With a federal budget deficit still as large as it is, not all that much of a surprise.
Karim writes:
Nice upside surprise:
- Orders and employment both up on the month; export orders up sharply (but not seasonally adjusted)
| Sept | Aug | |
| Composite | 53.2 | 51.5 |
| Activity | 52.8 | 54.4 |
| Prices Paid | 60.1 | 60.3 |
| New Orders | 54.9 | 52.4 |
| Employment | 50.2 | 48.2 |
| Export orders | 58.0 | 46.5 |
| Imports | 53.0 | 50.5 |
- “General state of the business has not changed in the last three months. The market is still soft for new sales due to financing requirements.” (Construction)
- “Business seems to be flat from last month.” (Finance & Insurance)
- “Signs that the economy may be improving, but our sector is still flat or declining.” (Professional, Scientific & Technical Services)
- “Business activity is generally stable — slightly better than last year.” (Accommodation & Food Services)
- “Third quarter is looking profitable with improving confidence and expectations in the economy. Capital expenditures are being approved.” (Wholesale Trade)
Bloomberg reporting 10% GDP deficits now. How much of that is TARP?
JC,
TARP seems to be working in reverse as far as the deficit now. ie As the money is “paid back” it is resulting in higher deposits to the Treasury’s Fed account, thus lowering the deficit (cash basis). Much of the TARP was paid out in FY2009, that made that FY’s deficit seem higher. This past year (FY 2010) the process was reversed as the entities “paid back” the TARP balances.
The key flow measure to me looks like about a $110B-$120B per month fiscal deficit… that seems to be what the non-govt sector can as WM sez ‘muddle through’ on for now.
Resp,
Ok Matt, but 10% GDP deficits is a huge huge number. Where is that money going?
govt deficit = non govt savings of financial assets
I see this today:
http://www.bloomberg.com/news/2010-10-05/goldman-s-hatzius-says-fed-s-easing-measures-will-probably-fall-short-.html
I seem to remember you mentioning that you had gotten Hatzius “in paradigm”…
just read the article. looks ok to me? he says qe will cut rates some, which is true, and that it won’t help and the economy will remain sluggish, and that hiking taxes will hurt. am i missing something?
Sorry, I wasn’t saying he was wrong – I was just trying to remember if he was the guy from GS that you had mentioned talking to.