- by New Deal democrat
Meteorologically speaking, we are at the coldest point of the winter. From now on, we can begin to look forward to spring.
Economically speaking, housing has been stuck in the depths of winter for two years, and that was the spotlight of the monthly data this week. Housing starts declined more than expected to 529,000, but were still above 2009 lows. Permits, however, surged 91,000 to 635,000. Existing home sales increased for the 3rd time in 4 months, from 4.12 million annualized in August to 5.28 million last month. Months of supply was cut to just over 8 months (we'd want to see under 7 months for several months in a row to begin looking for a possible bottom in prices). Billings by architects rose to the highest level in several years, signalling that commercial real estate may also be close to bottoming. Housing permits are one of the 10 leading indicators and helped that gauge of future activity rise 1.0 for December - just about cementing good growth for this quarter.
So, let's start this week's high frequency data with the housing component:
The Mortgage Bankers' Association reported a net decrease of -1.9% in seasonally adjusted mortgage applications. This number has declined over the last 5 weeks, giving back about 1/3 of its uptrend since bottoming in July, and is down -11.0% YoY . Refinancing increased 7.7%, and is actually up YoY, but in real terms remains near low levels equal to many bottoms in the last 5 years.
The BLS reported initial jobless claims of 404,000. The 4 week moving average declined to 412,000. Last week I noted that "the first full week in January is typically by far the highest number for NON-seasonally adjusted claims all year. Thus the seasonal adjustment is major, and it is easy - and common - for this adjustment to be 'off.'" :This week certainly seemed to confirm that. The downtrend in initial claims is intact, and the real question is whether it stalls at just above 400,000 or moves down into the 300,000. We'll know by the end of February.
Gas at the pump went up 1 more cent to $3.10 a gallon last week, while Oil went below the $90 a barrel mark to $89.55 Thursday night. Gasoline usage was up about 2% from last year's levels.
The American Staffing Association Index increased 7.7% to 88 for the week ending January 9, entirely for seasonal reasons. This was 13% above a year ago, but about 5% below 2007 levels. Seasonal factors probably finally ended with this week.
Railfax generally remained steady in all components last week, and also steady in its comparative improvement over last year. Shipments of waste and scrap metal and auto shipments were slightly better than last year's levels. We are at the low seasonal point for rail traffic, which should start to increase next week.
The ICSC reported that same store sales for the week ending January 15 decreased -0.1% w/o/w, but increased a paltry 1.4% YoY. Shoppertrak reported that sales rose 3.3% YoY for the week ending January 15, but were down almost 13% from the week before, suggesting that shoppers took a breather in early January after a strong holiday season.
Weekly BAA commercial bond rates gave back -.02%, to 6.07%. This was less than the -.04% decrease in the yields of 10 year treasuries.
A reminder that on a trial basis I am using Matt Trivisonno's +1.07% adjustment to withholding data this year vs. last year, due to the recent payroll tax political deal. So adjusting, the Daily Treasury Statement showed adjusted receipts in the first 12 reporting days of January of $99.0 B vs. $96.5 B a year ago, for a gain of $2.5 B. Over the last 20 reporting days, this year shows $159.9 B collected vs. $160.5 B one year ago, or an adjusted loss of -0.8 B. Either we have suddenly had a slowdown (i.e., still ahead of last year's levels, but just barely), or Matt Trivisonno's adjustment is too conservative. We should have a better handle on this after a full month.
Finally, a real change in the last couple of weeks: M1 was down -0.5% for the week, up +0.2% month over month, and up +7.5% YoY, meaning "Real M1" was up 6.1%. M2 was up +0.1% for the week, +0.1% month over month - and now, the big change - up +3.9% YoY, meaning "Real M2" was up +2.5%. Real M2 has now, for the first time, joined Real M1 out of the "red zone." There has never been a recession with positive Real M1, or Real M2 at 2.5% or above.
Bottom line: we have an economy that is trying to gain momentum, and is being restrained by the choke collar of Oil.
P.S. One final note: For a great chuckle to start off your weekend, where the DK Pied Piper of Doom gets completely pwn'd, read this exchange!
Have a nice weekend!