http://en.wikipedia.org/...
The PMI report is an extremely important indicator for the financial markets as it is considered the best indicator of factory production.
The Chicago PMI came in this morning at 46.1, way below estimates. Generally anything under 50 means the economy is contracting. Economists are shocked! Shocked, I tell you!
http://uk.reuters.com/...
U.S. stocks turned negative on Wednesday, and major indexes fell more than 1 percent after a regional gauge of business activity unexpectedly contracted in September. The Institute for Supply Management-Chicago business barometer fell to 46.1 in September from 50.0 in August. Economists had forecast the index at 52.0.
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It was so unexpected! Who would've thought? But why aren't people marching out like good little consumers to snarf up the latest fashions from Nordstrom? Why is that 53 inch LED still on display at Best Buy, collecting dust? Why, it's downright Un-American!
Are you buying anything? Making those big, non-essential luxury purchases? Upgrading your automobile? Outfitting your kids in Ralph Lauren for back-to-school?
Of course not.
If you're in the bottom 98%, like me, you're stashing your cash away or paying down debt. Because you think your job is at risk. It may or may not be, but you sure as hell know someone who is unemployed. And he's probably a good friend. Depending on where you live either one in ten people you meet is unemployed, or one in five.
So the last thing you're doing is spending time at the Supermall. Instead, you're probably squeezing out what you can out of your garden, cooking instead of eating out, and washing your car by hand. Your appliances are being repaired, rather than thrown out. Your shoes are being re-soled. If you're a guy, everything from your shirts down to your Boxers are just gonna have to last for another year. Or you're going to the TJ Maxx to buy 'em at discount.
Your Christmas plans are being drastically cut back, as are your travel plans this holiday season. Hell, you may not even buy gifts this Christmas. Celebrating Christ's birthday without buying something. What a bizarre concept.
WHY is this a
surprise?
http://finance.yahoo.com/...
A surprise drop in a key regional economic indicator sent stocks reeling in early trading Wednesday, with the Dow Jones industrials tumbling more than 100 points
http://online.wsj.com/...
The market had been shaky thanks to surprisingly weak jobs data released prior to the opening bell. Then the losses in major indexes piled up after the Chicago Purchasing Manager's Index showed a surprising decline.
"Surprise" is walking down the street and having a barrel of flour dumped on your head. "Surprise" is unlocking your front door and being knocked over by bats and monkeys. These are "surprises."
There's nothing "surprising" about how people will behave with 10-20% unemployment bearing down on them. Nor should it surprise anyone that a stimulus package geared to infrastructure, energy development, and shoring up existing programs (and overloaded with useless tax cuts) will not prompt the consumer to spend until he's fairly sure his job is safe. That is going to take a long, long time.
But I guess it's no surprise that our economic whiz kids can't see that.