Written by Steven Hansen
Residential building permits and construction completions in April 2012 show the industry rebound is continuing. Growth trend lines have been positive for the last 4 months, and building permits continue to grow faster than construction completions
US Census Headlines:
- building permit down 7.0% month-over-month, up 23.7% year-over-year
- construction completions up 10.0% month-over-month, up 20.1% year-over-year
- the market expected 675K to 680K annualized housing permits versus the 717K reported
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Written by Steven Hansen
The headlines say Industrial Production (IP) was increased 1.1% in April 2012 and up 5.2% year-over-year. Econintersect analysis is up 1.7% month-over-month (reversing last month’s decline) and up 5.1% year-over-year.
The market was expecting a month-over-month increase of 0.4% to 0.5% (vs the headline 1.1%).
The manufacturing component of this index is NOT indicating a recession is imminent. Continue reading →
Written by Steven Hansen
The Empire State Manufacturing Survey (manufacturing in New York State) in May 2012 continued on its sixth month of expansion. Manufacturing expansion is indicated by positive numbers to this index:
- This noisy index fell from 20.2 to 6.6 in April – and now bounced back to 17.1 in May.
- Expectation was for a readings of 8.0 to 8.4
As this index is very noisy, it is hard to understand what these massive moves up or down mean.
Continue reading →
Written by Steven Hansen
Business sales rate of growth continued to slow in 2012, while inventory-to-sales ratios were in the middle of a normal range. Business sales combines manufacturing, wholesale and retail sales.
- The data this month was historically reset due to the new retail data baseline.
- Inventory-to-sales levels were near historical lows in February but returned to normal mid-range in March.
Advanced retail sales for April released today was “less good” destroying the former “better good” trend. Continue reading →
by Steven Hansen and Doug Short
The April 2012 Consumer Price Index (CPI-U) annual inflation rate fell from 2.7% to 2.3%. Core inflation (CPI less food and energy) was unchanged at 
2.3% annual inflation [note that the Federal Reserve uses 2.0% core inflation as an inflation target].
The Fed’s inflationary targets are flexible at this time with so much economic slack, and the Fed statements continue to indicate they expect inflation to recede in the coming months.
The real question is why inflation is moderating at this point in an economic cycle. Inflation generally accelerates as the economy heats up – and a lower inflation rate could be an indicator that the economy is cooling. However, because of globalization and free trade – it is hard to be sure how this relates to the economy. Continue reading →
Posted in Prices - PPI, CPI and More
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Tagged Advisor Perspectives, consumer prices, CPI, Doug Short, dshort.com, energy, export prices, finished goods, food, gasoline, inflation, PPI, producer prices, Steven Hansen
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by Jeffrey Frankel, from Project Syndicate
China watchers are waiting to see whether the country has engineered a soft landing, cooling down an overheating economy and achieving a more sustainable rate of growth, or whether Asia’s dragon will crash to earth, as others in the neighborhood have before it. But some, particularly American politicians in this presidential election year, focus on only one thing: China’s trade balance.
True, not long ago the renminbi was substantially undervalued, and China’s trade surpluses were very large. That situation is changing. Forces of adjustment are at work in the Chinese economy, so foreign perceptions need to adjust as well. Continue reading →
Written by Steven Hansen
April advanced Retail Sales was far from good, and likely was the poorest retail sales growth (year-over-year) in last 20 months (Census result).
- Econintersect inflation adjusts the data. This is the poorest sales growth in 26 months.
- Gasoline contribution to the year-over-year growth continues to be near the average for the retail sector growth.
- There appears no category of retail sales which one could point to as strong or weak – they were all “less good”.
Continue reading →
by Barry Eichengreen and Kevin H O’Rourke, from Voxeu
The debate over stimulus versus austerity continues unabated. This article shows that, while industrial production and trade recovered much more 
quickly than during the Great Depression, both series now appear to be slowing down. It suggests that, as St Augustine would have said had he been managing director of the IMF, there is a case for additional fiscal consolidation and monetary normalization, but not yet.
The debate over stimulus versus austerity continues unabated (eg Corsetti and Muller 2012). Eighty percent of economists surveyed by the Booth School of Business at the University of Chicago agree that the stimulus bill passed by the US Congress in 2009 successfully lowered the rate of unemployment. But this also means that 20% are either skeptical or uncertain – and that doesn’t even count a number of high-profile conservative members of the profession who did not participate in the survey.
Note: For larger view of caption graphic, see Figure 3.
Continue reading →
Written by Steven Hansen
Last week I posed the question whether the consumer was returning. It seems to be a common perception that consumer credit is driving the retail economic expansion. Below is a set of graphs that may surprise.
Consumer credit is expanding at an annual rate of 7.75% according the G.19 consumer credit report released last week by the Fed. If one digs a little into the data, and if student loans are backed out, consumer credit grew 0.1% year-over-year, and declined marginally month-over-month. Continue reading →
Posted in Consumer Credit, Retail & Business Sales, Weekly Economic Summary
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Tagged consumer, credit, Economy, employment, personal consumption, retail sales, Steven Hansen, unemployment, weekly review
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by Doug Short, Advisor Perspectives/dshort.com
The University of Michigan Consumer Sentiment Index Preliminary for May came in at 77.8, which is the highest reading since January 2008. Today’s number was above the Briefing.com’s consensus forecast of 76.0.
See the chart below for a long-term perspective on this widely watched index. Because the sentiment index has trended upward since its inception in 1978, I’ve added a linear regression to help understand the pattern of reversion to the trend. I’ve also highlighted recessions and included real GDP to help evaluate the correlation between the Michigan Consumer Sentiment Index and the broader economy.
Continue reading →
Written by Steven Hansen
The news in this index is that the supply chain inflation continues to be inverted – with deflation in the crude goods portion of the index. Historically, crude goods leads finished goods.
The Producer Price Index (PPI) finished goods prices increased 
1.9% year-over-year in April 2012 (less than the 2.8% in March) – and declined 0.2% month-over-month. The PPI represents inflation pressure (or lack thereof) that migrates into consumer prices – and the PPI continues to moderate. This moderation in PPI has global aspects – PPI in China is actually deflating year-over-year.
The market had been expecting a 0.0% to 0.1% month-over-month increase in finished goods prices (compared to the -0.2% increase).
Continue reading →
Posted in Prices - PPI, CPI and More
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Tagged consumer prices, CPI, energy, export prices, finished goods, food, gasoline, inflation, PPI, producer prices, Steven Hansen
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Written by Steven Hansen
There is absolutely no correlation between economic activity, recessions and export / import prices. Prices can be rising or falling going into a recession. Econintersect follows this data series to adjust economic activity for the effects of inflation where there are clear relationships.
The story remains the continually moderating year-over-year inflation – however, this moderating cycle should shortly end. Exports are now up only 0.7% year-over-year and imports up 0.5% (up 1.3% if oil is excluded).
Continue reading →
Written by Steven Hansen
Import growth has positive implications historically to the economy – and March 2012 trade data (although not as good as February), continued to support projections the economy is expanding moderately.
The market expected a trade deficit between $49.5 and $50.2 billion and the seasonally adjusted headline data from US Census came in at $51.8 billion. The Econintersect trade balance number is $58.5 – and there were no unusual elements in the data.
Continue reading →
Written by Steven Hansen
It is not often that the difference between the adjusted and unadjusted data is like night and day – but in March 2012, the seasonally adjusted data looks very good and the unadjusted data looks terrible. The year-over-year unadjusted data crashed from up 14.0% last month to up 3.9% this month. One month is not a trend but after inflation adjustment there seems little growth in wholesale in March.
Continue reading →
Written by Steven Hansen
JOLTS tre
nds continued to predict moderate jobs growth in the coming months, similar to what has been seen year-to-date.
There was moderate growth in jobs openings in March 2012, and JOLTS remains in its improvement channel established since the beginning of 2011. This data series historically is very noisy which likely is a result of data gathering issues and/or seasonal adjustments.
Jobs openings in the BLS Job Openings and Labor Turnover Survey (JOLTS) serves as a predictor of future jobs growth. Continue reading →
Written by Steven Hansen
The Fed’s consumer credit report should have stated that student loans continue to drive the credit economy.
Consumer credit increased at an annual rate of 7-3/4 percent in the first quarter. Revolving credit was little changed, while nonrevolving credit increased at an annual rate of 11-1/2 percent. In March, consumer credit increased at an annual rate of 10-1/4 percent..
Here is what they should have said:
- Overall consumer credit increased 5.0% year-over-year – growth rate increased from 4.3% year-over-year in last month’s report
Continue reading →
by Guest Author Edmund Phelps
Editor’s note: These are Prof. Phelp’s opening remarks for the Keynes vs. Hayek debate produced by Reuters, 8 November 2011 at Columbia University. James K. Galbraith led the Keynes team. His opening remarks have been posted previously. Pictured left is John Maynard Keynes; pictured right is Friedrich August Hayek.
Keynes was a close observer of the British and American economies in an era in which their depressions were wholly or largely monetary in origin – Britain’s slump in the late 1920s after the price of the British currency was raised in terms of gold, and America’s Great Depression of the 1930s, when the world was not
getting growth in the stock of gold to keep pace with productivity growth. In both cases, there was a huge fall of price level. Major deflation is a telltale symptom of a monetary problem. Continue reading →
Written by Steven Hansen
Today the Conference Board reported their April employment index rose moderately after falling marginally last month.
This gives Econintersect one more chance to Monday morning quarterback the Jobs situation after the BLS jobs report on Friday – second bad report in a row. As Econintersect has continued to remind its readers, a 2% growth economy is not up to producing a lot of jobs – and it now appears that the good jobs growth seen in the recent past is reverting to a more typical growth based on the current dynamics.
Continue reading →
