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Monday, December 5th, 2011
body blows

Economic body blows:

1) The Bloomberg Financial Conditions Index is supposed to show the number of standard deviations away from the average (since 1994) of the current U.S. financial market conditions.  These are monthly numbers — the weekly reading got below -12 in early October 2008.  Look that up in your statistics textbook.

2) Housing is down substantially in price, but has only given back half of the rise since the start of 1994.  While there has been deleveraging (both forced and voluntary), there really hasn’t been much of a dent in total household debt.  (On that topic, Scott Bell has a nice chart showing debt loads relative to GDP for households and businesses.  Look at the much-needed decline in financial sector leverage.)

3) The working-age population has continued to grow, although job creation easily outpaced it during the late 1990s.  However, total non-farm payrolls are now where they were in the spring of 2000.

4) In the aftermath of a shocking economic cataclysm (including the bailing out of the too-big-to-fail miscreants), a collapse in the housing stock which had supported borrowing, a woeful job market, and a stock market (not pictured) that didn’t perform as financial planners had said it would, how would you expect people to feel?  Just as you see in the Bloomberg Consumer Comfort Index, which measures consumer views on the economy, personal finances, and the buying climate.  The malaise is pervasive, which is understandable.  One wonders what can turn it around.  (Chart:  Bloomberg terminal.)