Although this was a slow news week, as I noted several days ago, 2 of 5 data points that can help determine if we are headed for a 'double dip" recession or just a slowdown were released today.
And boy oh boy did the first indicator, well, indicate! Retail sales didn't just disappoint due to gas station sales, they were poor across the board, going down-1.2% in total, and -1.1% ex autos. Retail sales ex-gasoline were down -1.0%. (April's retail sales were revised up from +0.4% to +0.6%, but that is trivial in comparison). Since May 2009 real retail sales were up +0.6%, this will lead to a YoY decline in real retail from about +5.5% to +4.5%. Peter Broekvar at The Big Picture has a very interesting point, that all of the non-gasoline decline was in building materials. More on that in the weekly rail traffic indicator below.
On the plus side both weekly M1 and M2 increased substantially. For the month of May, this means that "real" M1 is up over +0.8%, and M2 is up 1.1%. Since M2 is a Leading Economic Indicator, this will add +0.2 or +0.3 to that index in May. "Real" M2 will be up at least +0.8%. This means that "real" M1 is well above zero, and "real" M2 has turned positive on a YoY basis (but I would want to see +2.5% YoY on a "real" basis for M2 to be sure we are out of the woods).
Turning to the weekly indicators:
The ICSC reported that year over year sales were up 3.0% from last year for the week ending June 5, and also up +0.8% from the previous week. Shoppertrak reported that YoY retail sales increased 3.9% for the month of May compared with 2009, but did not make a weekly report.
The price of Gas remained steady at $2.73, a decline of $0.17 or about 6% from its high of $2.90 four weeks ago. The 4 week average of usage last week is actually slightly down from last year, again suggesting that the price of Oil did begin to "bite" and suggesting a slowdown. The price of a barrel of Oil is now only about 6% higher than last year at ~$74/barrel. [UPDATE: Apologies for the blank spaces. The spamalator at my place of employment decided the Bonddad blog was a personal storage and backup site and blocked me out for most of today! Hopefully this is just a one-time problem].
The BLS reported 456,000 new jobless claims last week. The inability of this indicator to decline below 440,000 has become a real concern. While we have no way of knowing from what sector this continued elevated level of layoffs is coming from, the monthly jobs reports make me suspect that it consists of construction jobs post expiration of the housing credit, and state and municipal workers.
The American Staffing Association's weekly index of temporary employment declined 0.95%, the first decline in 3 months. The Association blamed this on the shortened week due to the Memorial Day holiday.
Railfax - for the first time this year, this indicator is trending down YoY, although still ahead of last year's absolute numbers. Almost all of the loss can be laid at the doorstep (and framing and roof) of lumber shipments.
This bodes ill for the May and June housing statistics. May permits and starts will be reported next -Thursday- Wednesday.
Seven days into -May- June, the Daily Treasury Statement shows $54.7B in withholding taxes collected compared with $48.1B last year, a gain of 14% YoY! For the last 20 reporting days, withholding taxes for 2010 are $129.4B vs. $120.9B a year ago, a gain of 7%.
Given the strongly positive money indicators, and the strongly negative retail sales, railroad, and purchase mortgage indicators, all three focused on housing, next Thursday's housing permits and starts data is looming like the monster in "Cloverfield" over the economy.
