– 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.

– by New Deal democrat

Keep in mind NDd only talks about Real Average Wages in which he does not include supervisor wages or increases. In this regard, readers get a much better perspective of Labor wages and earnings. Since NDd was traveling, we have an additional post this week.

The Bonddad Blog

On Wednesday I was traveling so I didn’t get around to writing about the important CPI release. Let me start my delayed response by updating real wages and payrolls for non-supervisory employees.

Historically, as I have pointed out a number of times, real aggregate payrolls (red in the graph below) have a flawless record over the past 50+ years of peaking in the months ahead of a recession (Note: I show the last 30 years below. From the late

– by New Deal democrat

The Bonddad Blog

New Deal democrat has been on top of the discussions of shelter and/or gasoline prices in February and also in January. He has been on top of these discussions which appear to be making the news moreso in April than earlier in the year. I have linked to the February commentary and there you can find an earlier commentary link. Enjoy the detail of NDd’s.

~~~~~~~~

The one advantage of not reporting on the March CPI results for two days is I’ve had the opportunity to look at more data in depth and mull things over.

And I’ve decided that there really wasn’t much change from the pattern we’ve seen for about the past 9 months. Basically, the month-to-month variation in inflation is a function of the

– by New Deal democrat

The Bonddad Blog

[NOTE: After traveling all day yesterday, I decided to put off any comments on the CPI upside surprise until later today. Short version is that shelter continues its slow decent, gasoline picked up, and services are accelerating as one might expect in a strong economy with the supply chain tailwind having dissipated.]

Initial claims continued to be rangebound this week, declining -11,000 to 211,000. The four week moving average declined -250 to 214,250. With the usual one week delay, continuing claims increased 28,000 to 1.817 million:

On the YoY% basis more important for forecasting purposes, weekly claims were down -4.1%, the four week average down -4.4%, and continuing claims up from last

– by New Deal democrat

I neglected to post this over the weekend, so I will post it now….

Weekly Indicators: The Coincident Indicators Say ‘Soft Landing Is Here.’

– Long Leading Indicators Show Improvement

– Short Leading Indicators are showing mixed results.

– Coincident Indicators suggest a Soft-Landing scenario for 2024.

“My “Weekly Indicators” update is over at Seeking Alpha.

There was lots of churn under the surface last week, but it continues to point towards general improvement.

As usual, clicking over and reading will bring you up to date through last Friday, and reward me with a little lunch money as well.

Also, tomorrow morning the CPI for March will be reported. I’ll be on the road, so I won’t be able to do any in

– by New Deal democrat

The Bonddad Blog

New Deal democrat has been writing and featured at Angry Bear for years now. His economic outlooks have been accurate with few exceptions. As always the US economy is independent of us in the short term. Read on as NDd’s remarks are focusing on a sound labor market.

~~~~~~~~

As I wrote Friday, the news from the employment report was almost all good. Let’s follow up on the most important points today.

First, the thre month average of new jobs added rose to a 12 month high, meaning Q1 of this year was the best quarter since Q1 of last year (dark blue, below, vs. monthly jobs light blue):

And the unemployment rate ticked down 0.1%, meaning that the three month average is 3.8%, or 0.3% higher

In sum, this month’s report was very much consistent with a “soft landing” scenario, which must be regarded as the default outcome at this point. Read-on for the details . . .

– by New Deal democrat

The Bonddad Blog

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.
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. After a contra-trend jump

– by New Deal democrat

The Bonddad Blog

Initial claims in the last week rose 9,000 to 221,000, while the four week moving average increased 2,750 to 214,250. With the usual one week lag, continuing claims declined 19,000 to 1.791 million:

On the more important YoY% basis for forecasting purposes, initial claims are up 2.3%, while the four week average is down -4.5%. Continuing claims are still up, by 5.1%:

The important takeaways are that the four week average is still giving a positive signal, while the YoY% change in continuing claims is the lowest increase since the beginning of March 2023. The net is a slightly positive continuing signal for economic expansion.

With tomorrow’s jobs report, including the unemployment rate,

– by New Deal democrat

“it should be no surprise that Biden’s poll numbers have recently improved.”

No big economic news today, so let me update a correlation with information from last Friday’s personal income data. To wit, is consumer sentiment about the economy tied to any real metric? With a lot of noise, it does appear to be correlated.

The University of Michigan has been measuring consumer sentiment for over half a century. The last 45 years are available on FRED. The below graph compares this with real disposable personal income per capita. Basically, what we are looking for is, if people have more (or less) money to spend on things other than necessities, is their feeling about the economy better (or worse)?

Both data sets, but

– by New Deal democrat

The Bonddad Blog

The JOLTS report for February showed stabilization or slight improvement to all but one of its components, generally suggesting, well, stabilization in the overall jobs market.

Starting with the monthly changes, job openings (blue in the graph below), a soft statistic that is polluted by imaginary, permanent, and trolling listings, increased 8,000 from a sharply downwardly revised January number to 8.756 million, over -100,000 lower than where we thought we were in January. Actual hires (red) rose 120,000 from a slightly upwardly revised January to 5.818 million. Voluntary quits (gold) rose 38,000 to 3.484 million from a slightly downwardly revised January. In the below graph, they are all normed to a

– by New Deal democrat

The Bonddad Blog

As usual, the new month’s data starts out with information on manufacturing and construction. To repeat what I have said often recently, these are the two sectors I am paying particular attention to for forecasting purposes this year.

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 had been in contraction for the last 16 months, to levels that before 2000 would always have meant recession, that didn’t happen in 2023.

Notice I said “had been.” Because in March, for the first time since late 2022 the total

– by New Deal democrat

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

Regional Manufacturing Declines Again

After several weeks of flirting with full recovery, the remaining regional Fed’s weighed in with their monthly manufacturing indexes, and they all went in the tank again. On the bright side, payroll tax withholding has had its best month in the fiscal year so far.

Also:

Long Leading Indicators Show Gradual Improvement with Bond Yields and mortgage Rates Becoming Neutral.
Short Leading Indicators are turning more positive, with stock pricing soaring with real consumer spending holding up.
Coincidental indicators remain mixed, with some positive and negative trends.
More detail revealed by clicking over and reading will bring