Amity Shlaes, the author of The Forgotten Man: A New History of the Great Depression
● The Escape Artists: How Obama’s Team Fumbled the Recovery
By Noam Scheiber
Review via Slate
Though the economy may appear to be improving, this might not be the ideal time for a book discussing the reasons for a sluggish recovery. In The Escape Artists: How Obama’s Team Fumbled the Recovery, Noam Scheiber presents a thought-provoking examination of the administration’s policymaking. He portrays a team that, while failing to fulfill its obligations to prevent a severe economic downturn, navigated incredibly challenging circumstances and arguably achieved the best outcome possible.
US crude oil imports fall to 12-year low
Financial Times | Mar 1
U.S. crude oil imports have reached their lowest point in twelve years, driven by diminished demand and an increase in domestic production. In 2011, the United States imported an average of 8.91 million barrels of crude oil daily, the lowest level since 1999, as reported by the U.S. Energy Information Administration.
The slight dip in the ISM manufacturing index for February could be just an instance of typical monthly fluctuations; however, this decline may not help morale following the disappointing January data on personal income and spending. The Institute for Supply Management’s factory index fell to 52.4 in February, down from 54.1 in January. While this doesn’t signify a crisis, it is certainly not encouraging, especially given that analysts were predicting an increase, according to Bloomberg.
Consumer income and spending saw small gains last month. However, these increases do little to alleviate concerns about the sustainability of economic growth. Initial jobless claims remain at a four-year low, offering some optimism that cyclical challenges can be managed. The key factor continues to be the labor market and whether job growth can sustain wage increases. This, in turn, is essential for maintaining consumer income and spending levels. Fortunately, wages are still on the rise, making the argument for optimism viable. Nonetheless, with energy prices climbing and tensions in the Middle East looming, caution is warranted regarding upcoming economic data.
February exhibited a mixed performance across major asset classes. However, this did not hinder the Global Market Index (GMI) from making gains. Fueled by a robust month in global equity markets, the passive GMI, which includes all major asset classes in market-value weights, recorded a solid increase of 2.8% in February, marking its third consecutive monthly rise.
The landscape of ETF and mutual fund research is extensive, filled with insights and analyses from various perspectives. However, a need exists for more focused analysis, particularly concerning low-cost index fund proxies of the major asset classes. For investors with a strategic mindset aiming to assemble and manage multi-asset class portfolios, the abundance of choices can be overwhelming. While many resources exist for thorough exploration, those seeking a concise list of effective options often find them limited. To address this gap, I’m introducing a semi-regular series of updates that will feature a curated selection of products within specific asset classes, starting with U.S. equity funds.
Stimulus Is Maligned, but Options Were Few
The New York Times | Feb 29
In Britain, which has its own currency and benefits from low interest rates, a notable comparison can be drawn with the U.S. The coalition government led by David Cameron took office in 2010, vowing to reverse the stimulus policies of its predecessor. They implemented widespread spending cuts, asking government departments to reduce budgets by 25 to 40 percent. This approach hindered the nascent recovery, with the British economy remaining 4 percent smaller than before the recession began four years prior, and predictions indicate it may contract further this year. Despite having cut expenditures, the government’s debt relative to the economy has increased since Mr. Cameron assumed office. In contrast, while the Obama administration’s stimulus faced criticism over its scale and structure, it did create jobs and foster growth. The nonpartisan Congressional Budget Office estimates it will have added between 1.6 million and perhaps as many as 8.4 million jobs by 2013.
New orders for durable goods experienced a significant decline in January, dropping by 4.0%, according to reports from the U.S. Census Bureau here. This marks the steepest monthly decrease in three years and is likely to reignite discussions about the economic outlook. However, relying solely on this month’s figures to predict a negative economic trajectory would be premature. The overall yearly trend for new orders remains positive, as does the year-over-year growth rate for business investments (non-defense capital goods excluding aircraft orders).
Recent insights from several regional Federal Reserve banks indicate that economic growth remains robust. Four regional banks have reported February manufacturing activity, all showing improvement. This trend suggests further encouraging statistics may emerge in the upcoming economic news. Later today, the Richmond Fed will provide its manufacturing activity update, and January’s durable goods summary for the U.S. will be released. Tomorrow, we will receive the latest figures from the ISM-Chicago Business Barometer, followed by the ISM Manufacturing Index for February, which will provide a comprehensive overview of U.S. economic activity for the month. Collectively, these reports imply that February is likely shaping up to be another month of expansion. Here’s a quick summary of the four regional Fed reports released thus far:
