Data Watch

Personal Income and Outlays confirm poor August, poor LT trends

The data releases came at or below expectations. The economy is neither hot nor cold, just tepid. The charts indicate that the trends for the past two years have weakened. That´s not surprising given the Fed´s “actions” over this period, when all the talk has been about “normalizing” policy, something for which, according to Yellen, there´s “no fixed time-table”. The “guessing-game” the Fed is playing is just not conducive to an improvement in economic outcomes. August was confirmed a poor month for GDP. This is not really news now that current month, September, surveys have shown better outcomes than expected.… Read More

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GDP Report – Second Revision

RGDP QoQ annualized growth was revised up to 1.4% from 1.1% in the first revision. Here we read: Thursday’s report showed a measure of business investment improved rather than declined, accounting for most of the upward revision. On a YoY basis the revision was from 1.2% to just 1.3%. These annualized QoQ figures make for dramatic headlines, multiplying actual % change by four,  but are grossly exaggerate of reality. However, no matter how you slice it, it´s a dreary economic performance. The charts give an idea. On the LHS, we get an idea of the depth of the recession, measured… Read More

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After a good result in August, the September survey was even better, and August was revised up. The level of 104.1 is the highest since the recession ended, beating the previous post-recession peak set in January 2015. It was driven by growing confidence in the jobs market even if income prospects and business conditions were more balanced in their outlook. This picture fits with the sluggish growth in the economy overall, but no pressure on the labor market, either on the downside to cut jobs or on the upside to raise wages. It´s as if the economy has shown the… Read More

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While consumer confidence shows strength, the output side of the economy had been reporting weak trends. Manufacturing has been poor for a long while, as seen in the Industrial Production numbers and surveys like Markit’s for manufacturing, which was out last week and showed weak results for September. Worrying was the fact that the far bigger services sector was also reporting poor survey data. Apparently, this trend has changed, with Markit’s PMI out today showing a very healthy pick up, which was confirmed by regional Fed surveys for Dallas and Kansas City. Although the output side is not showing stellar results, it… Read More

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The unofficial, “flash” PMI for the manufacturing sector from Markit did not show the upturn seen in some recent regional Fed manufacturing surveys. The Philly Fed last week and the Kansas City Fed yesterday had both shown significantly positive readings for manufacturing in their regions. The lack of follow through will disappoint bulls, especially after some positive readings from the NAHB about the confidence of builders of single-family homes in September. All in all, the early trends for September look mixed and likely unable to recover a lot from the bland-looking August. The implication being that 3Q 2016 GDP growth… Read More

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The headlines are wrong: Inflation is not “firming” On the CPI release today we read versions of this headline: Consumer prices moved higher in August, a sign that U.S. inflation may be continuing to firm after years of sluggish price growth. There can only be an “inflation problem”, by which it is meant that inflation is on a rising trend, if NGDP growth is also on a rising trend. The charts illustrate. I use the PCEPI because that´s what the Fed targets, but the picture for the CPI would be the same. From the mid-1960s to the late 1970s, rising… Read More

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It´s not, as the WSJ would have it that “Cooling Indicators Suggest Slower Recovery”, but that the slowing recovery is cooling indicators! In mid-2010, the Fed consciously capped the recovery that had begun four quarters earlier, in June 2009. For the past two years, since it began its on/off threat of rate hikes, the already slow recovery is slowing down further. No wonder retail spending, industrial production and other spending categories are deflating. It´s not the Fed that is data-dependent, but the data that appears to be Fed-dependent. And there´s no end in sight to the Fed´s misguided reasoning, in… Read More

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August surveys of manufacturing have been almost uniformly poor, showing negative growth. It was no surprise that consensus expectations for Industrial Production were low, but the figures came in even lower and the prior month was revised down. The negative YoY trend for the index was thus reinforced, down more than 1%. the subset of Manufacturing Production, that excludes energy production, was also expected to be weak and yet came in even weaker and with the prior month downgrade too. As a result, a sort of promising break to actual growth YoY became a negative YoY trend. Since 1919, a… Read More

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The August NFIB survey fitted in with other industry-side surveys from both manufacturing and services sectors. Current job openings rose quite strong mirroring the Job Openings survey, but it is unclear how meaningful these indicators are. Increased ease of advertising openings may mean there is a secular change occurring in the job search market. It may mean that strong secular change within employment as tech employees are more needed than ever but are hard to find at any price. That said the trend probably means most of all that there is just not enough money or sales to bid up… Read More

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The official PMI from ISM for the huge non-manufacturing sector fell heavily in August. It had been holding up remarkably well at 55 or so, but was oddly above the much poorer trend seen in its less well-established competitor survey of services from Markit. Well, now it has fallen to the same barely growing level of 50. Within the components it seems as if new orders and export orders were very weak, and retail and wholesale trade particularly hit. The employment component did weaken but service sector firms are not yet laying off staff. This is a positive sign for… Read More

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