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X22 Report is a daily show that will cover issues surrounding the economic collapse

Monday, August 26, 2013

By Michael Mccune: The Rant (US Government auditor for 16 years - NO TITLE FOR TODAYS RANT- (( to Have Michael send you the Rant to your Email contact Him Here ((


Less than a month into the quarter and it appears the third quarter of 2013 is off to a much shakier start than had been anticipated. There might be time for the quarter to recover and meet expectations, but given the shakiness of the rest of the world's economy, the downturn being seen nationally leaves prognosticators groping for an upside.


Orders for durable good dropped a staggering 7.3% in July. Planned business spending on capital goods and investment for the rest of the year dropped even more. After the dismal results of the first half of the year, the 'recovery' seems close to stalling out completely.


There is some good news. Wall Street took the signs of a weakening economy and ran with it. Because of Fed policies, bad economic news means the current support from the Fed will continue, by printing money. Ironically, what is good for Wall Street in the short-term is very bad for the rest of us in every way.


Economists had expected durable goods to drop about 4% in July (mostly after seeing what was actually happening after the first two weeks of the month) but their crystal balls were cloudy, how else do you explain a miss by 75%?


But even worse than the 7.3% drop the government used as the headline catcher was the weakness of the details in the rest of the Commerce Department report.


In early March, orders for durable and capital goods reversed and began inching higher. This went on throughout the second quarter. Nothing robust, mind you, just a slow, steady rise that would begin to form the base for a long-term recovery. Something consumers could hang their hats on at last.


BE-E-EP! Hit the reset button!!! Those upward inchers lost not only all of the gains but have a reversal from even March's gains. Thus for the first seven months of the year the economy continued to sink, not rise.


Detail weakness also showed up, surprisingly, in construction. A nine-month upward trend was missing in July. While some of the decline is directly attributable to a rise in interest rates, home sales are now seemingly stuck in the anemic 1.7% annual pace recorded during the second quarter.


Weak retail sales in the 'back-to-school' programs, first reported in mid-July, are definitely not giving the economy the expected boost.


But government analysts are as much to blame for this as anyone else. Using the unethical practice of 'seasonally adjusting' data, the government wasn't prepped for the flat Back-to-School results. Declines in computer and electronic products were unexpected at best. If the analysts made the usual seasonal adjustment for the start of the school year, they may have adjusted for something that wasn't there and increased the reported drop.


There was nothing in the reports details to show this miscalculation was there. Every indication is the report made no such adjustment because none was required.


The only hopeful sign in the report was a notation from the economists that the drop followed several months of increased orders and therefore the decline 'could be temporary.' The basis for this hope is the 'unfilled orders' rose to the highest level ever recorded in the 21 years of the category. This might suggest durable goods might regain footing but, again either by intent or oversight, the analysis does not show 'cancelled' orders. There is no way, from the data released, to know if the unfilled orders are current or not.


Another ominous sign was auto sales finally hitting a snag. The government is quick to point out the .1% decline is 'likely to be temporary.' Watching the large and continuous dealership sales from all manufacturers of autos across their product lines does not indicate the vehicle trade is expecting July's swoon to end quickly on its own volition.


The lone bright spot was that the number of employed rose again. The bad news is the numbers of part-time and temporary jobs were three times as great as the full-time jobs. Therefore the hopeful signs economists are expecting from more consumer income may very well not materialize outside the energy and agriculture categories.


Despite all the manipulations, the economy is still not in a recovery mode. That is a fact the government is going to have to come to grips with very soon or we will find the dollar, like our superpower status, will be ruined.


"I have sworn on the altar of God eternal hostility to every form of tyranny over the mind of man."--Thomas Jefferson

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