Monday, July 02, 2012

Welcome to Carter Country!

In case you missed it - or were confused by Obama's claim that "the private sector is going fine" - U.S. manufacturing contracted last month and the threat of a double-dip recession is real.  Doug Ross notes that nobody saw it coming: "U.S. manufacturing plummets "unexpectedly"; 0 of 70 analysts predicted the recession-like numbers."  Zero Hedge says: "Houston, we have a contraction"
And so we have recoupling, with the ISM printing below 50 (i.e. contraction) at 49.7 for the first time since July 2009. Expectations of a 52.5 print were obviously blown away, as the final number came well below the lowest Wall Street forecast of 50.5.
Why is this critical?  If you're a political junkie (like me) you would have recalled a November 2011 analysis by the New York Times' Nate Silver who noted that of all the economic indicators which predict the outcome of a Presidential election, the ISM Manufacturing Index is #1.  Only one incumbent ever had to face the electorate with the ISM below zero (in contraction).

Extra - Power Line: "U.S. Manufacturing shrinking again."

More - From Gateway Pundit.


538 said...

The manufacturing news came out this morning. Silver's formula was updated this evening. Obama's likelihood of reelection has dropped down to 68.6%.

Eric at work said...

Hold tight to that number, buddy. Hope and change!

Anonymous said...

"I cite Nate Silver if I like what I see, and I flee from Nate Silver when I don't." Standards!

Eric said...

Not true: a couple days before the Brown-Coakley general election, Silver called the race a "tossup."

Sometimes NY Times writers suffer from uncontrollable bias, even over numbers.

Anonymous said...

"When writers don't predict what I want to see happen, they suffer from uncontrollable bias."

If anything, Silver and his formulas are known for being tentative and overcautious. His biases are very controlled. Unfortunately, Silver's also known for being accurate.

But cheer up... the economy might get even worse!

Eric said...

With Obama in charge, it's pretty much a fait accompli.

Anonymous said...

Poor Nate Silver. So very perceptive when he brings up ISM Manufacturing Indices, but oh so very wrong when he calculates Romney’s stagnant chances.

Plus, your strange exhumation of Silver’s "tossup" call, in order to discredit the same source you’d so recently credited as being crucial. But Silver’s January 2010 columns explicitly described the process of Scott Brown picking up steam down the stretch as reflected by the available polling... which is exactly what happened. Rasmussen, a pollster which has been shown to have a consistent house tilt towards Republican candidates, wrapped up their work with Brown losing, yet the biased liberal Nate Silver didn’t.

Four days before his “tossup” column, Silver estimated that Martha Coakley would win by more than 8%. By the final day, Silver’s formula had reduced Coakley’s estimated lead to 4 points. And then, later on the same day, he applied a second downshift to knock her to 0%.

From more than 8 to 4 to 0 in 96 hours. Whoo-ee, Silver sure blew that call.