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Industrial and manufacturing production improve for the month, but 16+ month fading trend continues

2 days ago

Originally Published at The Bonddad Blog

by New Deal democrat
Industrial production is an indicator that has faded somewhat in importance in the modern era since China’s accession to normal trading status in 2000. Before that, a downturn in production was an excellent coincident indicator for a general downturn in the economy. Since then there have been several downturns, most importantly during 2015-16, when the broader economy, most notably housing and the consumer, did not follow. That was again the case of the downturn in 2023 – which has not resolved yet.

This morning’s report was another case of good news and bad news. The good news is that industrial production rose 0.1% for the month, and manufacturing production rose 0.8% from

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Good news and bad news Thursday: the good news is jobless claims . . .

3 days ago

Bonddad Blog

– by New Deal democrat

This morning brought us both good and bad economic news.

The good news was that initial jobless claims continue very low, at 209,000, down -1,000 from last week, while the four week average declined -500 to 208,000. Even better, after major downward revisions, continuing claims rose 17,000 to 1.811 million:

Recall that continuing claims had been reported over 1.900 million, so as I said above, this was major!

On the more important YoY basis for forecasting, initial claims are down -14.3%, the four week average down -7.2%, and continuing claims, which before revisions had been running at about 10% higher YoY, are now only up 2.2%:

This is all very positive for continued good employment

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The most potent labor market indicator of all is still strongly positive

5 days ago

The Bonddad Blog

 – by New Deal democrat

On Monday I examined some series from last Friday’s Household survey in the jobs report, highlighting that they more frequently than not indicated a recession was near or underway. But I concluded by noting that this survey has historically been noisy, and I thought it would be resolved away this time. Specifically, there was strong contrary data from the Establishment survey, backed up by yesterday’s inflation report, to the contrary. Today I’ll examine that, looking at two other series.

Historically, as economic expansions progress and the unemployment rate goes down, average hourly wages for nonsupervisory workers improve at an increasing rate (blue in the graph below). But eventually, inflation

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February consumer inflation: the tug of war between gasoline and shelter continues

6 days ago

February consumer inflation: the tug of war between gasoline and shelter continues

The Bonddad Blog

 – by New Deal democrat

Last month I described the trend in consumer inflation as an ongoing “tug of war” between energy and housing. Energy (mainly gasoline) peaked in June 2022 and made its low in June 2023, while housing, which peaked in early 2023, has been gradually disinflating since.

That tug of war continued in February. Energy prices firmed, up 2.3% for the month, while shelter, which still increased 0.4% for the month, had its lowest YoY reading since June of 2022. As you may already know, both headline and core inflation rose 0.4% in February. The YoY increases were 3.2% and 3.8% respectively. The former YoY reading is in the

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Scenes from the February jobs report: yes, the Household Survey really was recessionary

7 days ago

Scenes from the February jobs report: yes, the Household Survey really was recessionary

 – by New Deal democrat

Later this week we get a lot of interesting reports, including CPI tomorrow, retail sales on Thursday, and industrial production on Friday. In the meantime, let’s take a further look at some of the more noteworthy data from Friday’s employment report. In particular, as I wrote then, the Household Survey portion of that report was downright recessionary. Let me show you why.

Let’s start with YoY civilian employment. This is only up 0.4%. (Note: in this graph, as in all of the below graphs except for the last one, I subtract the current value so that it shows exactly at the zero line for easy comparison with previous occasions where

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New Deal democrats Weekly Indicators March 4 – 8 2024

9 days ago

Weekly Indicators for March 4 – 8 at Seeking Alpha

 – by New Deal democrat

My “Weekly Indicators” post is up at Seeking Alpha.

Generally speaking, there is a demarcation between consumer-oriented data, which is in the main positive, and manufacturing-oriented data, which is mainly weak or negative.

As usual, clicking over and reading will bring you up to the virtual moment on the economy, and reward me with a little lunch money.

New Deal democrats Weekly Indicators for February 12-16 2024 – Angry Bear by New Deal democrat

Tags: 2024, weekly indicators March 3-8

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February jobs report: Household Survey is downright recessionary and the Establishment Survey is decidedly mixed

10 days ago

February jobs report: the Household Survey is downright recessionary, while the Establishment Survey is decidedly mixed

 – by New Deal democrat

In the past few months, my focus has been on whether jobs gains are most consistent with a “soft landing,” i.e., no further deterioration, or whether deceleration is ongoing; and more specifically: 

Whether there is further deceleration in jobs gains compared with the last 6 month average, or weather gains have held steady. In February, they held steady.
Whether the unemployment rate is neutral or decreasing; or whether there is further weakness. The recent excellent reports in initial claims suggested this rate would decline. To the contrary, it increased to a new 2 year high; and

Based on the

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Initial jobless claims continue positive, suggesting good news for the tomorrow’s February unemployment rate as well

11 days ago

Initial jobless claims continue positive, suggesting good news for the tomorrow’s February unemployment rate as well

 – by New Deal democrat

The most important reason I cover initial jobless claims is because they are an “official” short leading indicator. They are also very good at forecasting the short-term trend in the unemployment rate in the monthly jobs report, which will be updated for February tomorrow.

And the news continues to be positive. Initial claims were unchanged at 217,000, continuing near their 50 year lows from several months ago. The four week moving average declined -750 to 212,250, while continuing claims, which comparatively lag, and are reported with a one week delay, rose 8,000 to 1.906 million, close to a two year

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January JOLTS report shows more (relative) weakening, downward revisions to 2023

12 days ago

January JOLTS report: shows more (relative) weakening, downward revisions to 2023

 – by New Deal democrat

The JOLTS report for January showed only minor changes compared with December, all to the downside, but was somewhat overshadowed by mainly downward revisions to all of 2023.

Starting with the monthly changes, job openings (blue in the graph below), a soft statistic that is polluted by imaginary, permanent, and trolling listings, declined -26,000 to 8.863 million. Actual hires (red) declined -100,000 to 5.687 million. Voluntary quits (gold) declined -54,000 to 3.385 million. In the below graph, they are all normed to a level of 100 as of just before the pandemic:

Openings are at their lowest point except for last November since

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Real incomes and Presidential approval: most measures did not surpass pre-pandemic levels until 2023, or this year!

13 days ago

Real incomes and Presidential approval: most measures did not surpass pre-pandemic levels until 2023, or this year!

 – by New Deal democrat

This post is somewhat of a follow-up to one I wrote two weeks ago, about perceptions of income vs. inflation, as well as following up on yesterday’s post considering the electoral implications of the current economy.

It’s a truism – if certainly an oversimplification – that people vote their pocketbook. Real incomes are thought by some analysts to be an important determinant of that behavior. But, alas, there’s no one way to measure real income. Back 10 years ago, I occasionally used to track 4 of them. Adding real median household income, there’s five.

So let’s take a look at the entire pack.

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What real spending and the unemployment rate portend for the 2024 Presidential election (so far)

14 days ago

A bit behind here as other things have distracted me in AZ. Health being one of them. A double dose of excellent reviews of the economy today. If there is one commentary (if you are rushed) on Angry Bear you should read concerning the economy, it is NDd’s reporting.

Spending and Unemployment are in the early commentary today. Not sure what NDd has in store for later. The economy and employment are in far better shape after the pandemic than what occurred when Wall Street blew up the US with their gambling.

What real spending and the unemployment rate portend for the 2024 Presidential election (so far)

 – by New Deal democrat

The economic news later this week will focus on employment: the JOLTS report for January on Wednesday, weekly

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Manufacturing and construction show softness to start the month

16 days ago

Manufacturing and construction show softness to start the month

 – by New Deal democrat

As usual, the new month’s data starts out with information on manufacturing and construction.

The ISM manufacturing index has been a good leading indicator in that sector for 75 years. The difference over time, especially the last 20 years, is that manufacturing makes up a smaller share of the total US economy. As a result, even though it has almost consistently been in contraction ever since late 2022, to levels that before 2000 would always have meant recession, that didn’t happen in 2023.

In January, the total index rose to near its equipoise point of 50, and for the first time all year, the more leading new orders index surpassed that level. In

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January personal income and spending: Goldilocks is knocking at the door

17 days ago

January personal income and spending: Goldilocks is knocking at the door

 – by New Deal democrat

Personal income and spending has become one of the two most important monthly reports I follow, because it nets out the impacts of higher interest rates and abating inflation due to the unlinking of the supply chain. Because real personal spending on services for the past 50 years has generally risen even during recessions, the more leading components of this report have to do with spending on goods. Additionally, there are several components that form part of the NBER’s “official” toolkit for determining when and whether a recession has begun.

Now, to the report for January . . . 

Nominally income rose a sharp 1.0% in January, the same

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Initial jobless claims still very positive, especially YoY

18 days ago

Initial claims still very positive, especially YoY

 – by New Deal democrat

Before I get to this morning’s personal income and spending report, let’s get the latest weekly update to jobless claims out of the way.

New jobless claims rose 13,000 to 215,000, while the four-week moving average declined -3,000 to 212,500. Continuing claims, contrarily, rose 45,000 to 1.905 million, their second highest reading in over 2 years (but remains extremely low compared with the 40 years before the pandemic):

On the more important YoY basis for forecasting purposes, both the one week and four week average of new claims are down -2.7%, while continuing claims are up 10.9%, which remains better than almost all readings in the past 10 months:

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The state of freight

19 days ago

The state of freight

 – by New Deal democrat

There’s no significant economic news today. Yesterday we did get durable goods orders, which are an official leading indicator. I don’t pay too much attention to them, because they are so volatile. Thus yesterday’s big -6.1% decline (blue in the graph below) is more likely than not just noise, particularly because “core” capital goods orders (red) increased 0.1%, and have been generally tending sideways. Another segment which is also an official leading indicator, consumer durable goods orders (gold), have been trending higher for the past six months:

Another important – and less noisy – way to look at the manufacturing and consumption aspects of the economy is to compare transportation with

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Repeat sales house price indexes continue to increases on par with past expansions

20 days ago

Repeat sales house price indexes continue to increases on par with past expansions

 – by New Deal democrat

House prices lag home sales, which in turn lag mortgage rates. Yesterday we got the final January reading on sales. This morning, we got the final monthly (for December) read on prices, for repeat sales of existing homes.

The FHFA purchase only price index rose 0.1% on a seasonally adjusted basis, and is up 6.6% YoY. Meanwhile the Case Shiller National index rose 0.2% for the month, and was is up 5.1% YoY. Here’s what the monthly numbers look like for the past five years:

Note that this month’s increase was the lowest since last January for both indexes.

Further, although the 6.6% and 5.1% YoY increases appear to be major, the

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New home sales and YoY prices change little; expect sideways trend to follow similar recent trend in mortgage rates

21 days ago

New home sales and YoY prices change little; expect sideways trend to follow similar recent trend in mortgage rates

 – by New Deal democrat

This week we conclude January’s housing market data with repeat sales prices tomorrow, and new single family home sales, which were reported this morning.

Per my usual caveat, while new home sales is that they are the most leading of the housing metrics, they are noisy and heavily revised. Which was the case this month, as last month’s number was revised downward by about 2%, or 13,000. January sales increased 10,000 from that revised number (blue in the graph below) to 661,000 annualized. The slightly less leading but much less noisy single family permits is also shown (red, right scale):

The

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The “gold standard” of employment reports suggests that last summer’s job growth was even weaker than we thought

23 days ago

The “gold standard” of employment reports suggests that last summer’s job growth was even weaker than we thought

 – by New Deal democrat

While the monthly jobs report gets all the headlines, the “gold standard” for actual employment gains and losses is the Quarterly Census of Employment and Wages (QCEW), which as its name indicates, unlike the payrolls report is not a survey but rather an actual census of about 97% of all employers, via their withholding tax reports. The downside of the QCEW is that it is reported with a serious lag (4 or more months after the end of a quarter), and it also can be revised up until a year later. Once that happens, the nonfarm payrolls data from the previous year is also revised to be in accord.

Additionally,

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The bottoming process in existing home sales continues, as YoY price comparisons increase

25 days ago

The bottoming process in existing home sales continues, as YoY price comparisons increase

 – by New Deal democrat

The bifurcation of the housing market between new and existing home components continues, as existing home sales continue near their bottom, but with a little improvement.

Specifically, in January sales increased 120,000 on an annualized basis from an upwardly revised (by 80,000) 3.88 million to 4.00 million. This is the seventh month in a row that the annualized rate has varied between 3.85 million and 4.11 million:

Because of the low inventory, the non-seasonally adjusted median price for an existing home increased to up 5.1% YoY, the highest YoY comparison since 2022:

The YoY improvement is consistent with what we

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The good news on jobless claims continues

25 days ago

The good news on jobless claims continues

 – by New Deal democrat

The good news on jobless claims continued this week, as initial claims declined -12,000 to 201,000. The four-week moving average also declined, by -3,500 to 215,250. Continuing claims, with the usual one-week delay, declined -27,000 to 1.862 million:

Needless to say, this also helped the YoY comparisons, which are more important for forecasting purposes. Initial claims are down -7.4%, the four-week average is up a mere 1.1%, and continuing claims are up 8.6%. In the case of the last, that is the lowest YoY comparison since last March:

Recall that continuing claims, considered by itself, triggered some recession comparisons a few months ago. But that was not supported

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Perceptions of inflation vs. wage growth: why the divergence?

26 days ago

WEDNESDAY, FEBRUARY 21, 2024

Perceptions of inflation vs. wage growth: why the divergence?

 – by New Deal democrat

My recent travels included visits to cousins and their children on both sides of my family. Without any prompting from me, inevitably the table talk turned to the state of the economy.

Rather than Bigfoot the opinions of my relatives, I decided to sit back and listen until they were all done before I weighed in.

The most important thing I learned by far is that inflation remains the #1 topic across the board. Nobody seemed to think that incomes were keeping up. There was skepticism even after I pointed to the relative better performance of average hourly wages in the past three years vs. inflation, and even after comparing

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New Deal democrats Weekly Indicators for February 12-16 2024

28 days ago

Weekly Indicators for February 12 – 16 at Seeking Alpha

 – by New Deal democrat

I am back from my travels, so it’s time to catch up. There’s no significant economic news until tomorrow, but in the meantime I neglected to link to my weekly high frequency indicator wrap-up, which was posted at Seeking Alpha.

As usual, if you haven’t already done so, clicking over and reading will bring you up to the virtual minute on the economic data and forecast, and reward me a little bit for my efforts.

New Deal democrats Weekly Indicators for February 5-9 2024 – Angry Bear, by New Deal Democrat

Tags: 2024, February 12-16, weekly indicators

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Retail sales faceplant; industrial production continues 16-month streak of weakness

February 18, 2024

Retail sales faceplant; industrial production continues 16-month streak of weakness

– by New Deal democrat

Let’s take a look at two the big short leading and coincident indicators that were reported yesterday, respectively real retail sales and inducatrial production.

Retail sales can be volatile monthly, and about once in a typical year they either faceplant or unexpectedly soar. Yesterday we got the facelpalnt.

Retail sales declined nominally -0.8% in January. Because consumer prices rose 0.3%, in real terms sales declined -1.1%:

This is the lowest level in 10 months. It’s important to note that January sales, on a non-seasonally adjusted basis, are always awful, and while this year was even poorer than last year, it was better

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Housing construction essentially stable in January

February 16, 2024

Housing construction essentially stable in January

 – by New Deal democrat

I’m on the road, so I need to keep this brief, but fortunately I can give you the essence of this most important housing report with little difficulty.

Mortgage rates have declined about 1% from their peak during the autumn, and are about equal to where they were one year ago:

As a result, we should expect some improvement in the housing market from its worst levels. And that’s what we got.

Housing permits declined 1.5% for the month, but are about average compared with the past 10 months. The more significant single family permits increased 1.6% to their highest level in over 18 months. The much more noisy starts decreased a sharp -14.8% for the month, to a

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Initial jobless claims remain positive

February 15, 2024

Initial claims remain positive

 – by New Deal democrat

Initial jobless claims declined this week -8,000 to 212,000. The four week average rose 5,750 to 218,250. With the typical one-week lag, continuing claims rose 30,000 to 1.865 million:

On the more important (for forecasting purposes) YoY basis, initial claims are down -1.9%. The four week average is up 5.4%. Continuing claims are up 10.3%:

Initial claims indicate continued expansions. Continuing claims would be a significant issue if supported by initial claims, but this is their lowest YoY increase in eleven months. 

While the last several weeks of initial claims are higher than in January, they remain very low by historical standards, and continue to suggest that the

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NDd’s long leading forecast for 2024

February 14, 2024

The long leading forecast for 2024 at Seeking Alpha

 – by New Deal democrat

A couple of times a year I update my long leading forecast. With the latest GDP and Senior Loan Officer Survey data, there is enough to take a look at what the next 12 months probably have in store.

This article is up at Seeking Alpha. 

Below, a brief Introduction of what New Deal democrat is featuring. As usual, a very well detailed article by NDd.

The Long Leading Forecast Through Year End 2024

Summary

Long leading indicators provide insights into the likely state of the economy one year from now.

Corporate bond yields, housing, credit conditions, and real retail sales per capita are positive indicators.

The yield curve and real money supply are

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January 2024 consumer inflation: still a tug of war between gas and housing

February 13, 2024

January 2024 consumer inflation: still a tug of war between gas and housing

 – by New Deal democrat

As it has been for going on two years, consumer inflation has boiled down to a contest of strength between energy (mainly gasoline), which peaked in June 2022 and roughed in June 2023, and housing, which peaked in early 2023 and has been gradually disinflating since.

The headlines, as you presumably already know, are that total inflation rose 0.3% in January, and 3.1% YoY, while core inflation (less food and energy) rose 0.4% for the month and 3.9% YoY.

To spare you a bunch of graphs, here is the Census Bureau’s spreadsheet. Go down the column at the far right and it is easy to see where the remaining problem areas are:

The only

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Aggregate payrolls vs. total withholding taxes paid: which one has been telling the truer tale?

February 12, 2024

Aggregate payrolls vs. total withholding taxes paid: which one has been telling the truer tale?

 – by New Deal democrat

The drought in new data continues for today. So I wanted to take a further look at the two measures of total payrolls I discussed on Friday, one of which has been of some concern. One is total aggregate payrolls, which is part of the Establishment survey portion of the jobs report each month, and the other is total tax withholding, which is the actual aggregate number reported daily by the Department of the Treasury.

Since these measure similar things – total payrolls and the taxes withheld from total payrolls – with the exception of tax law changes and updated bracketing, they should tell similar stories. And normally for

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New Deal democrats Weekly Indicators for February 5 – 9 2024

February 11, 2024

Weekly Indicators for February 5 – 9 at Seeking Alpha

 – by New Deal democrat

My Weekly Indicators post is up at Seeking Alpha.

Most notable is that two of the long leading indicators – interest rates and corporate profits – have turned from very negative to at very least neutral, increasingly suggesting better economic news ahead.

As usual, clicking over and reading will bring you up to the virtual moment as to the economy, and reward me a little bit for my efforts.

New Deal democrats Weekly Indicators January 29 – February 2, Angry Bear, by New Deal democrat

Tags: February 5 – 9 2024, weekly indicaators

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And now for something completely different: portents of DOOOM

February 9, 2024

And now for something completely different: portents of DOOOM

 – by New Deal democrat. February 9, 2024

The lion’s share of the employment news recently has been very good. But not all of it. In particular, several of the annual revisions to the Household jobs Survey, and several other measures of employment and unemployment have been downright gloomy.

Since I haven’t discussed them at any length, I thought I would collect them all here.

First, there’s been a marked divergence between the Establishment jobs survey (red in the graph below) and the smaller, noisier Household survey (blue) ever since March of 2022. In the latter, about half of all the growth in jobholding was recorded in the two months of December 2022 and January 2023. For

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