include new orders, production, employment, supplier deliveries, inventories, prices, new export orders, imports and backlog of orders. The production index is used to help predict industrial production. The prices index is used to help predict the Producer Price Index. The new orders index is used to help predict factory orders. The employment index is used to help predict manufacturing employment. And the supplier deliveries index is a component of the leading economic indicators index.

http://www.thestreet.com/tsc/basics/tscglossary/purchasingmanagersindex.html

initial jobless claims

What exactly? A measure of the number of people filing first-time claims for state unemployment insurance.

Source: Labor Department

Frequency: Weekly

Released when? Thursday at 8:30 a.m. Eastern. Data for week ended prior Saturday.

Market importance: Some. Occasionally moves market. Timely. Considered a good gauge of the condition of the labor market and good indicator of the tone of the employment report.

Other notes: Series is volatile and subject to big revisions. The four-week average is used to gauge the underlying trend in claims.

http://www.thestreet.com/tsc/basics/tscglossary/initialjoblessclaims.html

employment report

Official name: Employment Situation

What exactly? A measure of net new jobs created. Also measures the unemployment rate, average hourly earnings and the length of the average workweek.

Source: Labor Department

Frequency: Monthly

Released when? First Friday of the month at 8:30 a.m. Eastern. Data for prior month.

Market importance: High. Almost always moves markets. Very timely. Contains information about both job and wage growth and is considered the single best measure of the health of the economy. The tone of the employment report generally sets the tone for the other economic indicators that are released throughout the month.

Other notes: (a) Two key pieces of this report — the unemployment rate and average hourly earnings — appear in many inflation models. And various pieces of this report are used to help predict a host of other economic indicators. Average hourly earnings are used to help predict both personal income and the wages and salaries component of the Employment Cost Index. The index of aggregate manufacturing hours is used to help predict industrial production. The change in construction jobs is used to help predict both housing starts and construction spending. (b) For average hourly earnings, the headline number is the percent change from the prior month, but we also graph the year-on-year change. That way you can see the rate at which earnings are increasing or decreasing.

http://www.thestreet.com/tsc/basics/tscglossary/employmentreport.html

personal income and consumption

Official name: Personal Income and Outlays

What exactly? A measure of changes in personal income and personal consumption expenditures (or spending).

Source: Commerce Department

Frequency: Monthly

Released when? First business day of the month at 8:30 Eastern. Data for two months prior.

Market importance: Some. Considered somewhat dated (employment report already indicated income and retail sales report already indicated consumption) but occasionally moves markets — consumption typically accounts for roughly 68% of gross domestic product. Attained a somewhat higher profile in February 2000 when the Federal Open Market Committee began forecasting inflation in terms of the personal consumption expenditures deflator — a component of the report — instead of the timelier Consumer Price Index.

Other Notes: Report also includes a measure of the personal saving rate.

http://www.thestreet.com/tsc/basics/tscglossary/personalincomeandconsumption.html

retail sales

Official name: Advance Monthly Retail Sales

What exactly? A measure of sales at retail establishments. Does not include spending on services.

Source: Census Bureau

Frequency: Monthly

Released when? Around the 12th of the month at 8:30 a.m. Eastern. Data for prior month.

Market importance: High. Nearly always moves markets. Very timely — usually released just two weeks after the month ends. Also sets the tone for personal consumption expenditures to be released later in the month — and hence gives a peek at a good chunk of gross domestic product.

Other notes: The headline number is the percent change from the previous month, but we also graph the year-on-year change. That way you can see the rate at which sales are increasing or decreasing.

http://www.thestreet.com/tsc/basics/tscglossary/retailsales.html

gross domestic product

What exactly? A measure in the change in the market value of goods, services and structures produced in the economy.

Source: Commerce Department

Frequency: Quarterly

Released when? At 8:30 a.m. Eastern. The first-pass estimate of GDP is called the advance report and is released on the last business day of January, April, July, and October (data for prior quarter). The second-pass estimate is called the preliminary report and is released a month later; the third-pass estimate is called the final report and is released yet another month later.

Market importance: High. The actual pace at which the economy is growing or shrinking — especially as it relates to expectations — frequently moves markets.

Other notes: (a) The GDP release also includes a key inflation measure called the price index for gross domestic purchases. It measures the prices of everything — including imports — that Americans buy. (b) Personal consumption expenditures typically account for roughly 68% of GDP. Investment, government spending and net exports account for the rest.

http://www.thestreet.com/tsc/basics/tscglossary/grossdomesticproduct.html

federal open market committee

The Federal Open Market Committee, or FOMC, is the Fed’s monetary policy committee. It meets eight times a year in Washington (the schedule is on the Fed’s Web site) to set the fed funds rate.

Announcements of changes in monetary policy are at about 2:15 p.m. Eastern Time (on the second day if it’s a two-day meeting), and the minutes of the meetings are released within a few days of having been approved by the committee at its subsequent meeting.

The FOMC has 12 voting members and five alternates. The seven Fed governors always vote, as does the president of the New York Fed. The other 11 District Fed presidents vote on a rotating schedule. The Chicago Fed president votes in odd-numbered years, while the Cleveland Fed president votes in even-numbered years. The remaining nine presidents vote every third year, according to this schedule: Philadelphia, Dallas, Minnesota (1999, 2002); Richmond, Atlanta, San Francisco (2000, 2003); Boston, St. Louis, Kansas City (2001, 2004).

Alternates vote only if a District Fed president can’t make the meeting. The first vice president of the New York Fed is the New York Fed president’s alternate. The Chicago and Cleveland Fed presidents alternate for each other. And the other District Fed presidents are alternates the year before they vote. For example, if the Philly Fed president is absent, the Richmond Fed president votes instead.

http://www.thestreet.com/tsc/basics/tscglossary/federalopenmarketcommittee.html

Fed funds rate

The fed funds rate — short for federal funds rate — is the interest rate at which banks lend to each other overnight. As such, it is a market interest rate. But the Fed sets a target for the fed funds rate, and keeps the rate on target via open market operations. Unless otherwise specified, references to the fed funds rate are actually to the fed funds rate target (on any given day, the actual rate may differ from the target rate slightly).

The fed funds rate target is set by the Federal Open Market Committee, the Fed’s monetary policy committee. As the U.S. short-term benchmark, it influences market interest rates throughout the world.

http://www.thestreet.com/tsc/basics/tscglossary/fedfundsrate.html

federal reserve

The Federal Reserve, commonly referred to with no disrespect as the Fed, is the central bank of the U.S. It conducts monetary policy, regulates banks, maintains the stability of the financial system, and provides financial services to U.S. banks, foreign governments and the public.

The Federal Reserve System consists of a seven-member Board of Governors headquartered in Washington, D.C. and 12 Reserve Banks located in major cities throughout the country. The District Feds, as they are called, are in Boston, New York, Philadelphia, Cleveland, Richmond, Atlanta, Chicago, St. Louis, Minneapolis, Kansas City, Dallas and San Francisco. Each Federal Reserve Bank serves financial institutions and the public in a multistate district. A map on the Fed’s Web site shows the 12 districts.

Fed governors are nominated by the president, who nominates two governors to serve as Fed chairman and vice chairman.

The Fed conducts monetary policy through its Federal Open Market Committee, which sets a target for the fed funds rate. The Fed then keeps the fed funds rate on target through open market operations.

The Fed’s purposes and functions are spelled out in much greater detail on its Web site.

http://www.thestreet.com/tsc/basics/tscglossary/federalreserve.html

district feds

The District Feds are the 12 Federal Reserve Banks in the Federal Reserve System. Each bank serves financial institutions and the public in a multistate district, hence the nickname District Feds. A map on the Fed’s Web site shows the 12 districts.

Each District Fed has a president, appointed by its board of directors to five-year terms that end on the last day of February in years ending in 1 and 6. Official bios appear on the Fed’s Web site. District Fed presidents serve on the Federal Open Market Committee on a rotating basis.

Here is a list of the District Feds, with links to their Web sites.

* Boston Fed
* New York Fed
* Philadelphia Fed
* Cleveland Fed
* Richmond Fed
* Atlanta Fed
* Chicago Fed
* St. Louis Fed
* Minneapolis Fed
* Kansas City Fed
* Dallas Fed
* San Francisco Fed
http://www.thestreet.com/tsc/basics/tscglossary/districtfeds.html

http://www.federalreserve.gov/otherfrb.htm
The Federal Reserve officially identifies Districts by number and Reserve Bank city.

In the 12th District, the Seattle Branch serves Alaska, and the San Francisco Bank serves Hawaii. The System serves commonwealths and territories as follows: the New York Bank serves the Commonwealth of Puerto Rico and the U.S. Virgin Islands; the San Francisco Bank serves American Samoa, Guam, and the Commonwealth of the Northern Mariana Islands. The Board of Governors revised the branch boundaries of the System in February 1996.

open market operations

Open market operations are what the Fed does to keep the fed funds rate close to the target set by the Federal Open Market Committee. The fed funds rate is the rate at which banks lend to each other overnight, and the Fed keeps it on target by supplying as much liquidity as there is demand for at the target rate. If the Fed failed to supply enough liquidity, the fed funds rate — the cost of money — would rise as the supply fell. Conversely, if the Fed supplied too much liquidity, the fed funds rate would fall as supply outstripped demand.

The open market operations by which the Fed supplies liquidity to the banking system are purchases from and sales to dealers of Treasury and other debt securities. It works this way: When the Fed buys securities from a dealer, the dealer’s bank see its reserves increase by the amount the Fed paid for the securities.

Open market operations are either permanent or temporary. The Fed buys or sells securities on a permanent, or outright, basis, when its forecasts indicate that the amount of liquidity in the banking system will continue to need adjustment. It buys or sells them on a temporary basis when a shortage or excess of liquidity in the system is viewed as short-lived.

An outright purchase of Treasury notes or bonds by the Fed is called a coupon pass. A temporary purchase is called a repurchase agreement, since the dealers agree to buy the securities back from the Fed on a certain date. Permanent and temporary sales of securities by the Fed to dealers are much less common than purchases.

Open market operations are conducted by the Fed’s Domestic Trading Desk (a.k.a. the Open Market Desk) at the New York Fed.

http://www.thestreet.com/tsc/basics/tscglossary/openmarketoperations.html

coupon pass

A coupon pass is a purchase of Treasury notes or bonds by the Fed from dealers. Coupon refers to the coupons that distinguish Treasury notes and bonds from Treasury bills, which are discount instruments. When the Fed purchases Treasury bills from dealers, it’s called a bill pass.

Coupon and bill passes are two of the tools at the Fed’s disposal in open market operations.

http://www.thestreet.com/tsc/basics/tscglossary/couponpass.html

The Federal Reserve Board eagle logo links to home page
System Publication. The Federal Reserve System Purposes and Functions.

A publication of the Board of Governors of the Federal Reserve System

This book is available in Adobe Acrobat format, as a complete publication or by chapter.

Complete publication

(29 MB PDF)

1 Overview of the Federal Reserve System

(15.6 MB PDF)
Background
Structure of the System
Board of Governors
Federal Reserve Banks
Federal Open Market Committee
Member Banks
Advisory Committees

2 Monetary Policy and the Economy

(953 KB PDF)
Goals of Monetary Policy
How Monetary Policy Affects the Economy
Limitations of Monetary Policy
Guides to Monetary Policy
Monetary Aggregates
Interest Rates
The Taylor Rule
Foreign Exchange Rates
Conclusion

3 The Implementation of Monetary Policy

(721 KB PDF)
The Market for Federal Reserve Balances
Demand for Federal Reserve Balances
Supply of Federal Reserve Balances
Controlling the Federal Funds Rate
Open Market Operations
Composition of the Federal Reserve’s Portfolio
The Conduct of Open Market Operations
A Typical Day in the Conduct of Open Market Operations
Securities Lending
Reserve Requirements
Recent History of Reserve Requirements
Contractual Clearing Balances
The Discount Window
Types of Credit
Eligibility to Borrow
Discount Window Collateral

4 The Federal Reserve in the International Sphere

(662 KB PDF)
International Linkages
Foreign Currency Operations
Sterilization
U.S. Foreign Currency Resources
International Banking

5 Supervision and Regulation

(1.9 MB PDF)
Responsibilities of the Federal Banking Agencies
Federal Financial Institutions Examination Council
Supervisory Process
Risk-Focused Supervision
Supervisory Rating System
Financial Regulatory Reports
Off-Site Monitoring
Accounting Policy and Disclosure
Umbrella Supervision and Coordination with Other Functional Regulators
Anti-Money-Laundering Program
Business Continuity
Other Supervisory Activities
Enforcement
Supervision of International Operations of U.S. Banking Organizations
Supervision of U.S. Activities of Foreign Banking Organizations
Supervision of Transactions with Affiliates
Regulatory Functions
Acquisitions and Mergers
Other Changes in Bank Control
Formation and Activities of Financial Holding Companies
Capital Adequacy Standards
Financial Disclousres by State Member Banks
Securities Credit

6 Consumer and Community Affairs

(1 MB PDF)
Consumer Protection
Writing and Interpreting Regulations
Educating Consumers about Consumer Protection Laws
Enforcing Consumer Protection Laws
Consumer Complaint Program
Community Affairs
Consumer Protection Laws

7 The Federal Reserve in the U.S. Payments System

(9.8 MB PDF)
Financial Services
Retail Services
Wholesale Services
Fiscal Agency Services
International Services
Federal Reserve Intraday Credit Policy

Appendixes

(439 KB PDF)
A    Federal Reserve Regulations
B    Glossary of Terms

Index

(354 KB PDF)

Home | About the Fed
Accessibility | Contact Us
Last update: July 5, 2005

http://www.federalreserve.gov/pf/pf.htm

governors

A seven-member Board of Governors is the core of the Federal Reserve System, a.k.a. the Fed. The chairman and vice chairman of the Fed are members of the Board of Governors.

Governors are appointed by the president and confirmed by the Senate to staggered 14-year terms that begin on Feb. 1 of even-numbered years. Appointees to unexpired terms may be reappointed; servers of full terms may not. The chairman and vice chairman are named by the president and confirmed by the Senate to four-year terms within the governor’s term.

http://www.thestreet.com/tsc/basics/tscglossary/governors.html

consumer price index

What exactly? An index (1982-84 = 100) that measures the change in cost of a representative basket of goods and services such as food, energy, housing, clothing, transportation, medical care, entertainment and education.

Source: Labor Department

Frequency: Monthly

Released when? Around the 15th of the month at 8:30 Eastern. Data for prior month.

Market importance: High. Timely. All inflation measures routinely move markets.

Other notes: (a) The  core  CPI excludes the often-volatile food and energy sectors and gives a clearer picture of the underlying inflation trend. (b) The CPI for medical care is used to help predict the benefit costs portion of the employment cost index. The CPI for gasoline is used to predict the gasoline stations portion of the retail sales report. The CPI for new vehicles is used to predict the vehicle portions of the retail sales and personal income and consumption reports. (c) The headline number is the percent change from the prior month, but we also graph the year-on-year change. That way you can see the rate at which consumer inflation is increasing or decreasing.

http://www.thestreet.com/tsc/basics/tscglossary/consumerpriceindex.html

employment cost index

What exactly? An index (1989 = 100) designed to measure the change in the cost of labor, free from the influence of employment shifts among occupations and industries, based on the changes in two things: Wages and salaries, and employer costs for employee benefits.

Source: Labor Department
Frequency: Quarterly

Released when? Last business day of January, April, July and October at 8:30 a.m. Eastern. Data for prior quarter.

Market importance: High. Timely. Almost always moves markets. Generally considered the most important leading inflation indicator available.

Other notes: The headline number is the percent change from the prior month, but we also graph the year-on-year change. That way you can see the rate at which employment costs are increasing or decreasing.

http://www.thestreet.com/tsc/basics/tscglossary/employmentcostindex.html

industrial production and capacity utilization

Official name: Federal Reserve Statistical Release G.17

What exactly? A measure of the change in the production of the nation’s factories, mines and utilities. Also includes a measure of their industrial capacity and how much of it is being used (commonly known as capacity utilization).

Source: Federal Reserve

Frequency: Monthly

Released when? Around the 15th of the month at 9:15 a.m. Eastern. Data for prior month.

Market importance: Much. Frequently moves markets. Timely. Considered a key factory-sector gauge. Capacity utilization considered a telling inflation indicator.

Other notes: (a) The level of industrial production divided by the level of industrial capacity equals the capacity utilization rate. (b) The headline numbers are the percent change in production from the prior month and the capacity utilization rate. We also graph the year-on-year change in both production and capacity, alongside capacity utilization, to illustrate the relationship between the three.

http://www.thestreet.com/tsc/basics/tscglossary/industrialproductionandcapacity.html

construction spending

Official name: Value of Construction Put in Place

What exactly? A measure of the value of new private (including residential and nonresidential) and public (meaning government) construction put in place
Source: Census Bureau

Frequency: Monthly

Released when? First business day of the month at 10 a.m. Eastern. Data for two months prior.

Market importance: Little. Rarely moves markets. Dated. Public construction used to predict the government spending portion of gross domestic product. Residential and nonresidential construction used to help predict the investment portion of GDP.

Other notes: The headline number is the percent change from the prior month, but we also graph the year-on-year change. That way you can see the rate at which construction spending is increasing or decreasing.

http://www.thestreet.com/tsc/basics/tscglossary/constructionspending.html

leading economic indicators

What exactly? A composite index (1992 = 100) of ten economic indicators designed to predict economic activity six to nine months in future. These indicators include:

1. The average manufacturing-worker workweek (from the employment report)
2. Initial jobless claims
3. Manufacturers’ new orders for consumer goods and materials (from the factory orders report)
4. Vendor performance (from the Purchasing Managers’ Index report)
5. Manufacturers’ new orders for nondefense capital goods (from the factory orders report)
6. Building permits (from the housing starts report)
7. The level of the S&P 500
8. The inflation-adjusted measure of the M2 money supply
9. The interest-rate spread between the 10-year Treasury note and the fed funds rate
10. The expectations portion of the University of Michigan’s Consumer Sentiment Index

Source: The Conference Board

Frequency: Monthly

Released when? Around the end of the month at 10 a.m. Eastern. Data for prior month.

Market importance: None. Never moves market owing to fact that most components have already been reported separately by the time the index is released.

Other notes: Until 1995 the Commerce Department compiled the leading index.

http://www.thestreet.com/tsc/basics/tscglossary/leadingeconomicindicators.html

***

http://www.census.gov/cgi-bin/briefroom/BriefRm

U.S. Census Bureau
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Housing Starts/Building Permits   chart icon CHART

Privately-owned housing starts in September 2008 were at a seasonally adjusted annual rate of 817,000. This is 6.3 percent below the revised August 2008 estimate of 872,000.

Current

-6.3
% change
September 2008

Previous

-8.1
% change
August 2008

* Current Press Release:
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* excel file icon  XLS
* Archived Releases –  1995 – present
* Historic Time Series – 1959 – present
* Released:  October 17, 2008
* Next release:  November 19, 2008
* Frequency:  Monthly
* Program Overview

Manufacturing and Trade Inventories and Sales   chart icon CHART
U.S. total business sales for August were $1,192.3 billion, down 1.8% from last month. Month-end inventories were $1,511.8 billion, up 0.3% from last month.

Current

-1.8
% Change in sales
August 2008

Previous

+0.1
% Change in sales
July 2008

* Current Press Release:
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* text icon  TXT
* Archived Releases –  1996 – present
* Historic Time Series –
* Sales, 1992 – present
* Inventories, 1992 – present
* Ratios, 1992- present
* Released:  October 15, 2008
* Next release:  November 14, 2008
* Frequency:  Monthly
* Program Overview

Advance Monthly Sales for Retail and Food Services   chart icon CHART

U.S. retail and food service sales for August reached $375.5 billion, a decrease of 1.2 percent from the previous month.

Current

-1.2
% change
September 2008

Previous
-0.4
% change
August 2008

* Current Press Release:
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* text icon  TXT   excel file icon  XLS
* Archived Releases –  1953 – present
* Historic Time Series – 2002 – present
* Released:  October 15, 2008
* Next release:  November 14, 2008
* Frequency:  Monthly
* Program Overview

U.S. International Trade in Goods and Services   chart icon CHART

The Nation’s international deficit in goods and services decreased to $59.1 billion in August from $61.3 billion (revised) in July, as imports decreased more than exports.

Current

-59.1
$ billion
August 2008

Previous

-61.3
$ billion
July 2008

* Current Press Release:
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* Archived Releases –  1991 – present
* Historic Time Series –
* US Trade Data (various)
* Country & Product Data (various)
* Released:  October 10, 2008
* Next release:  November 13, 2008
* Frequency:  Monthly
* Program Overview

Monthly Wholesale Trade: Sales and Inventories   chart icon CHART

August 2008 sales of merchant wholesalers were $404.9 billion, down 1.0 percent from last month. End-of-month inventories were $445.4 billion, up 0.8 percent from last month.

Current

0.8
% change in Inv
August 2008

Previous

1.5
% change in Inv
July 2008

* Current Press Release:
* pdf icon  PDF
* excel file icon  XLS
* Archived Releases –  1990 – present
* Historic Time Series –
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* 1992 – present, not adjusted
* Released:  October 9, 2008
* Next release:  November 7, 2008
* Frequency:  Monthly
* Program Overview

Quarterly Financial Report – Retail Trade   chart icon CHART

After-tax profits for retail corporations with assets greater than $50 million averaged 2.3 cents per dollar of sales for the second quarter 2008, up 0.1 (+/- 0.1) cents from the average of 2.2 cents for the first quarter 2008.

Current

+0.1
cents
2nd Qtr. 2008

Previous

-1.0
cents
1st Qtr. 2008

* Current Press Release:
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* excel file icon  XLS
* Archived Releases –  1993 – present
* Historic Time Series –
* Released:  October 8, 2008
* Next release:  January 7, 2009
* Frequency:  Quarterly
* Program Overview

Manufacturers’ Shipments, Inventories, and Orders   chart icon CHART

New orders for manufactured goods in August decreased $18.6 billion or 4.0 percent to $444.4 billion.

Current

-4.0
% change
August 2008

Previous

0.7
% change
July 2008

* Current Press Release:
* pdf icon  PDF
* excel file icon  XLS
* Archived Releases –  1992 – present
* Historic Time Series –
* 1992 – present (NAICS)
* 1958 – 2001 (SIC)
* Released:  October 2, 2008
* Next release:  November 4, 2008
* Frequency:  Monthly
* Program Overview

Construction Spending   chart icon CHART

Total construction activity for August 2008 ($1,072.1 billion) was nearly the same as the revised July 2008 ($1,071.8 billion). Please see our web site for further details: http://www.census.gov/constructionspending

Current

0.0
% change
August 2008

Previous

-1.4
% change
July 2008

* Current Press Release:
* pdf icon  PDF
* excel file icon  XLS
* Archived Releases –  2003 – present
* Historic Time Series –
* 1993 – present (new format)
* 1964 – 2001 (legacy format)
* Released:  October 1, 2008
* Next release:  November 3, 2008
* Frequency:  Monthly
* Program Overview

New Home Sales   chart icon CHART

Sales of new one-family houses in August 2008 were at a seasonally adjusted annual rate of 460,000. This is 11.5% below the revised July 2008 estimate of 520,000.

Current

-11.5
% change
August 2008

Previous

+4.0
% change
July 2008

* Current Press Release:
* pdf icon  PDF
* excel file icon  XLS
* Archived Releases –  1995 – present
* Historic Time Series – 1963 – present
* Released:  September 25, 2008
* Next release:  October 27, 2008
* Frequency:  Monthly
* Program Overview

Advance Report on Durable Goods Manufacturers’ Shipments, Inventories, and Orders   chart icon CHART

New orders for manufactured durable goods in August decreased $9.9 billion or 4.5 percent to $208.5 billion.

Current

-4.5
% change
August 2008

Previous

0.8
% change
July 2008

* Current Press Release:
* pdf icon  PDF
* excel file icon  XLS
* Archived Releases –  1992 – present
* Historic Time Series –
* 1992 – present (NAICS)
* 1958 – 2001 (SIC)
* Released:  September 25, 2008
* Next release:  October 29, 2008
* Frequency:  Monthly
* Program Overview

Quarterly Services Survey   chart icon CHART

U.S. Information sector revenue for the second quarter of 2008, not adjusted for seasonal variation, holiday or trading-day differences, or price changes, was $284.9 billion, an increase of 2.5 percent (+/- 0.5) from the first quarter of 2008.

Current

2.5
% change
2nd Qtr 2008

Previous

-4.6
% change
1st Qtr 2008

* Current Press Release:
* pdf icon  PDF
* excel file icon  XLS
* Archived Releases –  2004 – present
* Historic Time Series – 2004 – present
* Released:  September 11, 2008
* Next release:  December 11, 2008
* Frequency:  Quarterly

Quarterly Financial Report – Manufacturing, Mining and Trade   chart icon CHART

Manufacturing corporations’ seasonally adjusted after-tax profits averaged 6.1 cents per dollar of sales for the second quarter of 2008, down 1.1 (+/- 0.1) cents from the average of 7.2 cents for the first quarter of 2008.

Current

-1.1
cents
2nd Qtr 2008

Previous

-0.3
cents
1st Qtr 2008

* Current Press Release:
* pdf icon  PDF
* excel file icon  XLS
* Archived Releases –  1993 – present
* Historic Time Series –
* Released:  September 8, 2008
* Next release:  December 8, 2008
* Frequency:  Quarterly
* Program Overview

Housing Vacancies and Homeownership   chart icon CHART

Homeownership Rate (HR)
The homeownership rate at 68.1 percent for the current quarter was not statistically different from the second quarter 2007 rate (68.2 percent) or the rate last quarter (67.8 percent).

Rental Vacancy Rate (RVR)
National vacancy rates in the second quarter 2008 were 10.0 percent for rental housing, which was higher than the second quarter rate last year (9.5 percent), but was not statistically different from the rate last quarter (10.1 percent).

Homeowner Vacancy Rate (HVR)
For homeowner vacancies, the current rate (2.8 percent) was not statistically different from the second quarter 2007 rate (2.6 percent) or the rate last quarter (2.9 percent).

Current
68.1
percent
2nd Qtr 2008
(HR)

Previous

68.2
percent
2nd Qtr 2007
(HR)

* Current Press Release:
* pdf icon  PDF
* Archived Releases –  1994 – present
* Historic Time Series – 1956 – present
* Released:  July 24, 2008
* Next release:  October 28, 2008
* Frequency:  Quarterly

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A Beginner’s Guide to Economic Indicators
What are Economic Indicators?

By Mike Moffatt, About.com
See More About:

* economic indicators
* unemployment rate
* real gdp
* inflation rate

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Q: I’m constantly hearing about economic indicators in the news, but I’m never sure what they’re talking about. What are economic indicators and why are they important?

A: An economic indicator is simply any economic statistic, such as the unemployment rate, GDP, or the inflation rate, which indicate how well the economy is doing and how well the economy is going to do in the future. As shown in the article  How Markets Use Information To Set Prices  investors use all the information at their disposal to make decisions. If a set of economic indicators suggest that the economy is going to do better or worse in the future than they had previously expected, they may decide to change their investing strategy.

To understand economic indicators, we must understand the ways in which economic indicators differ. There are three major attributes each economic indicator has:

1. Relation to the Business Cycle / Economy
Economic Indicators can have one of three different relationships to the economy:

1. Procyclic: A procyclic (or procyclical) economic indicator is one that moves in the same direction as the economy. So if the economy is doing well, this number is usually increasing, whereas if we’re in a recession this indicator is decreasing. The Gross Domestic Product (GDP) is an example of a procyclic economic indicator.

2. Countercyclic: A countercyclic (or countercyclical) economic indicator is one that moves in the opposite direction as the economy. The unemployment rate gets larger as the economy gets worse so it is a countercyclic economic indicator.

3. Acyclic: An acyclic economic indicator is one that has no relation to the health of the economy and is generally of little use. The number of home runs the Montreal Expos hit in a year generally has no relationship to the health of the economy, so we could say it is an acyclic economic indicator.

2. Frequency of the Data

In most countries GDP figures are released quarterly (every three months) while the unemployment rate is released monthly. Some economic indicators, such as the Dow Jones Index, are available immediately and change every minute.

3. Timing

Economic Indicators can be leading, lagging, or coincident which indicates the timing of their changes relative to how the economy as a whole changes.

1. Leading: Leading economic indicators are indicators which change before the economy changes. Stock market returns are a leading indicator, as the stock market usually begins to decline before the economy declines and they improve before the economy begins to pull out of a recession. Leading economic indicators are the most important type for investors as they help predict what the economy will be like in the future.

2. Lagged: A lagged economic indicator is one that does not change direction until a few quarters after the economy does. The unemployment rate is a lagged economic indicator as unemployment tends to increase for 2 or 3 quarters after the economy starts to improve.

3. Coincident: A coincident economic indicator is one that simply moves at the same time the economy does. The Gross Domestic Product is a coincident indicator.

In the next section we will look at some economic indicators distributed by the U.S. Government.

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Economic Indicator Links
Economic Indicators – Day TradingEconomic Indicators – Mutual FundsEconomic Indicators – U.S. Congress
More Economic Indicator Links

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Related Articles

* Unemployment Rate – The Importance of the Unemployment Rate as an Economic …
* A Beginner’s Guide to Economic Indicators
* This Week in the Market 09/20/04
* Your Responses – What do the Economic Indicators Say About Dubya’s Chan…
* Lagging Indicators

Mike Moffatt
Guide since 2002

Mike Moffatt
Economics Guide

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***

How Markets Use Information To Set Prices
The Use of Contingent Contracts

By Mike Moffatt, About.com
See More About:

* free market economy
* contingent contracts
* prices

Classical Economics Economics Theory What Is Economics Basic Economics Book Behavioral Economics
Markets, when they operate efficiently, can provide a great deal of information on the beliefs of the people who participate in that market. Prices, and changes in prices, convey a lot of information on what traders think is currently happening and what they believe will happen in the future. To see how this works, we’ll look the at the pricing of a simple asset known as a  contingent contract .

A contingent contract in finance generally refers to a contract in which the amount of money one agent pays to another in the future will differ depending on the realization of some future event. A simple example of a contingent contract would be a contract which gave the bearer of that contract nothing if it rains next Thursday but one dollar if it does not rain. These kinds of contracts are more common than you might believe at first glance. A farmer’s crop may depend rather heavily or whether or not it rains. If it does rain, he has a healthy crop which he can sell on the market. If it does not rain the crop will be ruined and the farmer will having nothing. The farmer can minimize this risk by buying many of these contingent contracts. If the farmer buys the contingent contracts and it does not rain, his crop will be worthless but he will get $1 for each contract he holds. Of course, if it does rain his crop will be valuable, but he’ll also have paid money for contingent contracts which are now worthless. If the farmer buys enough of the contracts, he can insure that he receives the same amount of money no matter what the weather does. This sort of risk-minimization is known as hedging and is used quite frequently, particularly in finance.

From an informational standpoint, contingent contracts (also known as  contingent claims ) are very nice because they tell how likely the market thinks some event will happen. Suppose our $1 if it doesn’t rain and $0 if it does rain contingent contract is selling for 70 cents. This implies that the market believes that there is a 70% chance it will not rain and a 30% chance that it will. This is because we believe that 70% of the time the contingent contract will be worth $1 and 30% of the time the contingent contract will be worth nothing. So on average, we’d expect the contingent contract to be worth 70 cents. Now suppose a number of people in the  rain  market got a new piece of information (say satellite photos) and now believed that the chance of it not raining on Thursday is now 90%. This would cause them to value the contract at 90 cents, but the price is currently at 70 cents. So they would buy these contingent contracts as they’d expect to make 20 cents on average. The increase in demand for the contracts will cause the price to rise and if enough people in the market believed the chance of a lack of precipitation was 90%, we’d expect to see the value of the contingent contract to rise to 90 cents.

To see a good example of price changes and contingent contracts, we’ll look at the world of baseball.

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* How Markets Use Information To Set Prices
* Futures Trading – How are Futures Traded
* Market Data Definition – Day Trading Market Data – Understanding Market Dat…
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Mike Moffatt
Guide since 2002

Mike Moffatt
Economics Guide
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How Markets Use Information To Set Prices
The Baseball All-Star Game and Contingent Contracts

By Mike Moffatt, About.com
See More About:

* free market economy
* contingent contracts
* prices

Economics Dictionary Financial Market Markets Finance Finance Economics Economics Book
(Continued from Page 1)
While often used for serious purposes, contingent contracts can also be used as a form of entertainment. An Irish based website named TradeSports.com allows people to gamble on sports events using contingent contracts as a basis. You can buy contracts on all sorts of events, from who will win tomorrow’s Blue Jays vs. Red Sox game to who will win the next Superbowl. The contingent contracts work in a similar fashion as the one in the previous section. If you buy a $1 Blue Jay contingent contract and the Blue Jays win you get $1 but if they do not win the contract pays nothing. At the time of writing, the last trade price of the Tiger Woods contract for the 2003 British Open was 22 cents, meaning that the market believes that Tiger has a 22% chance of winning the tournament.

The 2003 Major League Baseball All-Star Game was expected to be a match between two equally capable teams. Before the game begin, the price of the American League contract had been hovering around 50 cents, so the market believed that the American League seemed equally as likely to win the game as the National League team. When the game began, the price was still around 50 cents, as investors had not learned any information which would cause them to change their beliefs about the outcome of the game. After an uneventful inning and a half, the American League started to make some noise. With two out in the inning, American Leaguer Edgar Martinez was hit by a pitch, then teammate Hideki Matsui hit a single, putting 2 men on base for Troy Glaus. Although there were two out, it looked like the American side had a chance to score some runs, which would obviously improve their chances of winning the game. During the inning the price of the American League contract rose from 48 cents to 55 cents as investors felt that having 2 men on base and 2 outs in a tie game in the 2nd inning raised the American League’s chances to win to 55%. Glaus struck out swinging and the price of the contingent contract fell almost immediately to 50 cents. A piece of new information (the Glaus strikeout) caused the price of the contingent contract to fall 10%, despite the fact that the game was nowhere near completion.

The National League side was unable to do much against American league pitcher Roger Clemens, but a single by Ichiro Suzuki, a wild pitch by National League pitcher Randy Wolf, and a single by Carlos Delgado put the American League up 1-0 and the price of the contingent contract up to around 65 cents. With Delgado on first and 2 outs, Alex Rodriguez grounded out to third base, and the price of the contingent contract slid to 60 cents.

Everything fell apart for the American League during the 5th inning. The first National League batter of the inning got to first base on a walk, and the second, Todd Helton, made the score 2-0 on a homerun. After the third batter of the inning, Scott Rolen, hit a single, the price of the contingent contract was down to 33 cents. The next two batters for the National League got out sending the price up to 38 cents, but a double by Andrew Jones and a single by Albert Pujols sent the score to 5-1 and the price to around 16 cents. The price did not seem to recover any after Barry Bonds struck out.

By the bottom of the 6th inning, the market believed that the American Leauge only had a 10% chance of winning. A two run homerun by Garret Anderson caused the price to double to twenty cents, but the price hike was short lived as a 7th inning homerun by Andruw Jones for the National League sent the price back down to 10 cents. Although the score was only 6-3, Fox, the network carrying the game, said that the American league did not stand much of a chance of winning since the National League’s closers were unbeatable. Even a homerun by Jason Giambi sending the score to 6-4 only moved up the contingent contract price to 15 cents.

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http://economics.about.com/cs/finance/a/pricing_info_2.htm

How Markets Use Information To Set Prices
How The All-Star Game Changed Prices

By Mike Moffatt, About.com
See More About:
* free market economy
* contingent contracts
* prices

Economics Finance Economics Dictionary Economics Book World Economics Markets Finance
(Continued from Page 2)
Things were looking pretty dire for the American League as they had to face Eric Gagne in the 8th inning and John Smoltz in the 9th inning while they had a 2 run deficit. With one out in the 8th, Garret Anderson hit a double, sending the contingent contract price up to 22 cents. Earlier in the game a hit that did not score a run would not have had much effect on the price, but since it was late in the game and the score was close, investors knew that even a small change in circumstances could change the outcome. As a result, the price changes became more dramatic near the end of the game. A ground-out by Carl Everett sent the price down to 19 cents, but a run-scoring double by Vernon Wells sent the game to 6-5, and caused the price to rise to 52 cents. Although the American League was still losing, investors believed that with a runner on 2nd and 2 outs, they were slightly more likely to win the game than the National League side. Hank Blalock, the next hitter, hit a towering homerun which caused the American league to take a 7-6 lead very late in the game, and caused the price to escalate all the way to 85 cents. In a matter of 10 minutes, the value of the contingent contract had increased 8-fold, and investors who bought at 10 cents suddenly had a very valuable asset. With the 8th inning over, the American League needed just three more outs to win the game. They would get those three outs and not score any runs. During the 9th inning the price of the contract rose from 85 cents to 1 dollar, the price it eventually paid to the holder.

The effect of the All-Star game was seen in other contracts. A day before the All-Star game, the contract which paid $1 if the Yankees won the World Series was selling for 20 cents. The league that won the All-Star Game would win home field advantage in the World Series. Teams win more often than not when they have the homefield advantage, so the outcome of the game was important. The Yankees, seen as the most likely American League team to make it to the World Series, were seen as slightly more likely to win the World Series by investors. A contract which pays $1 if the Yankees win the series was selling for 20 cents the day before the All-Star Game, but had climbed in price to 21 cents the day after. Investors took their new knowledge about homefield advantage in the World Series, and slightly upgraded the value of all the contingent contracts for American League teams and slightly downgraded the value of the National League teams.

Next we’ll look at some more practical applications of how information causes prices changes and how we can extract information from price changes.

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http://economics.about.com/cs/finance/a/pricing_info_3.htm

How Markets Use Information To Set Prices
Not Just Contingent Contracts
By Mike Moffatt, About.com
See More About:

* free market economy
* contingent contracts
* prices

Economics Finance Markets Finance Economics Dictionary Emerging Markets Economy Financial
(Continued from Page 3)
The effect of new information and changed beliefs are apparent in contingent contracts, but they also show up in the price of any asset. In quite a few articles, such as Canadian Dollar Slides Following Surprise Bank of Canada Interest Rate Cut I discuss the link between the differences in the interest rates in two countries and the exchange rate. In short, if the interest rate in country A falls and the rate in country B stays the same, we’d expect to see A’s currency become less valuable relative to B’s, all else being equal. As an investor, if I know that country A will be lowering its interest rate, I would expect that the A’s currency would soon become less valuable than B’s. So I’d do well for myself if I sold A’s currencies and bought B’s on the open market. Of course, if everyone believes the interest rate drop is coming, they’ll sell currency A and buy currency B, until the price of currency A falls to the level at which it would be after the interest rate drop was announced. So if we all expect that the central bank of country A will drop rates by 25 points, then they do, we should not expect to see any changes in the exchange rate at the time of the announcement. However, if they announce they’re not going to cause the interest rate to decline, we should see currency A rise back up to it’s former value, despite the fact that nothing tangible has changed. To the naive observer, it may even look like the drop in the exchange rate is causing the central bank of country A to lower its interest rate a few days later, an idea I look at in length in  Do changes in stock prices cause recessions?

By looking closely at these price changes we can also learn a great deal about what the market expects. Suppose we know that Alan Greenspan is going to make an announcement next Tuesday. This situation is not unusual, as it is usually known weeks in advance when the Federal Reserve Chairman is going to give a speech or make an announcement. We can tell what investors’ best predictions on the content of the announcement is going to be by looking at exchange rates. If the exchange rate drops or rises, we should expect to see a change in the interest rate, while if the exchange rate stays the same, it’s likely that no change will be made. Of course this is an oversimplification as announcements by the Federal Reserve influence all sorts of variables, not just the exchange rate. However it is apparent that if we watch how prices change we can determine what the investment community feels will happen in the future.

In a country with a free-market economy, prices are not set by a central planning bureau: they are set by supply and demand. Because supply and demand reflect the information and beliefs of investors in those markets, they contain the sum total of all the information and beliefs the investors have in a market. While we might not have the power to change people’s actions or beliefs, the price mechanism gives us the power to observe those actions and beliefs. Prices are far more than just what you have to pay for something, they are also a source of great knowledge if interpreted correctly.

If you’d like to ask a question about the information contained in prices, contingent contracts, baseball, or any other topic or comment on this story, please use the feedback form.

http://economics.about.com/cs/finance/a/pricing_info_4.htm

*** NOTE ***

What is the most bizarre to me, is that when the bailouts for corporations, banks, investment banks, Fannie Mae, Freddie Mac, lenders, mortgage companies, industries, lobbies, big business, Wall Street, stock brokers, mutual funds, money market funds, hedge funds, etc. happened and as they are happening – no one in the government or in the press call it socialism or communism or a dictatorship using its bailout funds that don’t belong to it.

But, the moment any help for homeowners, people in the United States, unemployed or health care or help to stimulate jobs in the country is suggested, then the socialism word is brought up as if that is the reason not to do it. So, then why do the other things that are being done which is also socialism, the founding principles of communism, and indicative of aristocracy and dictatorship – not capitalism, nor democracy – certainly, not representative government supporting the American people.

How could it be seen that way? There are also still people of the “experts” variety on the news in every show, every hour, every website of news and every broadcast that are saying things are not all that bad and that people in America simply are being misguided by all the negative news sensationalizing what is really okay.

I don’t think anyone in America is that stupid – not twelve year olds, not fifty year olds and not anyone between six and a hundred and three. These “experts” and government / political figures that are saying things are really okay obviously already have a job and don’t expect to lose it. They don’t shop for their own groceries in most cases and are not dependent on the little money coming in to assure their sustenance, or their retirement income. They don’t have to buy a car they can’t afford – that isn’t their problem.

Who are these people to be making decisions that any of us should have to live with? Why – they aren’t qualified to know what it is like for most people in America – or they would know why people across the US know there is a real economic disaster we are experiencing. That is because each of us are experiencing it – by homes lost, by jobs lost, by groceries higher every time we shop, by cars repossessed, by stores that aren’t open in our community anymore. After awhile, it gets to be real obvious.

– cricketdiane, 10-20-08

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