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Anyone who read U.S. economic reports in August needed to keep a bottle of aspirin nearby or suffer the consequences. It was getting at least that grim. There was no place to turn for a little respite. The economic recovery -- not robust, but it had some traction -- was slipping away and, like a heavy train failing to make it up a hill, vapors were beginning to rise visibly from under spinning steel wheels. Stocks, housing, jobs, manufacturing, retail … nothing appeared unscathed.
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In September in New York a sunny summer turned overcast and has remained that way since. The Federal Reserve's light-on-numbers portrait of the economy in September, the so-called "beige book," said "national economic activity continued to rise, albeit at a modest pace."
The Fed noted expansion in manufacturing, but said "hiring remained limited." Consumer spending was "flat to moderately positive," the Fed said.
If you could pin the tail on the donkey here, most would say the soft economy is in need of jobs to put 7.7 million recession-displaced workers back on their feet, so they could start spending again. That "moderately positive" pace of consumer spending needs to change, given consumer spending is frequently said to make up 70 percent of the country's gross domestic product.
Is it odd that U.S. Treasury Secretary Timothy Geithner is headed to South Korea this weekend for a Group of 20 nations summit with just the opposite plan of attack concerning U.S. consumer spending?
This depends on what outcome suits your fancy. If Nov. 2 is a make or break day for your employment situation, if you are running for office that is, it would be tempting to look for a sit-com solution to get the economy rolling by Thanksgiving Day, by Christmas at the latest.
Geithner is looking for something more sustainable than that. "The rest of the world wants us to save more -- and that means less U.S. demand for the rest of the world. Demand is going have to come from other sources," Geithner said during an interview with The Wall Street Journal.
The Obama administration's mantra these days is "rebalance." The pin the tail on the donkey approach works this way:
China starts buying more and allowing U.S. industries easier access to China as a manufacturing base and as a market. Not to put too fine a point on it, Chinese consumers prosper and start eating Eggos for breakfast by cooking them in toasters made in Wisconsin -- but those details can wait until later.
But it works precisely that way. Once it was said "what is good for General Motors is good for the United States," needs to be tweaked to read, "What is good for Caterpillar Inc. in China is good for the United States."
Good for GM, too.
If there is one statistic that could slap the United States out of its free-spending narcissism it's that China outpaced the United States in automobile purchases for the first time in history this year, buying 13.7 million vehicles, admittedly in an off year for U.S. sales. But, while U.S. vehicle sales are expected to slowly recover to a more normal 15.5 million car sales per year, in China, auto sales are expected to nearly double to 25 million within five years.
In other words, China did not just surpass the U.S. in automobile sales this year -- they shot past at the speed of sound. The impact boom just hasn't reached the United States quite yet. But, it's coming.
When it comes to rebalancing, it might be said, be careful what you wish for. It might come true.
In international markets Thursday, the Nikkei 225 in Japan fell flat, falling 0.05 percent, while the Shanghai composite index lost 0.68 percent. The Hang Seng index in Hong Kong added 0.39 percent, while the Sensex in India surged 1.96 percent.
In Australia, the S&P/ASX 200 lost 0.04 percent.
In midday trading in Europe, the FTSE 100 index in Britain rose 0.76 percent, while the DAX 30 in Germany added 0.9 percent. The CAC index in France gained 0.99 percent, while the Stoxx Europe 600 rose 0.3 percent.
