The economic news this week has been amazing – at least five pieces of news that show that 2013 is shaping up to be the year that sets the foundation for a strong restructuring, as predicted here last January. It’s hard to run it all down without getting a little breathless, so … hold on to something …
The look of desperation is totally unnecessary. Really.
The week started with news that Black Friday weekend sales were down about 2.9% – a drop for the first time since 2009. How is that good news? Because according to Visa overall credit card purchases were up 30% for the period that includes the next Monday, the day everyone shops online. Online sales were up 20% to $2B, but that isn’t big enough to account for the huge increase in overall sales. Some of that had to come at smaller stores that no one has surveyed yet.
Holiday shopping is coming in strong, but Black Friday is fading fast. Even with the extended hours into Thanksgiving it came up a turkey. Perhaps this nonsense will finally be curtailed in 2014. Between sales moving away from this horror show and the overall growth in the hands of smaller and online stores holiday sales are turning in what can only be called a best case scenario.
Why are sales so strong? Barataria has always held that employment tells the picture, and news on that front was nothing less than stunning. The ADP Report for November came in with a super strong gain of 215k jobs that month. Granted, some of that is making up for a weak October, and between the two we have an average of 175k gained each month – the average for 2013. But 2013 is ending on a strong note with a projected 2.1M jobs added overall, up about 8% over 2012 in net rate of gain. And as the chart below shows, that gain is coming from a pick-up in jobs produced by larger companies:
As predicted here, the net gain in corporate profits this year (eventually) produced a gain in jobs at those companies. It’s just very slow. But this is a sign of renewed confidence.
While these numbers are impressive, there is more. The weekly initial unemployment claims dropped below 300k to a low of 298k for the week. While one week does not a trend make in this volatile measure, it’s still damned good news.
The best news of all was the GDP figure, which showed 3Q13 grew at a net annualized rate of 3.6% – way ahead of anyone’s expectations. This is the strongest growth since 2006 and it shows that the economy is rebounding very well. This is the foundation that a strong restructuring will be built on overall.
Speaking of foundations, new home sales rose an amazing 25.4% in October – the highest growth in one month for 33 years. That’s right, you have to go way back before the bubble to find a rebound like this. It has to put pressure on the Federal Reserve to scale back its jobs program … er, “quantitative easing” of $85B per month in mortgage backed bonds. The home market has rebounded.
All together, there has been nothing but good news in this amazing first week in December. We have one month to go before we call 2013 for sure, but it’s shaping up to be the year we were hoping for all along. Barring any major disaster or act of Congress, in case there’s any difference, we should end this year exactly where we need to be.
Note that Barataria is not yet making predictions for 2014. The larger prediction is for 2017 to be the year when we look back and realize that the worst is definitely behind us, meaning the real strength won’t come until well into 2016. There is still a lot of restructuring to go and very likely some much needed political turmoil – hard decisions, that is, not the (cowpuckey) we’ve seen so far. That can’t possibly come before 2015 at this rate, if then. In addition, we won’t be anywhere near full employment until that time, meaning the labor market will remain difficult.
But there is reason to hope. This has been a very good week, and it defines the end of a pretty good year overall.
Barataria - The work of Erik Hare 
There goes Mr Sunshine! But I think you are right. Things are looking up and this year is way better than last year for me at least.
What do you think about the deadline for congress to do something about the sequester coming up in a week? It seems like they are going to do nothing again which is probably not as bad as people think. The shutdown was hardly a blip and that was way bigger.
I haven’t heard much about the 13 December deadline, but Rep Ryan and Sen Murphy are pretty capable. it’s all about what they can sell to their own people. I do think something can happen, but this is a sequestration deadline and it’s not as important as the looming need for a continuing resolution in January.
Good blog but it looks to me like the job gains at big companies was higher this time last year. I guess you are looking for sustained increases which we don’t have for anything except small companies but isn’t that always true?
Yes, there was a big spike last year. It’s hard to explain that, and it stands out as an anomaly. The trend this year has been positive and that is why job growth is accelerating now – and that’s what counts to me.
Small businesses do usually account for the largest share of growth, but it’s been oversized through the last two years. Medium sized companies seem especially squeezed, which I honestly don’t understand.
Things are definitely better then they were. Congrats on calling a lot of this. I think Mr Sunshine is justified!
Thanks! It’s a matter of what next year might bring at this point. That is very unclear given the end of the Fed’s QE and the next phase of budget nonsense. At some point we do need real leadership to get to the next level, and I don’t see where it will come from. I have a lot of faith in Janet Yellen but the Fed can only do so much.
Prosperity is around the corner, I agree.
In this vein I would like to express my solidarity with the protesters in Ukraine. They toppled a statue of Lenin. They remembered the bitter days of the past and the Ukraine famine. They see a more positive future with Europe.
It’s still a tough corner, but we can see around it. It helps.
Ukraine is at a crossroads, and I do think things will work for them. As you said, they have seen worse and they are tough. Once people see a brighter future together they can’t be stopped!
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