Friday, January 27, 2012

Waiting for Q4 GDP report - Macroeconomic Advisers forecast is 3.1%

The initial estimate for Q4 2011 GDP is due out in about an hour. Meanwhile, I just checked and the forecast from Macroeconomic Advisers (MA) from yesterday was for annualized real GDP growth of +3.1%. That was up slightly from their reduced forecast of +3.0% from last week. Usually, MA comes in within 0.2% of the headline official number, but this is just the initial, "advance" report and will be revised next month and again in March.
MA is forecasting Q1 2012 GDP growth of +1.9%. That is up slightly from their reduced forecast from last week, but that "1" handle is still a bit concerting. There is still no sign or hint of an imminent recession, but one has to wonder if that "1" handle will simply be a short-term bump or a more persistent deceleration that could lead to recession.

Sunday, January 15, 2012

Planning for annual retirement contributions

Although I am still not ready to make my annual retirement contributions since I haven't yet done (or even started) my taxes to know how much I can contribute, I am at least starting the planning process. My default, and most likely path, is to continue with my autopilot strategy and simply invest once again in the appropriate target date fund. In my case, I expect to retire at age 70 or so in another 13 years or so, so a 2025 target-date fund is most appropriate.
In recent years I have been using the Fidelity Freedom 2025 Fund (FFTWWX). I have been thinking about switching to Vanguard's equivalent fund, Vangard Target Retirement 2025 Fund (VTTVX) since its expenses and return are better, but the total size of my account is still too small to warrant the hassle of moving the account, especially since I already have several Fidelity accounts. Although, I could open a Vanguard account for this year and see how it goes before making the decision to move.
My other thought is that I'm not so keen on bonds and all the other stuff that goes into a target date fund, so I may decide to go simply with straight stocks or a more aggressive stock mutual fund. That would somewhat defeat the purpose of my autopilot strategy, but at least considering it as a viable alternative and would help me better evaluate whether the target-date approach is best, for me.
Overall, I am moderately happy with my Fidelity target-date fund, although not thrilled with its performance over the past year, I just have this concern that it is somewhat inefficient in terms of fees and complexity, and may be a little too high a price to pay for the convenience of being on autopilot. OTOH, my portfolio is still too small to warrant a significant investment of my time.

Get those annual free credit reports

I do like to get my free annual credit reports, but it is sort of a pain to get each one, paw through them entry by entry, and then save them locally for future reference, and heaven help you if you need to make corrections, but this week I will endeavor to bite the bullet and pull the trigger and do the deed(s). I do want to get my credit score as well, but that doesn't come for free as the actual reports do.
Warning: There are lots of sites that purport to offer "free" credit reports, but the only official one is the FTC web site, at, as described on the FTC web page.
For my FICO credit score I usually just buy it, one-time only, not subscription service, from Experian.

Saturday, January 14, 2012

Q4 GDP estimate lowered to +3.0%

Macroeconomic Advisors (MA) has lowered their forecast for Q4 annualized real GDP growth to +3.0% from +3.3%, and is also lowering their Q1 forecast to +1.9% from +2.0%. Although it is probably still too early to raise alarm, it is clearly disconcerting that Q4 now just barely has a "3" handle and Q1 has now lost its "2" handle. Growth below 2% is not exactly a sign of a healthy economy.
The bottom line is that the forecast trend has been pointing towards a decelerating economy over the past month. That by itself is not a cause for alarm per se, but unless we see a reversal of that trend over the next one to two months, Q2 could be dicey. None of this in any way tells us what Q2 will be like, but simply that all bets are off.
The weekly unemployment insurance initial claims report was disappointing, but one weekly data point doesn't indicate a trend. That will be something else to keep a close eye on. Overall, initial claims have been trending well over the past couple of months.
The ECRI Weekly Leading Index was mixed this week, with the weekly data rising nicely, but the smoothed growth rate declining modestly, telling us only that the outlook is still unclear, but with a somewhat negative bias since the smoothed growth rate is still well below zero. Meanwhile, ECRI is still sticking with their call that the U.S. is tipping into a recession.
We will definitely keep an eye on the GDP forecast trend over the next six weeks, as well as weekly unemployment insurance initial claims, as we transition from the tail of the holiday sales season and move back into the more normal part of the real economy.

Tuesday, January 10, 2012

Q4 GDP estimate lowered to +3.3%

Macroeconomic Advisors (MA) has lowered their forecast for Q4 annualized real GDP growth to +3.3% from +3.4%, but is maintaining their Q1 forecast of +2.0%.
The bottom line is that they are essentially planting a stake in the ground and implying that there will not be a recession in Q1.

Monday, January 09, 2012

Q4 GDP estimate lowered to +3.4%

Macroeconomic Advisors (MA) has lowered their forecast for Q4 annualized real GDP growth to +3.4% from +3.6%, but is maintaining their Q1 forecast of +2.0%.

The bottom line is that they are essentially planting a stake in the ground and implying that there will not be a recession in Q1.

Thursday, January 05, 2012

Q1 GDP running at +2.0%

Macroeconomic Advisors (MA) has finally come out with their initial forecast for Q1 annualized real GDP growth of +2.0%. They are sticking with their forecast of +3.6% for Q4 of 2011.
They are essentially planting a stake in the ground and implying that there will not be a recession in Q1.

Monday, January 02, 2012

Prospects for the Occupy movement in 2012

I can't speak to the prospects of the Occupy movement in other countries since the United States is such a completely different case, but as we start the new year I would like to summarize my perception of where the movement is (in the U.S. only) and what prospects the movement has for the rest of this new year. Basically, the movement started and persists as a "protest" movement. They seek "change" if not "revolution" (whatever that means), but to date they have only managed a number of half-hearted protests of limited size. Sometimes they manage to stage larger rallies with the cooperation of (some) labor unions and students, but other than relatively minor disruptions, they continue to come up empty on the "change" and "revolution" fronts."
Although the movement grew dramatically in October, they seemed to taper off and stagnate in November and December. Who knows, maybe that was the weather, but if that is true then the movement is even less potent than they seem.
The big, open, make-or-break question for the whole Occupy movement (in the U.S., at least), is the degree of support and actual participation that will come from average Americans, who although they appear to offer some sympathy for the demands of the movement, seem determined to remain on the sidelines.
It appears to me that although the movement can easily attract the unemployed, the students without jobs and large student loans, and the otherwise disaffected of society, they stand little chance of actively engaging the vast majority of average Americans with jobs and families and otherwise busy with their daily jobs. Sure, plenty of those people will honk their horns in support or maybe even donate a few bucks or maybe one of their kids will join the movement, that's about as far as they themselves will go.
One of the reasons that the Occupy movement will not make deeper inroads into the American psyche is that the unity of the movement is only at the level of vague aims, like fairness, political corruption, and social justice, but when you drill down and listen to what individuals in the movement are actually saying and promoting, things like commitment only to direct democracy and opposition to representative democracy and opposition to capitalism itself, it is difficult to imagine that such specific goals are going to be very appealing to many average Americans. In other words, as the movement starts to clarify and detail its goals, their level of support among the general public will wither rather quickly.
I suggest that you evaluate the movement at three levels: 1) sympathy, 2) support, and 3) commitment. Yes, their has been and will continue to be a significant degree of sympathy for the movement in terms of the issues they raise. There will even be some degree of support, although financial donations have already dropped off dramatically. Commitment is the really tough nut to crack. Sure, the movement appears to have a diehard core that really is truly committed, but that base doesn't appear to be growing and shows little prospect for dramatic growth in the months ahead, and without such growth the movement has little prospect of achieving the degree of "change" and "revolution" they seek.
Another factor impacting the movement in the U.S. is that America is very diverse and geographically distributed. Egypt, Cairo, Tahrir Square, and the Egyptian people were all relatively synonymous. But in the U.S., New York and Wall Street are geographically separated from our political capital of Washington, D.C. And we have quite a number of major business centers all over the country. That means that Occupy has to try to be everywhere, which means that it has to divide itself, its people, its resources, and its attention, and not have the kind of central focus it had in any of the countries of the Middle East. Even with a more lax and permissive attitude, the D.C. occupation has been only very modest in size. Despite the difficulties caused by the financial crisis, recession, and weak recovery, Americans overall are still in much better shape and have a much brighter outlook on the future, and have a much more diverse range of life styles, aims, and interests than the average crowd outside the U.S. or in the Middle East specifically. Occupy Wall Street has been and remains the central focus of the movement in the U.S., but our social and political diversity and geographic distribution have been severe impediments to the movement.
In summary, yes, the Occupy movement will remain with us for the coming year, but only as a shadow of their grand vision of last summer and fall. Yes, we will see a number of protests, rallies, and popup disruptions and flash mobs, but overall the level of disruption will be no worse than your garden variety of urban traffic jams and the like. Crowds will number in the dozens and hundreds and only occasionally in the thousands, but not consistently grow into the tens or hundreds of thousands that an effective movement would need on a sustained and regular basis to succeed as a force of change. Yes, the police will remain a constant, vigilant presence, but their response will become more measured as the protests fall into more predictable patterns. Yes, there will be a few protests that get out of hand and become near or actual riots, but overall the protests will be more at the level of minor annoyance and mere street theater spectacle than true "revolution" ala the protests in the Middle East. To put it simply, the United States, for all of its problems, is simply not the Middle East. Besides, the results from Tahrir Square are not looking so appealing of late.