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Archive for October, 2012

October 29,2012

Posted by nahetsblog on October 29, 2012


One of the unintended consequence of an improving economy is for the first time since July of 2007 the number of Mexicans (illegal or otherwise ) coming to the United States is more than the number heading south. The numbers are not exact but a research report conducted by the University of Southern California and a Mexican government-sponsored research group using data from both the United States and the Mexican governments and interviews came to this conclusion.For example, in 2000 their was 770,000 that came to the United States (illegal and legal ) in 2010 that number was 140,000 that is a huge difference.


The economy is going to improve slowly through 2013,according to a survey of 48 economist done by the USA TODAY newspaper.But as usual they premise their predictions on the fact that congress does not do anything that will hinder the growth,the economy is expected to grow at a rate of 2.3% that is a modest improvement over this years 1.65 %. The unemployment rate now stands at 7.8% and it is predicted to average 7.6% next year,we have been adding jobs at a rate of about 125,000 per month , next year it is predicted to be about 175,000 jobs per month.Business investment growth is has been 4.2 % over last year, next year that rate is predicted to be about 7.5%. The Fed has promised to keep buying mortgage backed securities and also has promised to keep the short-term interest rates about where they are now.


Due to the high price of a barrel of oil and the new technologies for extracting the oil we have been increasing our production by about 7 or 8 percent per year and at this rate we are going to surpass Saudi Arabia either in 2013 or 2014,that is assuming that Saudi Arabia keeps their production where it is right now.The boom has surprised everyone, including the experts.The Energy Department has predicted that next year crude production should hit 11.4 million barrels per day,that is just below the Saudies production of 11.6 million barrels per day.Even with the increases over the last four years we still are not even close to what we consume,current consumption is just a little over 18 million barrels per day.Even though the increase in domestic production has not shown up at the pump it has created a lot of jobs,a lot,and how do you know it has not showed up at the pump? one year ago the pundits were predicting that because of the election this fall and that the Obama administration was touting the green energy that we were going to be paying $4.50 to$5.00 per gallon this summer,and that has not happened,so maybe we have seen it at the pump we just do not know it.

One of the biggest reasons we are seeing an increase domestically is our new found ability to get oil out of rock that used to be to difficult or impossible,to free the oil and gas out of the rock they use a technique called "fracking" that is where they pump water,sand and chemicals into the well,this fracking method has unlocked enormous amounts of oil and gas.This long period of high prices has given the drillers the motivation they need to expand and search for new areas.

These increases have been a boom for the local economies,the states that have seen the biggest boom are North Dakota,Oklahoma,Wyoming,Montana and Texas,after BP oil spill in the gulf the production waned,it is now starting to climb back to where it was.The two states that have the most shale that can be fracked are North Dakota and Texas.

One concern that some people have is the long term effects of fracking are unknown, their is a concern that some of the chemicals that are used in that method could end up in the water table,it might be years before we find out.

Caterpillar known as a bellwether company for judging the health of the worlds mining and heavy equipment construction has three main sectors in their business,heavy equipment,mining and power services, lately they have made huge investments in their mining and equipment sectors.

99.99% of the time it does not matter whether the President is a Democrat or a Republican,but when it comes to education it does matter. Democrats tend to care more about the blue collar jobs then their counter-parts.Republicans tend to care more about the 2 and 4 year schools, CDL schools,welding schools,heavy equipment operators schools or heating & air conditioning repair schools will be better off with a Democrat than a Republican,of course that is my opinion.

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October 22,2012

Posted by nahetsblog on October 21, 2012


Being in the middle of any election cycle,and a Presidential one that is getting ugly the rumors had already started before the ink was dry on the morning papers. CONSPIRACY that is what the anti-OBAMA people are claiming now,the official percent went from 8.1 percent down to 7.8 percent.The 7.8 percent is nothing to brag about,but what makes that number so special is this is the first time since Barak Obama has been elected President that it has been below 8.0 percent and during the last Presidential race Barak Obama had promised everyone that he would make sure the unemployment rate would be below 8%during his first term in office and sure enough thirty days before election day it is 7.8 percent..


The worlds largest mining and construction equipment manufacturer has announced that its sales and per share profit for the year 2015 needs to be adjusted down about 12 percent in both categories,Caterpillar announced Friday that the gross sales and dollars per share net income were a little to optimistic,so they needed to correct them.Thirty days ago when they held a press conference and issued a press release making the 2015 forecasts I joked that the real reason they were so optimistic about their revenue and profits were to hide the 3% price increase across the board,which they announced at the same press conference,does anybody really care what Caterpillar thinks their dollars per share is going to be three years from now.I can remember a quip from the 1960’s that went something like this,"If General Motors catches the flu,the rest of the economy sneezes" that,s close I might be paraphrasing a little but you get my point.I know Caterpillar is one of the bellwether companies they use to measure the DOW Industrial Average,but do the other companies that make up the DOW Industrial forecast their sales and profits three years into the future,that 2015 sales/revenue forecast that Caterpillar made came on the coattails of China forecast that they were going to update,repair,modernize,fix all of their runways,bridges,railroad bridges and interstate highway system over the next ten to fifteen years and the total could be close to a trillion dollars,and OH by the way General Motors went b.k. four years ago and a whole bunch <millions of people> got stiffed some of the share holders or bond holders or vendors <depending on your classification> will get somewhere between zero and 33% of what they had coming.Their are some pundits that look at Caterpillars profitability as a reflection of the worlds economic health.


Depending on which measuring stick you use,CA is one of the five worst states in regards to A) number of homes in the foreclosure process B) number of homes underwater C) percentage of homes at their all time high or within 2%D) All of the above.This could almost be the tail of two cities,it is the worst of times and it is the best of times.California has a huge disparity in wealth,their are areas that are doing terrible economically and you can drive thirty miles down the street and find areas that are doing way better than the average.Three out of the last six months CA led the nation in the number of new jobs created,two out of the last four months CA led the country in highest percentage of private/public money spent in major construction projects.

The National Association of Home Builders (NAHB) reported that out of the 337 largest metropolitan areas the construction employment went up in 191 of them went down in 88 of them and remained the same in the rest, the 57 % that saw an increase in construction employment is the third time in the last six months that the number of areas that saw an increase was above 50 % NAHB The Department of Labor said that their is not going to be hearings scheduled regarding the Keystone XL project until after the next president is sworn in.If that project is started before January 2014 I,ll eat my hat.

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October 20, 2012

Posted by nahetsblog on October 19, 2012


A recovery in home construction is finally building enough strength to help the economy instead of dragging it down.It is about time,the home construction business showed huge numbers in September,August housing starts were up 11.2 percent over July and the Commerce Department came out with a report last Thursday that showed September with 15 percent over August, that is for all four regions,even though the northeast was the worst, the other three made up for it.The National Association of Home Builders ,NAHB. said that the last quarter has showed slow but steady growth and now they are showing fast and steady growth,

Housing typically leads us out of the recession,and the only reason it did lead us out of this one is this recession has been the only one that was caused by housing,the housing bubble that burst in the last half of 2008 is what caused what most economist refer to as the biggest recession since the great depression,some areas of the country saw 40 to 50 percent of homeowners equity go poof in thirty days,that hurts,best estimates now are less than 20 percent of current homeowners are underwater with their bank,that is half of what it was five months ago.

Home construction is closely watched because it is labor intensive and most economists feel that for every two houses that are built creates one fulltime job.That cannot be proven or disprovened absolute perfect for most economist,that just the way they like it,heck,most of them cannot even me a Monday morning quarterback,their batting averages on their predictions is akin to the third basemen for my Yankees,he gets 29 large and he batted a buck twenty in the playoffs,and here is a real kick in the pants,in the clutch they sat him down for a forty year old part timer. Imagine that,37 years old and they bench you for a guy who is forty but he still gets his 29 million dollars every year for the next four years.

Last year was the worst year for new housing starts since they started keeping tract,434,000 new homes were built in 2011,so far this year we are on pace to pass that number by at least 21 percent.NAHB predicts increase of 21 to 25 percent increase over the next 6 months.


U.S. home prices are starting to inch up, after getting the bejeeza beat out of the prices over the last five years finally they are going up,not all over the country but in a lot of places where they have been stagnant for years.More than a 100 metropolitan areas our over their all time high and 50 areas are currently within 2 percent of their all time high.That,s nice,some examples of the ones that are higher than they have ever been Austin,TX,Denver and Boulder CO,Indianapolis IN,and Portland MN. Many of the cities that are close to their peak now never had the huge swings in the prices in the first place,so they did not have far to go to get to their peak.Other markets that are close have been driven by their local economies,energy and agriculture did not suffer as bad as other areas.

Nationally the July price was 1.2 percent above one year ago,August was 4.4 percent above one year ago and September is expected to exceed August,so with the auto sales having a fantastic quarter for United States and Canada most of the economic indicators are pointing up,finally.


Americans spent more money at the retailers in September, that surge is a reflection of their confidence,the 1.1 percent advance is followed by a revised 1.2 percent for August,those two month,s are the biggest uptick we have seen sinceOctober 10.

A huge drop in joblessness and a firming up on the price of homes and we are starting to see the consumer confidence index go up,many Americans are reducing their debt loads in lieu of spending,builders are extremely concerned with their debt load and businesses are cautious about hiring and raises,so who is going to blink first,the consumers are waiting for the businesses to start hiring and expanding along with upping the ante on the pay scale and the businesses are waiting for the consumer to start spending their money like a drunken sailor on a Saturday night shore leave.

For most of us our home is our most valuable asset,with less than 20 percent of them underwater and the prices starting to inch up the economists are waiting for a spark to ignite the sales rally in the housing market,thats not going to happen,regardless of which direction the indexes are pointing the bubble bursting is fresh in every ones memory,and painful,what is the difference between a recession and a depression? a recession is when your neighbor loses his job,a depression is when you lose your job.That might seem a wee bit sarcastic but it really is true.

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