U.S. retail sales. Employment trends. Small biz mood. Foodstamp recipients hit record. OECD leading indicators. Eurozone woes continue. Taxation migration. Sentiment watch. Pension tensions.
U.S. Retail Sales Hanging In
Weekly chain store sales have increased in each of the last 4 weeks after their 6-week collapse early this year. The Y/Y growth rate keeps falling, however, due to the strong 2012 base.
Retailers are likely to report pretty weak results for Q1 but the weekly trends are suggesting that American consumption is not collapsing.
The Conference board said its February employment trends index increased to 111.14 from a revised 109.93 in January. The January figure initially was reported as 109.38.
The latest index is up 3.2% from a year earlier and is now at its highest mark in nearly five years.
Small Biz Employment Picking Up
Even though sales and mood not much better:
According to the USDA, an all time high of 47,791,966 Americans closed 2012 in possession of the highly desired Electronic Benefits Transfer (EBT) card, managed by who else but JPMorgan. And with a civilian non-institutional population of 244.4 million in December, this means that a record 19.56% of eligible Americans are on Foodstamps.
In December an additional 109,924 Americans became reliant on foodstamps for their poverty-level needs, bringing the total to 47.8 million.
Following is directly from the OECD. I don’t agree with all their comments. Particularly worrisome is that only the U.S., Japan (!) and the U.K. (!) appear to be firmly growing. Economic momentum is fading fast in China, Brazil, India and Canada.
In the United States and Japan, the CLIs continue to point to economic growth firming. In the Euro Area as a whole, and in particular Germany, the CLIs point to a pick-up in growth. The CLIs for Italy and France point to no further declines in growth.
The CLI for United Kingdom points to growth close to its long term trend rate but with a slowing momentum. In Canada the CLI continues to point to weak growth.
In China, India and to a lesser degree in Brazil the CLIs point to growth below trend. In Russia however, the CLI points to growth picking up.
Regarding Europe, read on:
The euro-zone economy appeared to pick up steam in January, with official data from Germany showing a modest rebound in exports from the region’s biggest economy.
Exports rose 1.4% in January from December, the strongest performance since August, and were up 3.1% from January 2012. That was the biggest increase since October and was based on strong orders from countries outside the euro zone.
This is from the rear-view mirror. Recall that just last week: German Factory Orders Unexpectedly Decline
Orders, adjusted for seasonal swings and inflation, decreased 1.9 from December, when they rose a revised 1.1 percent, the Economy Ministry in Berlin said today. In the year, workday- adjusted orders dropped 2.5 percent. (…)
Factory orders from the euro area slumped 4.1 percent in January, driving a 3 percent decline in export demand, today’s report shows. Domestic sales dropped 0.6 percent. Orders for intermediate, investment and consumer goods all fell. December orders were revised up from an initially reported 0.8 percent increase.
Germany exports about 40 percent of its products to the euro area.
And today’s WSJ adds:
French factory output dropped further than expected in January as manufacturing output sank, figures from national statistics bureau Insee showed Monday. Industrial production in the euro zone’s second-largest economy fell 1.2% in January from December. (…)
In Italy, the statistics office said it has reduced its reading of the economy in the fourth quarter, showing a 2.8% year-on-year fall in GDP instead of the 2.7% drop originally reported. Output in quarter-on-quarter terms was left unrevised to show a 0.9% fall, the sixth contraction in a row.
Greece’s economy shrank 5.7% in year-to-year terms in the fourth quarter, a shallower contraction than the 6.0% fall originally reported, its statistics agency said.
Portugal’s statistics agency confirmed the economy shrank 1.8% in the fourth quarter from the third quarter, its ninth straight decline. Output was down 3.8% in annual terms.
Two senior executives at Moët Hennessy, the champagne and cognac arm of the LVMH luxury group, are moving to London from Paris and the head of Dassault Systèmes, the software arm of Dassault Aviation, said some senior managers of his company had left and he was considering following suit.
Don’t be too quick to laugh at the French:
Billionaire New Yorker looks to shield wealth
According to Bloomberg, which first reported Mr Paulson’s exploration of the possible move, 10 wealthy individuals have already located to Puerto Rico to take advantage of the tax break, and 40 more are in discussion with the government.
The S&P 500 has averaged a 21% gain during the fifth year of previous bull markets, he says, which amounts to the second biggest yearly gain within the first five years of a bull market. (WSJ)
llinois settled SEC civil-fraud charges that the state misled municipal-bond investors by failing to adequately disclose the risks of its underfunded pension system.
The action also shows in detail how political decisions left the state with only 40 cents of assets for every dollar of pension liabilities—a financial hole Illinois officials are now scrambling to fill. (…)
Most states comply with governmental accounting standards, which “Illinois did not follow,” Elaine Greenberg, head of the SEC’s municipal securities and public pensions unit, said in an interview. “But the SEC cannot order a state to follow any particularly methodology.” (…)
The state’s five public-employee pension plans manage the retirement benefits for clerical workers, teachers, judges, college professors and lawmakers. Collectively, their funding level stands at 40%. Nationally, the average funding level is about 75%. (…)
The problems date back to 1994, when Illinois lawmakers passed a funding plan that would allow the state to amortize, or spread the pension costs, over 50 years. Most pensions use a 30-year amortization period.
State officials also ignored the common practice of calculating contributions to the plans based on what is known as the “Actuarially Required Contribution.”
Instead, Illinois left it to lawmakers to decide how much to contribute to the funds each year.(…)