“The economic news on Tuesday was muddled. The Commerce Department reported that factory orders rose by more than twice what had been expected in November, reflecting demand in the steel, computer and chemical industries. The gain of 1.1 percent easily beat the 0.5 percent forecast of analysts polled Thomson Reuters.
“Meanwhile, the number of buyers who agreed to purchase previously occupied homes fell sharply in November, an indication that sales will fall this winter. The National Association of Realtors said its index of pending home sales fell 16 percent, the first drop after nine months of gains. Some decline had been expected as investors raced to buy homes ahead of a tax credit deadline, which was later extended.”
WATCHDOG: This old dog’s various companies here and abroad have long served as a leading indicator of the direction of the economy. Perhaps this reflects a regional problem, for which there is some evidence, but things do not seem to be getting better and may well be getting worse.
If there is no tangible sign of improvement in the economy by the end of February, consideration should be given to a second stimulus bill.
Debt can be repaid during good times. We saw this during the Clinton years. Idle hands and unused industrial capacity are lost forever.
Young people go into debt to buy a house. They benefit as they pay the mortgage from something tangible. The same applies to an economy. Spending money on infrastructure and investment in health and education bring tangible results in exchange for debt. Not stimulating the economy during a sharp recession causes us the pay the same price as for “a house” in lost capacity, but we get nothing in return. So we were taught by John Maynard Keynes and Paul Samuelson!
