– by New Deal democrat

First, a programming note: I’ll post about retail sales later today.

Consumer inflation in April continued essentially to be an interplay between shelter and gas prices, with a side helping of auto insurance and repairs. During late 2022 and early 2023, shelter was still accelerating or steady at a high rate of inflation, while gas prices were falling. Beginning in late 2023, the dynamic reversed, as shelter inflation was slowly decelerating, while gas prices had bottomed. That remained the case in April.

So first, let’s look at the month over month change in headline inflation (blue) vs. inflation less energy (red) and inflation less shelter (gold) for the past two years:

All three rounded to +0.3% increases in

– by New Deal democrat

Tomorrow and Thursday a plethora of data will be released, on consumer inflation and spending, production, housing, and jobless claims. In the meantime today we got a chance to look at upstream pressures on inflation.

And those upstream pressures do seem to be building slightly, reflecting a strong economy with full employment.

Commodity prices increased 0.9%. These are very volatile, so this was not particularly out of the ordinary, as shown in the below graph of monthly changes for the past 10 years:

YoY commodity prices are just 0.1% above unchanged (red, left scale in the graph below). They are very well behaved compared with just after the pandemic (blue, right scale):

By the time we get to finished

Weekly Indicators for May 6 – 10 at Seeking Alpha

 – by New Deal democrat

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

The majority of short leading and coincident indicators continue to show strength rather than weakness. This week it was commodity prices’ turn to show that the global economy is getting stronger.

As usual, clicking over and reading will bring you up to the virtual moment as to the economic data, and reward me with a little pocket change for my efforts.

New Deal democrats Weekly Indicators April 29 – May 3, Angry Bear, by New Deal democrat.

Tags: 2024, Weekly Indicators May 6 – 10

– by New Deal democrat

I’ve written two posts earlier this week delving into the big divergence between the Establishment Survey portion of the Employment Report, which shows moderate growth, and the Household Survey, which is most consistent with a recession already having started.

At any given time, some data will be positive and some will be negative. That’s why I follow a whole series of reports with longer term proven reliability. Most of those at present are positive.

But the Household Survey isn’t the only negative data point. 

Here is a graph from six months ago showing the historical record over the past 25 years of both the ISM manufacturing index and the ISM non-manufacturing index. The former has a 75 year history, but the

– by New Deal democrat

After several months of snoozing at almost identical weekly levels, initial jobless claims awoke with a bit of a jolt this week, increasing by 22,000 to 231,000, the highest weekly number since last August. The four week average unsurprisingly also rose, by 4,750, to 215,000. With the usual one week delay, continuing claims rose 17,000 to 1.785 million, still one of the lowest readings since last August:

As usual, the YoY% figures are more important for forecasting purposes. The weekly number was higher for the first time in six weeks, by 2.7%. The four week average is still lower by -1.4%. Continuing claims remain higher, by 4.6%, but are still close to their lowest YoY reading in over a year:

Now that we have

– by New Deal democrat

AB: New Deal democrat reviews the Establishment Survey and again it differs from the Household Survey in a positive way.

On Monday I wrote that the Household survey portion of the jobs report was recessionary for the second time in three months. But I pointed out that there was a very large divergence in jobs growth in the past 24 months, amounting to 1.7% of the prime age workforce, between that survey and the Establishment survey, one of the largest such divergences on record.

Today let’s take a look at the Establishment survey, which is much more positive.

Every month as part of my look at the jobs report, I look at the leading employment sectors. These are the ones that usually turn down first before the overall

– by New Deal democrat

The Senior Loan Officer Survey is a long leading indicator, telling us about credit conditions that typically turn worse a year or more before the economy turns down, and improve just at the economy is ready to turn up.

The big drawback of this series is that the information is only reported Quarterly, and with a one a one month lag. As I indicated in my introductory note yesterday, data for Q1 was released yesterday.

There are two series that have a long enough record to give us a lot of information: whether banks are tightening or loosening standards; and the demand for commercial and industrial loans. 

Let’s look at each in turn.

The first series is the percentage of banks tightening lending standards, meaning

– by New Deal democrat

First, a brief programming note. This week is particularly sparse in the new economic data department. The Senior Loan Officer Survey will be reported this afternoon, and on Thursday as usual we get jobless claims. Aside from that, nada.

So I might take a day or two off.

But I want to spend some time looking more closely at last Friday’s jobs report(s). I use the plural, because last Friday there really were two very divergent reports. The Establishment report was decent, but as I say in the title to this post, for the second time in three months, the Household Report was what I would expect to see in a recession.

Let’s start by comparing the employment level (blue) with the unemployment level (red). The former did

Weekly Indicators for April 29 – May 3 at Seeking Alpha

 – by New Deal democrat

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

Very little change this week in any of the indicators, but what there was had everything to do with the frame of reference, because all gas prices under $3/gallon have now dropped out of the three year reference period. Which means that – *relatively* speaking – gas prices are currently cheap!

As usual, clicking over and reading will bring you up to the virtual moment as to the state of the economy, and reward me with some pocket change for organizing it for you in a coherent format.

The Bonddad Blog

– 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, vs. a “soft landing” stabilization – and even whether the recent increase in monthly jobs numbers signifies a re-strengthening.

Based on the leading relationship of initial and continuing jobless claims, whether the unemployment rate is neutral or decreasing; or whether there is further weakness.

Based on the leading relationship of the quits rate to average hourly earnings, whether YoY wage growth would continue to decline

– by New Deal democrat

 The snooze-a-thon in jobless claims continues, as both initial and continuing claims are well-behaved within the narrow range where they have been generally for the past six months.

Initial claims were unchanged least week at 208,000, while the four week moving average declilned -3,500 to 210,00. With the usual one week delay, continuing claims were unchanged at 1.774 million, which is tied for the lowest level in nearly 9 months except for a three week period right at the turn of the year:

Ask per usual, the YoY% change is more important for forecasting purposes. On that basis initial claims were down -2.8%, the four week average down -3.1%, and continuing claims higher by 4.0%, just above last week’s 14 month low

– by New Deal democrat

After almost half a year of general stabilization, or very slow deceleration, the JOLTS report for March featured multi-year lows in almost all of its components. 

Job openings (blue in the graph below), a soft statistic that is polluted by imaginary, permanent, and trolling listings, declined -325,000 to a three year low of 8.488 million. Actual hires (red) declined -281,000 to 5.500 million, the lowest level since the pandemic lockdowns. Voluntary quits (gold) declined -198,000 to a more than three year low of 3.329 million. In the below graph, they are all normed to a level of 100 as of just before the pandemic:

As has been the case for a number of months now, hires are below the level they were at just in early

By New Deal democrat

The Bonddad Blog

A preliminary programming note: In addition to the manufacturing and construction reports, today we also get the JOLTS report for March, and updated motor vehicle sales reports. Yesterday we also got the Employment Cost Index for Q1.

I will comment on the JOLTS report later today. I’ll comment on the ECI along with jobless claims tomorrow. Additionally, Wolf Richter made an interesting point yesterday about the sharp increase in repeat home sales prices in the Case Shiller and FHFA reports yesterday. He noted that the reports coincided with the December through early February decline in mortgage rates to 6.6%, which presumably prompted a lot of potential buyers to “strike while the iron is hot,” thereby

– by New Deal democrat

The Bonddad Blog

Our final housing statistics of the month are the FHFA and Case Shiller repeat sales indexes. As usual, keep in mind that mortgage rates lead home sales, which in turn lead prices. Which, in turn, lead the official CPI measure of shelter by a year or more.

This morning the FHFA purchase only price index through February spiked a sharp 1.2% (!) on a seasonally adjusted monthly basis, causing the YoY gain to accelerate from 6.3% to 7.0% YoY. Meanwhile the Case Shiller National index rose 0.4% for the month of February, and aLeo accelerated from 6.1% to 6.4% YoY. Since the FHFA index (dark blue) has frequently led the Case-Shiller index (light blue) at turning points by a month or two, I put more weight

– by New Deal democrat

The Bonddad Blog

About 10 years ago, I went looking for what I called “mid cycle indicators.” In other words, I wanted to go beyond leading or lagging indicators to find at least a few that tend to peak somewhere near the middle of an expansion.

That synapse was jangled when I read the title of a recent update by financial analyst Cam Hui, “Relax, it’s just a mid-cycle expansion.” 

Since I hadn’t looked at the mid-cycle indicators I identified last cycle* during this one, I thought I’d take a look. So here we are. (*incidentally, those peaked in 2014, about 5 years after the expansion’s start, suggesting the next recession would occur in about 2019 or so…Hmmm, I don’t think they foretold a pandemic, but still ….)

– by New Deal democrat

The Bonddad Blog

On Friday the CDC updated its COVID death statistics through March 31, which means that we now have 4 full years of data. It also updated its hospitalization data through April 20, and to cut to the chase, last week saw a record low hospitalizations for COVID – 5,615 – since its onset. So this is a good time to look at the state of the now-endemic pandemic.

When it comes to both hospitalization and death statistics, the first two years and the last two years look entirely different by scale. 

Let’s start with hospitalizations. Here are the first two years:

The worst hospitalizations ever were just over 150,000 in the week of January 15, 2022 during the original Omicron BA.1 wave. The lowest

– by New Deal democrat

The Bonddad Blog

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

Not much churn in the short leading or coincident timeframes this week. But one of the long leading indicators joined the “less bad” parade. This is what I would expect to see coming out of a recession, before growth in the shorter term improves. Just one week, but still . . .

As usual, clicking over and reading will bring you up to the virtual moment as to the economy, and bring me a little pocket change for the week as well.

New Deal democrats Weekly Indicators for April 15 – 19 2024, Angry Bear by New Deal democrat

– by New Deal democrat

The Bonddad Blog

Personal income and spending has become one of the two most important monthly reports I follow. This is in large part because the big question this year is whether the contractionary effects of Fed tightening have just been delayed until this year, or whether the fact that there have been no rate hikes since last summer mean that the expansion will strengthen.

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, including real

– by New Deal democrat

The Bonddad Blog

Most of the commentary you will read about Q1 GDP that was released this morning will be about the core coincident components. For that I will simply outsource to Harvard’s Prof. Jason Furman:

“much of the slowdown was in non-inertial items like inventories (-0.35pp) and net exports (-0.86pp). The better signal of final sales to private domestic purchasers was 3.1%.”

I agree.

With that out of the way, as usual, my focus is instead on what the leading indicators contained in the report can tell us about the months ahead. There are two such long leading indicators: private residential fixed investment (basically, housing) as a share of GDP, and deflated corporate profits.

Let’s look at each one

– by New Deal democrat

The Bonddad Blog

[Note: I’ll put up a post discussing Q1 GDP later today.]

Initial and continuing claims continued their snooze-fest this week.

Initial claims declined -5,000 to 207,000, continuing their nearly 3 month long range of between 200-220,000 per week. The four week average declined 1,250 to 213,250. This average has remained in the 200-225,000 range for over half a year! Finally, with the typical one week delay, continuing claims declined -15,000 to 1.781 million:

As per usual, for forecasting purposes the YoY range is more important. Here, initial claims were down -1.0%, the four week average down -1.8%, and continuing claims higher by 3.4%, still the lowest comparison for continuing claims since

– by New Deal democrat

The Bonddad Blog

First off, let me reiterate that my focus this year is on manufacturing and construction. That’s because these are the two sectors the waxing and waning of which have almost always determined if the US economy is growing or not. By contrast, for the past half century or more the production and consumption of services has tended to increase even right through most recessions.

With that framework in mind, yesterday I wrote about how, following interest rates, housing is range-bound.

This morning durable goods orders for March were reported, which gives me a good opportunity to update the state of the maufacturing sector.

Total durable goods orders rose 2.6% month over month. Core capital goods

– by New Deal democrat

The Bonddad Blog

As per my usual caveat, while new home sales are the most leading of the housing construction metrics, they are noisy and heavily revised. 

That was true again this month, as sales (blue in the graph below) increased almost 9% m/m to 693,000 annualized, after February was revised downward by -25,000 to 637,000. As the five year graph below shows, after the initial Boom powered by 3% mortgage rates, sales declined almost 50% in 2022, but have stabilized in the 650,000 +/-50,000 range for the past 16 months. For comparison I also include the much less noisy, but slightly less leading single family housing permits (red), which as anticipated appear to have started to follow sales down from their peak:

– by New Deal democrat

The Bonddad Blog

This is an update of some information I last posted several months ago.

Real median household income is one of the best measures of average Americans’ well-being. However, the official measure is only reported once a year, in September of the following year.

So right now the most recent official measure is for calendar year 2022 (when you might remember gas prices surged to $5/gallon). In other words, it’s hopelessly out of date.

There are several ways of approximating real median household income on a more timely basis available in the public data. 

For this purpose, wages are a very imperfect proxy, because income includes stimulus payments or debt relief during the pandemic. Also during the

– by New Deal democrat

The Bonddad Blog

I neglected to put this up Saturday, so here it is now. My “Weekly Indicators” post is up at Seeking Alpha.

There continues to be a fair amount of churn and noise in the short leading and coincident time range. Nevertheless, the underlying theme is one of positivity. Aside from the swoon in the stock market this past week, the other big move was in industrial commodities, which spike higher late in the week. This is the first time they have been positive YoY in well over a year.

Typically that is because of higher demand straining against current supply, which means an expanding economy (with inflationary pressure building up).

As usual, clicking over and reading will bring you up to the virtual

– by New Deal democrat

The Bonddad Blog

The bifurcation of the new vs. existing home markets continued in March, per the report on existing home sales and prices yesterday. Remember that, unlike existing homeowners, house builders can vary square footage, amenities, lot sizes, and offer price and/or mortgage incentives to counteract the effect of interest rate hikes.On a seasonally adjusted basis, existing home sales declined from 438,000 to 419,000 in March. But this is well within the seasonally adjusted range of the past 16 months (gray, right scale in the graph below){also, note I am using Trading Economics graphs due to restrictions put on FRED by the Realtors; also note difference in scales):

At their worst seasonally adjusted

– by New Deal democrat

The Bonddad Blog

For the last 8 months, initial and continuing claims have been remarkably consistent. Initial claims have varied between 194,000 and 228,000, and continuing claims have with the exception of three weeks right at the new year varied between 1.787 million and 1.829 million.

That rangebound trend continued this week as initial claims were unchanged at 212,000, and the four week average was also unchanged at 214,500. With the usual one week delay, continuing claims rose 2,000 t0 1.812 million:

Indeed, with the exception of last spring, initial claims have been essentially rangebound for the entire last 2 years!

For forecasting purposes, the YoY% change is more important. There, initial claims are

– by New Deal democrat

The Bonddad Blog

Industrial production, one of the premier series the NBER has historically used to declare recessions vs. expansions, has faded in importance since China was admitted to regular trading status in 1999. As you can see in the first graph below, both total and manufacturing production peaked in 2007. Further, manufacturing has continued to fade, as its post-pandemic peak has not equaled its 2010’s peak either:

In March, total production increased 0.4% from an upwardly revised, by 0.2%, February; but it is still down -0.6% from its September 2022 post-pandemic peak. Manufacturing production increased 0.5%, but is also down, by -0.2% from its post-pandemic peak as well:

Before the “China shock,” a

– by New Deal democrat

The Bonddad Blog

There was a big decline in housing starts last month, and a smaller but significant decline in permits. Whether that signifies a change in trend or just noise is the issue. I lean towards the latter. To wit, in reaction to both January and Februarys’ housing construction report I wrote, “To signify a likely recession, units under construction would have to decline at least -10%, and needless to say, we’re not there. With permits having increased off their bottom, I am not expecting such a 10% decline in construction to materialize.” I also indicated that I expected to see more of a decline in the actual hard-data metric of housing units under construction.

That is still the case.

To recapitulate my

– by New Deal democrat

The Bonddad Blog

As per usual, real retail sales is one of my favorite indicators, because it gives so much information about the consumer, and since consumption leads employment, it helps forecast the trend in the latter as well.

And the news this morning was good, as nominally retail sales increased 0.7% in March, while February’s number was revised higher by 0.3% to 0.9%. After accounting for 0.4% inflation in March, real retail sales increased 0.3%, and February was revised up to 0.5%.

To the extent there was bad news, it was that January’s -1.2% decline has still not been completely erased.

To the graphs: first, below I show the historical record for the past 15+ years of both real retail sales (dark blue)

– by New Deal democrat

The Bonddad Blog

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

Long Lead Indicator Remain Unchanged.

Short Lead Indicators show Improvement.

Coincidental Indicators suggest a stable consumer and taxpayer environment for 2024.

There has been a lot of churn in both the short leading and coincident indicators in the past few weeks, but the overall tone is towards a more positive economic environment.

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