A Misbegotten View

Some conservatives want to find meaning

In professed homosexual leaning,

Which some think explains

The penchant of Keynes
For cyclical, state intervening.

We know the economist said

In the long run, that we are all dead, 

But the meaning was not

That he hadn't begot,

Or who he preferred in his bed. 

Economic Driver

Sales of new vehicles, typically,
Recede in recession terrifically,
'Til recovery beckons,
And that's when, we reckon,
They amplify upswings pro-cyclically.

Courtesy of FT Alphaville, we learn that auto sales have comprised 30% of GDP growth in the last two quarters of our tepid, ongoing recovery. Mining a gem from the research of Credit Suisse economists, Alphaville spotlights an interesting insight:

Motor vehicle output is less than 3% of GDP. But its standard deviation is more than nine times the overall GDP’s standard deviation. So in the world of growth rates, the auto sector will tend to punch well above its weight in expansions (and well below during recessions).

To all those who would worry that the surge in US auto sales is unsustainable, Alphaville points out that, as shown in the accompanying graph, the seasonally adjusted auto sales volume is still below the level of typical recessions such as that of 2001.

Overheard at FedEx

"A drop in the pricing of oil
Should sweeten the fruit of our toil,
But since shipping has slowed
In the air and the road,
The fruit of our toil may spoil."

When should shippers not rejoice in the falling cost of fuel? When it indicates a slowing economy, according to the Wall Street Journal's Kelly Evans. Her Ahead of the Tape column points out that lower oil prices have coincided with weakness in the price of $FDX and the S&P 500 generally. Although cheaper fuel is clearly a benefit when looked at in isolation, it may be correlated with global economic activity, as is the shipping business.

Dr. Bernanke's Medicine

Said Bernanke, "The time is impending
To rein in our deficit spending,
And though no-one likes taxes,
To raise them in practice
Would show the recession is ending."

Not Lovin' the Recovery

At McDonald's they have a confession:
"We'd prefer to go back to recession.
We sell more dollar menus
At each of our venues
When folks are afraid of depression."

Thanks to Kelly Evans for analyzing fast food's elasticity of demand - "Ahead of the Tape."

No Change from the Fed

To the Fed Open Market Committee,
The economy still isn't pretty;
When the job market's strong, 
They'll sing a new song, 
But for now, it's the same low-rate ditty.

No Sure Footing on the Summit

At the annual forum in Davos,
US policymakers are nervous;
In the crisis at hand,
There's no pent-up demand
To be pressed into crash-ending service.

Job Growth

"To grow jobs," Larry Summers explains,
"One must tolerate some fiscal strains;
Those tender green seedlings
Need less Milton Friedman,
And a little more John Maynard Keynes."

The Four Seasons

Larry Summers admits: "I recall,
We were still losing jobs in the Fall;
Mid the Wintery snows,
Job hemorrhaging slows -
We'll have growth in the Spring (if at all)."

A Risk Concentration You Can Live In

"Your house," says the Fed's Karen Pence,
"As an investment, makes little sense;
With your eggs in one basket,
You can't really ask it
To play a bear market defense."