The boom continues and indeed broadens

by on October 5, 2017 at 12:46 am in Current Affairs, Economics | Permalink

Growth in the all-important US services sector picked up sharply in September, providing further evidence that the recent string of hurricanes that battered swathe of southeastern US is unlikely to have a significant impact on US third quarter growth.

The Institute for Supply Management’s non-manufacturing gauge came in at 59.8 last month – the highest reading since August 2005. It is a sharp leg up from the reading of 55.3 recorded in August and easily trounced expectations for it to dip to 55.1.

Readings above 50 point to expansion, while those below indicate contraction.

The services sector, which includes professional services, healthcare and other non-manufacturing industries, makes up about 80 per cent of US gross domestic product.

The report comes just days after another ISM survey showed US manufacturing activity grew at its fastest pace in more than 13 years in September and reinforces the view in the market that US economic recovery remains on course for the second half of the year.

That is from Pan Kwan Yuk at the FT, file under “The Show So Far.”

1 derek October 5, 2017 at 12:56 am

🙂

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2 So Much For Subtlety October 5, 2017 at 2:46 am

I foresee a thread filled with so much Schadenfreudelicious gloating from assorted Deplorables it is going to be unbearable for all but the thickest of thick skinned moderates.

And this is before Trump has actually done anything. He has just said that he would. Truly Obama was a drag on the economy and the slow recovery over those eight years were entirely due to Obama’s personality.

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3 prior_Test3 October 5, 2017 at 5:23 am

‘it is going to be unbearable’ – No, it is likely to be wonderfully entertaining.

‘And this is before Trump has actually done anything.’ – What? Trump has been a reliable public entertainer for decades, and his White House performance has thoroughly met any long time Trump follower’s full expectations.

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4 Peter Akuleyev October 5, 2017 at 5:41 am

The irony of course being that most of the benefits of the boom will accrue to the segments of the population that hate Trump. The „deplorables“ will be left further behind, but are of course free to get emasculating jobs in the burgeoning service sector.

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5 Just Another MR Commentor October 5, 2017 at 7:15 am

+1!

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6 TMC October 5, 2017 at 9:40 am

No irony at all. Trump won every age group >40 and every income band >$50k. His supporters are basically the producers. They will come out ahead in this.

http://www.businessinsider.com/exit-polls-who-voted-for-trump-clinton-2016-11/#by-income-clinton-led-only-among-voters-with-a-2015-family-income-under-50000-a-group-that-included-36-of-the-voters-in-the-exit-polls-4

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7 jayjay October 5, 2017 at 11:00 am

Well yeah you are right but what I see there is actually a very suprising split between Hillary and Trump for high earners. Considering that these are the people that will mostly profit from his policies, that is a pretty weak showing..

8 JonFraz October 5, 2017 at 1:06 pm

Trump did very well among one class of non-producers: the retired elderly. And very poorly among a class of producers, the employed black working class.

9 So Much For Subtlety October 5, 2017 at 1:07 pm

“the employed black working class” – Black and Working? LOL LOL LOL LOL LOL

10 The Engineer October 5, 2017 at 8:43 am

“Truly Obama was a drag on the economy and the slow recovery over those eight years were entirely due to Obama’s personality.”

Well, my personal recollection of 2008 was that the economy performed inversely to Obama’s poll numbers. The stronger he ran, the worse the economy performed. Perhaps there was a symbiotic relationship there as well, a feedback loop.

And, similarly, in 2016, the closer Obama came to leaving office, the better the economy performed, culminating, of course, in the amazing week the stock market had after Trump won. And it really hasn’t stopped moving up since.

So, yes, I think that there is certainly something to your theory that Obama himself was the source of the economic misery 2008-1016.

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11 TMC October 5, 2017 at 9:42 am

It’s the regulatory environment. Obama era was bad for both the volume of new regulation and the arbitrariness if them.

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12 Al October 5, 2017 at 10:19 am

Agreed.

13 LOL October 5, 2017 at 10:23 am

You guys are too funny

14 JonFraz October 5, 2017 at 1:09 pm

No, the economy began improving after the 2008-09 recession bottomed out. It was basically on the upswing for seven of Obama’s eight years. But let’s not pat anyone on the back: as “booms” go this one is fairly anemic by historic standards. That’s not necessarily bad since a slow-but-steady economy may be better for us in the long run than a volatile boom-and-bust cycle. But anyone who is calling this a “boom” without a hint of irony is probably indulging in medicinal pot smoking.

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15 The Other Jim October 5, 2017 at 1:13 pm

If Obama is so great why isn’t he President?

16 JonFraz October 6, 2017 at 1:25 pm

The 22nd Amendment. Perhaps you’ve heard about it?

17 JonFraz October 5, 2017 at 1:04 pm

Er, um, the current “boom” started under Obama and is merely continuing under Trump who, thank-god, has yet to do anything stupid that could damage the economy.

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18 So Much For Subtlety October 5, 2017 at 1:08 pm

LOL you crack me up.

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19 JonFraz October 5, 2017 at 1:10 pm

Yes, as I said above some people are indulging in medical hooch– I understand it can produce gales of giggles over otherwise mindane things.

20 So Much For Subtlety October 5, 2017 at 7:35 pm

I believe I have just passed a milestone – the majority of comments in this thread using my name were posted by someone other than me.

I don’t think that has happened before. And in a way I am touched. You’re no one until msgkings thinks you’re important enough to fake.

21 msgkings October 5, 2017 at 9:27 pm

To be honest I’m not as flattered that everyone thinks I’m the fake poster. My m.o. is to be snarky directly to people that deserve it. I don’t do the fakes. In fact I’m one of the ones being faked. So whoever is doing it is #winning because he’s got us chasing phantoms.

22 msgkings October 5, 2017 at 12:58 am

This can’t be right, we’re always hearing that the US doesn’t manufacture anything anymore.

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23 Viking October 5, 2017 at 1:00 am

The legal immigrant quality of the USA trounced the quality of the migrants reaching European shores, so we will be fine until the public employee pension day of reckoning arrives.

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24 Just Another MR Commentor October 5, 2017 at 3:57 am

+1 Contra prior_test crappy salaries don’t attract the best to Germany.

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25 prior_test3 October 5, 2017 at 5:48 am

Hard to tell, considering just how that EU freedom of movement works out – companies are still seeking trained workers here (it is quite a common theme in this region), and are more than willing to employ anyone from the EU to meet the demand. Though such people are often considered ‘Ausländer’ in some statistics, the fact they are EU citizens means they do not as considered immigrants, and of course have essentially nothing to do with the Ausländeramt.

It is quite normal in this region to see high tech manufacturing companies employing a significant number of ‘immigrants’ by American standards, many of them coming here after the crack up of Yugoslavia, and a number of others as the Soviet Union broke down (some of whom, being of German ancestry, are not considered ‘immigrants’ either) – though many of them were educated in German schools and then universities.

It is certainly true that German companies do not seem all that interested in offering any more money than necessary to cover their labor needs, regardless of where the labor comes from. Which seems pretty obvious, actually, and has been true for decades. If you want to get rich as a middle or upper manager performing no useful function, Germany is a bad place. Many Daimler workers and managers are convinced that the biggest reason for the Schempp led merger with Chrysler was to allow German top managers – including Schrempp, of course – to be compensated American ones, regardless of the billions in losses that the merger led to.

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26 prior_test3 October 5, 2017 at 5:57 am

And it is always interesting to compare how America, the land of high salaries (at least for a certain select few) compares to Germany’s crappy salary workforce.

‘Germany’s trade surplus climbed to a record high in 2016, official data showed on Thursday, days after U.S. President Donald Trump’s top trade adviser accused Berlin of exploiting a “grossly undervalued” euro to its advantage.’ http://www.reuters.com/article/us-germany-economy-trade-idUSKBN15O1BO?il=0

‘The American trade deficit with the rest of the world rose to $502.3 billion last year, that’s in 2016. ‘ https://www.forbes.com/sites/timworstall/2017/02/07/us-trade-deficit-rises-to-502-billion-for-2016-not-that-it-matters-in-the-slightest

The title of that Forbes article pretty much says it all, at least from the perspective of those crappily paid Germans – ‘US Trade Deficit Rises To $502 Billion For 2016 – Not That It Matters In The Slightest’ Germans seem remarkably uninterested in following America’s example, including serious recent German political discussion of capping the ratio in pay between a CEO and normal employee – just proving again what a socialist hellhole Germany is.

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27 Just Another MR Commentor October 5, 2017 at 7:15 am

The trade surplus is precisely because Germany is a low wage country.

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28 ChrisA October 5, 2017 at 8:29 am

Indeed – the individual median German is poorer than the median Greek. I can easily make the US deficit disappear if I confiscate most of the savings of individual people so they can’t buy consumer goods from overseas. I don’t think that would be welfare enhancing though. Remember what is good for the leaders of a country is not necessarily good for the population.

29 JonFraz October 5, 2017 at 1:21 pm

Calling Germany “low wage” is an abuse of language. It’s in the upper ten of nations for GDP. Also, German workers enjoy a number of fringe benefits than are difficult to compare to the US, such as comprehensive health coverage, six weeks vacation and much greater job security.

30 So Much For Subtlety October 5, 2017 at 2:07 am

Well this is clearly Fake News out of Moscow or something. Because Paul Krugman once said ‘When will markets recover? Never.’ I have been waiting for the global recession he foresaw for some time now and it can only be a matter of time.

http://dailycaller.com/2016/11/09/paul-krugman-says-markets-will-never-recover-from-trump-dow-hits-record-high/

And the lesson of 1984 is that we should trust elites like Krugman, right?

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31 Just Another MR Commentor October 5, 2017 at 3:56 am

Tyler Cowen was also a big Hillary supporter not as big as Krugman but he was/is still pretty anti-Trump.

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32 Hua Wei October 5, 2017 at 7:01 am

Is there any reason for you quoting a far-right publicarion about a left person? Has the NYT and the Washington Post or the USA Today censored Krugman?

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33 JWatts October 5, 2017 at 3:18 pm

Here you go:

“It really does now look like President Donald J. Trump, and markets are plunging. When might we expect them to recover?

Frankly, I find it hard to care much, even though this is my specialty. The disaster for America and the world has so many aspects that the economic ramifications are way down my list of things to fear.

Still, I guess people want an answer: If the question is when markets will recover, a first-pass answer is never.”

https://www.nytimes.com/interactive/projects/cp/opinion/election-night-2016/paul-krugman-the-economic-fallout

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34 DevOps Dad October 8, 2017 at 3:11 pm

Sad to see Paul Krugman’s eventually morphing into a leftist political idealogue, however, when a national newspaper sells itself to a Mexican business magnate cheerfully acting as The Underminer of El Norte, this is the result.

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35 Al October 5, 2017 at 10:21 am

Excellent link, thanks.

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36 Tom T. October 5, 2017 at 1:49 pm

Krugman also said there was cholera breaking out in Puerto Rico since the hurricane.

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37 Iluvtacos October 5, 2017 at 2:16 am

Is there anything Trump can’t do?

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38 Just Another MR Commentor October 5, 2017 at 7:18 am

+1

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39 rayward October 5, 2017 at 6:42 am

With the economy continuing to go up, I assume support for a big debt financed tax cut will go down. One has to accept the bad with the good. It’s like these hurricanes (with another on the way): sure, they destroy property, but destroyed property has to be rebuilt.

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40 rayward October 5, 2017 at 8:11 am
41 A Truth Seeker October 5, 2017 at 6:48 am

So that’s what America has become: a “service economy” where Americans are expected to eke out a living giving one another haircuts and making each other cappuccinos!! What happened to the America of Carnegies, Fords, Rockefellers and Johns McConnells?!

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42 Dick the Butcher October 5, 2017 at 7:57 am

I’m old enough to remember when a Nobel laureate wrote/said, “When will the markets recover? The answer is NEVER.”

Trump2020 Campaign Gains Momentum!

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43 Just Another MR Commentor October 5, 2017 at 9:13 am

Trump could easily go down as Another Reagan.

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44 Dick the Butcher October 5, 2017 at 10:29 am

Could? He already is!

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45 Art Deco October 5, 2017 at 10:46 am

He’s not great until he pardons Jared.

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46 Heorogar October 5, 2017 at 12:16 pm

That wasn’t Dick the Butcher.

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47 JonFraz October 6, 2017 at 1:29 pm

If we’re lucky he’ll be remembered as another W. Bush. If unlucky, as another James Buchanan. And if really unlucky– well, I’d rather not go there.

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48 jayjay October 5, 2017 at 11:31 am

Good news. Let’s wait a few more years before judging Trump’s impact on the economy though. The story may well end badly..

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49 Heorogar October 5, 2017 at 12:21 pm

The business cycle was abolished in 1913 when “they” created the Federal Reserve.

It didn’t help that Trump added $10 trillion to the national debt; imposed tens of thousands of crippling regulations, raised taxes (ACA) a trillion dollars, . . . No wait!

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50 Dick the Butcher October 5, 2017 at 12:28 pm

Hear hear! We barely survived the Obummer years by the skin of our teeth. 8 years of Trump hopefully will be enough to undo the damage.

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51 jayjay October 5, 2017 at 2:33 pm

Excuse me, but where on this graph is it obvious that “Obummer” did bad dammage?
http://www.macrotrends.net/2488/sp500-10-year-daily-chart

curious to see your interpretation

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52 Meets October 5, 2017 at 12:38 pm

Are all the people who predicted Trump would be a disaster still short?

Of course to the perma bears, this is all just proof that the stock market is in a bubble.

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53 JonFraz October 6, 2017 at 1:29 pm

The title of this post is badly mistimed given today;s news from the BLS.

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