- by New Deal democrat
This morning Initial Jobless claims were reported at 496,000, the highest in nearly 3 months. The 4 week moving average increased to 473,750.
Up until now, the jobless claims data had not broken the downward trendline since March 2009. They have now done so. Add this to the surprise strong drop in the Conference Board's consumer confidence number (not confirmed at this point by the similar, older U of Michigan survey), and you have a worrying setback on the jobs and consumer front.
On the other hand, durable goods orders were reported up 3% this month, and last month's report was revised up to +1.9%. While ex-transportation there was a -0.6% decline, last month's data ex-transportation was also revised up to +2.0%. Nondefense capital goods were up 4.7%. This completely turned around YoY Capital goods readings to a positive reading over 10%!
Besides the durable goods data, all of the regional Fed reports - New York, Philadelphia, and Chicago - have also come in strong. Industrial production came in good. The American Trucking Association's report for January showed a very strong increase -- to the point where trucking is back about 2/3 of the way from its recession bottom to its pre-recession top. All of these show a very strong manufacturing rebound that is continuing.
Bonddad and I have both suggested that exports and manufacturing may lead the way in this recovery, and both of us have noted that the US consumer, formerly the locomotive of the world economy, is now the caboose.
We are seeing - at least in one month's data - an amplification of that bifurcated pattern. The economy ex-people is having a V-shaped recovery, while the consumer - especially those in the bottom half of the income distribution - may not be seeing any improvement at all.
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6 comments:
a few comments on jobless claims....the 52 week moving average of non seasonally adjusted jobless claims is now 542,355. The high was in November at 576,928.
we are now 6% off the high. Curiously the 1982 recession high for the 52 week moving average was
on 1/15/83 at 578594 and 16 weeks later this average was at 555,501 or 4% off its highs.That is the good news.The bad news is California continues to show very
sluggish improvement its 52 week moving average is 74,878 which is only a .3% improvement from its high on December 13th at 75,124.
The numbers look bad. There is a possibility that the economy began to slip back into recession last month. Failure to pass health care reform is probably a big reason why consumer confidence plunged last month. People have lost confidence that the government can function, and see that the goverment is hopelessly gridlocked. Unfortunatley, this is what the GOP wants, so there is no incentive for them to cooperate with the Democrats.
However, there is still hope. The higher jobless claims could be mostly due to the extraordinary harsh winter throughout the eastern half of the country. The plunge in housing starts and sales last month could create extra demand in the spring. Thus, we could see the economy bounce back then. This in turn could cause more hiring, which could cause consumer confidence to move up again.
The miserable winter could well delay recovery long enough for the next blow to hit the economy: mass layoffs in state and local governments as budgets keep contracting. I think the weather is to blame for these lousy winter numbers, but I don't find that explanation reassuring.
brodero -- that would be comforting, because it shows that layoffs have decreased. Unfortunately, hiring has also decreased YoY, so it's not yet clear that employment is recovering.
NDD - good observation. But with Europe and Asia starting to weaken, and the inventory bounce almost done, will the manufacturing V continue without PCE? In any case manufacturing is a small share of the economy, so we need to see the recovery spread.
There is a risk that many business owners will give up if recovery doesn't happen.
The coming debate:
those that argue that we're in a double-dip recession, versus those who argue that we never really got out of the recession.
Another way of looking at it....
National jobless claims less California jobless claims is now 7.3% off its high on a 52 week moving average basis.....
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